Saarc foreign ministers push for economic union
The South Asian Economic Union will ensure larger investment inflows and higher trade volumes
Eight finance ministers from South Asia who recently met in Islamabad pushed for the fast-track formation of the South Asian Economic Union (SAEU) to ensure larger investment inflows, higher trade volumes and energy generation.
The decision was taken at a conference of finance ministers of the South Asian Association for Regional Cooperation (Saarc) - including Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka.
The finance ministers urged leaders in the Saarc region to "accelerate the process of formation of the SAEU in a phased and planned manner, as decided in the Declaration of the 18th Saarc Summit."
The top leadership of the region, including Pakistan Prime Minister Nawaz Sharif, and others heads of state and government endorsed the demand for formation of the SAEU.
Finance Minister Ishaq Dar and his counterparts agreed that the decision to form the SAEU should move speedily at the 19th Saarc summit which is scheduled to be hosted by Sharif on November 9 and 10 this year at Islamabad.
Importance of Saarc summit
The significance of the forthcoming Saarc summit is highlighted by the fact that it is the first such top-level conference taking place after Islamabad and Peking started implementing the Chinese-funded $46 billion China-Pakistan Economic Corridor (CPEC). The CPEC links China and Pakistan with the UAE, Saudi Arabia and Middle East in the south, Iran in the middle, Central Asian Republics, Turkey in the north and the European Union in the North-West. Projects worth $18 billion are already being implemented while projects valued at $17 billion are at various stages of start-up.
Sharif asked the leadership to "realise the goals of the Saarc Charter to promote the welfare of South Asian people and to accelerate economic growth, social progress and cultural development in the region."
The finance ministers decided for further "strengthening of regional trade through expeditious implementation of the South Asian Free Trade Agreement [Safta] in order to achieve deeper integration. The aim is to bring down tariffs, eliminate non-tariff and preferential trade barriers and reduce sensitive lists for enhanced intra-regional trade under Safta".
Another key decision was to "operationalise the Saarc agreement on trade in services by finalising the schedules of specific commitments."
A major decision taken at the conference was the finalisation of the text of the agreement on promotion and protection of investments. Investment flows will be promoted as a result of the decision on widening the scope of the Saarc agreement on avoidance of double taxation and mutual administrative assistance in tax matters.
Uniform customs procedures
Yet another priority to promote business in the region relates to standardising customs procedures and documentation to facilitate movement of goods across borders.
Although the region as far as individual countries are concerned is growing in IT and mobile phone services, there is much scope for integration. They also have to bring the tariff and prices of these services lower to help reduce the cost of doing business and expand economies in the Saarc and other regions, including the UAE, Saudi Arabia, Middle East, Asean, Central Asian Republics, China, EU, US and Latin America. All of these are sources for large trade volumes and inflow of investment into the Saarc region.
The finance ministers "underlined the need for improved connectivity in the region, including through land, sea and air routes, and early signing of motor vehicle and railway agreements."
The conference was preceded by a meeting of eight finance secretaries in Islamabad on August 25. Dr Waqar Masood Khan, secretary of ministry of finance, government of Pakistan, presented his report to finance ministers. Dr Khan said: "The finance secretaries were satisfied that considerable progress has been made on recommendations of the 7th meeting of Saarc Finance Ministers" which took place in Kathmandu on August 20, 2015.
Sharif said: "Pakistan has been a strong advocate for stepping up regional efforts to ensure energy supplies, besides other sectors, through sharing of indigenous sources of energy. Pakistan also shares the perspective that regional connectivity is critical to progress and prosperity. We support road, air, rail and water connectivity with the region."
Dar, who chaired the conference, said: "Considerable progress has been made to create the SAEU, but a lot is yet to be done. South Asia is a region with countless opportunities and vast potential to meet the growth needs of its people. The region needs joint strategies and convergence of commonalities among its member states to exploit its resources for the economic and social uplift of our people."
The writer is based in Islamabad. Views expressed are his own and do not reflect the newspaper's policy.
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