The South Asian Association for Regional Cooperation (SAARC) is an economic and geopolitical organization of eight countries that are primarily located in South Asia or the Indian subcontinent. SAARC was founded in Dhaka on 8 December 1985. The organization promotes development of economic and regional integration.

The SAARC Charter clearly lays down that cooperation among member-states will be based on sovereign equality, territorial integrity, political independence and non-interference in internal affairs. SAARC maintains permanent diplomatic relations at the United Nations as an observer and has developed links with multilateral entities, including the European Union.

South Asian Association for Regional Cooperation

Established: 1985| Headquarters: Kathmandu, Nepal

Secretary General: Amjad Hussain B. Sial (Pakistan)

Table of Contents:

Objectives Areas of Cooperation Membership Decision Making Significance of SAARC SAARC Preferential Trading Arrangement (SAPTA) South Asian Free Trade Area (SAFTA) Recent Developments Critical Analysis Success | Failure | Reasons Comparing ASEAN with SAARC Important Specialized Bodies of SAARC SAU | SDF | SARCO | SARSO

Objectives

• 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 potentials;
• To promote and strengthen collective self-reliance among the countries of South Asia;
• To contribute to mutual trust, understanding and appreciation of one another’s 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 them in international forums on matters of common interests;
• To cooperate with international and regional organizations with similar aims and purposes.

Areas of Cooperation

Human Resource Development and Tourism:

• A SAARC Action Plan on Promotion of Tourism has been adopted by the second meeting of Tourism Ministers (Bangladesh, 2006) and pursued since then.
• The Action Plan includes a joint pro-active marketing or promotional campaign of the SAARC landmass as a composite destination in the international markets.
• The Action plan also emphasize on the role of private sector of the SAARC region for promotion and development of tourism both intra-regionally and internationally.

Agriculture and Rural Development:

• According to 2014 statistics, South Asia is home of 1.749 billion people and 67% of them are living in the rural areas. Almost half of the workforce is employed in the agriculture sector 42% of South Asia’s landmass is under agricultural operation. 
• Considering the facts and importance, members agreed to increase investment, promote research and development, facilitate technical cooperation and apply innovative, appropriate and reliable technologies in the agriculture sector for enhancing productivity to ensure food and nutritional security in the region.
• They also underscored the importance of promoting sustainable agriculture.

Environment, Natural Disasters and Biotechnology:

• The Programme for Cooperation in the field of Biotechnology provides for cooperation in various areas of Biotechnology- agriculture, environment, animal, fertilizer, vaccine, etc.
• The cooperation will be pursued through hosting of conferences and workshops; post-doctoral fellowships; joint research projects; and exchange of visits among scientists and specialists from the region.

Economic, Trade and Finance:

• The members are committed to achieve South Asian Economic Union (SAEU) in a phased and planned manner through a Free Trade Area, a Customs Union, a Common Market, and a Common Economic and Monetary Union.
• They acknowledged that SAARC Member States, particularly the Least Developed and Landlocked Member States, face structural constraints and challenges that result in their weak productive capacity affecting their competitiveness in external trade
• They committed to enhance support with a view to ensuring equitable benefits of free trade arrangements.
• In this context, they agreed to effectively implement the existing preferential facilities under SAFTA and SATIS.

Social Affairs:

• The SAARC Charter envisages acceleration of social progress through active collaboration and mutual assistance amongst Member States.
• Focus on social issues under the broad heading of Health and Population Activities was one of the five original areas of cooperation identified by Member States during the inception of SAARC.

Information and Poverty Alleviation:

• SAARC Plan of Action on Poverty Alleviation had been developed and implemented.
• They recognized the potential of cooperatives in achieving inclusive, broad-based and sustainable economic growth and development, and called for sharing of experiences, expertise and best practices in this sector.  

Energy, Transport, Science and Technology:

• The process of regional cooperation in the energy sector began in January 2000.
• They formed Expert Groups for different commodities and services.
• They have emphasized that for accelerated and balanced economic growth it is essential to strengthen transportation, transit and communication links across the region.
• The Action Plan on Science and Technology and a number of short-term activities have been undertaken as a follow-up to the Action Plan.

