Introduction

SAARC moved to a new phase in the early 1990s by undertaking efforts for regional integration and starting cooperation in core economic areas such as trade in goods and services, investment, finance and so on. While ‘intra-regional trade was earlier not included within the area of cooperation of SAARC, mainly due to the political overtones’, with the dawn of the 1990s it was apparent that the organization would need to move cooperation from functional areas to the core economic areas if SAARC was to be viable and deliver substantive benefit to the people of South Asia. At the Male summit in 1990, the SAARC leaders made the ‘in principle’ decision to move the regional cooperation to core economic areas. The first substantive step in this regard was taken in 1993 with the signing of the SAARC Preferential Trading Arrangement (SAPTA), thus opening a new chapter in the evolution of SAARC. The agreement was characterized as a ‘significant achievement’. The trading arrangement was upgraded by the conclusion of the South Asian Free Trade Area (SAFTA) agreement in 2004, which by historical measure was an ambitious economic plan for the region. In the meantime, SAARC added new areas in the agenda of cooperation.

Initiating cooperation in core economic areas essentially meant a transformation from neo-functionalism to ‘peace through trade, economic and financial cooperation’. While neo-functionalism as a framework of cooperation was not abandoned, cooperation in core economic areas certainly signalled an upgraded stage of regionalism in South Asia, which should be a natural process in its evolution. Indeed, cooperation (or lack of it) in core economic areas primarily defined the character of the organization after 1992.

Notwithstanding the ambitious programme SAARC adopted during the second phase of its evolution, this period also experienced disagreements and differences. This became vividly evident when SAARC failed to implement the SAFTA by the stipulated time that it set when the agreement was signed. The free trade agreement was meant to be fully functional by 2016; the member states not only failed to meet the deadline, but also the SAARC summit in November that year was cancelled due to political discord between India and Pakistan.