SAARC

Trade Scenario - World

During 19th and 20th century, international free trade termed as Engine of growth.
Trade liberalization has increased with the rise of regionalism.
Trade liberalization and regional economic integration can help a region. increase intraregional trade by exploring the size of the market.
Driven towards integration by the pressure of economic interest of the region, seven South
Asian countries- Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka
formed the South Asian Association for Regional Cooperation (SAARC) in 1985.
Afghanistan joined in the year 2007 as the eighth country.

IMPORTANCE ASPECTS

SAARC is an organization of eight countries located in the South Asia and it

stands for the South Asian Association for Regional Cooporation.

The Secretariat of this organization is located in the Kathmandu.

3% of the area of the world is represented by SAARC countries.

It was founded as a movement toward collective progress for the involved

nations of South Asia.

It is around 1.7 billion of the people and it is 21% of the world population.

REASONS FOR FORMATION OF SAARC

1.

Central Location of Asia.

2.

Common features of Indian Subcontinent.

3.

All Countries gained independence after second world war.

4.

All countries have some cultural background & History.

5.

All countries from part of the third world.

6.

The region is poor & over populated.

7.

Predominance of agriculture.

8.

Dependence of the economy on southwest monsoon.

Symbol: The SAARC symbol depicts alliance, which is specifically respect for the
(a) Territorial integrity.
(b) Principles of sovereign equality
(c) Calm settlement of all conflicts.
Observer: SAARC currently has nine observers at its summits: China, the US, Myanmar, Iran, Japan, South
Korea, Australia, Mauritius and the European Union (EU).
Roles:
1. Representatives of the observer nations are allowed to sit and speak in the inaugural and concluding
sessions but not allowed to engage in negotiations, core discussion or vote on matters discussed at
summits.
2. The other role of observer states is to monitor the situation as they might have some stake in the
organisation ( USA, EU, Japan)

OBJECTIVES OF SAARC

Primary Objectives

Improve quality of life & welfare of

people.

Economic, social & cultural

development.

Contribute mutual trust &

understanding.

Strengthen cooperation among

themselves & other Developing
countries.

Cooperate on issue like water resources.

Secondary Objectives

SAARC also looks in critical Areas

like Poverty, Education, Culture,
Sports & Arts.

SAARC Recognized bodies

SAARC Chamber of Commerce & Industry (SCCI):- Its primary focus is on the holistic
growth of service sector and small & medium enterprises.

SAARC LAW (South Asian Association for Regional Cooperation in Law): The desire to
establish an association within the SAARC region to disseminate information and
promote an understanding of the concerns and developments prompted the birth of
SAARCLAW in 1991.
South Asian Federation of Accountants (SAFA): In 1984, this organization came into
existence with an objective of strengthening and serving the accountancy profession in the
South Asian Region.

SAARC Recognized bodies

South Asia Foundation (SAF): A non-profit and non-political organization founded by

UNESCO Goodwill Ambassador Madanjeet Singh in 2000 .

South Asia Initiative to End Violence Against Children (SAIEVAC): Found in 2005, this
regional forum aims at ending all forms of violence against children in South Asia.

Foundation of SAARC Writers and Literature (FOSWAL): Its the first non-government
organization working towards nurturing and strengthening cultural connectivity through
interactions among SAARC nations.

Organisational Structure of SAARC

The Council
Highest Policy-Making Body

Council of Ministers

Standing Committee

Programming Committee

Technical Committees

AREAS OF COOPERATION

Areas of cooperation are agriculture and forestry, health and population, meteorology, rural development;
telecommunications; transport; science and technology; postal services; sports, arts, and culture; women in
development; and drug trafficking and abuse, poverty alleviation, health issues, education, human resource
development and youth mobilization, promotion of the status of women, promotion of the rights and well
being of the child, population stabilization and drug addiction, rehabilitation and reintegration.

Other concerns, such as tourism and terrorism, however, have also been targeted.

SAARC-Summits
S. No.

Location

Date of Summit

1st

Dhaka

7-8, December, 1985

2nd

Bangalore

16-17 November, 1986

3rd

Kathmandu

2-4 November, 1987

4th

Islamabad

29-31 December, 1988

5th

Male

21-23 November, 1990

6th

Colombo

21st December, 1991

7th

Dhaka

10-11 April, 1993

8th

New Delhi

2-4 May, 1995

9th

Male

12-14 May, 1997

Colombo

29-31 July, 1998

10th

12

SAARC-Summits
S. No.

