South Asia - Regional Cooperation on Trade

Challenges

• The cost of trading across borders in South Asia is one of the highest in the world.
• South Asian countries have maintained a higher level of protection within the region than with the rest of the world.
• Intraregional trade is less than 2% of GDP, compared to more than 20% for East Asia.
• It takes on average more than 33 days to export from South Asia compared to 12 days from OECD countries and more than 46 days to import into South Asia compared to 14 days for OECD.
• South Asian exports lacks diversity in terms of products and markets.
• The import-substitution policies of South Asia worked toward limiting not just total trade but in some ways asymmetrically toward limiting intraregional trade.
• With the possible exception of Sri Lanka that had undertaken significant liberalization in the late 1970s, anti-trade policies remained dominant in the region for nearly four decades.
• In the case of India and Pakistan, political tensions virtually closed official international trade between them.

Opportunities

• Trade within South Asia can be more than doubled if appropriate regional agreements on roads, rail, air, and shipping are put in place enabling seamless movement.
• The development of effective bilateral and multilateral trade will not only allow an increase in trade but also diversification of the types of goods traded. It will improve export competitiveness by allowing producers in one country to obtain unique, less costly, or better quality inputs from suppliers in neighboring countries.
• Annual trade between India and Pakistan, the bulk of which is routed through Dubai, is currently estimated at US$1 billion, but could be as great as US$9 billion if barriers are lifted.
• Trade liberalization policies, which had begun to be introduced in the second half of the 1980s, were introduced on a more systematic basis in the 1990s. The change contributed to a more rapid expansion of trade of India, Pakistan, Bangladesh, and Nepal not only with the outside world but with one another as well.
• Trade between South Asian countries would likely grow substantially if they were to just open the borders to each other on a genuine Most Favored Nation (MFN) basis.

More on Regional Trade

- Trading Choices of South Asia

- Development of Electricity Trade in Central Asia - South Asia Region, Second Regional Economic Cooperation Conference on Afghanistan, November 18-19, 2006

- Studies on India-Bangladesh trade : trade policies and potential FTA (Vol. 1 of 2) : Main Report

- Studies on India-Bangladesh trade : trade policies and potential FTA (Vol. 2 of 2) : Methodology and selected case studies

Economic Coorperation in the Wider Central Asia Region

Trade policies in South Asia : an overview (Vol. 1 of 3) : Operational summary

Trade policies in South Asia : an overview (Vol. 2 of 3) : An overview

Trade policies in South Asia : an overview (Vol. 3 of 3) : Some key sectors

Additional Resources

- South Asia: Growth & Regional Integration
South Asia is the least integrated region in the world. Closer integration can be an effective tool in addressing energy shortage, improve connectivity, and promote peace and stability. (Read More »)

- South Asia: Development Data
A wide range of social and economic measures on South Asia, including links to the World Bank's most important online development databases. (Read More »)

- South Asia: Analysis and Research
Compilation of all the World Bank's publications on South Asia, with 'search' options and links to analysis and research on other South Asian countries. (Read More »)

- World Bank Program in South Asia
Launching pad to all information on World Bank activities in Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka.(Read More »)