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The South Asian Association for Regional Cooperation(SAARC) comprises the seven countries of South Asia, i.e. Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan and Sri Lanka. It is an Association based on the consciousness that in an increasingly interdependent world, the objectives of peace, freedom, social justice and economic prosperity are best achieved in the South Asian region by fostering mutual understanding, good neighbourly relations and meaningful cooperation among the Member States which are bound bytes of history and culture. The idea of regional cooperation in South Asia was first mooted in May 1980. After consultations, the Foreign Secretaries of the seven countries met for the first time in Colombo in April 1981. This was followed by a meeting of the Committee of the Whole in Colombo in AugustSeptember 1981, which identified five broad areas for regional cooperation. The Foreign Ministers of South Asia, at their first meeting in New Delhi in August 1983, adopted the Declaration on South Asian Regional Cooperation (SARC) and formally launched the Integrated Programme of Action (IPA) initially in five agreed areas of

cooperation namely, Agriculture; Rural Development; Telecommunications; Meteorology; and Health and Population Activities. The Heads of State or Government at their First SAAR Summit held in Dhaka on 7-8 December 1985 adopted the Charter formally establishing the South Asian Association for Regional Cooperation (SAARC).

The objectives, principles and general provisions contained in the SAARC Charter are as follows: To promote the welfare of the peoples of South Asia and to improve their quality of life; To accelerate economic growth, social progress and cultural development in the region and to provide all individuals the opportunity to live in dignity and to realize their full potential; To promote and strengthen collective self-reliance among the countries of South Asia;

To contribute to mutual trust, understanding and appreciation of one anothers problems! To promote active collaboration and mutual assistance in the economic, social, cultural, technical and scientific fields;

To strengthen cooperation with other developing countries;

To strengthen cooperation among themselves in international forums on matters of common interests; and

To cooperate with international and regional organizations with similar aims and purposes.


The South Asian Association for Regional Cooperation (SAARC) comprises eight countries of South Asia, i.e. Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, Sri Lanka. The idea of regional cooperation in South Asia was first mooted in May 1980 by Bangladesh President Ziaur Rahman. President Rahman addressed letters to the Heads of Government of the countries of

South Asia, presenting his vision for the future of the region and the compelling arguments for regional cooperation in the context of evolving international realities. The Foreign Secretaries of seven countries in South Asia met for the first time in Colombo in April 1981 and identified five broad areas for regional cooperation. A series of meetings followed in Nepal (Kathmandu/November 1981), Pakistan (Islamabad/August, 1982), Bangladesh, India (Delhi/July 1983) to enhance regional cooperation. The next step of this process was the Foreign Ministers meeting in New Delhi in 1983 where they adopted the Declaration on South Asian Regional Cooperation (SARC). During the next two years South Asian nations committed themselves to form this South Asian alliance and the process culminated in the First SAARC Summit held on 7-8 December in 1985 in Dhaka where the Heads of State or Government of seven countries, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka adopted the Charter formally establishing the South Asian Association for Regional Cooperation (SAARC).


The preamble to the SAARC Charter spells out the intention of forming this South Asian alliance as We, the Heads of State or Government of BANGLADESH, BHUTAN, INDIA, MALDIVES, NEPAL, PAKISTAN and SRI LANKA; Desirous of promoting peace, stability, amity and progress in the region through strict adherence to the principles of the UNITED NATIONS CHARTER and NONALIGNMENT, particularly respect for the principles of sovereign equality, territorial integrity, national independence, non-use of force and non-interference in the internal affairs of other States and peaceful settlement of all disputes Conscious that in an increasingly interdependent world, the objectives of peace, freedom, social justice and economic prosperity are best achieved in the

SOUTH ASIAN region by fostering mutual understanding, good neighbourly relations and meaningful cooperation among the Member States which are bound by ties of history and culture Aware of the common problems, interests and aspirations of the peoples of SOUTH ASIA and the need for joint action and enhanced cooperation within their respective political and economic systems and cultural traditions Convinced that regional cooperation among the countries of SOUTH ASIA is mutually beneficial, desirable and necessary for promoting the welfare and improving the quality of life of the peoples of the region; Convinced further that economic, social and technical cooperation among the countries of SOUTH ASIA would contribute significantly to national and collective selfreliance; Recognising that increased cooperation, contacts and exchanges among the countries of the region will contribute to the promotion of friendship and understanding among their peoples; Do hereby agree to establish an organisation to be known as SOUTH ASIAN ASSOCIATION FOR REGIONAL COOPERATION hereinafter referred to as the ASSOCIATION... Objectives Moreover, the cooperation of the SAARC is also based on broader principles of respect for the principles of sovereign equality, territorial integrity, political independence, non-interference in internal affairs of the Member States and on mutual benefit. Decisions are taken on the

basis of unanimity and bilateral and contentious issues are excluded from the deliberations of SAARC. The highest authority of the Association rests with the Heads of State or Government. The SAARC Charter provides that the Heads of State or Government shall meet once a year or more often as and when considered necessary by the Member States. The country which hosts the summit holds the Chair of the Association. The Association also convenes meetings at Ministerial level on specialised themes Council of Ministers comprising the Foreign Ministers of Member States, the Council of Ministers is responsible for formulating policies, reviewing progress, deciding on new areas of cooperation, establishing additional mechanisms as deemed necessary, and deciding on other matters of general interest to the Association.

The Council meets normally twice a year and may also meet in extraordinary sessions by agreement of Member States. The Standing Committee comprising the Foreign Secretaries of Member States is entrusted with the task of overall monitoring and coordination of programmes, approving of projects and programmes, and modalities of financing, determining inter-sectoral priorities, mobilising regional and external resources, and identifying new areas of cooperation. Usually this Committee meets twice a year preceding the Council of Ministers and submits its reports to the Council of Ministers. It may also meet in special session as and when necessary by agreement among Member States. The Standing Committee is authorised to set up Action Committees comprising Member States concerned with implementation of projects involving more than two but less than seven Member States. (Article VII of the SAARC Charter).

The Programming Committee (which is not a SAARC Charter body) comprises senior officials of member States. It assists the Standing Committee in scrutinising the Secretariat Budget, considers the reports of the Technical Committees, SAARC Audio Visual Exchange (SAVE) Committee, and Regional Centres finalising, and the Calendar of Activities.

The SAARC Technical Committees are responsible for determination of the potential and the scope of regional cooperation in agreed areas, formulation of programmes and preparation of projects, determination of financial implications of sectoral programmes, formulation of recommendations regarding apportionment of costs, implementation and coordination of sectoral programmes, and monitoring of progress in implementation. In addition to the Technical Committees, various Working Groups are established to consider specific issues and make recommendations to the appropriate SAARC bodies. Currently five Working Groups are established in the areas of Telecommunications

and ICT, Biotechnology, Intellectual Property Rights and tourism. SAARC Secretariat The SAARC Secretariat is based in Kathmandu, Nepal. The Secretariat coordinates and monitors implementation of activities, prepares and services meetings, and serves as a channel of communication between the Association and its Member States as well as other regional organizations. The Secretariat is headed by the Secretary General, who is appointed by the Council of Ministers from member countries in alphabetical order for a three-year term. Dr. Sheel Kanta Sharma from India currently serves as the Secretary General of SAARC. The Secretary General is assisted by Directors on deputation from Member States. Committee on Economic Cooperation. The Committee of Economic Cooperation consists of Secretaries of Commerce of member states and it promotes regional cooperation in the economic field. The Agreement on SAARC Preferential Trading Arrangement (SAPTA) was signed in Dhaka during the 7th SAARC Summit, in 1993. It aims to promote and sustain mutual trade and the economic cooperation among the South Asian States, through exchanging concessions.

