It was in 1958, with the signing of the Treaty of Rome, that the Europeans embarked on regionalism, albeit in the relatively narrow economic sense of trade liberalisation. They knew that regionalism would drive international relations in the future, and could foresee the economic benefits that would pour from efficient and productive use of available resources, an expanded market, specialization, rapid technology transfer, use of comparative advantages, and the spur of competition. In a region engulfed by mistrust and division, the pioneers of European regionalism could see ahead the peace dividend, ushered by political stability. That political stability, in turn, would be assured through increased intra-regional trade and economic exchange.
For the countries of Southasia, economic regionalism means much more than what it meant for those European pioneers. Beyond the obvious importance of trade within the Subcontinent, the additional incentive for us is that it can be a potent tool to bolster negotiating strength vis-à-vis developed countries.
Globally, economic regionalism has become a centrepiece in the commercial policy landscape, particularly after the advent of the World Trade Organization (WTO) and the multilateral trade regime it supports. The debate over whether regional blocs are 'stumbling blocks' or 'building blocks' for multilateral liberalization has already ended in favour of the latter argument. Today, WTO rules provide a passage for the formation of regional blocs and Southasia would be wise to take full advantage of the facility.
There are about 235 regional trade blocks at present, and between them, they make up nearly half of global trade. A further 70 such groups are at the negotiation/ proposal stage. An overarching view of regional economic combines, scattered across continents and among countries at different levels of development, reveals a confusing 'spaghetti bowl' scenario of crisscrossing and overlapping trade relationships. The majority of the arrangements wade in shallow waters, focusing only on trade liberalization. Very few have deep integration programmes targeting harmonisation of economic policy for a common market.