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Trade within Saarc

Trade within Saarc

According to newspaper reports, trade volume within the member states of the South Asian Association for Regional Cooperationis only 5 percent of the total regional trade after around three decades of the establishment of this forum. The figure also shows the member states have miserably failed to overcome their political differences and are still hostages to their bitter past. At a time the countries in the world are heading towards a bright future, the member states are moving in the reverse gear, turning to become part of one of the most impoverished regions in the world. The ratio of regional as well as global trade is on the rise but tariff and non-tariff barriers are hindering the growth of trade volume within theSaarc countries. Political differences between Pakistan and India have also rendered the Saarc forum ineffective and recent events in occupied Kashmir are adding insult to injury. The regional countries have so far failed to identify the areas of concerns to enhance cooperation under South Asia Free Trade Agreement.

It is unfortunate that despite close cultural and linguistic affinities, the regional trade could not be picked up and various efforts to enhance trade and investment have ended in smoke. There is not only lack of coordination within the member states, but also lack of business to business contacts.The countries still have to find out new avenues for trade and investment. There is also need to increase public-private leadership, involvingall the stakeholders to address the troubles coming across trade in the region. A study holds the non-tariff barriers responsible for limited trade in the region.Indian import ratio is only 1 percentin the Saarc member countries whereas Pakistan’s imports from bloc is 4percent of the total imports.Indian exports accounts for 65 percent of the region’s combined total exports and Pakistan’s exports accounts for 21 percent in the region. The study hopes after full implementation of Safta, some countries will be able to increase their exports.India would be the largest beneficiary of the agreement in the region as its export could increase by $858 million.

The recent events in Kashmir can have long term repercussion if the situation is not handled carefully. The regional countries have begun to improve their economy and any hostilities will bring disaster to the economy of the entire region. Indian leadership should consider twice before going to war with Pakistan as its economy will suffer irreparable losses. On another note, Pakistani economy is able to suffer shocks. Going to war is very easy but making peace is difficult. Kashmir situation is precarious and sooner the Indian leadership finds a solution, the better.