Later, with the broad objective of moving towards a South Asian Economic Union (SAEU), the SAARC Member States signed the Agreement on SAARC Free Trade Area (SAFTA) on 6 January 2004 at the 12th SAARC Summit held in Islamabad and came into force on 1 January 2006. SAFTA has six core elements covering trade liberalization programme, rules of origin, institutional arrangements, safeguard measures, special and differential treatment for least developed countries (LDCs), and dispute settlement mechanisms.



The signing of the Social Charter by the Heads of State/ Government at the 12th SAARC Summit held in Islamabad in 2004, has been a major development in SAARC. The Social Charter aims at promoting the welfare of the peoples of South Asia and accelerating economic growth and social progress through poverty alleviation, improving health conditions of peoples, human resource development, empowerment of women, and providing welfare to the children. Although the Social Charter is not a binding document, it underpins the SAARC Charter objective of providing all individuals the opportunity to live in dignity and to realize their full potentials. SAARC Regional Convention of Suppression of Terrorism. The SAARC Regional Convention of Suppression of Terrorism was signed during the Third SAARC Summit in Kathmandu in November 1987. This was the result of a series of discussions held between Member States for more than two years starting from very first SAARC Summit held in Dhaka. This Convention recognizes dangers posed by the spread of terrorism and its harmful effects on peace & cooperation and also the sovereignty and territorial integrity of the States.


This Convention came into force on 22 August 1988. Later, an Additional Protocol to this Convention was signed during the 12th SAARC Summit in Islamabad on 06 January 2004. This Additional Protocol updates the Convention by adding terrorist financing and has been ratified by all Member States. SAARC Regional Agenda the Agenda of Regional Cooperation under SAARC has expanded over the years and are broadly covered under the Regional Integrated Programme of Action (RIPA). In addition, a number of issues are given high priority. At the 12th SAARC Summit held in Islamabad in 2004, the Heads of States/Government recognized poverty alleviation as the greatest challenge facing the peoples of South Asia and declared poverty alleviation as the overarching goal of all SAARC activities. Cooperation with the International Organizations SAARC has established institutionalized arrangements for cooperation with a number of other regional groupings and international and regional organizations. It has entered into cooperative arrangements through the signing of MOUs with organizations like the EC, UNCTAD, ESCAP, UNIFEM, APT, ITU, UNDP, UNDCP, UNEP, UNIFEM, CIDA, WHO, ADB, PTB, UNAIDS, UNICEF, World Bank etc. SAARC has recently agreed with ASEAN Secretariat for a Partnership Work Plan (2004-2005) in a

number of areas including trade, HIV/AIDS, energy and tourism. SAARC has a dialogue forum with ASEAN and EU on the side lines of the UN General Assembly sessions.


Under the SAARC Visa Exemption Scheme, some specifically identified categories of persons along with their spouses and dependent children are entitled to travel within the SAARC region without visa. Although the Visa Scheme is yet to attain the depth and coverage of regional visa schemes like the Schengen visa, it has proved to be effective in generating credibility about the SAARC process. SAARC as an institution has always emphasized the need for strengthening people-to-people contacts through greater participation of NGOs, including professional bodies in the private sector, to promote socio-economic and cultural co-operation in South Asia. SAARC has formulated a set of guidelines and procedures for granting recognition to regional NGOs and professional bodies. SAARC Charter Day The SAARC Secretariat and Member States observe 8th December as the SAARC Charter Day. SAARC designated years SAARC has designated years to draw

special focus on specific social issues and has contributed to raising awareness, mobilizing resources and adopting/adapting national programs.

SAARC Summits since inception Dhaka, Bangladesh 7-8 December 1985 Bangalore India 16-17 November 1986 Katmandu, Nepal 2-4 November 1987 Islamabad, Pakistan 29-31 December 1988 Male, Maldives 21-23 November 1990 Colombo, Sri Lanka, 21 December 1991 Dhaka, Bangladesh, 10-11 April 1993 New Delhi India, 2-4 May 1995 Male, Maldives 12-14 May 1997 Colombo, Sri Lanka, 29-31 July 1998 Katmandu, Nepal, 4-6 January 2002 Islamabad, Pakistan, 2-6 January 2004 Dhaka, Bangladesh, 12-13 November 2005 New Delhi, India, 3-4 April 2007


SAARC designated years 1989 Year of Combating Drug Abuse and Drug Trafficking 1990 Year of Girl Child 1991 Year of Shelter 1992 Year of Environment 1993 Year of Disabled persons 1994 Year of the Youth 1995 Year of Poverty Alleviation 1996 Year of Literacy 1997 Year of Participatory Governance 1999 Year of Biodiversity 2002-2003 Year of Contribution of Youth to Environment 2004 Year of Awareness for TB & HIV/AIDS 2006 South Asia Tourism Year SAARC has also declared decades on specialized themes;



The South Asian Association for Regional Cooperation (SAARC) summit is often described as being a mere photo opportunity for south Asian leaders who should actually be using the comatose organization to reinvent regional cooperation in a globalize world. Such pessimism is inevitable if one takes stock of the progress that SAARC has made over the period of time. There exists a SAARC convention to deal with all issues that have a certain salience in the regional context. Yet, even 25 years after its inception the organization is found wanting both in terms of forming a regional identity and of forging any sense of a regional belongingness. This is where the problem lies. Contested national identities constructed by member states have not encouraged an identity based on common socio-cultural heritage to take root. South Asian countries engage readily and often with powerful states in the international system, yet when it comes to regional engagement, their bilateral relations have remained strained, and are characterized by mistrust and suspicion thus making regional cooperation hostage to bilateral politics.



At present, consisting of eight members, SAARC has the potential to expand its membership to include Myanmar. What has been intriguing in the recent past is that while many in South Asia have written the obituary of SAARC as a vehicle for fostering regional cooperation, there are countries who are vying with each other to become part of it as observers. One of the observers aspiring for membership is campaigning for it through its regional proxies. It is too early to say whether SAARC, which could not inculcate a sense of regional solidarity within its membership, will be able to deal with observer countries who are more interested in gaining strategic space rather than in regional cooperation. The organization has yet not delineated the possible role of the observer countries. In this context it is not clear whether their engagement will benefit the SAARC countries. Some member countries like Sri Lanka and Bangladesh have expressed hopes that the observers would play a positive role. SAARC has progressively addressed 'hard' issues that confront the region more than 'soft' issues. If one compares the agenda of the organization when it was formed with its current goals then SAARC can be seen to be slowly moving towards regional integration in the real sense. This

integration is beyond having just a common approach to issues like poverty, telecommunication, weather, sports, culture, etc., as was envisaged in the beginning. The translation of its agenda into a meaningful cooperation has also not been possible due to the declaratory approach the leadership has taken and endorsed without having any real commitment towards these goals. The reason could be that the leaders perhaps feel compelled to demonstrate to the people of the region that they are committed to the process of regional cooperation without appearing to be spoilers. There exists popular support for regional cooperation. The people want less rigid visa controls and free exchange of goods and ideas, while keeping the current borders intact. Regional cooperation is a reality. An economic raison d'tre is a prerequisite for regional politics in a globalized world where regional cooperation is the only option. The transnational character of problems relating to terrorism, drug trafficking or climate change cannot be addressed individually by countries which share porous and, many a time, un-demarcated and contested borders. The countries of the region realized this but are yet to shed their securitized state-centric mindsets. Regional cooperation without regional commitment Regional engagement among south Asian countries has been minimal compared to their engagement with

