Title: Preferential Trade Agreements in South Asia and SAARC
Author: Niharika Tiwari
ISBN: 978-93-82395-53-9
Language: English
Binding: Hard Cover
Category: Political Science/South Asian Studies
About the Author
Niharika Tiwari has done her Graduation and Post Graduation
from Banaras Hindu University (BHU). She has attained her M.Phil degree from
Jawaharlal Nehru University (JNU), New Delhi and pursuing her PhD from JNU. She
has been awarded NET–JRF by UGC in Political Science & NET in Women
Studies. Currently she is working as an Assistant Professor at Kalindi College,
University of Delhi.
About the Book:
Economic regionalism has
emerged as a reality in today’s liberalized world. The origin of this
phenomenon can be traced back to the past when initiatives were taken to
constitute the European Economic Community. The first wave of regionalism
started when the Rome Treaty of 1957 came into existence for establishing the
European Common Market (ECM). Since then, it is flourishing in almost every
part of the world. The European Union (EU), North Atlantic Free Trade Area
(NAFTA), Association of South East Asian Nations (ASEAN), South Asia Free Trade
Agreement (SAFTA), MERCOSUR etc. are examples of the worldwide phenomenon of
growing regional economic integration. Access to a larger market and
diversifying production has been a long – standing rationale for regional
arrangements particularly among developing countries. Even developed countries
adopt regionalism in order to enhance their trade and consequently, their trade
related benefits.
The idea of economic
regionalism implies the groupings of the countries, more often than not having
geographical proximity which makes preferential trading arrangements possible.
L. Alan Winters defines regionalism loosely as any policy designed to reduce
trade barriers between a subset of countries regardless of whether those
countries are actually contiguous or even close to each other.
The phenomenon of
regional economic integration has acquired new dimensions since 1980s when
scholars began talking about “new regionalism” which is a response to those
problems which old regionalism was either not aware of, or was not designed to
address. Old regionalism allowed for a kind of shallow regional integration
because of the protective nature of the economies. New regionalism as explained
by Wilfred J. Ethier, (1998) has two main characteristics. Firstly, it focuses
on deep integration and secondly, it is the link between developed and
developing countries. On these two bases new regionalism is different from the
pre-1980s old regionalism. The emergence of European Union (EU) as an economic
union is the example of deeper integration. Apart from this, the Association of
South East Asian Nations (ASEAN) is also trying to move towards deeper
integration in Asia. The examples of the second characteristic are the economic
assistance programme pursued by EU for developing countries, and its active
interest in signing the FTAs with the developing countries like India.
Similarly, United States of America has also signed Preferential Trade
Agreement (PTAs) with the countries of other regions.
The phenomenon of
regionalism has both its supporters as well as its opponents. Supporters say
that it provides experience to the countries to enter into multilateral trade
liberalization. Whereas, the scholars who oppose regionalism say that it can
handicap the world trade liberalization system by initiating trade diversion.
Preferential Trade
Agreements (PTAs) are agreements among a set of countries involving
preferential treatment of bilateral trade between any two or more than two
parties relative to their trade with the rest of the world. There are also many
other terms used to describe PTAs such as Regional Trading arrangements (RTAs),
Regional Integration Agreement (RIA), and Regional Economic Integration (REI).
PTAs have a unique place in the General Agreement on Trade and Tariff / World
Trade Organization.
South Asia embarked on
regionalism in 1985 with the establishment of, SAARC the regional body
comprising seven countries India, Pakistan, Sri-Lanka, Nepal, Bhutan,
Bangladesh, and Maldives. In 2005, Afghanistan also became the member of
this block. With 1.5 billion people, south Asia has the largest
population in all the existing trading blocks in the world. The idea of the
establishment of the SAARC was put forward by Zia-ur-Rahman the then president
of Bangladesh in order to make the countries of this region prosperous through
mutual co-operation particularly in the economic sphere. This idea is echoed in
the SAARC charter as it says the main objective of the SAARC is “to
accelerate economic growth, social progress and cultural development in the
region and to provide all individuals the opportunity to live with dignity and
to realize their full potential”.
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