Column: Strengthening trade linkages in South Asia

Updated: Jul 24 2014, 06:11am hrs
Once again hopes soar high that with the new government at the helm in India, regional integration in South Asia could get the big push that it has been waiting for. A key concern for the region has been poor connectivity due to inadequate cross-border infrastructure, weak transport protocols and a restrictive visa regime. We suggest a three-point agenda for improving connectivity in the backdrop of the South Asia Free Trade Area (Safta) ministerial of the South Asian Association for Regional Cooperation (Saarc) nations in Thimpu, Bhutan.

The poor state of physical infrastructure for the land routes, in comparison to that of the ports for maritime routes, has been well documentedbe it the inadequate warehousing and storage facilities, limited parking space or lack of container-scanners. These deficiencies are seen as a major bottleneck towards opening up the several intra-regional transit corridors. There is, hence, an urgent need to set up a vehicle to finance such transit infrastructure that enhances regional connectivity and trade.

Here, a South Asian Development Bank (SADB) could play a crucial role. Within this, there should be a dedicated infrastructure fund on the lines of the Asean Infrastructure Fund (AIF) which is funded by equity from the Association of South East Asian Nations (Asean) member-states and the Asian Development Bank.

The Saarc Development Fund (SDF), already in place, could play a role if its economic and infrastructure windows are made operational for supporting the infrastructure development that facilitates trade and transit. However, as of now only the social window is operational.

In addition to developing infrastructure, the existing land transport protocols urgently need amending. The primary constraint is a restriction on movement of trucks across borders and a ban on containerised movement of goods. Saarc members had been negotiating a motor vehicles agreement for regional transit; however, this has not progressed beyond the rudimentary stage. Along with being limited to the South Asian region only, the agreement is likely to be archaic and not in line with global best practices. It would be a better proposition if all members agree to ratify an international transit convention, such as the Transports Internationaux Routiers (TIR) Convention, as it would not only facilitate seamless transportation in the South Asian region but would also allow members to access countries beyond the region. The TIR is an international, harmonised system of Customs-control that facilitates trade and transport whilst effectively protecting the revenue of each country through which goods are carried.

Upon acceding, all Saarc members would automatically have streamlined procedures for transit, and would be able to move containerised cargo under full customs security and guarantee. However, except Afghanistan, none of the Saarc member countries have ratified the convention. Interestingly, Pakistan has already initiated the process of acceding to the TIR Convention.

Afghanistan and Pakistan are interested in acceding to the TIR as the remaining members of the Economic Cooperation Organization (ECO) of the Central Asian region, which includes Tajikistan, Uzbekistan, Turkmenistan, and Iran, have already ratified this. If all Saarc members move towards ratifying the convention, it would permit seamless transport connectivity not only amongst Saarc members but also between Saarc and the ECO nations.

The movement of people in the region for business purposes also remains quite restricted. The Saarc Visa Exemption Scheme (SVES) launched in 1992 allows 24 categories of people including dignitaries, judges of higher courts, legislators, senior government officials, business persons, journalists and sportspersons certain exemptions from visa requirements within the region. At present, under the scheme, 200 such stickers across all categories are issued in one calendar year. This means that business persons have limited access to this scheme. Moreover, the validity period has been reduced to 30-90 days from one year in 2012.

South Asia should introduce a regional business travel card along the lines of the Asia Pacific Economic Community (Apec) Business Travel Card, or ABTCsomething that allows business travelers pre-cleared, facilitated, short-term entry to participating member economies. The ABTC removes the need for individually applying for visas or entry permits which saves valuable time and allows multiple entries into participating economies during the three years that the card is valid. Card-holders also benefit from faster immigration processing on arrival, via access to fast-track entry and exit through special Apec lanes at major airports in participating economies.

At the Safta ministerial, this three-point agenda could lead to a major breakthrough. The South Asian Development Bank could help in setting up the much-needed infrastructure in the region, while acceding to the TIR Convention would enable members to connect globally. Introducing the South Asian Business Travel Card would be an effective way of connecting the business community.

A vision for South Asia based on global best practices, to be implemented within an agreed time-frame, would lead to a paradigm shift in South Asian regional integration.

Nisha Taneja, Sanjana Joshi & Isha Dayal

Taneja is professor, Joshi, senior consultant and Dayal, researcher, Icrier