Western countries. Whether it is security or economics, SAARC countries are more integrated with the global order than with their regional arrangement. There are no underlying economic compulsions that bind the countries of the region as was the case with the European Economic Community (EEC). The countries of south Asia do not have common security concerns to unite them. Threats are mostly seen arising from within the region rather than from the outside. Therefore the problem is: how can the countries of South Asia cooperate with each other when they perceive each other as being responsible for their instability? Because of this mistrust, many of the conventions--such as the Additional Protocol of the SAARC Convention on Terrorism--have become defunct. Each country faces the challenge of terrorism yet South Asian countries have not been able to devise a common approach to it. They neither share intelligence nor is there any commitment to stop cross-border support to terrorist groups. If one analyses the various clauses of the Additional Protocol of Terrorism which criminalised the collection or acquisition of funds for the purpose of committing terrorist acts, it becomes amply clear how the very purpose of dealing with the issue has been defeated because of the double standards prevailing among states in the region. Though SAARC has


a Terrorism Monitoring Desk in Colombo it has not yet come out with any report. The SAARC interior ministers' meeting has also not made any concrete suggestions on how best to cooperate. The issue of terrorism has rather been addressed bilaterally. If one studies the speeches of the heads of states at the recently concluded 16th SAARC summit it will be seen that they devoted much time to expounding their countries' achievements in dealing with various socio-economic and terrorism-related problems. Some of these speeches were prescriptive in nature when what was required was how their countries had promoted regional cooperation. The leaders reiterated the importance of regional cooperation without specifying how to take this cooperation forward. The president of Afghanistan, Hamid Karzai, in his speech put greater emphasis on terrorism and said: 'Until all members of SAARC, without exception or reservation, commit not to allow their territories to be used directly or indirectly to shelter, arm or train terrorist groups . . . the wild fire of terrorism will not discriminate in choosing its target'. 1. He also stressed that with current bottlenecks, expeditious overland movement of goods and benefits of a modern transport infrastructure would not be felt. Maldivian president, Mohamed Nashid called for a 'comprehensive review of the

on-the-ground effectiveness of SAARC'. He asked for greater dialogue between India and Pakistan and expressed the frustration of the smaller countries of south Asia who have often found themselves hostage to the Indo-Pak conflict. The president said that the 'neighbours can find ways to compartmentalise pending differences, while finding areas on which they can move forward'. 2. Bhutan felt that SAARC was losing its focus because of the requirement of close to 200 meetings per year. It therefore suggested a substantial reduction of activities and meetings to ensure focus. 3. The Indian prime minister said that the countries of south Asia need to accept that the glass of regional cooperation is half empty and the institutions are not empowered sufficiently to be proactive. 4. The Bangladesh prime minister rejected anyone using the cloak of Islam or any other religion to perpetuate violence and categorically stated that Bangladesh will not let its territory be used for launching terrorism elsewhere. 5. Pakistan's prime minister Sheikh Hasina Wazed, said that SAARC has not made much progress due to historical legacies, differences and disputes while the Sri Lankan president, Mahinda Rajapaksa, said: 'We often tend to provide priority to our engagements with extra regional actors, without devoting sufficient attention to further developing and strengthening the links within our own regional organisation'.

6. SAARC needs to follow a bottom up approach rather than a top down one. In this context good relations between the countries can help regional cooperation rather than the other way round. Moreover, even though there is a people's SAARC at the civil society level, attempts should be made to build synergy between the official SAARC and the people. The reason is that SAARC is yet to connect with people and its agreements and commendable conventions have not touched the lives of the people on whose behalf these declarations have been made. Moreover, issues like terrorism are addressed at a bilateral level. This shows that the countries do not have much faith in the regional approach. Even though there exists a convention on terrorism and an additional protocol, Bangladesh has put forward a proposal for forming a regional task force. India, which has been a victim of terrorism and shares its borders with many South Asian countries, has taken up the issue of terrorism bilaterally. Some issues where bilateralism is adopted even though relevant SAARC conventions exist are as follows. The previous Bangladesh National Party government provided shelter to Indian insurgent groups as strategic assets in violation of the SAARC convention. They were arrested and handed over to India only after the Awami League government came to power in Dhaka. This was

largely the result of a bilateral initiative. Bhutan's decision to flush out Indian insurgent groups who took shelter in southern Bhutan is again a bilateral initiative. Similarly, the issue of cross-border terrorism originating in Pakistan was decided in 2004 on the sidelines of the Islamabad SAARC summit. The now defunct IndoPak Joint Terror mechanism is yet another bilateral initiative. Both India and Afghanistan have approached the United States a number of times to resolve the issue of terrorism emanating from Pakistan. This is in spite of the fact that Pakistan has been a frontline state and a crucial player in the global war against terror but it has been reluctant to cooperate either with India or Afghanistan. PostMumbai, Pakistan could have taken action under Article 7 of the Additional Protocol to confiscate funds of the Jamaat-ul-Dawa. However, this was only done following a UN resolution and under pressure from China and the US. This establishes that the regional approach to terrorism has been a non-starter. SAARC speaks of regional connectivity, but Bangladesh's offer to provide transit facilities to India and the use of its ports to India, Nepal and Bhutan has been entirely a Bangladeshi initiative. In the regional context Pakistan has not allowed Afghan trucks to carry Indian goods from Wagah. They go back empty. India also has been using Iran for its trade with Afghanistan.


The concept of the South Asia Growth Quadrangle was another way to carry forward sub-regional cooperation under Article 6 of the SAARC charter. There is an urgent need to reactivate the Nepal, Bhutan, Bangladesh and India cooperation under the Growth Quadrangle. The 16th summit declaration: anything new? As has been the case with past summits, the 16th summit declaration says the leaders 'expressed satisfaction' that SAARC has achieved a number of milestones which are not specified. It is silent on whether these 'milestones' have made any difference to the region. Had that been the case the SAARC leaders would not have lamented the failure of the organisation even 25 years after its establishment. As was pointed out in the summit declaration, SAARC's relevance lies 'in providing a platform for regional cooperation'. However, it is up to the member countries to make the platform effective. It is therefore not surprising that now, after 25 years of existence, the leaders are discovering the need for a vision statement. The declaration further states that the: 'silver jubilee year should be commemorated by making SAARC truly action oriented by fulfilling commitments, implementing declarations and decisions and operationalizing instruments and living up to the hopes and aspirations of one-fifth of humanity'. The summit recommended public diplomacy to reach out to different sections of society. Such


an aim can only be realized if the countries can implement some of the agreements they have signed and evoke these agreements to resolve problems. For example, in spite of two agreements on terrorism, why is there no cooperation between countries to deal with the menace? The member states reiterated their resolve to cooperate on terrorism and drug trafficking and reaffirmed their commitment to implement relevant regional conventions. Implementation will remain a big challenge as long as state sponsorship of terrorism continues. There are inherent contradictions in what the countries project. While Bhutan speaks of Gross National Happiness (GNH) and promises to hold workshops on GNH in the country, it has denied the right of return to its ethnic Nepalese who fled the kingdom in 1990. Economic cooperation between countries of the region is yet to take off and explains why, in spite of South Asia Free Trade Association (SAFTA) being ratified, regional trade has remained below five per cent. On the issue of energy there is no concrete cooperation for establishing a regional energy grid. India has offered to prepare a roadmap for developing a SAARC market for electricity, which needs enabling markets in the member states. One of the welcome developments has been the establishment of the South Asia Development Fund (SDF) which was envisioned in 2005 by reconstituting the South Asia Development


Fund established in 1996. To make the SDF viable the countries first need to arrive at a consensus and identify areas where these funds would be used. One hopes this would not be bogged down by bilateral and trilateral disputes. The leaders have sagaciously agreed that 'the projects being funded through SDF are demand-driven, time bound and aligned with the developmental priorities of the region'.10 It would, however, take a lot of diplomatic sweating to translate this vision into reality. Perhaps one of the issues that SDF needs to address urgently is to fund infrastructure projects to enhance regional connectivity. The summit also recommended increased public-private partnership for greater intra-SAARC investment promotion efforts. This would help in the speedy implementation of projects as this is an effective way to deal with administrative bottlenecks pertaining to land acquisition, electricity supply and bureaucratic red tape. Intra-SAARC investment for the private sector would also be a welcome development. Given the tardy processes of regional trade and restrictions in foreign investment and long negative lists it will not be easy to attract private capital. To implement the public-private partnership trade it will be important to ensure liberalization, harmonization of standards as well as guarantee that products produced through this


partnership would have access to regional markets.