Education, Security and Culture:

• The SAARC principles have recognized the literacy is a fundamental human right and the foundation for lifelong learning which adopt through education.
• Illiteracy was a major impediment to economic development and social emancipation.  The member States have given special attention to enhance the level of literacy in the region by promoting the quality of education.
• The members have expressed their resolve to eliminating illiteracy from the region in line with the global goal of education for all and ensuring quality education in all institutions by reforming curricula, teaching methods and evaluation systems adequately supported by physical, technical and other facilities.
• The leaders also agreed to promote regional cooperation in the field of vocational education and training.

Membership

• Member countries: Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka. Afghanistan joined SAARC as its eighth member state in April 2007.
• Observers:  Australia, China, the European Union, Iran, Japan, Mauritius, Myanmar, South Korea and the United States.
• Myanmar has expressed interest in upgrading its status from an observer to a full member of SAARC.Russia and Turkey have applied for observer status membership of SAARC in 2012.
• India is not too happy to admit China as a SAARC member or even elevate its observer status in the regional organisation.

Decision Making

The Meetings of the Heads of State or Government of Member States is the highest decision making authority under SAARC. Summits are usually held biennially hosted by a Member State in alphabetical order.

Council of Ministers:

• The Council meets, preceding the Summit and between the two summits.
• The Council undertakes formulation of policies of the Association; review of progress of cooperation under SAARC; decision on new areas of cooperation; establishment of additional mechanism under SAARC, as deemed necessary; and decision on other matters of general interest to SAARC.

Heads of State or Government:

•  The reports of the Council of Ministers are submitted to the Meeting of Heads of State or Government for consideration/approval.
• The last 18^th SAARC Summit was held in Kathmandu in Nov, 2014.
• The 19^th SAARC Summit scheduled to be held in Islamabad was cancelled due to Mumbai terrorist attack.
• Next SAARC Summit will be held in Colombo, Sri Lanka in 2019.

Secretary General: He is head of a SAARC Secretariat.

• The Secretariat coordinates and monitors the implementation of activities, hosts meetings, and serves as a channel of communication between the Association and its member states as well as other regional organisations.
• He is appointed for a three-year term by election by the Council of Ministers from member states.  

Significance of SAARC

• The combined economy of SAARC is the 3rd largest in the world in the terms of GDP (PPP) after the United States and China and 5th largest in the terms of nominal GDP.
• SAARC nations comprise 3% of the world’s area and contain 21% of the world’s total population and around 9.12% of Global economy as of 2015.
• The SAARC has developed external relations by establishing permanent diplomatic relations with the EU, the UN (as an observer), and other multilateral entities.

SAARC Preferential Trading Arrangement (SAPTA)

• Signed in 1993 and entered into force in 1995 the Agreement reflected the desire of the Member States to promote and sustain mutual trade and economic cooperation within the SAARC region through the exchange of concessions.
• SAPTA had no significant impact on intra-regional trade of SAARC- It was firstly, one of the least ambitious trading agreements.
• The agreement provided for a positive list; the trade of the items on positive list could be regulated.
• There was a lack of commitments on tariff reduction; it was a completely voluntary arrangement.
• There was no clarity on rules of origin. There was no provision for a Dispute Settlement Mechanism.

South Asian Free Trade Area (SAFTA)

• For creating a free trade area within the region, taking into consideration the asymmetries in development within the region and bearing in mind the need to fix realistic and achievable targets, the SAFTA Agreement was signed in 2004 during 12^th SAARC Summit held in Islamabad, Pakistan.
• Under this agreement, SAARC members will bring their duties down to 20 per cent by 2009 and to zero by the year 2016.
• Major instruments of SAFTA:
  • Trade Liberalization Programme, Rules of Origin, Institutional Arrangements,
  • Consultations and Dispute Settlement Procedures, Safeguard Measures,
  • Special Provisions for Least Developing Countries of SAARC.
• Though an advance over SAPTA, SAFTA has not been able to improve the trade relations of SAARC members significantly. Intra-regional trade is still below 5% of the total trade of the SAARC members.
• SAFTA was expected to bring down illegal trade by bringing much of the illegal trade in the region to the official level.
• The concept of ‘sensitive list’ (not included for tariff concession) exists in SAFTA; trade of the commodities on sensitive list can be regulated by the countries. The countries continue to maintain big sensitive lists.
• Though there is a commitment on reducing tariff barriers; non-tariff barriers still remain high.
• The two largest members of SAARC have security issues with each other. Pakistan is yet to award India, the status of Most Favored Nation (MFN) while India withdrew MFN status granted to Pakistan after Pulwana Attacks.

