Since the 1970s, the successful industrialised countries of the world were pushing developing countries onto the path of globalisation, forcing them to cut subsidies and barriers to trade and under the regimes of the WTO and IMF. Simultaneously, while small countries were being forced to compete with the globe, the EU and North America were closing themselves up into trade blocs. Now they export as a giant group to Pakistan, but they don’t import much, since we were never really allowed to protect our local industries and agricultural goods have always deteriorated in value compared to the manufactured goods from the west. While we could have competed with European countries individually, the EU as a whole is just too big and powerful. East Asian countries with China created their own trading block (ASEAN), further locking countries like ours out.
So here we are, like many countries in Africa and Asia, on the outside. We can’t close our economies to international competition, as we would starve. We can’t band together, because the process of decolonisation and the Cold War left us at loggerheads. Meanwhile we cradle our rising debt burden due to our terrible trade balances, unable to use our national revenues for national development.
In this scenario, it makes sense for the South Asian economies to make their own little club under the South Asian Association for Regional Cooperation (SAARC). The SAARC finance ministers and heads of delegations decided on Wednesday to accelerate the process towards South Asian Economic Union in a phased and planned manner. They agreed to operationalise the SAARC agreement on trade and services without further delay. This sounds great but there can be no economic union without a cooperative India, the biggest and most powerful of the group. A clarification of how Pakistan and India would freely trade is not forthcoming. Foreign policy on trade is linked to our security policy. Indian being part of the BRICs group and the Indian Ocean Rim Association (IORA) could have been the active agent, helping open up foreign markets for smaller states like Bangladesh, Pakistan and Nepal. But with India-Pakistan infighting in SAARC there are no chances for economic gains.
Within the EU, Germany and France have taken the lead. In NAFTA, the North Atlantic Free Trade Association, the USA is the kingpin. The success of ASEAN, the Association of Southeast Asian Nations, would not have been possible without the Chinese market. For SAARC, India is going to be in the driving seat, and should be, by the size of its economy. But its venomous foreign policy against Pakistan vis a vis Kashmir puts a monkey wrench in the plan for a prosperous economic future for the whole region.