SAARC has already established the South Asia Regional Standard Organization. Efforts should be made to make it operational. Bilateral relations between the countries would be crucial to facilitate such investments as private businessmen are unlikely to invest given an environment of distrust which is not conducive for business. For example, bilateral proposals involving investments have already run into rough weather. Even after the Pakistan Peoples Party (PPP) announced a liberalized policy for investment by Indian businesses there continues to be resistance to Indian investment. An investment proposal by TATA, for example, got derailed due to Bangladesh's internal politics. A common market for south Asia is still in its infancy because of non-tariff and Para tariff barriers. Therefore, unless the tendency to politicize economics does not end, this vision of the leaders of the region will be added to the list of wishful thinking that the SAARC has accumulated over 25 years. The summit also took a decision to declare 2010-2020 the 'Decade of Intraregional Connectivity in SAARC'. It is important that SAARC leaders take steps to implement regional connectivity in order to drive growth, induce better synergy

and give a boost to SAFTA. Observers in SAARC China's growing influence in the region has been a matter of concern for India. China's entry into SAARC in 2005 has been significant and Nepal, Bangladesh and Pakistan played an important role in facilitating Chinese entry. China's presence is a matter of concern for two reasons. First, there is a growing nexus between China and Pakistan at the heart of which lies the policy to balance India. Its presence therefore cannot be considered neutral. Second, China's presence in SAARC is specifically for gaining strategic space. China has been following a strategy to engage with neighbouring countries for defence and economic cooperation. Though China's trade ties with India have seen an upward swing, it has border conflicts with India and Bhutan. The relations between India and China have remained highly suspect. China shares good relations with the neighbouring countries whereas India is looked upon with suspicion. In this context China's presence could be a pressure tactic that may be employed on India. A conflicted relationship with China would confine India to the region and prevent it from playing a larger global role. This has been one of the principles of China's engagement in the region. Since SAARC itself has hardly made any progress it is not clear how China can contribute to its progress.


Some other observer countries have other interests in the region. For example, Japan is the highest aid donor to the region and the US is heavily engaged in the region to counter terrorism and has a stake in regional peace; Australia has the largest number of immigrants from this region. SAARC will now have to brace for an India-China contest apart from the one between India and Pakistan which was largely blamed for the slow progress of SAARC. The Chinese vice foreign minister said China would 'expand cooperation with SAARC and elevate our friendly and cooperative ties to a new level'.11 It proposes to hold a China-SAARC senior officials meeting. The Myanmar representative said that its geographical proximity, historical and cultural links prompted it to become an observer in SAARC. It also offered to act as a bridge between south and Southeast Asia. However, one has not been able to understand why Myanmar has not applied for membership. The representative of Iran said that Iran's geographical location and extensive transport network enables it to help South Asia in expanding its trade with other parts of the world. Conclusion Regional cooperation in the South Asian region lacks the commitment and dedication that is required to make it a success. Some countries have agreed to cooperate because they do not want to be spoilers while there are others who genuinely believe that this is the way forward. In spite


of scathing criticism of SAARC by the leaders of the region on its 25th anniversary, one is not sure whether there would be any fundamental change in the attitude of the countries. Earlier, attempts were made to multi-lateralize bilateral issues but now efforts are being made to resolve some issues like terrorism bilaterally. The countries which do not have bilateral synergy will not be able to make a meaningful contribution to the success of SAARC.

To quote the Pakistani Prime Minister Syed Yousuf Raza Gilani: 'Only when we refuse to be held hostage to history, only when we sincerely and assiduously work to build trust, resolve disputes, bridge perceptions and see merit in an enlightened collective self-interest, will we be able to unleash our latent potential'.12 The big question that remains is 'When?' It is a tall order to expect regional cooperation between countries who do not see eye to eye even in bilateral matters. Each country joined SAARC to forward its interests or to avoid getting sidelined, particularly within


the Indo-centric region. Pursuing national interests is desirable but to pursue it under the cloak of regionalism is a recipe designed for the failure of SAARC. A regional identity is essential for the success of SAARC.

If the countries try to undermine regional interests for their narrow political advantage then members can resign themselves to this forum becoming a mere talking shop. Even after 25 years it has failed to connect with the masses. Its promotion of people-topeople contact is restricted to judges, diplomats and the parliamentarians. SAARC needs to get off its elitist pedestal and adopt a subaltern approach. However, the time to write the epitaph of SAARC has not yet come. In spite of all the misgivings, and non-implementation of various agreements and conventions, SAARC provides greater regional visibility to smaller countries and provides them with the opportunity and responsibility to contribute to the region in a meaningful way. For them even a failed SAARC is more attractive as a platform than being restricted to bilateralism in an Indiadominated region.



The two-day 16th summit of South Asian Association for Regional Cooperation (SAARC) held in Bhutanese capital of Thimpu on April 28-29 concluded with a joint declaration expressing the resolve of their leaders to wage common struggle for economic development, improve their inter-connectivity, promote people to people contacts and evolve a joint strategy to tackle the issues of climate change, water and food shortages. During the last quarter of the previous century international relations witnessed a strong surge towards regionalism. The underlying idea was to promote peace and economic progress through multilateral partnership of states in the region by pooling

the available resources. Further impetus was provided by the emergence of new issues that threatened the fabric of international norms, such as terrorism, drug trafficking, extremism, and economic crisis. It was realised that these problems could not be solved at bilateral level and required joint efforts and close coordination. Accordingly regional groupings such as ECO, GCC, ASEAN and SAARC emerged. SAARC came into being in December 1985, with the adoption of its charter in Dhaka. The objectives were to promote the welfare and improve the quality of life of the people of South Asia by accelerating economic growth in the region and building up mutual trust among the member states. The importance of SAARC as a regional organisation despite its rather unsatisfactory record, is recognised by all leaders. The feeling that peace and prosperity are indivisible and that the South Asia region has a common destiny and a shared struggle for a better and brighter future has emerged dominant theme. The leaders who gathered in Thimpu made a frank appraisal and acknowledged that the organisation has failed to live up to the hope and aspiration of 1/5th of humanity represented by SAARC members. The Prime Minister of Bhutan also expressed the hope that SAARC will not turn into just a talk shop.

This honest confession that the bloc has not moved away from declarations of intent to concrete implementation, should however not blind us to the achievements. Its performance has not been entirely dismal. Despite failings, a number of significant achievements such as (i) The Regional Convention on Suppression of Terrorism (ii) SAARC Agriculture Information Centre at Dhaka (iii) SAARC audio visual exchange programme (SAVE) and (iv) Social Charter to set targets for eradication of poverty, population stabilisation and human resource development fall to its credit. The South Asia Preferential Trading Agreement (SAPTA) was signed in the 7th summit at Dhaka in April 93, but it has not yet been operationalised. The proposal to establish South Asian Food Reserve and South Asian Development Fund have also met the same fate. Similarly declarations on enhancing political cooperation and promotion of mutual trust and understanding reiterated in each summit have registered limited success. Saarc despite these limitations and poor performance, however, remains a useful tool for smaller countries to promote understanding and cooperation at bilateral level. Facing criticism that SAARC has failed to realise its ambitious objectives during the last 25 years, the Thimpu Summit decided not

to indulge in rhetoric and set ambitious goals. The two major and modest projects agreed upon were US$300 million fund to reduce poverty in the region and also on trade and environmental protection. The perceptions of the failure of SAARC to implement its charter have been aggravated by the political climate obtaining in the region. SAARC summits should act as a forum where member states discuss not only matters of regional importance but also the underlying causes of tension in bilateral relations. To retain its credibility and relevance SAARC should eschew unrealistic economic and social goals; instead it should be effectively used as a medium to discuss issues of peace, security and development with international organisations and agencies to promote interests of the member countries. At the Thimpu Summit, the leaders pledged that they will unitedly work to realise the aspirations of the founding fathers t as set out in the first Summit. The fundamental weakness that SAARC suffers from is trust deficit among the member states. The political differences had deep negative impact on the political will to realise the economic cooperation and integration. Besides political differences and

conflict, economic factors have also played an unhelpful role. The member states except India have still not reached the take-off stage to be able to pursue the programme of economic integration and collaboration.