Location

Date of Summit

11th

Kathmandu

4-6 January, 2002

12th

Islamabad

2-6 January, 2004

13th

Dhaka

12-13 November, 2005

14th

New Delhi

3-4 April, 2007

15th

Colombo

1-3 August 2008

16th

Thimphu

28-29 April, 2010

17

Male

November 10-11, 2011

18

Kathmandu

November 26, 2014

19

Islamabad

November, 2016*

13

SAARC IN FIGURES 2015

This Economic data is sourced from theInternational Monetary Fund current as of April 2015,
and is given inUS dollars.

Trade Practices Top 3 Commodities (World vs India)

(Values in US$ Billions)

Trade Practices Top 3 Commodities (World

vs India)

(Values in US$ Billions)

Trade Practices Top 3 Commodities (World

vs India)

(Values in US$ Billions)

Trade Practices Top 3 Commodities (World

vs India)
(Values in US$ Billions)

PAKISTA
N

Source: http://indiantradeportal.in/vs.jsp?
lang=0&id=0,25,45,916

SAARC SUCCESSES:
Creating Amiable Environment.
CREATION OF SAPTA : Trading Agreement for promoting trade amongst the member
countries.
CREATION OF SAFTA : A free trade agreement confined to goods to reduce customs duty
of all traded goods to zero by the year 2016.
ADVANTAGES TO THE DEVELOPING AND UNDERDEVELOPED COUNTRIES :
Provided a forum for bilateral and regional agreements to the nations for collaboration among
themselves for development.

CHALLENGES
1. Poverty
2. Unemployment
3. Literacy
4. Governance
5. Education
6. Development
7. Enabling environment
8. Defense expenditure
9. Terrorism

SAARC

20

SAARC FAILURES
UNRESOLVED BORDER AND MARITIME ISSUES : This has led to the problems of Terrorism, Refugee
Crisis and Smuggling. These unresolved issues continue to mar cooperative relations.
ROLE OF EXTERNAL POWERS : Indias ambitions crisscross with China. China has strengthened its
relationship with Sri Lanka and Bangladesh. Thus, this has led to the trust deficit in the grouping.
The intra-regional trade of SAARC amounted to $40.5 billion in 2011, which constitutes just 5% of member
countries trade.
In its 30 years of existence, SAARC failed to hold 11 annual summits for political reasons, both at the bilateral
and internal levels.

SAFTA : INTRODUCTION

An agreement reached on 6 January 2004 at the 12th SAARC summit in Islamabad,

Pakistan.

It created a free trade area of 1.6 billion people in Bangladesh, Bhutan, India, Maldives,
Nepal, Pakistan and Srilanka.

The seven foreign ministers of the region signed a framework agreement on SAFTA to
reduce customs duties of all traded goods to zero by the year 2016.

PURPOSE OF THE AGREEMENT

The SAFTA agreement came into force on 1 January 2006.
The purpose of SAFTA is to encourage and elevate common contract among the countries such as medium
and long term contracts.
Contracts involving trade operated by states, supply and import assurance in respect of specific products etc.
It involves agreement on tariff concession like national duties concession and non-tariff concession.

HISTORICAL PERSPECTIVE:SAPTA

The Agreement on SAARC Preferential trading Arrangement (SAPTA) was signed on 11 April 1993
and entered into force on 7 December 1995, with the desire of the Member States of SAARC.

to promote and sustain mutual trade and economic cooperation within the SAARC region through the
exchange of concessions.

SAARC: The South Asian Association for Regional Cooperation is an organization of South Asian
nations, which was established on 8 December 1985.

REASONS FOR FAILURE OF SAPTA

Tariff cuts by the Saarc countries were not deep
Majority of the items offered concessions were not relevant to the trade interest of
other member countries
Sapta was negotiated on product-by-product basis
Tariff concessions alone could not generate any significant gains in the intra-Saarc
trade.
The stringent rules of origin prescribed under Sapta were also partly responsible for
its failure

PRINCIPLES OF SAFTA
overall reciprocity and mutuality of advantages so as to benefit equitably all Contracting States, taking
into account their respective level of economic and industrial development, the pattern of their external
trade, and trade and tariff policies and systems.
negotiation of tariff reform step by step, improved and extended in successive stages through periodic
reviews.
recognition of the special needs of the Least Developed (LDCS)Contracting States and agreement on
concrete preferential measures in their favour.
inclusion of all products, manufactures and commodities in their raw, semi-processed and processed
forms.
free movement of goods, between contracting states.

OBJECTIVE

To eliminate barriers to trade in, and to facilitate the cross- border movement of goods between the territories of the
Contracting States.

To promote conditions of fair competition in the free trade area, and to ensure equitable benefits to all Contracting
States, taking into account their respective levels and pattern of economic development .

To increase the level of trade and economic cooperation among the SAARC nations.

To create effective mechanism for the implementation and application of this Agreement.

To establish a framework for further regional cooperation to expand and enhance the mutual benefits of this
Agreement.

