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Published online by Cambridge University Press: 16 April 2015
Preferential trading exchanges have been a very common phenomenon in today's world. FTAs and RTAs are growing so fast that many academics are arguing that they are creating obstacles towards WTO's multilateral trade liberalization. Although seven nations in the South Asian region have recently executed an FTA, the progress of regional cooperation in this region is rather dismal. The purpose of this paper is to analyze SAFTA and discuss the prospect of more meaningful cooperation within the SAARC.
1 Hafez, Zakir, The Dimensions of Regional Trade Integration in Southeast Asia (New York: Ardsley, 2004) at 6 [Hafez]Google Scholar.
2 Ibid.
3 Cohn, Theodore H., Global Political Economy: Theory and Practice (New York: Longman, 2000) at 241-42Google Scholar and Pomfret, Richard, The Economics of Regional Trading Agreements (Oxford: Clarendon, 1997) at 16–70 Google Scholar, cited in Hafez, supra note 1.
4 Ibid.
5 Ibid.
6 Rahman, Atiur, Political Economy of SAARC (New Delhi: Sterling Publishers, 1986) at 1 [Rahman]Google Scholar.
7 Hafez, supra note 1 at 7.
8 Pascal Lamy, “Multilateral or Bilateral Trade Agreements: which way to go?” (Paper presented to the Confederation of Indian Industries Partnership Summit 2007, Bangalore, January 2007) published online: World Trade Organization <http://www.wto.org/english/news_e/sppl_e/sppl53_e.htm>. Lamy, the Director General of the WTO, predicted that by 2010 around 400 RTAs could be active.
9 Syed Nawab Haider Naqvi, Economic Integration: Meaning and Dimension, cited in Asian Development Bank, “Towards Regional Cooperation in South Asia” (Paper presented to the ADB/EWC Symposium on Regional Cooperation in South Asia, 9-11 March 1987, Manila) (ADB, 1998) at 121.
10 See WTO, The Future of the WTO Addressing Institutional Challenges in the new Millennium: Report by the Consultative Board to the Director-General Supachai Panitchpakdi at 19-20 (WTO, 2004).
11 Ibid. at 19.
12 Rahman, supra note 6.
13 SAARC Secretariat, A Brief on SAARC, online: SAARC <http://www.saarc-sec.org/main.php?id=76> [SAARC Brief].
14 Mehrotra, Lakhan Lal, Towards a South Asian Community (New Delhi: Indian Council for Cultural Relations, 1997) at 19 [Mehrotra]Google Scholar.
15 Ibid.
16 SAARC Brief, supra note 13.
17 The main basis of the division of the Indian Sub-Continent in 1947 was that Muslims and Hindus within the region were two distinct nations and there should be India which would be the land of Hindus and Pakistan which would be the land of Muslims. But in 1971 when Bangladesh emerged as a sovereign nation gaining independence from Pakistan, after a liberation war, this theory was perhaps buried.
18 Sudhakar, E, SAARC: Origin, Growth, and Future (New Delhi: Gyan Publishing House, 1994) at 3 Google Scholar.
19 Ibid.
20 See generally, Joy, P A, SAARC Trade and Development (New Delhi: Deep & Deep Publications, 1995)Google Scholar.
21 Ibid.
22 Rehman, Javaid, “Institutions of International Law and the Development of Regional Forum for Peaceful Dialogue in South Asia” (2006) 1 Asian Journal of Comparative Law at 13–14 CrossRefGoogle Scholar.
23 Chibber, Bharti, Regional Security and Regional Cooperation: A Comparative Study of ASEAN and SAARC (New Delhi: New Century, 2004) at 152 [Chibber]Google Scholar.
24 Mehrotra, supra note 14 at 299.
25 Ibid.
26 Rule 4 of the Annex II to Agreement on SAARC Preferential Trading Agreement (SAPTA), online: <http://www.saarc-sec.org/old/freepubs/sapta.pdf>.