The establishment of SAARC Development Fund, Food Bank, The Arbitration Council, and the Regional Standards Organisations are the right moves. SAARC should also seek free and preferential trading arrangements with other regional bodies notably EU and the ASEAN. It should also remain fully focused on SAARC social charter to spread out its reach to the common man. The people of South Asia desire to have a peaceful, prosperous and secure future. The security can be obtained through sincere and sustained efforts to narrow the political differences. SAARC is the appropriate tool not only to build trust but also to solve disputes and create conducive climate for realisation of SAARC charter.




In order to fulfill the high aspirations of its peoples in the face of current global economic and financial crises, SAARC will need a new strategic vision. In South Asia, over the past six decades, development practitioners, economists and politicians have presented a number of measures and approaches to address and fix South Asia's socio-economic problems, but nothing sufficient has been done in this regard. Unfortunately South Asia happens to be a region afflicted with terrorism, ethnic rivalries, different kinds of fatal diseases, shortage of food, intra and inter-state wars, political turmoil, instability, leadership crises and security issues. The region is bestowed with enormous natural resources but has little to demonstrate for it. It is a region endowed with fertile land but cannot feed its people, a region that has given birth to learned human resources in all walks of human endeavour but has not yet been able to liberate itself from the shackles of underdevelopment, foreign intervention and vested interests. These factors, besides limiting the development of the region, raise one basic question: what role has leadership played to help improve the situation? Could South Asia have been better with visionary, devoted leaders? It is often said that "the only safe ship in a storm is leadership." Martin Luther King, Jr. once said, "The

ultimate measure of a man is not where he stands in moments of comfort, but where he stands at times of challenge and controversy." Unfortunately, leadership has not played its due role to tackle the challenges and problems plaguing the region. Most of the conflicts, intra and inter-state rivalries and the worst terrorist activities in the region, thrive on the wings of leadership. In the region, we see that human life, property and resources have been lost and wiped out in pursuit of this leadership. In South Asia, the agenda to achieve prosperity is driven by the need to achieve sustainable growth and reduce poverty. This requires public sector reform, including tax reform and expenditure restructuring, and an improvement in the performance of public enterprises through increased competition, privatisation, a wider distribution of shared ownership and removal of entry barriers that still impede participation of the private sector. Tax reform is still in the early phase. Financial reform remains an elusive objective although some important steps have been taken in Pakistan while India has placed it at the top of the policy agenda. Little progress has been made in reforming land and labour markets.


Developing South Asia's human resource base is particularly important in pursuing an outward-looking, pro-poor growth strategy in the current global scenario. South Asia's ability to pursue this strategy will depend on its success in shifting public expenditure priorities to the social sectors to ensure a more rapid buildup of human capital. Currently, life expectancy in South Asia lags behind that in East Asia; out of every ten children born, at least one is expected to die before reaching his/her first birthday and nearly half of the children in the region do not complete primary school. Although there is a danger of raising the level of expectations about the ongoing inter-governmental talks between India and Pakistan, which can result in serious disappointment as only modest results can be achieved in the face of existing ground realities and the limited vision of the political leadership in both countries, it is essential not to lose sight of the opportunities in store and to analyse the causes of those opportunities that have been missed in the past. The most serious impediment in achieving even a modest degree of improvement in the presently dismal state

of Indo-Pakistan relationship is the high level of misunderstanding and misperceptions that the public opinion in each country has about the problems facing the other. Relationship of South Asian countries is often a source of discord than unity among them. The challenge for South Asian nations is not that they should forget the history of hostility towards each other, but they should rather develop an understanding about the evolution of culture and society in the subcontinent through objective research based on respect for various religions and social groups that have lived in it and have contributed to its development and splendour. The term "enlightened moderation" does not need to be restricted to the relations between Western and Eastern cultures, but also needs to be applied to relations among various religions and cultures which thrive in South Asia. Even more importantly, history need not be viewed simply as a clash of religions and cultures, but be interpreted in terms of its economic and social dimensions as well.

Unfortunately, SAARC has not yet delivered on its promise.


In order to fulfill the high aspirations of its peoples in the face of current global economic and financial crises, SAARC will need a new strategic vision. It will have to change its ways and its structure and will have to make efforts to revitalize itself. SAARC's new vision could be seen as a bridge between East Asia, rich in its human resources and technology and West and Central Asia, rich in natural resources and finance. The SAARC region's massive population and educated elites could complement the needs of both nations, with India overseeing the Eastern flank and Pakistan providing the linkage to West and Central Asia. This will help realize the dream of the Asian century. It will also avoid the counterproductive competition between India and Pakistan in their respective regions of influence, which has often been a mutual diplomatic irritant between the two countries. This vision will present a win-win, non-zero-sum situation for all concerned. The only downside such a vision may entail is the possible fear of smaller SAARC countries that collusion between India and Pakistan - the reverse of the present situation and far from probable - may result in some detriment to them.


South Asia's growth prospects depend to a large extent on what happens in India. The reform efforts in India, combined with similar reforms of investment and the trade and payments system initiated in Bangladesh, Pakistan and Sri Lanka, augur well for the medium-term growth prospects of South Asia. Contingent to the successful completion of current reforms, export growth is expected to improve and boost growth to the 5-6 percent range from the present low of 3-4 percent. Uncertainties remain. Almost all South Asian countries face transition in leadership. The political process is broadening out in these countries and generational changes in political and economic leadership are taking place. No one can be sure how these processes will evolve or what the economic consequences will be. And in some of the bigger countries in the region - India and Pakistan - there are large numbers of poor people at early stages of an accelerated development process. Rapid rates of growth are not synonymous with robust institutions at the local level, which is where ultimately most decisions on investment and implementation are made. It will take time for the institutional infrastructure - public and private - to effectively support the modernisation of these economies in the face of the current global economic and financial crisis.




On 8 August 1967, five leaders - the Foreign Ministers of Indonesia, Malaysia, the Philippines, Singapore and Thailand - sat down together in the main hall of the Department of Foreign Affairs building in Bangkok, Thailand and signed a document. By virtue of that document, the Association of Southeast Asian Nations (ASEAN) was born. The five Foreign Ministers who signed it - Adam Malik of Indonesia, Narciso R. Ramos of the Philippines, Tun Abdul Razak of Malaysia, S. Rajaratnam of Singapore, and Thanat Khoman of Thailand - would subsequently be hailed as the Founding Fathers of probably the most successful inter-governmental organization in the developing world today. And the document that they signed would be known as the ASEAN Declaration. It was a short, simply-worded document containing just five articles. It declared the establishment of an Association for Regional Cooperation among the Countries of Southeast Asia to be known as the Association of Southeast Asian Nations (ASEAN) and spelled out the aims and purposes of that Association. These aims and purposes were about cooperation in the economic, social, cultural, technical, educational and other fields, and in the promotion of regional peace and stability through abiding respect for justice and the rule of law and adherence to the principles of the United Nations Charter. It stipulated that the Association would be open for participation by all States in the Southeast Asian region subscribing to its aims, principles and purposes. It proclaimed ASEAN as representing "the collective will of the nations of


Southeast Asia to bind themselves together in friendship and cooperation and, through joint efforts and sacrifices, secure for their peoples and for posterity the blessings of peace, freedom and prosperity.


