South Asian Association for Regional Cooperation (SAARC)

The South Asian Association for Regional Cooperation (SAARC) comprises the eight nations of South Asia: Afghanistan Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka; headquartered in Kathmandu. Due to the ongoing political conflict between India and Pakistan, SAARC has achieved little in promoting regional economic cooperation. After a series of confidence building measures, Prime Minister Vajpayee and President Musharraf met on the sidelines of the January 2004 SAARC summit in Islamabad and agreed to commence a Composite Dialogue addressing outstanding issues between India and Pakistan, including Kashmir. Resolving the war in Afghanistan, which joined SAARC in 2007, isn't on the organization's agenda.

Founded as South Asia Regional Cooperation (SARC) at a meeting for foreign ministers in New Delhi on August 1-2, 1983; the group was renamed when the 1983 agreement was ratified at the inaugural summit meeting at Dhaka, Bangladesh, on December 7-8, 1985. SAARC's goal is to effect economic, technical, and cultural cooperation, and to provide a forum for discussions of South Asia's political problems.

The grouping of seven South Asian countries in the framework of the South Asian Association for Regional Cooperation (SAARC) presents a sizeable opportunity for regional collaboration. The SAARC region has one of the poorest health indicators in the world-it houses the largest number of people with micronutrient deficiencies and diabetes; carries 40% of the world's tuberculosis burden, and has a high burden of cardiovascular diseases and one of the worst indicators for reproductive health in the world. In addition, issues of rural health, risks posed by close contact with animal population and high prevalence of zoonotic diseases, highlight issues of a regional nature that could be amenable to locally tailored public health strategies.

With about 263 people for every square kilometer, South Asia represents the world's most densely populated region (World Bank, 1999). The region is characterized by large income disparities, with 43 percent of its population living below the poverty line (UNDP, 1997). The overall food supply, although sufficient in quantity, is not distributed uniformly, with Bangladesh and Nepal in danger of shortfalls. Trade is, therefore, vital in alleviating regional food shortfalls, and can also play an important role in generating further policy reform and economic growth.

In 1993, the South Asian Preferential Trade Agreement, SAPTA, was initiated to promote greater regional economic cooperation. Although SAPTA allows for negotiations on a sectoral basis, the approach taken to date has been to negotiate trade concessions on a product-by-product basis. Therefore, except for a few minor tariff concessions, not much has been accomplished through SAPTA. Studies on regional integration in South Asia point out that unilateral trade liberalization rather than regional trade arrangements will be most beneficial for South Asia. However, other studies indicate that the small economies in the region, such as Nepal and Bangladesh, would gain considerably from a regional trade agreement.

Forward movement in SAARC had slowed because of tension between India and Pakistan, and the SAARC summit scheduled for 1999 was not held until January 2002. In addition, to boost the process of normalizing India's relationship with Pakistan, the January 2004 SAARC summit in Islamabad produced an agreement to establish a South Asia Free Trade Area (SAFTA). All the member governments have ratified SAFTA, which was slated to come into force on January 1, 2006, with a series of graduated tariff cuts through 2015. As of December 2006, however, the FTA partners were still negotiating sensitive product lists, rules of origin, and technical assistance. India hosted the 2007 SAARC summit, which called for greater regional cooperation on trade, environmental, social, and counterterrorism issues.

The long awaited South Asia Free Trade Area (SAFTA) is being hampered by historical prejudices and bilateral disputes it was revealed at a seminar held in Bangladesh on the weekend attended by business delegates of SAARC countries. India bore the brunt of most grievances for holding up the process. Under South Asia Free Trade Area (SAFTA) agreement, Pakistan is set to allow duty concessions on the import of over 1000 items from Afghanistan. A landlocked country, Afghanistan is dependent upon transit countries for its foreign trade. Pakistan represents its main access to a seaport.

The agreement on the South Asia Free Trade Area (Safta) that was signed in Islamabad in 2004 set a 2012 deadline for zero customs duty on the trade of a majority of products between India, Pakistan and Sri Lanka. Tariffs for the whole eight-member bloc were meant to be eliminated for all practical purposes by 2016. Yet Safta has languished as India and Pakistan have squabbled over non-tariff barriers and the agreement has yet to be ratified by either country.

The Eleventh Summit (Kathmandu, 4-6 January 2002) provided further impetus to the regional economic cooperation to give effect to the shared aspirations for a more prosperous South Asia. At the Summit, the Leaders agreed to accelerate cooperation in the core areas of trade, finance and investment to realise the goal of an integrated South Asian economy in a step-by-step manner. They also agreed to the vision of a phased and planned process eventually leading to a South Asian Economic Union. At the Twelfth SAARC Summit (Islamabad, 4-6 January 2004) the SAARCFINANCE was given the responsibility to study and make recommendations on the early and eventual realization of a South Asian Economic Union (SAEU). It was also tasked with examining the concept of a South Asian Development Bank.