Integrate and trade

Updated: Nov 15 2005, 05:30am hrs
The recent Saarc summit in Dhaka can be considered impo-rtant for regional economic integration. One, it relates to reiteration of the fact that Saarc has immense potential for economic integration. Two, there are some concrete and new steps taken to help realise that potential.

The resolve to operationalise Safta by January 1, 2006, is evident from the proceedings. In addition to focusing on the core issue of trade cooperation, the summit has moved forward in creating institutional mechanisms for augmenting trade and investment on a regional basis. All the measures taken, including avoidance of double taxation, mutual administrative assistance in customs matters, establishment of Saarc arbitration council, etc. and the proposals for transport connectivity and energy security, point to the fact that enhancement of trade and investment cooperation are being considered much more seriously.

There is ample evidence to suggest that Saarc has rich trade complementarities. This offers wide scope for intra-industry trade which can be provided impetus through investment cooperation. Through this, possibilities of effecting vertical integration and horizontal specialisation in key sectors can be tapped. Such efficiency-seeking industrial restructuring would contribute to more intensive regional integration process among Saarc members. Some of our estimates, hence, suggest that there are immense economic gains in static and dynamic scenarios.

It is in this context that the measures taken and directions given would contribute meaningfully to the ultimate objective of economic unification under Saarc.

The writer is Fellow, Research and Information System for Developing Countries (RIS) The views expressed are personal