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Uniting South Asia's Economies

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    Uniting South Asia's Economies

    Wonderful Article

    Asia is the land of great religious leaders and financial experts. As is the centre of diversified cultures and integrated civilisations. Asia is the passage of global integration and superior human wisdom. According to the President of World Bank, that next international wars will be fought on the subject of economics, not geography. The existence of NFTA, EU, ASEAN, OPEC and SARRC are supposed to be answer of prompting unilateral trade and commerce activities within the respective region. The idea of free trade among the member sates is very hot these days in Pakistan. President Pervez Musharraf has already stressed the need of a free trade zone in South Asia. India has also responded positively to the proposal of president of Pakistan. Business communities from both sides are in favour of free trade among the seven member states of SAARC. But political constraints have stood in the way of free trade. India signed Free Trade Pact with Sri Lanka in 2000-2001. Bangladesh is also taking keen interests to have free trade ties with India.

    The population of South Asia is about two billion, that is more than six times of that of the EU and four times of that of NAFTA countries. South Asia has failed to close its income gap within the developed world in the last three decades. For instance, South Asia's average per capita GDP was 12 times lower than the average US level in 1990. Defence expenditures are higher for some member states of South Asia. India and Pakistan are bearing huge expenditure, that is, 60 crore and 20 to 25 crore respectively per day due to recent stand-off positions of armed forces. Normal trade between the two countries has been prevented by territorial disputes and chances of immediate opening of free trade are very bright. South Asia, home to nearly a fifth of humanity, is endowed with vast natural and human resources. It has the potential of becoming a vibrant region in the world, given its enormous resources in manpower, technology, agricultural and mineral assets, its history and civilisation, arts and culture. A lack of political will and hampered by vicissitudes of the political climate is damaging mutual trade in the region.
    Critical analysis shows that chances of multilateral trade are very bright within the SARRC (South Asian Association for Regional Co-operation). The stagnation of trade among the SAARC members, which has increased at an average annual rate of 4.5 per cent in last five years, underlines the need for more affective policies and their implementation to benefit the members to lap the real potential that the region offers. There is an immense potential for trade and commerce among SAARC members which has remained stagnant primarily due to lack of political will on part of member countries. We have still not decided whether to open our trade with India or not. The SAARC members were engaged in perfunctory trade based on necessity and more like an obligation rather than creating markets, which could benefit all the members. The volume of Pakistan's trade with SAARC countries has increased by 22 per cent during 1992-93 to 1996-97, from $ 409 million to $ 500 million.

    Mutual trade in SAARC accounts for below 5 per cent of total external trade and despite recent agreements, progress toward freer trade, which could save more than $ 4 billion in tariff, has been slow. The reason is that SAARC itself is hostage both to India-Pakistan rivalry and to internal problems. The poisonous legacy of hate and suspicion that separates the two sub continental rivals translates into huge defence and intelligence establishments that have a vested interest in fanning the flame of mutual animosity. The Kashmir issue has cast its baneful shadow over all of South Asia, not allowing the potential gains from regional and free trade in South Asia. We remain locked in a time warp impervious to new realities and ideas. SAARC groups' comprises seven countries: Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan and Sri Lanka. With 1.3 billion inhabitants in 1999, these countries represent almost 22 per cent of the world population, but only 1.97 per cent of world GNP, $ 575 billion in 1999. Average per capita income is $ 441. Indeed, poverty is one fundamental element characterising the situation in South Asia. The SAARC region has more than 25 per cent of the world's population with a combined GDP of $ 300 billion and contribute less than one per cent to the total global exports, while its intra-regional trade accounts for only three per cent of its world trade. It is then no surprise that the total external trade of the region amounts to 0.8 per cent of world exports and 1.3 per cent of world imports. Intra-regional exchanges represent only 5.3 per cent exports and 4.8 per cent imports of the total. It is a pity that intra-regional trade among all the countries is just five per cent of the total South Asian trade volume as compared with the rest of the world 1.3 billion or almost 20 per cent of global population, with about 66 per cent of the world's poor residing here.

