ABSTRACT
As a region, South Asia was fairly late in embracing the concept of regional economic cooperation that gathered fresh momentum in the latter half of the 1980s. It took a decade after the initial establishment of the South Asian Association for Regional Cooperation (SAARC) in 1985 for South Asia to turn its attention to the promotion of trade through a regional agreement. Nevertheless, having accepted the concept of regional economic cooperation, SAARC was quick to set itself an ambitious agenda. The proposal to set up a South Asian Preferential Trade Agreement (SAPTA) was accepted and came into formal operation in December 1995. In 1996, SAARC member countries agreed in principle to go a step further and attempt to enact a South Asian Free Trade Agreement (SAFTA). The transition to SAFTA has been inordinately delayed with the postponement of successive summits between 1999 and 2002. As a result, the drafting of the Framework Agreement commenced only in 2002 with final agreement reached in January 2004. With outstanding negotiations finalized, SAFTA is to begin implementation in July 2006. Despite the apparent commitment to economic cooperation within a regional framework, South Asian countries have, in reality, exhibited a marked reluctance to open their markets to each other. Much of the failure can be attributed to the swings in political relations between India and Pakistan, a seemingly irreversible situation in which SAARC appears to have lost its relevance as a forum through which an economic agenda can be meaningfully realized.
