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Vajpayee moots measures to kickstart SAARC economic integration

Prime Minister Atal Bihari Vajpayee today announced a series of significant measures to accelerate economic integration of the SAARC region by offering bilateral free trade agreements, lifting of quantitative restrictions on more than 2,000 products and raising upto $ 15 million the investment limit for Indian entrepreneurs to encourage economic cooperation among south Asian countries.

Addressing the opening session of the tenth SAARC summit, Vajpayee asserted that apprehensions of a setback to the SAARC process following nuclearisation of south Asia were misplaced.

Declaring that socio-economic development for SAARC countries was imperative, he assured the neighbouring countries that India wanted good relations with them and would work towards building on their commonalities and shared aspirations for development.

Apparently referring to the Indo-Pakistan differences on Kashmir, the prime minister said these ''should be resolved in a rational manner, peacefully and through bilateral negotiations''. He added ''we have consistently been in favour of a serious sustained dialogue on those lines.''

Vajpayee reiterated India's strong commitment to global nuclear disarmament, saying that global security was best ensured in a nuclear-weapons-free world. India would continue to work actively for a nuclear weapons convention, providing for elimination of nuclear weapons worldwide with a time-bound frame.

Calling upon the SAARC countries to reaffirm their commitment to the goal of a South Asian Free Trade Area by 2001 and take steps to make it a reality, the prime minister proposed immediate negotiations on a separate SAFTA treaty to spell out in detail the schedules for elimination of discriminatory trade practices, lifting of non-tariff barriers and tariff reductions.

Stating that collective self-interest had been the guiding spirit of regional cooperation the world over, he said SAARC's vision should be to look beyond SAFTA to the evolution of a SAARC economic community early in the next century.

Vajpayee said the SAARC economic community would create a common regional economic space, providing for the free flow of goods, capital and services.

Noting that trade and investment was closely inter-linked, the prime minister advocated the promotion of joint ventures to develop trade complimentarities and expand intra-SAARC trade which was at an unacceptably low level.

In this context, he underlined the need for institutional framework through bilateral or regional agreements for investment promotion and protection to provide the necessary confidence to investors.

Welcoming the decision of the SAARC Chamber of Commerce and Industry to convene an annual SAARC Investment Forum, Vajpayee said India had taken specific steps to promote investment by Indian entrepreneurs in SAARC countries.

Referring to the acute shortage of energy in south Asia even though some of the countries in the region had considerable untapped resources, the prime minister said SAARC could take some immediate steps towards regional co-operation in this area. ''We should also consider co-operation in infrastructure, particularly transportation, for removing the bottlenecks for expeditious movement of goods.''

He was of the view that such steps would facilitate closer linkages and SAARC's move in the direction of an economic community.

Pointing out that major economic changes were taking place around the world with a significant impact on this region, he said the twin trends of globalisation and liberalisation had dramatically altered the dynamics of the international economic environment. The increasing globalisation of the economic processes had been accompanied by the emergence and consolidation of vast new economic groupings.

The financial crisis in many countries including those in east Asia had exposed the vulnerability of even relatively dynamic developing economies as well as the weakness of the international monetary and financial system to cope with the stresses and strains of global financial liberalisation, he said.

The prime minister said there was need for SAARC countries to identify and face these challenges. The SAARC countries should identify the strengths and weaknesses of their structures and policies so as to make sure that they were able to avoid difficulties while taking full advantage of globalisation and liberalisation. He proposed that the governors of central banks of SAARC countries and their finance secretaries meet annually to have a dialogue on macro-economic policies and to share experiences and ideas.

Referring to the success of the South Asian Preferential Trading Arrangement, the prime minister said India had offered the maximum concessions in two rounds of negotiations covering more than 1,000 tariff lines. ''We also offered the deepest tariff cuts with special concessions for the least developed countries. The impact of these openings will take some time to be assessed as they came into effect only between March and December last year.''

Vajpayee noted that the third round of SAPTA negotiations had made a promising start in July last year with all member-countries agreeing to go beyond a product-by-product approach and negotiate concessions on a sector or chapter-wise basis. ''There has unfortunately been delay in concluding these negotiations. We must collectively ensure that the momentum is maintained and that these talks are concluded quickly.''

On its part, the prime minister said India was willing to take concrete steps to speed up trade liberalisation. As a special gesture, India would lift quantitative restrictions maintained for Balance of Payments reasons on a preferential basis for SAARC countries from August 1.

This, he said, would involve lifting restrictions on more than 2,000 products and would substantially increase the opportunities for SAARC countries to access Indian markets and increase their exports. ''Our negotiators would also have the mandate to offer significant tariff reductions during the SAPTA negotiations,'' he added.

UNI