    Currently, the bilateral trade between India and Pakistan is less than one per cent of the global trade. There are various factors responsible for the restricted and limited trade between the two nations. It is a reality that the Kashmir issue, despite being unresolved, has not stopped the considerable amount of illegal trade taking place between India and Pakistan. Items of many types and sizes are being smuggled into Pakistan from India are industrial machinery, cement, tyres, chemicals and tea. Pulses, edible oils, spices and dry fruits are also being smuggled from Pakistan. India and Pakistan could co-operate in agriculture, which is supposed to be the backbone of GDP and employment in both the country. Pakistan is importing many commodities of agriculture each year from western countries which can be available from India on much lesser rates and more suitable to our soil. Pakistan imports tea from Kenya at higher prices of course it can be purchased at much cheaper rates from India. In the recent past government imported huge consignment of sugar and cement from India that show that potential of bilateral trade is bright and stronger. It is estimated that trade between the two countries has reached to Rs. 47.15 crore in 1987-88 to 702 in 1999-2000.
    Trade between Pakistan and India has been carried out in black or illegal mode transacted through the land habitants of both countries, the informal which is carried out through third countries like Middle East or Far East and re-exported from there to Pakistan. Finally, formal or official trade through imports/exports of merchandise through all recognised seaports, airports, land customs stations and inland container depots. The president of Delhi chamber of commerce estimates that smuggling and unofficial trade between Pakistan and India through third countries such as Dubai is worth as much as US$ 500 million a year. The total volume of mutual trade (import and export) was worth of 184.84, 463.92 and 648.76, 279.08 crore in 1998-99.People from both sides are suffering from massive poverty, unemployment, illiteracy, scarcity of resources, and distrust. Both side is taking price in the massive collection of arms and atomic weapons and much less is spent on social-economic sector. Bilateral trade can bring prosperity, peace and harmony between the two old enemies and it will be also the essential bridge in crossing the political divide. The Commerce of Indian Industry (CII) estimates that the India-Pak trade has the potential to touch $ 5 billion by 2005 form the current $ 800 million. Mere policies of socio-economic isolation may harm the much needed quick economic revival of the government. Stressing economic co-operation as is supposed to be the key to foster better relations between the two countries.
    India and Pakistan share common border, the two counties can gain a lot by mutual trading due to low freight costs. Pakistan imports iron ore, heavy machinery of textile, sugar, cement, and electronic from Brazil, Germany. Italy, Japan and Australia at higher prices. These items can be purchased at much cheaper rates from India. Similarly, pharmaceutical products in India are about 30 per cent cheaper than in Pakistan and can bring some sort of relief to masses of Pakistan. Life saving drugs can be purchased at much cheaper rates from India.

    There is bright scope for the proper utilisation of energy resources in the South Asia. India now relies on poor quality domestic coal and represents a large and rapidly expanding market for energy. Sri Lanka needs to import more fuel or power. Bangladesh and Nepal could realise significant economic benefits from the development and export of clean energy natural gas and hydro-electric power. Pakistan's economy would benefit from both energy imports and exports. Some limited exchanged of electricity already occurs between Nepal, Bhutan and India. Supporting and encouraging more robust trade in energy will have far-reaching economic, development and security benefits in the entire region. Available and reliable energy supplies are key elements in attracting capital investment to South Asia. The energy resources exist in the region, but their development, efficient distribution and utilisation will require co-operation and trade among the region's countries.
    The poor people of the region would benefit by importing cheaper goods from other countries in the region, instead of the more expensive goods from other regions a community wherein fear and suspicion are replaced by a sense of well-being, a community free of poverty, enabling each of our citizens to lead a life dignity, free from hunger and illiteracy.-> It is time to rid ourselves of the underlying causes of tension and mistrust and build a secure and peaceful environment conducive to peace, progress and prosperity. It is a fact that while governments come and go, personalities change and economics rise and fall, geography is one constant nobody can alter. Like it or not, Pakistan and India are neighbours and it is high time they realised it.

    History international politics, power and diplomacy reveals that in the last two decades, countries which have succeeded in invigorating their economies and achieving high rates of economic growth have done so through increased reliance on foreign trade. They focused more on the development of economics rather than to prolong political and regional rivalries. Political differences have not stood in the way of closer economic ties, especially trade between nations having a long history of hostile political bitterness. The unification of East and West Germany and emergence of European Union clearly shows that economic survival, financial independence and stability and regional trade is more important than severing political differences. The dawn of regionalism and closer economic ties was successful in establishing regional peace and created common bonds of understanding. It also helped the people to heal bitter memories of the past.

    General Pervez Musharraf is doing his level best to establish atmosphere of harmony, equality and brotherhood in the region and reconcile our long-standing bitter relationships with India. War and mutual hostilities can achieve nothing but massive destruction, poverty, dependency and death of true and pure spirits of brotherhood and peace. Economics of brotherhood can bring economic prosperity, harmony, regional stability and above all sense of security among the people.

    East or West<---> South Asia is the Best

    like northamerican free trae eventualy it will come it will benefit pakistani economy.


      Originally posted by rvikz:
      like northamerican free trae eventualy it will come it will benefit pakistani economy.
      u bet!


        A word of caution; NAFTA isn't the bowl of cherries you make it out to be. It mainly benefits the monied interests in the US. The labor abuses south of the border coupled with lax environmental standards would clearly not be in the win column of the people south of the US. The situation vis-a-vis India and Pakistan might well be of a different paradigm. It sounds like there is a serious need for economic reform in Pakistan involving the military, business, land ownership, and politics. In some countries revolution was the variable that achieved that type of change, being a horror unto itself. Musharraf may be able to address some of these issues, but it would seem that many are touchy subjects.


          Economic free trade with India should be thought out very very carefully by Pakistan. Muslim political clout has been diluted by makeing three independent blocs, and the economies of Pakistan and BD are weak compared to India. Free trade could result in the economy of Pakistan being dominated by india. It could be the worst Bania domination scenario. So let's proceed with our eyes open.



            If Mushy is sooo interested in SA Free Trade zone, then why didn't he reciprocate MFN to India for 2 years?


              What? Hell no. It would be a waste of time. None of the economies are up to the standard to link together. It is a pipe dream, I would love to get the stuff the author has been smoking. What about our cotton and cloth industries? They would have to compete in Pakistan with India and the other SAARC countries.

              Iím just a freedom fighter
              No remorse
              Raging on in holy war
              Soon thereíll come a day
              When youíre face to face with me
              You can't fix stupid. So might as well troll them!