Let’s trade

The hope lies with the WTO and its capacity to act as a levelling factor.

The major focus of the economic liberalisation process South Asian countries have undertaken in the past decade or so has been trade. In a way, this is reflected in the three-fold increase (from USD 37.9 billion to USD 110 billion) and the four-fold rise (from USD 1.2 billion to USD 4.44 billion) in South Asia´s global and intra-regional trade respectively over 1980-1996. The share of intra-regional trade as a share of South Asia´s global trade has also recorded a marginal increase from 3.19 percent in 1980 to 4 percent in 1996. This is an encouraging sign because India´s share in Pakistan´s total trade is not even 1 percent, and till very recently, 78 percent of Nepal´s trade used to be with countries outside South Asia, and Sri Lanka´s (60 percent) and Bangladesh´s (52 percent) major trading partners were located in industrial countries. All these defied the primary logic of trade based on lower transport cost.

This significant increase in the share of intra-regional trade is adequately manifested by the multifold growth in India´s bilateral trade with its neighbours in the last six to eight years. Since there has been a parallel and simultaneous process of trade liberalisation under the World Trade Organisation (WTO) and SAARC Preferential Trading Arrangements (SAPTA), one cannot actually pinpoint what really triggered off this jump in intra-regional trade.