Economic performance of South Asian countries, with the exception of Sri Lanka, has often been likened to a slow coach - getting there all right, but later than every body else. There are many reasons why South Asia as a region has lagged behind. The degree to which regional countries have restructured their economies and reformed their critical institutions remains fairly low. In recent years, there has been some impetus in tariff liberalisation and simplification of rules governing direct foreign investment. But crucially, South Asia has failed to generate momentum towards regional economic cooperation and integration. As a result, intra-region trade still accounts for around three per cent of the total trade volume of the member-states of Saarc.

The lack of progress towards economic integration remains one of the major impediments to economic growth in the region. Trade is clearly one of the major vehicles available to nations to effect economic growth. South Asian countries have traditionally looked to the industrialised economies as their export markets as well as source of their imports. In addition, mutual political mistrust has prevented South Asian countries from looking at one another as reliable trading partners. This has persisted even when evidence from Europe and East Asia has clearly demonstrated the importance of intra-region trade to growth of national economies.

The launching of the Saarc Preferential Trading Arrangement (Sapta) was supposed to usher in an era of accelerated intra-region trade, paving the way for a South Asia Free Trade Area (Safta) by the year 2000. This hope now looks forlorn, as the Sapta process itself has stalled and become difficult to reinvigorate since the dramatic increase in political tension between India and Pakistan in May last year. But, as commerce secretaries from the seven Saarc nations currently meeting in Dhaka have already recognised, the need to accelerate integration is greater now than ever before. There is no greater stimulus to national growth than intra-region trade, and there is no greater guarantor of regional stability and peace than inter-dependence through economic integration.