Recent Developments

SAARC Satellite:

• SAARC Satellite is a proposed communication-cum-meteorology satellite by Indian Space Research Organisation (ISRO) for the SAARC region.
• Prime Minister of India Mr. Narendra Modi mooted the idea of a satellite serving the needs of SAARC member nations.

Framework agreement on cooperation in power sector:

• During 18th SAARC Summit, at Kathmandu, foreign ministers of all∙ the eight countries signed the framework agreement on cooperation in power sector which will ensure electricity trading through grid connectivity.

Critical Analysis

SAARC Successes:

• Over the last 25 years, despite extremely difficult political circumstances, SAARC has managed to create situations, institutions and forums where Heads of State have had to shake each other’s’ hands and go into talks together.
• SAARC has tackled important topics for the region such as a social charter, development agreements and even the sensitive subject of fighting terrorism.
• The food and development banks, Agreement on Transportation, Energy are important steps in the right direction.
• Exchanges in the areas of civil society and science have become one of the pillars of South Asian integration efforts.

SAARC Failures:

• In its 30 years of existence, SAARC failed to hold 11 annual summits for political reasons, both at the bilateral and internal levels. The last summit in Kathmandu was held after a gap of three years.
• The intra-regional trade of SAARC amounted to $40.5 billion in 2011, which constitutes just 5% of member countries’ trade. The number pales into insignificance when compared with the volume of trilateral trade between member-countries of NAFTA (the North American Free Trade Agreement) with the US, Canada and Mexico, which hit $1 trillion in 2011.
• While different regions of the world have progressed even to monetary union, SAARC has failed to even come up with a free trade agreement.
• There were no important decisions on flow of investments and financial arrangements to push the economies towards “deeper regional integration”, which was projected as the main theme of the recently held 18th summit in Kathmandu.
• Even in the Kathmandu Summit 2014, there were three connectivity agreements on road, rail and energy, to be endorsed by the eight SAARC leaders. Only one of these- on energy- has been signed.
• The Kathmandu Declaration, which the summit produced, lists a lot of other lofty goals like developing a “blue economy” (ocean-based economy) for the region, monitoring cyber-crimes, good governance, reinforcing cultural heritage, universal health coverage, food security, etc.

Reasons for Failure:

