Problems and Prospects of Inter and Intra Regional Cooperation and Trade – Geography – UGC NET – Notes

South Asia is one of the least economically integrated regions in the world, despite its recent burgeoning growth in terms of human capital and commercial engagements. An inter-regional and intra regional integration or cooperation is an essential for achieving economic prosperity as well as social progress and political stability in the specific regions. It is also at the same time important to acknowledge the dilemma of the direction of this progression, the familiar debate between the trade theorists and international relations theorists on the paradoxical conflict-trade linkage. Which is contradictory evidence that proves that trade promotion need not mitigate conflict between nation-states.

It is still not entirely answered how, despite all the efforts of regional cooperation or other trading arrangements like the SAARC (South Asian Association for Regional Cooperation) and SAFTA (South-Asian Free Trade Agreement), South Asia still hasn’t witnessed an active deceleration or slackening of political instability resulting from intra regional or inter regional conflicts. This is evident from the infamous history of political vulnerability and inter-regional conflict that South Asia has faced especially after the partition of India into Pakistan and later into Bangladesh. However, the countries have come a long way from the post-colonial rudimentary state of being and has developed trade relations with its neighbors as well as other nations. Yet, the southern region of the Asian continent has still a long way to go in terms of intra regional co-operation as well as trade with each other, with the advantage of close geographical proximity that could potentially act as the catalyst to this. It is intended to address the shortfalls in the intra regional trade in South Asia with a perspective underpinning India’s commercial relations with its neighbors (focusing on Nepal and Sri Lanka). The external Factor that would hinder or inhibit this potential integration, which is China’s interference in trade relation, is also looked at.

General Agreements On Tariffs & Trade

In the 18th and 19th century, almost all nations and nation-states believed that protectionism is a must for the well-being of domestic economies. However, with passing time, this idea started to change. The idea of liberalizations and thereby abolishment of protectionist measures peaked in the middle half of the 20th century. The epitome of liberalism took the first palpable shape as GATT, which was later replaced by the WTO.

General Agreement on Tariffs and Trade (GATT) includes some multilateral trade agreements formed to abolish the quotas and reduce various tariffs among the participating nations. GATT was formed by 23 countries signing the agreement at Geneva, in 1947. It was aimed to offer an interim arrangement which could be replaced by a United Nations agency soon.

GATT played a hero’s role in expanding the world trade in the latter half of the 20th century. 125 nations had already become signatories to GATT when it was replaced by the WTO in 1995.

Major Principles of GATT

GATT’s major principle was trade without discrimination. The participating nations opened the markets impartially to every other member. According to GATT, once a nation and its largest trade allies had agreed to reduce a tariff, that reduction automatically became applicable to all other GATT members.

• GATT preferred protection through tariffs and by leveraging on it, GATT systematically tried to eliminate the import quotas or other quantitative trade restrictions.
• GATT also had homogenous customs regulations and the obligation of the participating nations in negotiating for tariff reductions on any other nation’s request.
• The escape clause was also in place for contracting nations to modify the agreements when their domestic producers suffered excessive losses due to the trade concessions.