INSTRUMENTS OF SAFTA

Trade Liberalization Programme

Sensitive List
Institutional arrangements
Rules of Origin
Non-Tariff barriers

Trade Liberalisation programme:

There should be a fall to 20% tariff from the existing tariff by the Non Least Developing
Countries and 30% reduction from the existing tariff by the Least Developing Countries.
Sensitive list
Sensitive list is a list with every country which does not include tariff concession.

REVISED SENSITIVE LISTS UNDER SAFTA

The Working Group on Reduction in the Sensitive Lists under SAFTA has completed
its task of reducing the Sensitive Lists by 20%.
Maldives has reduced its Sensitive List from 681 tariff lines to 152 tariff lines (78%
reduction) and
India has reduced its Sensitive List for Least Developed Member States from earlier
480 tariff lines to only 25 tariff lines (95% reduction).

INSTITUTIONAL ARRANGEMENTS

The Contracting States hereby establish the SAFTA Ministerial Council(hereinafter

referred to as SMC).
The SMC shall be the highest decision -making body of SAFTA and shall be
responsible for the administration and implementation of this Agreement and all
decisions and arrangements made within its legal framework.
The SMC shall consist of the Ministers of Commerce/Trade of the Contracting
States.
The SMC shall meet at least once every year or more often as and when considered
necessary by the Contracting States. Each Contracting State shall chair the SMC for
a period of one year on rotational basis in alphabetical order.

 The SMC shall be supported by a Committee of Experts (hereinafter referred to as

COE), with one nominee from each Contracting State at the level of a Senior
Economic Official, with expertise intrade matters.
The COE shall monitor, review and facilitate implementation of the provisions of
this Agreement and undertake any task assigned to it by the SMC. The COE shall
submit its report to SMC every six months.
The COE will also act as Dispute Settlement Body under this Agreement.

 The COE shall meet at least once every six months or more often as and when
considered necessary by the Contracting States. Each Contracting State shall
chair the COE for a period one year on rotational basis in alphabetical order.
The SAARC Secretariat shall provide secretarial support to the SMC and COE
in the discharge of their functions.
The SMC and COE will adopt their own rules of procedure.

RULES OF ORIGIN
Rules of origin: Rules of Origin shall be negotiated by the Contracting States
and incorporated in this Agreement as an integral part.
Rules of origin are criteria used to determine the nationality of a product.

NON-TARIFF BARRIERS
Non Tariff barriers: Non-tariff barriers and measures (NTBs) include
measures other than border tariffs that affect trade in goods, services, and
factors of production.
Taxonomies of NTBs include both narrow and broad categories.

CLASSIFICATION NON-TARIFF BARRIERS

Price control measures: Para-tariffs, surcharges etc.
Finance measures: Regulate access to and the cost of foreign exchange for imports, define the
terms of payment.
Automatic licensing measure: Restrain the quantity of imports of any particular good.
Monopolistic measure.
Technical measure: Measures referring to product characteristics such as quality, safety or
dimensions, including the applicable administrative provisions, terminology, symbols, testing
and test methods, packaging, marking and labeling requirements as they apply to a specific
product.

Para-Tariffs
means border charges and fees, other than tariffs, on foreign
trade transactions of a tariff-like effect which are levied solely on
imports,
but not those indirect taxes and charges, which are levied in the
same manner on like domestic products.
Import charges corresponding to specific services rendered are
not considered as para tariffs.

ISSUES
Lack of commitment by Government
Self centeredness of the countries in the block
Political issues between member nations
1) India Pakistan
2) China-India-Bhutan
3) India-Nepal
Dual Framework with more importance to bilateral agreements.
Lack of proper framework.

SAARC vs ASEAN

 Image showing the comparison between SAARC & ASEAN with inclusion
of ASEAN+3 which includes China, Japan & South Korea.
SAARC showed intra-regional trade meaning trade between member states
which was found to constantly lying between 5-10% in the course of 19902011.
Whereas ASEAN shown its Intra-trade share lying between 20-30% in the
year 1990-2011.

COOPERATION OTHER THAN ECONOMIC

If we look closer SAARC is basically a trade union, as it is not politically active at the scale of EU or ASEAN
Visa Exemption
1. SAARC - Visa Exemption for few categories.
2. ASEAN - Announced to issue one visa for all ASEAN member states
3. EU - Schengen Visa allows free movement across the border (except UK & Ireland )
Healthcare
4. SAARC - poor cooperation between member states.
5. ASEAN - comparatively better cooperation between member states.
6. EU - full competence in healthcare delivery and they decide, define and implement health sector investments.

REFERENCES.
en.wikipedia.org
www.saarc-sec.org
commerce.nic.in
www.financialexpress.com
www.wto.org
www.worldtradelaw.net
http://www.unescap.org

Thank You!!!