Thosapala Hawaga
Ambassador
Embassy of Sri Lanka in Nepal



SAARC Countries Should Work Towards Regional Cooperation to Achieve Growth


How do you look at the regional trade in the South Asia region?

The regional trade in South Asia seems to be improving over the years but it is not up to the expectation. Compared to the past, the South Asian economy is more open today. The tariff rates have come down from 80-90 per cent in the 1990s to 20-25 per cent today and exports and imports together are equivalent to about 20 per cent of the regional GDP. SAFTA was expected to include all products, manufacturers and commodities. It is commonly accepted that negotiations under SAPTA will not be very effective in terms of inventing intra-regional trade in SAARC which is unfortunate. There are various possibilities of further improving regional trade within South Asia if countries can overcome the existing barriers. Remedies like substantial tariff cuts, removal of non tariff barriers, adequate trade related capacity building, and connectivity between the countries etc have to be implemented. The regional trade arrangements are in an interim state towards more efficient levels of globalisation.


Is there a possibility of India cannibalising all its neighbours?

It is difficult to say that India is cannibalising its neighbours. But, with the size of India and its economy, you can’t compare India with any of its neighbours. It is a vast and fast developing country and also the largest country in the region. Their contribution in terms of trade, tourism and economic growth is very high. It is extremely difficult for other countries to talk about balance of trade with India. However, India is having enough problems itself that needs to be resolved first such as regional disparity, low human development index (HDI), poor connectivity etc. India is by far the largest economy in the region and the second largest fast growing economy in the world. South Asia region needs India for its economic prosperity as much as India needs the region for its continuing prosperity.


How do you view trade diplomacy in the context of enhanced regional trade among SAARC nations?

When people talk about diplomacy, they talk about trade diplomacy because that is especially needed by countries in the region. Trade diplomacy in the context of regional trade among SAARC nation is positive and can be further improved. The member countries of the SAARC, I believe, should work towards regional cooperation in order to achieve growth. When there is regional growth, regional trade will definitely go up. If the member countries can develop a regional cooperation and agree upon certain things, a particular country can then focus on its available resources within its territory.


India, being the centre of regional trade among the SAARC nations, could have played a more vital role in making the SAARC trade bloc effective. What are the reasons for India not being able to do so?

As far as I know, India, being the centre of regional trade among the SAARC nations, is playing a vital role in making the SAARC trade bloc effective. However, there are issues among the SAARC nations that need to be resolved in order to make it more effective. India too has its own problems that it needs to resolve. But I believe India can play a major role with regard to development of regional trade in the region.


Why is the trade in this region more oriented towards international market than trading within the region?

The trade in the SAARC region is more oriented towards international market probably due to the trade relations that have been developed with countries outside the region over a long period of time. There is also this attraction to trade with countries outside the region because of the high market price for products in the international market. The international destinations have far more secure markets and offer good prices and hard currency. I do agree that trading within the region is not up to the expectations, however, I believe this can be resolved through agencies like SAARC. Actually, SAARC can play a proactive role in the development of trade within the region. They are doing it already but my feeling is that they can do more. Regional cooperation and agreements like SAFTA, SAPTA etc need to be beneficial to all the countries. In order to do that, we have to identify proper people, train them and realise their services, so that we can request them to negotiate for the benefit of their respective countries.


Do you think that tariff and non tariff barriers contribute towards low intra-regional trade?

When the tariff is high, the prices of the goods also go up. Therefore, the countries must look at removing non tariff barriers. We can come up with some kind of consensus within the region so that tariff and non tariff barriers are removed. This, of course, needs to be done in consultation with the member countries of the region.


Can South Asia region prove to be a substantially big market to consume the production generated in the region and become self suffi cient on trade?

I think the South Asian region produces various products that are required for the region and it can certainly prove to be a market big enough to consume them. But the point is that one country has to produce products which the other country doesn’t produce so that you will have an assured market. Basically, what I can see is that most countries in the region produce similar goods and that’s where the problem lies. For example, Sri Lanka produces garments and at the same time, countries such as India, Bangladesh, Nepal and Pakistan also produce garments. Invariably, they have to go outside the region in search of a market for the same product. Hence, you have to have a common agreement with the countries in the region to address this issue. But this is not an easy task unless the countries in the region are committed to do so because each country is concerned about its own benefits. You can have a win-win situation only if there is a give and take policy in place.


What are the problems in expanding regional trade? What are the potentials of trade development?

Trade barriers such as high tariff, double taxation, lack of connectivity among the countries are some of the problems apart from what we have already discussed earlier. The countries have to look into their infrastructure and ways of connectivity in order to increase regional trade. The size of the economy is another issue that you need to look into, for example, India is a huge economy when compared to its neighbours.

There is also the issue of underutilisation of resources which is a cause of concern. If we can resolve these issues, we will certainly be able to expand our regional trade.

The potential for trade development is immense because all these challenges can be turned into opportunities. But we must make sure that we look at tapping the untapped resources. The barriers too need to be taken care of. I believe we will be able to prosper if we think of the entire region rather than only be bothered about our respective countries.


How would Sri Lanka like to represent itself as a brand in the region? What are the prospects of trade for your indigenous products in the region so that you donâte have to look beyond?

If you look at certain products like garments, gems and jewellery and herbal products, we do have the advantages. The market for these products is within the region as well as outside of it. Some of the products have already been accepted and valued by the region. If we produce in accordance with the region’s requirement, we can definitely carve a niche for ourselves. For example, we can design gems and jewellery in a way that caters to the tastes of people of other countries. I am positive that Sri Lanka can definitely expand its trade in the region as time passes.