The SAFMA Bangladesh Chapter hosted a conference on 'Regional Cooperation in South Asia' on August 20-21, 2004 in Dhaka. Media persons and experts from the countries of South Asia (with the exception of the Maldives) were in attendance. The conference focused on the themes of a South Asian Free Trade Area (SAFTA), Collective Security, Strengthening the SAARC Secretariat, Monetary Union and Energy Cooperation, Economic Union and a South Asian Parliament, and Human Rights. Professor Rehman Sobhan, Executive Director of the South Asia Centre for Policy Studies, Dhaka, delivered the keynote paper in the first morning session on 'Future Directions for South Asian Cooperation after the SAARC Summit at Islamabad'. This comprehensively argued paper traced the background of SAARC decisions in earlier Summits on regional cooperation, relating them to the Islamabad Summit decisions in a continuum.

The paper then went on to reveal the three agreements signed at the Islamabad Summit, namely: The SAARC Social Charter, the Framework Agreement for SAFTA, and the Additional Protocol to the SAARC Regional Convention on Combating Terrorism. The Summit also endorsed the report of the Independent Commission for Poverty Alleviation in South Asia and committed itself to implement its recommendations.
Professor Sobhan pointed out that the Islamabad Summit had committed itself to intensify cooperation in a number of areas, which include:
1. The creation of a South Asian Economic Union.
2. Energy cooperation.
3. Strengthening transportation, transit and communication links.
4. Harmonisation of standards and simplification of customs procedures.
5. Public and private sector cooperation through joint ventures.
6. Setting up a South Asia Development Bank.
7. Cooperation among Central Banks.
8. Development of tourism within South Asia.
9. Discussing, coordinating and exchanging information to adopt common positions in multilateral fora, and
10. Approval of the Plan of Action on Poverty Alleviation prepared by the Finance and Planning Ministers in Islamabad in 2004.
Professor Sobhan delineated the requirement of integration of the infrastructure of the region if trade was to be integrated, a key goal of deepening regional cooperation, for which SAFTA represents the first step on what is perhaps still a long road. During the discussion that followed, there was some scepticism voiced over the idea of a common South Asian currency, but a halfway step in that direction could be special exchange arrangements for South Asian trade. This would obviously relieve the member countries of SAARC from the requirement to find hard foreign currency for trade balance settlements.

The basic model of cooperation that Professor Sobhan based his thesis on was the European Union, whether at the level of a free trade area (FTA) evolving into a common Customs Union or the Social Charter. But Professor Sobhan is aware of the pitfalls and ground realities along the way. He therefore added a note of caution in his paper: 'Publishing a roadmap to a distant destination does not provide any indication of when such a journey may commence, how long it would take or whether we would all reach journey's end.'

Professor Sobhan then went on to indicate that for a region that aspires to an Economic Union, South Asia has one of the lowest levels of intra-regional trade. Prevailing trade barriers and structural asymmetries in the national economies do limit the scope for trade. Despite this, intra-regional trade has increased significantly in the last decade, but there is an inherent lop-sidedness in this otherwise healthy trend. Intra-regional trade has increased through India's growing exports to all countries of the region, with the exception of Pakistan. Reciprocal imports from these countries, however, have been stymied by India's relatively restrictive import regime as well as the structural rigidities in the smaller countries, with relatively little in the way of exportable surpluses.

The SAARC process to address the problem of regional trade asymmetries having moved too slowly, bilateralism has filled the gap. India has already entered into Bilateral FTAs with Nepal, Bhutan and Sri Lanka, and is negotiating a bilateral FTA with Bangladesh. These bilateral FTAs need not necessarily act as impediments in the movement towards SAFTA. In fact they may actually facilitate SAFTA through already enhanced regional trade.

