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‘Trade’ has been the buzzword in the policy paradigm of the global economy for some time now. With no progress in the WTO talks and free trade agreements emerging as focal points, the significance of the impact of trade on economic growth and even on domestic policy space is now a matter beyond debate. But what lies wide open is the development question. Considering that freeing international trade was supposed to foster economic growth and broad based development, the time is ripe for asking whether and how trade has contributed to domestic development and whether the current initiatives in the region are sufficient to sustain the development process. This becomes even more critical since the trade situation has become increasingly volatile and multilayered with the current commodity and financial crisis. In addition, the development agenda under the multilateral negotiations is being continuously undermined and there is a possibility that it will be even more so under some of the bilateral trade regimes. Simultaneously, with the global financial crisis and the impending recession in the US, the development agenda is likely to get further eroded in the coming years as there will be an intense pressure on international and domestic spending on providing job security, food and emergency aids and building social security networks in developing economies.
For South Asia which, with the exception of Sri Lanka, has low human development indicators, the development question is fast becoming crucial. This includes both income and social deprivation. Poverty levels are high which the current economic scenario has been unable to mitigate fast enough even in a rapidly growing country like India. Income inequalities are high and rising to levels hitherto unseen in South Asia which had been historically much more equitable compared to many other developing regions like Africa and Latin America. While research into these phenomena is carried on by the academia, policymaking bodies and civil society organisations, the role of trade in exacerbating these economic adversities must be the explored in further detail. It is true that in South Asia, gains from international trade and investment flows have been concentrated in specific sectors and subsectors creating enclaves of prosperity and have not necessarily encouraged broad based income generation and welfare. It is also true that domestic policies have been significantly influenced by the trade mandates and have in turn shaped the development context within South Asia.
Therefore, it is time to take stock of what the current trade situation implies in terms of nurturing the development potential of developing economies in general and of South Asia in particular. But at this juncture, we must specifically address the new issues in trade which were relatively unknown even a few years back. In terms of trading arrangements, plurilateral, bilateral and regional trade arrangements are emerging as the preferred instruments which if widespread enough, can bypass the multilateral trading framework and change the rules of the game completely. These also offer options for forming strategic alliances and looking for alternative trading options. For South Asia, this has emerged as a major alternative for looking beyond the multilateral trade framework given the impasse in Doha talks. At the same time, the pitfalls of going in for a PTA on an unequal basis is what any developing economy should be cautious about. On the other hand, even in the ongoing multilateral negotiations, the role of intellectual property rights and the control of knowledge is an area that developing economies are still grappling with. This also has special significance for South Asia where traditional knowledge in fields of cultivation, medicine are major resources held on a community basis. The current trading framework will also have a significant impact on issues of public health and environment, especially climate change, which in turn can have such a far reaching impact on development in the near future that they can leave basic commodity trading far behind. Discussions on these issues have begun relatively recently and the multidimensional nature of their impact is still beyond our comprehension. Finally, it is also imperative that we look at the interaction between international trade and the domestic policy space and determine how that connects to the broad based developmental needs within the region. In the final analysis, a country’s domestic policy environment must play a critical role in determining how gains or losses from a certain trade related issue are distributed among its inhabitants and what its impacts are in terms of generating employment and incomes.
The 4th South Asia Conference, hosted by CENTAD, intends to focus on these areas and reexplore links between trade and development in the context of a rapidly evolving trade scenario. In the process of its own research, CENTAD has time and again felt the need to highlight these issues and has worked with its partners to continuously improve the understanding on the specific themes covered in this conference. It hopes to foster a discussion on these specific issues and formulate a constructive ‘development policy agenda’ that is able to deal with all these complexities. Its expectation is that in future, the South Asian society will build these factors into their development demands.
The critical questions that will be addressed in the conference are; which are the new trade paradigms in the current scenario in South Asia; how can these be effectively used for development of the region; and, in the final analysis, what implications does the current trade paradigm have in terms of generating economic welfare by providing higher incomes through livelihoods that are sustainable, equitable and can help us alleviate the widespread poverty in the region.
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