SOUTH ASIAN ASSOCIATION FOR REGIONAL

COOPERATION (SAARC)

The South Asian Association for Regional Cooperation (SAARC) is an economic and political
organization of eight countries in Southern Asia.

ESTABLISHMENT:

It was established on December 8, 1985 by India, Pakistan, Bangladesh, Sri Lanka, Nepal,
Maldives and Bhutan. In April 2007, at the Association's 14th summit, Afghanistan became its
eighth member. In the late 1970s, Bangladesh President Ziaur Rahman proposed the creation of a
trade bloc consisting of South Asian countries. The idea of regional cooperation in South Asia
was again mooted in May 1980.

SECRETARIAT:

The SAARC Secretariat was established in Kathmandu on 16 January 1987 and was inaugurated
by Late King Birendra Bir Bikram Shah of Nepal.

FIRST SUMMIT:

The first summit was held in Dhaka on 8 December 1985, when the organization was established
by the governments of Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri lanka.
Since then the organization has expanded by accepting one new full member, Afghanistan and
several observer members.

(Ref; mapsofworld.com/saarc-member)

OBJECTIVES:

The objectives of the Association as defined in the Charter are to promote the welfare of the
peoples of South Asia and to improve their quality of life, to accelerate economic growth, social
progress and cultural development in the region and to provide all individuals the opportunity to
live in dignity and to realize their full potential and to promote and strengthen collective self-
reliance among the countries of South Asia. (Ref; PreserveArticle.com)
MAJOR OBJECTIVES:

1. To improve the quality of life and promote welfare of thee people.

2. To accelerate economic growth and social and cultural development in the region.

3. To promote self reliance among the countries of the region.

4. To generates mutual trust and understand and appreciate the problems of each other.

5. To strengthen cooperation with other developing countries.

6. To cooperate on matters of common interest in international forum.

7. To strengthen cooperation with regional and global organizations.

(Ref; saarc-sec.org)

POLITICAL ISSUES:

SAARC has intentionally laid more stress on "core issues" mentioned above rather than more
decisive political issues like the Kashmir dispute and the Sri Lankan civil war. However,
political dialogue is often conducted on the margins of SAARC meetings. SAARC has also
refrained itself from interfering in the internal matters of its member states. During the 12th and
13th SAARC summits, extreme emphasis was laid upon greater cooperation between the
SAARC members to fight terrorism.

SOUTH ASIAN FREE TRADE AREA:

SAFTA was envisaged primarily as the first step towards the transition to a South Asian Free
Trade Area (SAFTA) leading subsequently towards a Customs Union, Common Market and
Economic Union. In 1995, the Sixteenth session of the Council of Ministers (New Delhi, 18–19
December 1995) agreed on the need to strive for the realization of SAFTA and to this end an
Inter-Governmental Expert Group (IGEG) was set up in 1996 to identify the necessary steps for
progressing to a free trade area. The Tenth SAARC Summit (Colombo, 29–31 July 1998)
decided to set up a Committee of Experts (COE) to draft a comprehensive treaty framework for
creating a free trade area within the region, taking into consideration the asymmetries in
development within the region and bearing in mind the need to fix realistic and achievable
targets. The SAFTA Agreement was signed on 6 January 2004 during Twelfth SAARC Summit
held in Islamabad, Pakistan. The Agreement entered into force on 1 January 2006, and the Trade
Liberalization Program commenced from 1 July 2006. Under this agreement, SAARC members
will bring their duties down to 20 per cent by 2009. Following the Agreement coming into force
the SAFTA Ministerial Council (SMC) has been established comprising the Commerce
Ministers of the Member States. In 2012 the SAARC exports increased substantially to US$
354.6 billion from US$ 206.7 billion in 2009. Imports too increased from US$ 330 billion to
US$ 602 billion over the same period. But the intra-SAARC trade amounts to just a little over
1% of SAARC's GDP. In contrast, in ASEAN (which is actually smaller than SAARC in terms
of size of economy) the intra-bloc trade stands at 10% of its GDP.

(Ref; wikipedia.org/wiki/South_Asian_Association_for_Regional_Cooperation)

IMPACT OF SAARC ON PAKISTAN ECONOMY:

The impacts of SAARC as a whole on the economic system of Pakistan after its establishment
the average of trade of Pakistan with Sri Lanka and Bangladesh has generally been positive.
Pakistan’s main trade items include textile fabrics and yarn, rice, organic chemicals, leather
goods and tea. Similarly, the balance of trade with India has been favorable especially from
1997-99, but on the other hand, Pakistan ran a trade deficit with India after 1999. For example,
during the period 1997-99, Pakistan’s vegetables and fruit items were significantly in demand
from India, because during that phase Pakistan was capable of producing high quality vegetables
as compared to other countries such as Bangladesh. However, Pakistan’s trade with India was
further enhanced post-1999 in the field of textile yarn & fabrics, to the $10.37 million. At that
time Pakistan’s textile sector was blooming at with enormous speed. The main trade items
between Pakistan and India are textile fabrics and yarn, rice, organic chemicals and leather
goods. In case of Nepal, Pakistan has always had higher imports than exports.

Keeping all the factors in mind it would be right to say that SAAC has contributed positively in
developing Pakistan’s economy and has plaid active role in reducing the existing gap and
eliminating other barriers between India and Pakistan and the rest of the members, but for
progressing towards complete economic integration it is very important to remove all the
existing discrepancies among its members.
NATIONAL COLLEGE OF BUSINESS ADMINISTRATION AND
ECONOMICS (NCBA&E)

INTERNATIONAL TRADE II

SOUTH ASIAN ASSOCIATION FOR REGIONAL

COOPERATION (SAARC)

ASSIGNMENT NO: 2

SUBMITTED BY:
FATIMA PERVEZ
2131194