Professor Sobhan rounded off this part of his paper by underlining the guiding principles that must inform the negotiations on SAFTA:
1. India must make the deepest concessions.
2. The most generous concessions must be offered to the SAARC Least Developed Countries (LDCs).
3. The negative list must be reduced to a minimum.
4. Financial support must be offered to weaker members to enhance their development and trade capacity.
5. Financial compensation must be made available to those LDCs who are likely to face significant import revenue losses due to SAFTA.
6. Negotiations must reach a final agreement as soon as possible, preferably before the next Summit.

These principles are difficult to argue against. However, it appears that wringing concessions from countries with historical economic advantages has proved quite an intractable task (witness the impasse on agricultural issues at the WTO Conference in Cancun). Only if the bigger economies, and particularly India, see some trade-off advantage in political and strategic terms would they be willing to contemplate conceding some if not all of their inherent trade advantages.

On cross-border regional investment cooperation, Professor Sobhan envisages stimulating investment by offering access for regional and global actors to an unrestricted South Asian market. But he also points out that while the region's perceptions of political hostility and the attendant security threats to investors, particularly from India, could be addressed within a SAARC investment guarantee scheme, the real apprehensions remain invisible and originate in the mindsets within both India and the potential host country. Preconditions to alter these mindsets will have to be created by these potential host countries to make investors feel secure. Financing arrangements for investment through both public and private sector sources would have to be ensured to grease the wheels of commerce and capital flows.

Professor Sobhan emphasized the necessity of integrating labour markets, allowing thereby the free flow not only of commodities and capital, but also labour, a recognized factor of production. But he is realistic enough to acknowledge that much groundwork in the form of discussions within civil society and in the power corridors are needed to create the necessary climate for contemplation of a European Union-style labour market, in which people from member countries can freely choose to work in any of the countries comprising the Union.

Professor Rehman Sobhan's vision rests ultimately on the requisite political will to implement economic cooperation being present amongst the member countries. That, unfortunately, is precisely the rub. South Asian countries have not, at least so far, proved capable of transcending their differences inherited from the past, or those now emerging, to move on a fast track towards regional economic integration. That does not obviate the need to advocate such a union; it only points to the difficulties along the way.

In the second session two papers, one by Mr. Abul Ahsan, former Secretary General SAARC, on the 'Current Mandate of SAARC Secretariat—A Critique', and the other by C. Raja Mohan, Strategic Affairs Editor, The Hindu, India, and Professor of South Asian Studies at the School of International Studies, Jawaharlal Nehru University, New Delhi titled: 'Towards Cooperative Security in South Asia', were presented.

Abul Ahsan's critique of the structure and functioning of the SAARC Secretariat as at present constituted revolved around the mode of appointment of the Secretary General and professional staff and the limitations imposed by the mandate of the Secretariat in general, and the Secretary General in particular. The Secretary General is appointed by the heads of state and government of the member countries and the staff are all nominees of individual member countries. Unlike the EU or ASEAN, there is no mechanism in place for region-wise competition throwing up the best personnel for the SAARC Secretariat. Even the modest role assigned by the SAARC charter to its Secretariat is practiced more in the breach. Nor is the Secretary General mandated to communicate with the outside world except with the express authorization of the Standing Committee comprised of representatives of member countries. With such a Secretariat composed of personnel chosen not on professional merit but merely as nominees of the member countries, and the limited mandate of the Secretary General and the Secretariat, it is small wonder the SAARC Secretariat exists more on paper than as an effective instrument of regional cooperation.

Professor C. Raja Mohan's paper advocated the notion of 'cooperative security' as a counterpoint to the traditional 'collective security' concept, the latter having proved elusive in practice. The international system has never paid as much attention to the problems of South Asian security as it is today.
Unlike during the Cold War, an external environment may be emerging that is favourable to a reasonable resolution of the region's security challenges.