• Weak Cultural Identities:
  • The South Asian Region comprises countries sharing common history, heritage and culture.
  • However, fissures are commonly articulated through the ideas of distinct cultures. Pakistan wants to assert itself as Islamic State and calls India a Hindu State.
  • The debates regarding identity are similarly going on in Sri Lanka and Bangladesh. The pursuit of maintaining distinct cultural identity by every country has not allowed the region to come together.
• Conflict between India and Pakistan:
  • Rivalry between India and Pakistan, the two largest members of SAARC, has hovered hugely on SAARC.
  • The rivalry continues to restrain SAARC from functioning as a sub-regional organization.
• Unresolved Border and Maritime Issues:
  • The region is still beset with many unresolved border and maritime issues.
  • These unresolved borders have led to problems of Terrorism, Refugee Crisis, Smuggling, Narco-Trade.
• Lack of connectivity:
  • Lack of connectivity between different SAARC countries is another reason for the lackluster performance of SAARC so far.
  • Trade and other relations between India and Afghanistan are hampered by the fact that they don’t share any border.
• Role of External Powers, especially China:
  • India’s ambitions in the region crisscross with China’s ambitions to have an influence on the region.
  • China has a major involvement in Pakistan’s economy and defence and even in past decade strengthened its relations with Bangladesh, Sri Lanka.
  • This has led to a trust deficit in the grouping.
• Only multilateral issues to be included:
  • As a founding philosophy, SAARC prudently kept bilateral contentious issues out of the scope of the regional cooperation. It was believed that the inclusion of bilateral issues would hamper multilateral initiatives.
  • SAARC Charter Article X(2) of the SAARC Charter mandates that decisions, at all levels in SAARC, are only of multilateral issues, and only those issues are for inclusion in the agenda in a SAARC summit meeting on the basis of unanimity.
  • The SAARC platform thus cannot be used to resolve bilateral issues; this has undermined the scope and potential of SAARC.
• Fear of Indian hegemony:
  • Due to bigger economy, geographical size and military strength India has been perceived by smaller nations as “Big Brother” and fear that it might use the SAARC to pursue hegemony in the region. Indian Foreign Policy actions- 1971 war, Indo-Sri Lanka Accord continue to haunt the neighboring countries.
  • India has not forcefully articulated South Asian Vision; even the progressive ideas like the Gujral Doctrine have not been implemented on ground.

Comparing ASEAN with SAARC

Negative:

• Both were formed with similar vision and guided by a common hope to resolve disputes and a thirst for economic growth.
• ASEAN members have serious interstate disputes which they decided to forget. On the other hand, SAARC members insisted that disputes be resolved first, before economic cooperation could start.
• ASEAN nations were inclined to be trading nations and moved to conflict-avoidance mechanisms while SAARC nationsrefused to discuss bilateral disputes.
• SAARC had to suffer an Indo-Pakistan war at Kargil started by Pakistan in 1999, which prevented three SAARC summits from taking place.

Positive:

• ASEAN and SAARC cannot be compared as the ASEAN countries did not have contested ideologies, such as the one based on two-nation theory (Indo-Pak).
• The countries comprising ASEAN came together to defend themselves from the communist threat. Such a common external threat was absent in the case of SAARC. 

Important Specialized Bodies of SAARC

South Asian University (SAU): Delhi, India

• South Asian University (SAU) is an international university established by the eight member nations of South Asian Association for Regional Co-operation (SAARC).
• SAU started its operations from the academic year 2010. The university now offers post-graduate and doctoral programmes in various disciplines that include Economics, Computer Science, Biotechnology, Mathematics, Sociology, International Relations and Law.
• SAU attracts students from all member nations and its degrees are recognized by all the eight SAARC countries.

SAARC Development Fund (SDF):

• SAARC Development Fund (SDF) was inaugurated in 2010 during the 16th SAARC summit at Thimphu. It’s precursor was South Asian Development Fund (SADF), which itself was launched in 1996 by merging two existing facilities.
• SDF was created “umbrella financial mechanism” for all SAARC projects and programmes. Its core objective is to accelerate the economic growth, social progress and poverty alleviation in the region.
• It funds the projects in South Asia region via three windows viz. Social Window, Economic Window and Infrastructure Window. At present, only Social Window is in operation, the other two windows are yet to open.
• The Social window currently funds the projects mainly on poverty alleviation, social development focusing on education; health; human resources development; support to venerable/disadvantaged segments of the society; funding needs of communities, micro-enterprises, rural infrastructure development.

SAARC Arbitration Council (SARCO): Islamabad, Pakistan

• SAARC Arbitration Council (SARCO) is an inter-governmental body mandated to provide a legal framework/forum within the region for fair and efficient settlement of commercial, industrial, trade, banking, investment, and such other disputes, as may be referred to it by the member states and their people.

South Asian Regional Standards Organization (SARSO): Dhaka, Bangladesh

• South Asian Regional Standards Organization (SARSO) was established to achieve and enhance coordination and cooperation among SAARC Member states in the fields of standardization and conformity assessment and is aimed to develop harmonized Standards for the region to facilitate intra-regional trade and to have access in the global market.
• SARSO was established in 2011 and commenced its operations in April 2014.