Given a long standing history of conflict between India and Pakistan, the fact that Bangladesh is a break away arm of the former East & West Pakistan, continuous war in Afghanistan, the looming American withdrawal in 2014, and that Sri Lanka is still grappling with the after effects of a long drawn Tamil separatist war, it would be reasonable to fear that amidst such a politically charged environment, is there a way by which economic cooperation can truly be enhanced in the near-term within the troubled South Asian region? And provided that there indeed is such a possibility to independently kick-start economic cooperation before solving existing political/territorial disputes, then what should be the framework for such cooperation?
As for the first question the inspiration should be taken from China on how it conducted itself in its different neighbourly disputes in the East China Sea with Japan and in the South China Sea with the Philippines. Under Deng Xiaoping, when China truly began to emerge as a global economic power, the policy on territorial disputes was to set them to one side and where required, to also work with the opposing party to exploit mutual resources and potential. Sovereignty could be dealt with later. Back in 1978 Deng said that the Diaoyu/Senkaku (with Japan) tangle could be unravelled by ―a future generation‖. And this indeed is being done today -
to China‘s wishes — since today they have worked their way up to being the biggest boy in the neighbourhood! In fact, so confident are the Chinese today of their ability to secure their rightful boundaries that in spite of knowing fully well that it is they who are calling the shots, their current leader, Xi Jinping, after assuming power has once again reaffirmed Deng‘s approach. Mr. Jinping maintains that today‘s transformed China gives as
much weight to maintaining stability in the region as to safeguarding
China‘s rights. So if countries around us can cast aside territorial disputes
(at least in the short term) to address poverty and lack of development at home, so why can‘t we do it in our region?
On the second question, on what should be the framework of our mutual cooperation, there are again lessons to be learned from successful examples of regional trade, Free Trade Areas (FTAs) and common currency zones. We must remember that at the heart of the linkage/integration benefits are the tremendous synergies that exist among regional with distributed and diverse strengths in manufacturing, resource development, and trading and related services. The underlying benefits of integrating markets with large populations — especially the ones that in addition are also quickly climbing the wealth ladder — become visible over longer term in the shape of emergence of optimized and highly competitive regional supply chains. On the other hand, so are the challenges of integrating such markets and supply chains, and these challenges mainly come down to the sheer willingness and ability of nations to balance national interests with the benefits of bilateral economic linkages. The three key issues that thus emerge from this are: 1) Identification of the existing frameworks of regional, sub-regional and bilateral cooperation, 2) Reflections on the path- making. Here, China-Japan- Republic of Korea (ROK) Free Trade Talks (FTT) can be used as a model, and 3) Implications of Pakistan-India economic linkages and an invitation for new thinking on SAARC integration.
Discussing points one and two, a detailed paper written in 2012, by Steve Howard, Secretary General, The Global Foundation, provides a good insight into these aspects. He argues, that unlike other countries across the globe, exports of both India and Pakistan were less affected during the time of the financial crisis and it is with this positive in mind that the leading multinational corporations (MNCs) should be lured to invest by expanding their operations in the Sub-Continent in particular and South Asia in general; thereby treating it as a single market. For this it will be necessary to put in place the right and common systems in the areas of technology and research & development (R&D). And to do this he recommends a ‗job-
specific‘ study group to ensure implementation.
Further, the history and role of the Trilateral Cooperation Secretariats: A North-East Asian inter-governmental organization comprising China, Japan and ROK, where participating countries agreed to establish a permanent organization to systemize and institutionalize cooperation between the three countries, can also be replicated by Pakistan and India. The other similar frameworks in Asia include: Trans-Pacific Partnership (TPP) and Regional Comprehensive Economic Partnership (RECP). He
emphasizes that especially in the case of Pakistan and India there is no need to reinvent the wheel and to just learn from the success of other cooperating countries. History is full of examples, which tell us that despite diversity in market-size, openness, expectations and strategies of each country, a larger common market-size by itself boosts each member country‘s international
trade and investment. Further, benefits of economic linkages are not just limited to economic aspects, but also tend to promote institutional development and the global leverage of every cooperating country. In essence economic integration or enhanced economic linkages should always be viewed as a long-term solution to build mutual trust.
Finally, the SAARC framework should jointly look at and work on food security and water solutions, since given the high population growth rate in the region this will in years to come become the biggest common issue. Mr. Howard also talks about the need for reorganization in cooperation (both between Pakistan and India and also within SAARC) to determine how to grow, distribute and consume food in the coming years. The true challenge according to him is for economic cooperation to create investment driven relations within the ambit of a liberalized trade environment. Such a linkage would in fact imply that bilateral cooperation would not just remain limited to regional boundaries, but if properly leveraged can also be directed to incorporate a global view that in-turn can yield positive global dividends for the entire South Asian region. In order to
succeed though, the litmus test here will be to agree and ―draft‖ a
comprehensive economic framework, which ensures that the nature of respective national regulations directly affects the ability of the region as a whole to cooperate freely and build sustainable economic linkages. Regulations are invariably national in nature, whereas, large scale activities in both real and financial economies are increasingly transnational. As a result, the nature of national-regulations bears directly on the ability to work synergistically. In the end it will all boil down to our (Pak-India) willingness and courage to come up with a framework that allows trade, efficient flow of resources and judicious use of capital across the region.
Finally, to conclude I come to the question, which is invariably asked at the end of every debate or discussion: All very well, but how to do it? The straight and simple answer to this question is that we the people must make it happen. We have to look to ourselves to create a sustainable, just, peaceful and a secure neighbourhood. We cannot sit back and expect the respective or anyone else to rescue us. The political will needs to be created by us because simply on their own our political leaders cannot do it. Quoting from Franklin D. Roosevelt‘s memoirs he revealed that, ―After 4
hours of meeting with the labour leaders back in 1934, I told them, you have convinced me that you are right. Now go out there and FORCE ME
TO DO IT.‖ What he meant was that pressures on the leadership to stay
with the status quo are enormous and to move in a different direction it needs vociferous forces to push it in the direction it wishes to go itself. The leadership also counts on the public opinion to be confident that it is doing the right thing. Abraham Lincoln‘s confidence about, ―government of the people, by the people, for the people, shall not perish from the earth‖, was
only possible through the active participation of the American citizens for abolishing slavery and creating a just, peaceful, secure America where economic stability could be available to all its inhabitants.
What the SAARC leaders need to remember is that economic dynamism through mutual economic reliance creates its own peace dynamics and generates growth. However, only a carefully thought out process of negotiations and a comprehensive package of agreements followed by a sound monitoring & management mechanism that is practical, efficient and comprehensively addresses long standing concerns of all nations can bring about sustainable progress and a win-win for the region. In an entirely different setting altogether the second round of talks between China, Japan and South Korea for a trilateral free trade agreement (FTA) ended on August 16th, 2013, in Shanghai. As expected, the three
nations made virtually no progress worth reporting during these talks, but it does not mean that the talks achieved nothing. The three nations are scheduled to hold a third round of talks in Japan by the end of this year, which in itself indicates the strong willingness to connect the three nations by cementing their mutual trade and economic inter-linkages. The post talks
joint communiqué simply stated: ―China-Japan-South Korea Free Trade Agreement is irreversible‖ — SAARC ought to learn from their resolve!
Free Trade is God’s diplomacy. There is no other certain way of uniting people in the bonds of peace and prosperity. ~ British politician Richard Cobden, 1857.