The European Union represents the highest degree of regional integration in the world today. Especially in the context of the global economic crisis, others are now trying to see how they can emulate the EU. At talks in April, ASEAN invited six major economies – Australia, China, India, Japan, Korea and New Zealand – to join it in creating a massive free-trade area. India was the sole invitee from Southasia. It already has a mesh of 'free trade' agreements with Singapore, Korea and one in the moves with Japan, with an overarching agreement with ASEAN in process as well. At the moment, it appears that the dreams of Southasian integration are being ground to dust by the moves of the region's pivotal economy.
Economic integration is not achieved by pious declarations. Rather, it is achieved through the actions of economic agents who produce and trade goods and services. Governments do have a role to play, but it is an enabling one. They must remove the artificial barriers that hinder the activities of economic agents within the region to be integrated. Among the most obvious barriers in this instance are tariffs on goods. Less obvious, but perhaps more important, are barriers to seamless transport and communication.
If vehicles carrying goods cannot move across borders with minimum delay and fees, trade across those borders will inevitably be stifled. Along the same lines, let us look at the particular example of telecommunications, which are vital to commercial relations and trade in services. If leased-line telecom prices among the countries within the region are not lower than leased-line prices to destinations outside the region, it is unlikely that trade in services within the region will grow and modern commerce will flourish. If businesspersons cannot easily travel among countries within the region, the governments cannot be serious about integration.
Likewise, unless telephone calls within the region are cheaper than calls to locations outside, it is reasonable to dismiss declarations on economic integration as little more than hot air. In this way, unless the rapacious charges on roaming are reduced, at least to citizens of the countries that are being integrated, one can presume that SAARC will remain a dead letter. Quite simply, the costs of doing business within the region, including transport and communication costs, must be brought down to levels below the costs of doing business outside the region. When this is done, the economic actors will complete the job. They will travel, they will trade, and they will invest.