Brunei Darussalam

H.E. Pehin Dato Lim Jock Seng, Minister of Foreign Affairs and Trade


H.E. Dr. Aun Porn Moniroth, Advisor to the Prime Minister and Chairman of the Supreme National Economic Council of Cambodia


H.,E. Mr. Ali Alatas former Minister for Foreign Affairs H.E. Mr. Khamphan Simmalavong, former Deputy Minister of Commerce




H.E. Tan Sri Musa Hitam, former Deputy Prime Minister Chairman of the EPG


H.E. Dr. Than Nyun, Chairman of the Civil Service Selection and Training Board)


H.E. Mr. Fidel V. Ramos, former President of the Philippines, former Secretary of National Defense, Chairman of the Boa'o Forum of Asia


H.E. Prof. S. Jayakumar, Deputy Prime Minister, Coordinating Minister for National Security and Minister for Law


H.E. M.R. Kasemsamosorn Kasemsri, former Deputy Prime Minister and Minister of Foreign Affairs


H.E. Mr. Nguyen Manh Cam, former Deputy Prime Minister and Minister of Foreign Affairs



The Chairmanships vision is directed towards a community conscious of its diverse cultures and bounded by a common regional awareness, where people strive for equitable access to opportunities for total human development regardless of gender, race, religion, language, or social and cultural background. The end goal of the Chairmanship is to help sustain the momentum towards a caring ASEAN where the standard of living of disadvantaged groups are raised and the women and youth are empowered; where the civil society is engaged; and special attention is given to recommendations on the promotion of health, food security and safety, environment protection, and the promotion of common values and norms. The vision puts the ASEAN people at the center of regional integration with the Governments of Member Countries, Dialogue Partners and other friends of ASEAN providing them the means to fully participate in the process. We also see the need for a strengthened ASEAN Secretariat with an enhanced role to support the realization of our vision. Mission Statement: The Chairmanship mission is to steer ASEAN in the implementation of the Vientiane Action Program towards social protection and promotion of the rights of the vulnerable sectors in the community, in order to contribute to poverty alleviation and


empowerment through projects implemented with dialogue partners and other supporters. By the end of the Philippine chairmanship, all outcome documents and decisions by the Leaders and the Ministers should reflect the overall theme of a caring and sharing community, that should result in the following:
a people-centered approach in ASEAN integration and community building; clearer sense by the ordinary folks including the youth and other vulnerable sectors of the society of the community building efforts by the ASEAN Member Governments; better understanding of the importance of an ASEAN Charter and other initiatives for regional peace and security; stronger sense of regional awareness and common heritage of the region as may be discovered not only in ASEAN capitals but also in the rural areas; and closer cooperation and understanding between ASEAN with dialogue partners.

A landmark agreement among ASEAN foreign ministers meeting in Jakarta on 22nd February to send a small team of up to forty Indonesian civilian and military observers to a disputed area along the Thai Cambodian border has not only helped prevent continued fighting between Thai and

Cambodian forces, but also potentially given a boost to ASEANs long term capacity to manage internal conflict.

Limited as the observer missions terms of reference will be, few observers imagined such an outcome possible just a few weeks earlier when military forces clashed over a 4 square kilometer piece of land surrounding a Hindu temple that straddles the border. Cambodia called for UN intervention and took the issue to the United Nations Security Council, whilst Thailand insisted that the dispute could be settled bilaterally and rejected ASEANs overtures of help. Indonesia as ASEAN Chair took the lead in pressing the case for ASEAN assistance to help resolve the dispute. Indonesian Foreign Minister Marty Natalegawa mobilized swiftly, travelling to Phnom Penh and Bangkok as fighting continued along the border in early February. He also accompanied the foreign ministers of both countries at a UN Security Council Meeting convened on the dispute in mid-February. The UNSC in effect referred the dispute back to ASEAN, which paved the way for a meeting of ASEAN Foreign ministers in Jakarta on the 22nd.


The level of international concern and attention turned the spotlight on ASEAN, which despite provisions for internal dispute settlement embedded in bedrock treaties, has never successfully established a formal mechanism for resolving internal conflict between member states. Fortunately for ASEAN, the foreign ministers were able to agree on a tangible outcome. Indonesia was asked to send a team of civilian and military observers to the area. In addition, the ministers offered to assist bilateral negotiations between the two countries. Significantly, the move was widely applauded by ASEANs dialogue partners, including China. Critics might say that this amounts to another ad hoc arrangement, and will watch closely to see if ASEAN builds on these developments to move towards more formal structures and mechanisms. Indonesia for example has long advocated a formal peacekeeping force on standby to deal with just such a crisis. The argument is that without formal structures and mechanisms in place, it takes too long to mobilize and act, allowing the conflict to escalate.

Realistically, however, ASEAN member states wont support the kinds of elaborate formal structures for conflict management that,

for example, the African Union has in place. Nor is there an appetite for strengthening the security functions of the secretariat. ASEAN must therefore move cautiously. On the other hand, the Thai Cambodian crisis has underscored the threat of internal conflict, and Indonesias chairmanship of ASEAN this year offers a real opportunity to begin thinking about how ASEAN can grapple with its security issues within acceptable parameters. In this respect, precedent does provide some momentum. The idea of sending observers from one ASEAN country to another grew out of Indonesias earlier experience with ASEAN military monitors in Aceh, under the Cessation of Hostilities Agreement brokered by the HD Centre between the Indonesian Government an the Free Aceh Movement in 2003. Thai military personnel also joined an earlier monitoring mission to East Timor before independence. These light peace-monitoring rather than peacekeeping missions have helped generate confidence that military officials from neighbouring countries can help on the ground without violating sovereignty. Nor was it possible for Thailand to realistically resist ASEANs offer to help, when Thailand has long been an advocate of ASEAN assistance to help Myanmar deal with its own internal conflict. Now

Thailand joins Indonesia as a sizable member state that has called on its neighbours to help, which will reinforce and support future ASEAN collective action. There is a long way to go before ASEAN can boast a robust and effective response to internal conflict within the ten-nation association. But given how close two neighbouring ASEAN states came to a war along their common border, there is now no longer any doubt about the need for a more effective mechanism to defuse and settle conflict. And its not as if ASEAN will be doing anything that requires major negotiation or agreement between member states. The ASEAN Political-Security Community Blueprint, formally adopted at the 14th ASEAN Summit in 2009, calls for the strengthening of existing mechanisms for the settlement of disputes. It also urges the development of ASEAN modalities for good offices, conciliation and mediation.

