Economic Integration

SAARC has also initiated action on a series of practical measures to facilitate the process of economic integration. A group on customs cooperation was set up in 1996 and so far has held three meetings. It was inter-alia decided to harmonize HS lines and customs rules and regulations, simplify procedures for intra-regional exports; upgrade infra-structural facilities and provide training facilities. A customs action plan was drawn up in Islamabad in April 1997 and agreed by all member states.

The need to improve the transport infrastructure and transit facilities in the region was recognized and the 11th session of the SAARC Council of Minister in Colombo directed the CEC to take appropriate steps in this regard.

Accordingly, a study was commissioned to assess the existing transport infrastructure and transit facilities, including procedural and documentation issues in the region in relation to volume and composition of the existing trade in the region and to make recommendations for their improvement, with a view to enhancing trade within and outside the SAARC region. The study made far-reaching recommendations.

In the area of trade and tariff which are critical to individual member states and to the region as a whole, particularly those relating to multilateral negotiations in World Trade Organization (WTO), World Customs Organization (WCO), World Intellectual Property Organization (WIPO) etc; regular consultations are held not only at the headquarters of such international organizations, such as Geneva, but also in the member states themselves, so as to effectively coordinate, project and protect their collective interests. This process of consultation has been intensified so that wherever possible, a regional position may be taken which is compatible with the overall principles of SAARC, and which reflects the needs and requirements of the LDCs in the region through the provision of special and more favorable concessions.

In this regard, SAARC commerce ministers issued a declaration on the eve of the second WTO Ministerial Conference held in Geneva 1998. Consultations were also held with regard to the WTO ministerial Conference held in Seattle in 1999 and the SAARC commerce ministers issued a preliminary joint statement on the issues likely to be considered at the meeting.

SAFTA

SAPTA was envisaged primarily as the first step towards the transition to a South Asian Free Trade Area (SAFTA) leading subsequently, towards in customs union, common market and economic union. In 1995, the sixteenth session of the council of ministers held in Delhi agreed on the need to strive for the realization of SAFTA and to this end an Inter-governmental Expert Group was set up in 1996 to identify the necessary steps towards moving into a free trade area. The Male Summit in 1997 recognized the importance of achieving a Free Trade Area by 2001, however, the objective of a free trade area is still in the pipeline.

WTO Negotiations and SAARC Region

Individual countries don't possess enough bargaining clout at multilateral forums. Group effort and cooperation on negotiating table will undoubtedly enhance the Bargaining strength. Issues like labor or environmental standards or rules like anti-dumping and anti-subsidy investigations are areas where SAARC can stand together. And it is already happening. SAARC Commerce ministers meeting held at Islamabad in 1998 April 29-30 took decision to set up a coordinating group of SAARC ambassadors at the WTO. This was fruitful as before the Seattle and Doha summits they could adopt common positions.

The South Asian region is blessed with exceptional diversities of natural and human resources including:

• Land forms and climatic regimes ranging from sea level to the highest mountains, and deep gorges; hottest plains to snow clad mountains; wettest to driest places; dissected green
  Valleys to coral islands;
• Thousands of rivers and immense hydroelectric potential;
• Mineral resources such as coal iron, natural gas etc; and
• Extensive diversities of forest resources including exclusive varieties of animals, herbs and timber.

Unfortunately, this vast stock of natural wealth of the region has not been optimally and efficiently managed and utilized for the benefit of the peoples of this region. India has a role to play in the development of region. Its strength in IT field can be used for the development of IT. Similarly, each can offer something to other. This requires collective and collaborative strategies and joint ventures by the countries of this region.

The primacy of politics over economics in South Asia largely explains the sluggish growth of regional trade and pronounced volatility of trade between the South Asian countries.

SAARC FUNDS

South Asian Development Fund (SADF)

In order to establish a South Asian Development Fund, initially a Panel of Experts was formed under the chairmanship of H.E. Lyonpo Dawa Tshering, the Foreign Minister of Bhutan. The Panel of Experts consisting of eminent persons from the SAARC Region held three meetings and the Chairman had exploratory consultations with the potential donors. Subsequently it was decided to establish an InterGovernmental Group (IGG) on South Asian Development Fund (SADF) to define the size, structure, resources and operational modalities of the proposed Fund and also to examine the relationship of the Fund with the SAARC Fund for Regional Projects including the possibility of their merger.

A Consultant appointed by the Secretary-General submitted his Report which was considered by the IGG at its Second Meeting held at the SAARC Secretariat in October 1994.

The Second Meeting of IGG, inter-alia, recommended that a three-window South Asian Development Fund (SADF) may be established with the merger of the SAARC Fund for Regional Projects (SFRP), the SAARC Regional Fund (SRF) and a third window for social development and infrastructure building. This recommendation has been since approved by the Fifteenth Session of the Council of Ministers (New Delhi, 1995). The Council approved the recommendation of the Standing Committee which included convening a meeting of the Group of Experts consisting of the Members of the Council of SAARC Fund for Regional Projects (CSFRP) and National Focal Points of Member States at the SAARC Secretariat, to finalize the terms of reference, operational modalities and composition of the Governing Board of the South Asian Development Fund (SADF). The Meeting of the Expert Group held at the SAARC Secretariat (September 1995) finalized the recommendations for consideration of the Sixteenth Session of the Council of Ministers.

SAARC-Japan Special Fund

SAARC-Japan Special Fund has been established, under which the Government of Japan has agreed to finance activities/programmes relating to SAARC region. Letters were exchanged between the Secretary-General and the Japanese Ambassador in Kathmandu on 27 September, 1993 confirming the acceptance of the Memorandum on the Guidelines for the Fund.

The Fund established entirely with contribution of the Government of Japan consists of two components. The allocation under Component-I is to be used to finance selected programmes/activities identified and managed by the member states. Component-II would be for the programmes/activities identified and managed by the Government of Japan.

SAARC Fund for Regional Projects (SFRP)

The SFRP was established in 1991 to make available credit on easy terms for the identification and development of projects having a regional character. The Fund is managed by the Council for SAARC Fund for Regional Projects (CSFRP) comprising representatives of the Development Financing Institutions of SAARC member states. So far feasibility studies for thirteen projects have been undertaken which cover hydropower, sericulture, dairy products, medicinal cultivation and herbs etc.

SAARC Regional Fund (SRF)

The SRF aims at expediting the implementation of approved projects/programmes under IPA which remain unimplemented due to financial constraints. It would be administered by member states themselves. The sources of the Fund would be grants from donor countries, international agencies and organizations, and private sector donations. The projects/programmes that would qualify for funding are programme costs of SAARC Regional Institutions; costs of programme component of networking arrangements; development projects of scientific and technical in nature; projects/programmes involving high costs; long-term training programmes and projects/programmes of any other nature to be identified in future by member states.