27 Chibber, supra note 23 at 153.
28 Ibid.
29 Ibid.
30 Ibid. at 154.
31 See Tercan Baysan, Arvind Panagariya & Nihal Pitigala, Preferential Trading in South Asia (2006), World Bank Research Working Paper No 3813, online: <[http://ideas.repec.org/p/wbk/wbrwps/3813.html> [Baysan].
32 See SAARC Secretariat, South Asian Free Trade Area (SAFTA), online: SAARC <http://www.saarc-sec.org/main.php?t=2.1.6>.
33 Ibid.
34 Ibid.
35 All the member states have completed the formalities including depositing of their Instruments of Ratification with the SAARC Secretariat. Accordingly, a notification issued by the SAARC Secretariat on 22 March 2006 formally announced the entry into force of SAFTA Agreement with effect from 1 January 2006. See SAARC, SAFTA Secretariat Press Release: Notification on South Asian Free Trade Area (SAFTA), online: SAARC <http://www.saarc-sec.org/main.php?t=5#22032006>.
36 Supra note 31 at 2.
37 Ibid.
38 Robert Blake, Address at the Opening Reception of the South Asian Free Trade Agreement Conference, October 24, 2005 online: <http://newdelhi.usembassy.gov/pr102505.html>. Remarks made by Deputy Chief of Mission Robert Blake.
39 Ibid.
40 Pyakuryal, Bishwambher, “SAFTA and poverty alleviation” The Hindu (31 December 2003), online: The Hindu <http://www.kantipuronline.com/kolnews.php?&nid=8562>Google Scholar.
41 Panagariya, Arvind, “South Asia: Does Preferential Trade Liberalization Make Sense?” (2003) 26(9) The World Economy at 1279 CrossRefGoogle Scholar.
42 Ibid. at 1285.
43 Ibid.
44 Rajendra Kumar Khetan, “South Asia: a Vast Economic Powerhouse in Terms of its Market Potential and Natural Resources,” online: Peace Journalism <http://peacejournalism.com/ReadArticle.asp?ArticleID=5427> [Khetan].
45 Ibid.
46 Paranjoy Guha Thakurta, “South Asia: Burying Quarrels for Regional Free Trade,” online: IPS News <http://www.ipsnews.net/news.asp?idnews=31780>.
47 Ibid.
48 Ibid.
49 Ibid.
50 Article 3(1) of the SAFTA
51 Ibid. at Article 4.
52 Ibid. at Article 5.
53 Ibid. at Article 7 (1) (a)-(d)
54 Ibid. at Article 7 (6).
55 Ibid. at Article 12.
56 Ibid. at Article 7 (3) (a).
57 Ibid. at Article 7 (3) (b).
58 Ibid. at Article 10 (2)
59 Ibid. at Article 10 (5)
60 Ibid. at Article 10 (6).
61 Ibid. at Article 10 (8).
62 Ibid. at Article 10 (9).
63 Ibid. at Article 10 (10).
64 Ibid. at Article 14.
65 Ibid. at Article 15.
66 Ibid. at Article 16 (1).
67 Ibid. at Article 16 (7).
68 Ibid. at Article 16 (8).
69 Ibid, Rule 8 (a) (ii) of Annex IV to SAFTA.
70 Ibid, Rule 10.
71 See “Chronology: Volcker controversy?” Times of India (3 August 2006), online: Times of India <http://timesofindia.indiatimes.com/articleshow/msid-1849684,prtpage-1.cms>. Only recently Indian foreign minister, Natwar Singh, was forced to resign amid allegations that he had illegally benefited from the UN oil-for-food program in Iraq. See also “Bangladesh and Denmark in aid row” BBC News, online: BBC <http://news.bbc.co.uk/2/hi/south_asia/1930800.stm>. Also, in 2002, the Danish Government announced that it was withdrawing $45million of aid from the Bangladeshi shipping sector because it said that the then Bangladeshi Shipping Minister, Akbar Hossain, had behaved dishonestly over a tender for the repair of four ferries.
