Regional Groupings of Nations, Regional Trade Agreements in South Asia

Regional Grouping

Source:www.sociocosmo.com

In order to promote collaboration through shared institutions and regulations, regional grouping or integration is a strategy used by adjacent states. Although it has specifically accepted the form of a political economy initiative where commercial interests are the center of achieving security and more general socio-political goals, as explained by national governments, the agreement's goals could range from economic to political to environmental. Either intergovernmental decision-making, supranational institutional structures, or a combination of both have been used to manage regional integration.

In the past, regional integration efforts have frequently focused on lowering trade barriers within the region, enhancing cross-border mobility of people, labor, goods, and capital, reducing the likelihood of armed conflict within the region (for example, through Confidence and Security-Building Measures), and adopting unified regional positions on policy issues like migration, the environment, and climate change.

The process by which national nations "voluntarily merge, mingle, and mix with their neighbors so as to sleep off the factual aspects of sovereignty while achieving new ways for resolving problems among themselves" has been described as regional integration.

Van Langenhove asserts that regional integration programs should carry out at least eight fundamental duties:

• Fostering comprehensive regional trade integration.
• The formation of a suitable environment favorable to the expansion of the private sector.
• The creation of infrastructure initiatives to support regional economic integration.
• The growth of robust institutions for public sector governance.
• The growth of a civic society that values inclusion and the reduction of social marginalization.
• Contribution to regional peace and security.
• Regionally-based environmental program creation.
• The expansion and improvement of regional interactions with other global regions.

Regional integration agreements (RIAs) have significantly changed the way many countries interact internationally, especially in terms of increased trade and investment between nations and the formation of regional trading blocs. Regional integration is an important contemporary trend in international relations and is vital to the multifaceted process of globalization. Consequently, Regional Integration Agreements have grown in significance. Nearly all industrialized countries, as well as a significant portion of developing countries, are parties to at least one and, in some circumstances, multiple such agreements.

The percentage of trade that occurs within the purview of such agreements is over 35%, or more than one-third of all trade worldwide. These agreements' principal objectives are to lower trade barriers between the affected countries, however their structures might vary. Many economies' trade barriers have been reduced or eliminated, which has had two effects: most often, it has increased GDP, but it has also increased wealth concentration, global inequality, and the frequency and severity of economic crises.

Regional Trade Agreements in South Asia

The South Asian Association for Regional Cooperation (SAARC)

The South Asian Association for Regional Cooperation is a South Asian intergovernmental organization and regional geopolitical union. Afghanistan, Bangladesh, Bhutan, India, Nepal, the Maldives, Sri Lanka, and Pakistan are among the members. As of 2015, the SAARC region made up 21% of the world's population, 9.12% of its economic output, and 3% of its surface area. In 1985, the seven states established SAARC in Dhaka. Afghanistan started negotiating their membership in SAARC in 2005 and officially sought for membership the following year. Kathmandu is where its secretariat is located. The group supports the growth of regional and economic cooperation. In 2006, it created the South Asian Free Trade Area. SAARC maintains observer status in permanent diplomatic relations at the UN and has remained in contact with other multilateral organizations, such as the European Union (EU). But the company soon faces a lot of difficulties. Conflict breaks out between nuclear rivals The progress and potential of the union have frequently been hampered by Pakistan and India.

SAARC Preferential Trading Arrangement (SAPTA)

The creation of an Inter-Governmental Group (IGG) to oversee the establishment of the SAARC Preferential Trading Arrangement (SAPTA) by 1997 was accepted during the Sixth Summit, which took place in Colombo in December 1991. In line with the agreement within SAARC, the Agreement on SAPTA was signed on April 11, 1993, and it entered into force on December 7, 1995, well in advance of the Colombo Summit's deadline. Through the exchange of concessions, the Agreement demonstrates the Member States' desire to maintain and promote economic cooperation and reciprocal trade within the SAARC region.

SAPTA is based on the following fundamental ideas

• Taking into account each Contracting State's unique level of industrial and economic development, their respective external trade processes, and their respective tariff systems and policies, there should be overall mutuality and reciprocity of benefits in order to benefit all Contracting States equitably.
• Through recurring evaluations, the negotiation of tariff reform has been increased and improved step by step in subsequent stages.
• Identifying the unique requirements of emerging countries and deciding on a workable preferential system in their favor.
• Participation of all producers, goods, and commodities in their unprocessed, unfinished, and processed states.

Under SAPTA, four rounds of trade discussions covering more than 5000 goods have been established. Every Round focuses on a more pronounced trend in the depth of the tariff concessions over the prior Rounds and an incremental trend in the product coverage.

South Asian Free Trade Area (SAFTA)

At the 12th SAARC summit in Islamabad, Pakistan, on January 6, 2004, a deal known as the South Asian Free Trade Area (SAFTA) was made. There are 1.6 billion people living in Bangladesh, Afghanistan, Bhutan, India, the Maldives, Nepal, Sri Lanka, and other countries in this free trade zone (as of 2011, the total population is 1.8 billion people). The SAFTA framework agreement was signed by the region's seven foreign ministers, which calls for the elimination of all customs fees on all traded commodities by the end of 2016. The SAFTA agreement was confirmed by the seven countries on January 1st, 2006, and went into effect on that day. Pakistan, India, and Sri Lanka, which are developing nations in South Asia, must reduce their tariffs to 20% in the first phase of the two-year period beginning in 2007. The 20 percent duty will be reduced to zero during the course of the remaining five years, concluding in 2012. The South Asian countries with the lowest levels of development—Bhutan, Nepal, Bangladesh, the Maldives, and Afghanistan—have an additional three years to lower their tariffs to zero. The treaty was submitted by Pakistan and India in 2009, while Afghanistan, the eighth member of the SAARC, provided the SAFTA protocol on May 4, 2011.