India and Asean countries will sign the historic comprehensive Free Trade Agreements (FTAs) covering goods, services and

investment around August 2013. Each of the 10 Asean member countries' parliaments will have to ratify the Asean-India FTAs. Thailand's Parliament is expected to do so in April. "The signing of these agreements will facilitate further economic integration between Asean and India, and also contribute to the overall East Asian economic integration. India is currently Asia's third largest economy after China and Japan in terms of purchasing parity. The annual trade volume between India and Asean was expected to rise from this year's US$80 billion (2.4 trillion baht) to US$100 billion in 2015 and to US$200 billion in 2020 as India looks towards Asean for closer economic cooperation. Within the Asean-India FTA framework, there is a combined market of almost 1.8 billion people, with India's population totalling 1.2 billion and Asean's population around 600 million, as well as a combined GDP of US$3.8 trillion. Asean and India are also supporting sub-regional developments, including the Mekong-Ganga Coopera-tion and Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Coopera-tion frameworks. Other frameworks supported include the Brunei-IndonesiaMalaysia-Philippines-East Asean Growth Area, Cambodia-Laos55

Vietnam Development Triangle Area, Indonesia-Malaysia-Thailand Growth Triangle, Greater Mekong Sub-Region and Asean Mekong Basin Development Cooperation. Indian Foreign Minister Salman Khurshid said in an interview that the latest summit represented a crucial "take-off" point for connectivity between India and Asean countries. He cited the three-nation highway project linking India's northeast with Myanmar and Thailand as an example of landtransport connectivity. Additional sections of the 1,300-kilometre highway near India's border with Myanmar and the Myanmar border with northern Thailand are under construction and will be joined with the existing route in Myanmar, where road conditions will be improved. The cross-border highway is scheduled for opening in 2016. The Indian foreign minister also cited the potential linkages of India's Chennai seaport with other ports in Asean countries, especially the planned Dawei port in Myanmar and Thailand's Laem Chabang deep-sea port as another example of connectivity between India and Asean countries. From Thailand, the highways and seaports could be further linked with those in Laos, Cambodia and Vietnam, whose ports are in the South China Sea.


Yingluck said the Thai government would also support extending the trilateral highway to reach Laos and Cambodia. At present, India and Thailand have a limited FTA in goods covering 84 items. Bilateral trade is worth about US$9 billion per year. The two countries are negotiating a much more comprehensive economic cooperation agreement covering trade in goods and services as well as investments to further upgrade economic ties.


The foundation of the AEC is the ASEAN Free Trade Area (AFTA), a common external preferential tariff scheme to promote the free flow of goods within ASEAN.[44] The ASEAN Free Trade Area (AFTA) is an agreement by the member nations of ASEAN concerning local manufacturing in all ASEAN countries. The AFTA agreement was signed on 28 January 1992 in Singapore. When the AFTA agreement was originally signed, ASEAN had six members, namely, Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand. Vietnam joined in 1995, Laos and Myanmar in 1997, and Cambodia in 1999. The latecomers have not fully met the AFTA's obligations, but they are officially considered part of the AFTA as they were required to sign the agreement upon entry into ASEAN, and were given longer time frames in which to meet AFTA's tariff reduction obligations.



The ASEAN Comprehensive Investment Area (ACIA) will encourage the free flow of investment within ASEAN. The main principles of the ACIA are as follows

* All industries are to be opened up for investment, with exclusions to be phased out according to schedules * National treatment is granted immediately to ASEAN investors with few exclusions * Elimination of investment impediments * Streamlining of investment process and procedures * Enhancing transparency * Undertaking investment facilitation measures

Full realization of the ACIA with the removal of temporary exclusion lists in manufacturing agriculture, fisheries, forestry and mining is scheduled by 2010 for most ASEAN members and by 2015 for the CLMV (Cambodia, Lao PDR, Myanmar, and Vietnam) countries.



An ASEAN Framework Agreement on Trade in Services was adopted at the ASEAN Summit in Bangkok in December 1995.Under the agreement, ASEAN members are negotiating intra-regional services liberalization in several sectors, including air transport, business services, construction, financial services, maritime transport, telecommunications and tourism. Although some sectors have liberalized faster, such as air transport, other sectors remain subject to continued negotiation. Efforts to expand the scope of the Framework Agreement also remain subject to continued negotiations.

Western countries have criticized ASEAN for being too "soft" in its approach to promoting human rights and democracy in the junta-led Myanmar. Despite global outrage at the military crackdown on peaceful protesters in Yangon, ASEAN has refused to suspend Myanmar as a member and also rejects proposals for economic sanctions. This has caused concern as the European Union, a potential trade partner, has refused to conduct free trade negotiations at a regional level for these political reasons. International observers view it as a "talk shop", which implies that the organization is "big on words but small on action".

During the 12th ASEAN Summit in Cebu, several activist groups staged anti-globalization and anti-Arroyo rallies.[68] According to the activists, the agenda of economic integration would negatively affect industries in the Philippines and would cause thousands of Filipinos to lose their jobs. They also viewed the organization as "imperialistic" that threatens the country's sovereignty. A human rights lawyer from New Zealand was also present to protest about the human rights situation in the region in general. ASEAN has agreed to an ASEAN human rights body which will come into force in 2009. The Philippines, Malaysia, Indonesia and Thailand want this body to have an enforcement capacity, however Singapore, Viet Nam, Burma, Laos and Cambodia do not.


Today, the world has indeed become more sharply demarcated in regional terms. The tendency for regionalism is evident both in

developed as well as developing countries. The three distinct dimensions of regional space for the tendency to regionalism are: area (commonly known as territory); contiguity (parts are proximate to other or remote); and size (the extent of its scope). After the end of the Cold War phase in international politics, some very important developments took place, that is, regionalism. Regionalism has become an inescapable international political reality and an acceptable alternative to understand unilateral action and undependable United Nations (UN) intervention. Europe was merely a starting point for a further set of comparable experiments in integration. And, on the heels of European experience, there duly came attempts to create common markets and free trade associations in the Middle East, Africa, the Pacific and the Americas: the world was indeed filled in the 1960s with proposals for North

American Free Trade Agreement (NAFTA), Pacific Free Trade Area (PAFTA), Latin American Free Trade Association (LAFTA) and
even more. The NAFTA is the single example of a free trade area representing a group of two developed and one developing country. The NAFTA involves the creation of the worlds largest free trade agreement (FTA), with combined gross national product (GNP) of $6.3 trillion and a population of 363 million. The NAFTA, unlike other trade agreements, is not concerned exclusively with trade but


also deals with environmental and labour standards. It is the first case of a developing countrys accession to this type of agreement with developed states on a fully reciprocal basis.

While Canada and the U.S. were forging the U.S./Canada FTA, the government of Mexico was reforming its approach to international trade. The reform was motivated by the oil price collapse and foreign debt crisis that Mexico experienced in the early 1980's. As a result of these crises and internal economic malaise, the Mexican government reinvented its approach to the international economic community and joined the General Agreement on Tariffs and Trade (GATT). Having joined GATT in 1986 during the administration of Mexican President Miguel de la Madrid Hurtado, Mexico was disposed to reduce trade barriers and comply with international trade standards. 4This orientation, combined with a program of economic reforms instituted by President Madrid's successor, Carlos

Salinas de Gortari, reforms called "Salinastroika" by some managers in Mexico, made Mexico ready to join Canada and the U.S. in establishing a trade agreement. On August 12, 1992, Canada, Mexico, and the United States announced their intention to create a free trade zone - the North American Free Trade Agreement. Stretching from the Arctic Circle to Mexico's borders with Guatemala and Belize, NAFTA would be the largest trilateral trade relationship in the world.

As the world's largest trilateral trade relationship, NAFTA is of profound economic and social consequence. It is a trading bloc of a size, wealth, and potential heretofore unknown in the world. The NAFTA countries are a massive combined market of 370 million people, with an estimated Gross Domestic Product of U.S.$6.2 trillion, compared to the European Community's 325 million people and estimated Gross Domestic Product of U.S.$4 trillion. The agreement elevates Mexico from a developing economy toward the level of a first-world economy and has implications for exports and job creation in the U.S.