But this favourable external environment alone is not enough. Political courage and statesmanship within the region are essential to grasp the new challenges as well as opportunities for peace and development in the subcontinent. To some extent the popular pressure is already forcing states in the region to act more purposefully in this direction. India and Pakistan have turned the corner from tension and conflict to bilateral cooperation and conflict resolution. The time has come to deal with the civil wars in the region in a more innovative manner rather than as mere law and order problems.

The relentless pressures of globalization are helping to break down the economic walls within the subcontinent. Trade volumes have surged. Nothing less than a reversal of the economic partition of the subcontinent is now on the cards. India must bear the brunt of the responsibility for leading the region towards political, economic and social cooperation. The concept of cooperative security recognizes the reality of profound interdependence among the South Asian countries in both the economic and security realms. The challenge now is to lend political energy to the process.

In the third session, a paper on 'Energy Cooperation in South Asian: A Sustainable CBM' was presented by Professor Mahendar P. Lama of the School of International Studies, Jawaharlal Nehru University, New Delhi. The paper explicated the distinct advantages for South Asian countries in cooperation in the energy sector. Cross-border power and gas trading offers vast potential. It can fuel energy security, efficiency, economies of scale and sustained higher economic growth in an integrated South Asian power and gas market.
Professor Lama's vision is seductive, but again the problem of a salubrious political climate to achieve these goals raises its ugly head. Without political consensus on issues of regional cooperation, be it in the energy or other fields, integrated development of South Asia remains a chimera, as the track record of SAARC shows.

This third session was to have heard a paper by Dr. A.R. Kemal, Director of the Pakistan Institute of Development Economics, Islamabad on 'The Prospects of Economic Cooperation in the Perspective of South Asian Free Trade Area'. Unfortunately, Dr. Kemal was unable to attend the conference. The participants therefore had to be content with an attempted précis of the paper by Mr. Imtiaz Alam, Secretary General SAFMA, an almost impossible task given the length and complexity of Dr. Kemal's argument. In brief, Dr. Kemal points to the euphoria created by the signing of SAFTA, while underlining two possibilities that may make it redundant. One, if MNF tariff reductions under the WTO by the SAARC countries are close to preferential tariffs under SAFTA, intra-regional trade may not grow at a rapid rate. Implied in this statement is the reality that North America and Europe remain the preferred destination for South Asian exports. Two, if the negative list is large, trade would not flourish. Nevertheless, Dr. Kemal argues, SAARC countries must make every effort to make SAFTA a success to expedite the process of economic development, given the (growing) problems in global market access and the higher transaction costs of producing for the world market.

The second day's first session was dedicated to the paper by Professor S.D. Muni of South Asian Studies at Jawaharlal Nehru University, New Delhi, on 'A South Asian Parliament'. Although well argued, the discussion that followed revealed the deep scepticism amongst participants on the basis that the idea seems premature in the obtaining circumstances of South Asia.

The last paper in the second session was by Mr. Iqbal Haider, former Federal Minister for law, Justice, Parliamentary Affairs and Human Rights in Pakistan. Mr. Haider argued in his paper on 'Human Rights in South Asia' that the universality of human rights demands cross-border cooperation. He emphasized the need for a regional and sub-regional uniform Human Rights Code/Convention and an effective implementation agency such as a Regional Human Rights Commission. The main characteristics of regional/national human rights institutions required according to the Paris Principles laid down by the UN member countries in 1991 envisage:

1. Independence; establishment under the Constitution of the country or a statute.
2. Autonomy from the state.
3. Pluralism to reflect the society they represent.
4. A broad mandate based on universal human rights standards.
5. Adequate powers to conduct enquiry, investigations, intervention in any proceedings, make mandatory recommendations and conduct trials in specific cases.
6. Sufficient resources.

After this session, the plenary session heard the draft 'Guidelines for future direction of South Asian cooperation' and unanimously (with one or two dissenting voices) adopted these guidelines. These guidelines generally endorse the thrust of the papers presented at the Dhaka Conference and the Conference resolved to pursue these guidelines to enhance regional cooperation in South Asia.