The main prediction for SAPTA was that it would be the first phase of the creation of the South Asian Free Trade Area (SAFTA), which would eventually lead to the Common Market, Customs Union, and Economic Union. An Inter-Governmental Expert Group (IGEG) was established in 1996 to lay out the requirements for creating a free trade area after the Council of Ministers' Sixteenth session in 1995 decided that it was important to fight for the realization of SAFTA. In order to draft a comprehensive treaty framework for establishing a free trade area within the region, taking into consideration the irregularities in development within the region and keeping in mind the need to fix achievable and realistic targets, the Tenth SAARC Summit (Colombo, 29–31 July 1998) established a Committee of Experts (COE).

Purpose of The Agreement

The goal of SAFTA is to influence and raise standard contracts between nations, such as long-term and medium-term agreements. Contracts including state-run trade, supply and import assurance for specific products, etc. It also covers agreements about non-tariff and national duty discounts in relation to tariffs.

• Objective

  • The agreement's primary goals are to promote competition in the region and provide equal advantages to all of the participating nations. By fostering integrity and transparency among the countries, it seeks to benefit the citizens of those countries. SAFTA was also developed to provide the Least Developed Countries (LDCs) among the SAARC countries special consideration, as well as to boost the level of economic cooperation and trade among the SAARC nations by lowering barriers and tariffs.

• Instruments
  • SAFTA includes the following instruments: Institutional Arrangements, Rules of Origin, Consultations and Dispute Settlement Procedures, Safeguard Measures, Trade Liberalization Programme, and Any Other Instrument that May Be Agreed Upon.

Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC)

A set of nations from South East Asia and South Asia are members of the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC), an international organization. India, Sri Lanka, Bangladesh, Myanmar, Thailand, Nepal, and Bhutan are among these nations. A new subregional organization known as BIST-EC was founded on June 6th, 1997 in Bangkok. Myanmar participated in the organization as a full member at the Special Ministerial Meeting that took place on December 22, 1997 in Bangkok, where the name of the grouping was changed to BIMSTEC. Myanmar attended the first June Meeting as an observer. At the second Ministerial Meeting in December 1998 in Dhaka, Nepal was granted observer status. Bhutan and Nepal were later granted full membership in 2003.

Leaders of the group agreed that the name of the organization should be BIMSTEC, or the Bay of Bengal Initiative for Economic Cooperation and Multi-Sectoral Technical Development, at the first Summit on July 31, 2004. The major objective of BIMSTEC is economic and technological cooperation among southeast Asian and south Asian countries along the coast of the Bay of Bengal. BIMSTEC Headquarters was formed by Bangladeshi Prime Minister Sheikh Hasina (13 September 2014) and is located in Dhaka, Bangladesh. Various factors have been involved, including investment, human resource development, leather commerce, technology, tourism, agriculture, communication and transport, textiles, and fisheries.

BIMSTEC Priority Sectors

The 14 key sectors of BIMSTEC encompass all potential areas of collaboration. On November 19, 1998 in Dhaka, at the 2nd Ministerial Meeting, six key areas of cooperation were chosen. These are a few of them:

• Dominated by India in transportation and communication.
• Bangladesh is the leader in trade and investment.
• Myanmar is the energy leader.
• Sri Lanka is a leader in technology.
• Thailand is a leader in fishing.
• India is a global leader in tourism.

The Asian Development Bank has partnered with BIMSTEC since 2005 to conduct a research that aims to enhance transportation infrastructure and support promotion and logistics among BIMSTEC members. The project known as the "BIMSTEC Transport Infrastructure and Logistic Study" has already been finished by ADB. The final report of the aforementioned study from ADB has already been recommended to all members, and response is being sought. Later, further cooperative fields will be developed. Its corporate headquarters are in Mandaluyong, Philippines.

BIMSTEC Free Trade Area Framework Agreement

Free Trade Area Framework Agreement to encourage trade and investment between the parties and draw outsiders into higher level trade and investment with BIMSTEC. With the exception of Bangladesh, all members signed the Framework Agreement at the 6th Ministerial Meeting in front of the Thai Prime Minister and the foreign ministers of the BIMSTEC countries. On June 25, 2004, Bangladesh subsequently acceded to the Framework Agreement. The Trade Negotiating Committee (TNC) was kept in place, and its first Khyoiujholiach chief negotiator served as the TNC's spokespersons. The TNC's chairperson will inform the Trade and Economic Ministerial Meeting of the outcome via STEOM. Trade in commodities and services, economic cooperation, investments, trade assistance, and technical assistance for LDCs in BIMSTEC are all included in the discussion areas of TNC. It was anticipated that the TNC will begin negotiating on trade in investments and services after the trade in products was settled.

Reference

(http://saarc-sec.org/areaofcooperation/detail.php?activity_id=4)