The increase in exports and the number of jobs to be created by NAFTA was variously estimated. John Negroponte, a career foreign service officer, arguing that a first-world economy in Mexico was important for the U.S. wrote, "... nothing could be more desirable. A first-world market in Mexico signifies an exponential increase in U.S. exports and job creation. For every additional billion dollars the U.S. exports, 25,000 jobs are created." Dornbusch reported, "trade with Mexico in the past five years created almost 150,000 jobs that would not be there otherwise. An FTA (with Mexico) will bring more of the same." This view was confirmed in a prediction by the Institute for International Economics that NAFTA would bring a net gain of between 130,000 to 150,000 jobs over a five year period following its passage. Fortune magazine estimated NAFTA would bring the U.S. a net gain of "325,000 well-paying jobs by 1999." Beyond its economic significance, NAFTA has great social consequence. It demonstrates that the northern and southern hemispheres can "coexist in prosperity on the planet."

This is

particularly important for such cooperation will ensure that the gap between rich and poor nations in the Americas does not widen.


NAFTA combines the U.S. with its largest (Canada) and third largest (Mexico) trading partners. Trade between the three countries was well established prior to NAFTA and was embellished by the U.S./Canada Free Trade Agreement and an openness in Mexico that produced a near doubling of U.S./Mexican trade since 1988 "to $76 billion a year, with booming US exports accounting for much of the increase." NAFTA's provisions liberalize trade in the following ways: Tariffs are either eliminated or phased out over periods of up to fifteen years. As much as 50% of U.S. exports to Mexico and 70% of Mexican exports to the U.S. became tariff/quota free on NAFTA's passage. Limits on investments are removed. Investors from any of the three countries are treated equally, currency is freely transferred at market rates, and performance requirements such as maintaining export levels and trade balancing are eliminated. Additionally, over the next seven to fifteen years, financial services institutions will be permitted to establish foreign-owned institutions and to invest in Mexican banks, insurance, and brokerage firms. Mexico will, however, continue to restrict certain land ownership by foreign nationals.


Trade in services is liberalized and equal treatment is expected for service providers and professionals in each country. The countries are to facilitate the licensing of professionals and, by 1996, to eliminate citizenship and permanent residency requirements for professionals. Transportation regulations are liberalized. By the end of the decade, truck and bus operators will have almost unlimited access to the NAFTA countries. Protection of intellectual properties is strengthened. This includes protection of literary works, recordings, computer programs, and product and process patents. NAFTA also provides various provisions to enhance the flow of trade among the three countries. Included is a trilateral trade commission to resolve disputes, provisions to review and prevent dumping of products across national markets, and procedures to allow a country to reinstate pre-NAFTA duties for a period up to three years, on a one-time only basis, if domestic industries are injured as a result of an import surge from another NAFTA country. While these safeguarding provisions are important, there may be little need to enact protection because much of the trade among the three countries is already tariff/quota free due to the


U.S./Canada Free Trade Agreement and the trade reform and liberalization policies of former Mexican President Salina

The North American Free Trade Agreement (NAFTA), signed by Prime Minister Brian Mulroney, Mexican President Carlos Salinas, and U.S. President George H.W. Bush, came into effect on January 1, 1994. Since 1993, NAFTA has generated economic growth and rising standards of living for the people of all three member countries. By strengthening the rules and procedures governing trade and investment throughout the continent, NAFTA has proved to be a solid foundation for building Canadas future prosperity. In January 1994, when Canada, the United States and Mexico launched the North American Free Trade Agreement (NAFTA), the world's largest free trade area was formed. The Agreement has brought economic growth and rising standards of living for people in all three countries. In addition, NAFTA has established a strong foundation for future growth and has set a valuable example of the benefits of trade liberalization.


The principal goals of NAFTA were to reduce barriers to investment and trade, decrease prices on consumer goods through a greater division of labor, and diversify job growth throughout a larger geographical region, ultimately increasing both the economic wealth and stability of the North American region. This stability would lead to furthercooperation in several areas, resulting in a vibrant and competitive bloc of 360 million consumers. With the implementation of NAFTA, U.S. businesses secure virtuallytariff-free access to the Mexican market of 95 million people, and access to a low-cost industrial labor force with a strong work ethic. The text of the NAFTA document notes the primary goals of the Agreement: [NAFTA] will generate new jobs, spur economic growth, and serve U.S. workers and consumers. The NAFTA will help make the United States more competitive with Europe and Japan and in the global markets. Those goals have proved instrumental in eliminating investment obstacles toward easier access. Some of the sectors benefiting from NAFTA have included tourism,construction, financial, and telecommunications.



NAFTA created the worlds largest free trade area. It allows the 450 million people in the U.S., Canada and Mexico to export to each other at a lower cost. As a result, it is responsible for $1.6 trillion in goods and services annually. Estimates are that NAFTA increases the U.S. economy, as measured by GDP, by as much as .5% a year How does NAFTA benefit trade? First, it eliminates tariffs. This reduces inflation by decreasing the costs of imports. Second, NAFTA creates agreements on international rights for business investors. This reduces the cost of trade, which spurs investment and growth especially for small businesses. Third, NAFTA provides the ability for firms in member countries to bid on government contracts. Fourth, NAFTA also protects intellectual properties.

NAFTA has many disadvantages. NAFTA made it possible for many U.S. manufacturers to move jobs to lower-cost Mexico. The manufacturers that remained lowered wages to compete in those industries. Many of Mexico's farmers were put out of business by U.S.subsidized farm products. NAFTA provisions for Mexican labor and


environmental protection were not strong enough to prevent those workers from being exploited.


Since labor is cheaper in Mexico, many manufacturing industries moved part of their production from high-cost U.S. states. Between 1994 and 2002, the U.S. lost 1.7 million jobs, gaining only 794,00, for a net loss of 879,000 jobs. Nearly 80% of these jobs were in manufacturing. California, New York, Michigan and Texas were hit the hardest because they had high concentrations of the industries that moved plants to Mexico. These industries included motor vehicles, textiles, computers, and electrical appliances. (Source: Economic Policy Institute, The High Cost of Free Trade, November 17, 2003)


Not all companies in these industries moved to Mexico. The ones that used the threat of moving during union organizing drives. When it became a choice between joining the union or losing the factory, workers chose the factory. Without union support, the workers had little bargaining power. This suppressed wage growth. Between 1993 and 1995, 50% of all companies in the industries that

were moving to Mexico use the threat of closing the factory. By 1999, that rate had grown to 65%.


The 2002 Farm Bill subsidized U.S. agribusiness by as much as 40% of net farm income. When NAFTA removed tariffs, corn and other grains were exported to Mexico below cost. Rural Mexican farmers could not compete. At the same time, Mexico reduced its subsidies to farmers from 33.2% of total farm income in 1990 to 13.2% in 2001. Most of those subsidies went to Mexico's large farms, anyway.(Source: International Forum on Globalization, Exposing the Myth of Free Trade, February 25, 2003; The Economist, Tariffs and Tortillas, January 24, 2008)


NAFTA expanded the maquiladora program, in which U.S.owned companies employed Mexican workers near the border to cheaply assemble products for export to the U.S. This grew to 30% of Mexico's labor force. These workers have "no labor rights or health protections, workdays stretch out 12 hours or more, and if you are a woman, you could be forced to take a pregnancy test

when applying for a job," according to Continental Social Alliance. (Source:, Lessons of NAFTA, April 20, 2001)


In response to NAFTA competitive pressure, Mexico agribusiness used more fertilizers and other chemicals, costing $36 billion per year in pollution. Rural farmers expanded into more marginal land, resulting in deforestation at a rate of 630,000 hectares per year. (Source: Carnegie Endowment, NAFTA's Promise and Reality, 2004) Updated December 21, 2009)

NAFTA and the formation of other trading blocs around the world represent a paradigm shift in the way nations relate to each other through trade -- a paradigm shift that recognizes the emergence of trade alliances in the global marketplace. It is a shift that cannot be ignored. The world is an interdependent place and agreements such as NAFTA will have economic, political, and social consequences of a scale not heretofore experienced.