Economics · International Affairs · Law · Public Policy

Motor Vehicle Agreement: A Path-Breaking Endeavor for SAARC Nations?

In the ending years of 1970s, the seven inner South Asian nations that included Bangladesh, Bhutan, India,   Maldives, Nepal, Pakistan, and Sri Lanka agreed upon the creation of a trade bloc called South Asian Association of Regional Cooperation (SAARC) and to provide a platform for the people of South Asia to work together in a spirit of friendship, trust and understanding. Dhaka Declaration of 13th SAARC Summit in November 2005 included Afghanistan in the forum as its 8th newest member.  The objective of SAARC is to accelerate the process of economic and social development in member states through joint?actions in the agreed areas of cooperation. The SAARC policies aim to promote welfare economics, collective self?reliance among the countries of South Asia, and to accelerate socio?cultural development in the region.

The leaders of the South Asian Association for Regional Cooperation (SAARC) once again congregated in Kathmandu, Nepal last year for the 18th Summit and this is always seen as a golden moment by the SAARC member states to escalate regional cooperation among them for inclusive and sustainable development. South Asian countries have increasingly acknowledged that the regional approaches and common actions are essential to accomplish their development goals. The benefits from pursuing regional cooperation and integration are myriad, as it is a procedure by which country’s economic system becomes more regionally interconnected, speeding up economic growth, lessening poverty, and raising country’s employment level.

With the view to increase the growth rates for the intraregional trade among South Asian nations the heads of the SAARC nation agreed upon signing one of the important declarations known as Motor vehicle agreement. As the growth rates for south Asian exports have fallen significantly for example, in 2012, SAARC’s intra regional trade was only 4.3% of the total South Asian trade, even after almost 30 years of the establishment SAARC as compared with the intra?regional trade amongst ASEAN member countries, which is estimated at around 26%, there is an urgent need to remove trade barriers with a view of strengthening transport links and wider connectivity which would help in increasing supply capacities in smaller countries. The proposed SAARC Motor Vehicle Agreement if successful would allow seamless transit of passenger, personal and cargo vehicles to travel along designated key routes in the four SAARC countries without the need for trans-shipment of goods and passengers at the border crossings across SAARC member States and this could be a path breaking endeavour as with better transport linkages and efficient management of border-crossings, South Asia can facilitate intraregional trade. The agreement would reduce the costly and time-consuming unloading and loading of people and goods at border crossing points making cross-border trade more efficient and would likely to result in closer regional economic cooperation and integration through enhanced regional connectivity by allowing movement of goods and passengers in the region through road transport subject to various terms and conditions in the agreement. Further, this agreement would facilitate Nepal-India bus services on reciprocal basis and a seamless movement of people from the two countries which would promote tourism and people-to-people interaction. In addition to the regular bus service along the three routes, the Motor Vehicle Agreement also provides for movement of private vehicles and non-regular passenger vehicles across the border. Such private and non-regular passenger vehicles would be entitled to use all established entry and exit points in the agreed upon framework envisaged under the Draft Agreement. The leaders also strived to flag-off of the first bus from Kathmandu to New Delhi.

Free flow and efficient interregional Trade if enhanced and strengthen could be regarded as a tool to attract FDI and there is general belief that FDI plays crucial role in accelerating economic growth in developing countries.  Majority South Asian countries presently bear very high customs and port clearance, poor communication and transportation and regulatory constraints at the borders.  Reducing trade costs and facilitating transit are the keys for more integrated economy which could be done through the Motor vehicle agreement and the potential benefit of regional cooperation is in making the best of existing border infrastructure and developing new connectivity infrastructure.

The current layout of transit in South Asia is bilateral where India provides overland transit to Bangladesh, Nepal and Bhutan for their bilateral trade, and maritime transit to Nepal and Bhutan for its international trade. Land borders in South Asia are overcrowded. High trade cost, persistent border hassles and corruption is existent especially for Nepal and Bhutan. Lack of adequate regional cooperation has lead to uneconomical trade routes raising trade costs and time delays but all this problem could be solved to some extent with the success of motor vehicle agreement and the Kathmandu Summit presents a key opportunity for SAARC Leaders to give a major boost to the inclusive and sustainable development agenda for South Asia, through regional cooperation for the shared prosperity of nearly a quarter of humanity. Building on the progress made in negotiating and finalising the SAARC Motor Vehicles Agreement, this agreement would facilitate the transit of all types of vehicles between the contracting parties as is prevalent in other common markets like the European Union. The Agreement could go a long way in strengthening the ties and promoting multilaterism among SAARC Member states.

About the Author

Vartika AnandVartika Anand is a third year student pursuing her B.A. LL.B. (Hons) from Dr. Ram Manohar Lohiya National Law University, Lucknow. Being a law student, she is interested in working on human rights issues and enjoys researching and reading on the political history of India. Besides that, she is really passionate about sports, especially cricket, volleyball and badminton. Currently, she is interning with the Model Governance Foundation.

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