72 North American Free Trade Agreement (NAFTA) Article 1131(2), online: NAFTA Secretariat: <http://www.nafta-sec-alena.org/english/index.htm> provides that an interpretation of NAFTA by the NAFTA Commission shall be binding on any tribunal established under NAFTA Chapter 11. This has been used the NAFTA Commission following a series of expropriation cases to limit the ambit of certain provisions in NAFTA Chapter 11. See NAFTA Free Trade Commission, Notes of Interpretation of Certain Chapter 11 Provisions (July 31, 2001), online: <http://www.international.gc.ca/tna-nac/NAFTA-Interpr-en.asp>.
73 Khetan, supra note 44.
74 Ibid.
75 GATT, Decision of the Contracting Parties of 28 November 1979, Differential and More Favourable Treatment, Reciprocity and Fuller Participation of Developing Countries (“Enabling Clause”), Decision of 28 November 1979 (L/4903), 26th Supplement B.I.S.D. (1971) 203 [Enabling Clause].
76 European Communities - Conditions for the Granting of Tariff Preferences to Developing Countries, (2004), WTO Doc. WT/DS246/AB/R (Appellate Body Report).
77 Ibid. at para 104.
78 Enabling Clause, supra note 75 at para 2(c).
79 Ibid. at para 3.
80 Raj Bhala, “The Forgotten Mercy: GATT Article XXIV: 11 and Trade on the Subcontinent” (2002) N.Z.L. Rev. at 357.
81 Ibid.
82 General Agreement on Trade in Services, Apr. 15 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1B, Legal Instruments – Results of the Uruguay Round, 33 I.L.M 1167 (1994).
83 Though articulated in different contexts because pessimists use it to vindicate the futility of regional integration within the region.
84 See generally, Mandelbaum, David G., Women's Seclusion and Men's Honor: Sex Roles in North India, Bangladesh, and Pakistan (Tucson: University of Arizona Press, 1988)Google Scholar.
85 Article VIII of the Charter of the SAARC, online: < http://www.saarc-sec.org/data/docs/charter.pdf.
86 See Tallberg, Jonas, “The power of the Presidency: Brokerage, Efficiency and Distribution in EU Negotiations” (2004) 42(5) Journal of Common Market Studies at 999 CrossRefGoogle Scholar.
87 At the Hong Kong Ministerial Conference, it appears that Pakistan and Sri Lanka objected to duty and quota free market access of Bangladeshi garments to developed countries in general and to the US in particular. The stance of these two countries was contrary to the spirit of the Dhaka Declaration adopted at the 13th SAARC Summit held in Dhaka in November 2005. The Governments had agreed that the SAARC member states would ‘work closely together to coordinate their position’ in the ongoing negotiations on trade and directed the commerce ministers to hold consultations on the sidelines of the WTO Ministerial to evolve a common SAARC position on issues of common interest. See A. Rahman, “Hong Kong ministerial” The Independent Bangladesh, online: The Independent Bangladesh <http://independent-bangladesh.com/news/feb/10/10022006fr.htm>. See also, SAARC, Dhaka Declaration of the 13th SAARC Summit, (13 November 2005), online: <http://www.fbcci-bd.org/Dhaka%20Declaration_files/Dhaka%20Declaration.htm>.
88 Although there is an ongoing civil war in Sri Lanka.
89 See European Navigator, Discussion paper by Jean Monnet (5 August 1943), Fondation Jean Monnet pour l'Europe. Archives Jean Monnet. Fonds AME. 33/1/4, online: <http://www.ena.lu/europe/formation-community/discussion-paper-jean-monnet-1943.htm>. This is a translation of the original French version.
90 See Europa, Declaration by Robert Schuman on 9 May 1950, online: <http://europa.eu/abc/symbols/9-may/decl_en.htm>.