SAARC, BRICS,other Bilateral and Regional groupings
In the 20th century there was a strong dynamics of integration processes, in the singular regions of the world, what is identified, by many scientists, with a trial to find a new way of economy development. Nowadays, integration activity is tied with liberalization of economic relations, and they are not treated, like a necessary evil any more, but like a necessary condition of farther economic development. T. Sporek identifies this activity with a desire to create the free trade zone, where customs and quantitative limits in a group of countries, would be abolished. This view seems to be real especially, when observing a significant progress of commercial agreements, since the beginning of the nineties. A special attention needs a fact, that highest rise of numbers of commercial agreements, was in the West Hemisphere, and areas of Asia and Pacific.
A structure of the modern world economy is very complex. It comes from growing number of subjects, building it, and more complicated relations between them. In the last century, a new subject of the world economy appeared -integration grouping. It is defined, as ‘significantly different, on the surrounding background (for example, in the world economy, and in international economic relations), relatively uniform, new economic organism ,including two or more countries ( national economies ). A process of integration joins members of groupings, and, it is a mutual adaptation of structures of singular economies. These international groupings have a regional character. It means, that, it is built by countries, which belong to a common geographical region, often neighbor to each other, and they are characterized, by a similar level of economic development though, it is not a necessary condition.
It is worth to stress, that integration groupings can have a dual character: formal (institutionalized) and informal. Formal integration groupings, have right organization structures, and authorities. Their role is a stimulation and continuation of integration processes, in the institutional way. Formalized integration groupings are for example: European Union, NAFTA and ASEAN. Informal groupings are deprived of formal structures, which would initiate and dynamize, integration processes. They can be formed by countries, tied with strong economic relations, for instance commercial, capital or productive ones. An example can be existing, but not formalized, relations between Canada, the USA and Mexico, before NAFTA was formed Integrative activity is observed in all continents. Table 2 presents the most important groupings, with a year of their foundation, the first and actual composition and describes institutional – legal form of each organization.
SAARC
The South Asian Association for Regional Cooperation (SAARC) is the regional intergovernmental organization and geopolitical union of nations in South Asia. Its member states include Afghanistan, Bangladesh, Bhutan, India, Nepal, the Maldives, Pakistan and Sri Lanka. SAARC comprises 3% of the world’s area, 21% of the world’s population and 3.8% (US$2.9 trillion) of the global economy, as of 2015. SAARC was founded in Dhaka on 8 December 1985.Its secretariat is based in Kathmandu, Nepal. The organization promotes development of economic and regional integration. It launched the South Asian Free Trade Area in 2006. SAARC maintains permanent diplomatic relations at the United Nations as an observer and has developed links with multilateral entities, including the European Union.
In the ending years of the 1970s, the seven inner South Asian nations that included Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka agreed upon the creation of a trade bloc and to provide a platform for the people of South Asia to work together in a spirit of friendship, trust, and understanding. President Ziaur Rahman later addressed official letters to the leaders of the countries of the South Asia, presenting his vision for the future of the region and the compelling arguments for region. During his visit to India in December 1977, Rahman discussed the issue of regional cooperation with the Indian Prime Minister, Morarji Desai. In the inaugural speech to the Colombo Plan Consultative Committee which met in Kathmandu also in 1977, King Birendra of Nepal gave a call for close regional cooperation among South Asian countries in sharing river waters. After the USSR’s intervention in Afghanistan, the efforts to establish the union was accelerated in 1979 and the resulting rapid deterioration of South Asian security situation. Responding to Rahman and Birendra’s convention, the officials of the foreign ministries of the seven countries met for the first time in Colombo in April 1981. The Bangladeshi proposal was promptly endorsed by Nepal, Sri Lanka, Bhutan, and the Maldives but India and Pakistan were sceptical initially. The Indian concern was the proposal’s reference to the security matters in South Asia and feared that Rahman’s proposal for a regional organisation might provide an opportunity for new smaller neighbours to renationalise all bilateral issues and to join with each other to form an opposition against India. Pakistan assumed that it might be an Indian strategy to organise the other South Asian countries against Pakistan and ensure a regional market for Indian products, thereby consolidating and further strengthening India’s economic dominance in the region.
Political issues in SAARC
Lasting peace and prosperity in the Indian subcontinent has been elusive because of the various ongoing conflicts in the region. Political dialogue is often conducted on the margins of SAARC meetings which have refrained from interfering in the internal matters of its member states. During the 12th and 13th SAARC summits, extreme emphasis was laid upon greater cooperation between the SAARC members to fight terrorism. The 19th SAARC summit scheduled to be held in Pakistan was called off as India, Bangladesh, Bhutan and Afghanistan decided to boycott it. It was for the first time that four countries boycotted a SAARC summit, leading to its cancellation.
South asian free trade area
SAFTA was envisaged primarily as the first step towards the transition to a South Asian Free Trade Area (SAFTA) leading subsequently towards a Customs Union, Common Market and the Economic Union. In 1995, Sixteenth session of the Council of Ministers (New Delhi, 18–19 December 1995) agreed on the need to strive for the realisation of SAFTA and to this end an Inter-Governmental Expert Group (IGEG) was set up in 1996 to identify the necessary steps for progressing to a free trade area. The Tenth SAARC Summit (Colombo, 29–31 July 1998) decided to set up a Committee of Experts (COE) to draft a comprehensive treaty framework for creating a free trade area within the region, taking into consideration the asymmetries in development within the region and bearing in mind the need to fix realistic and achievable targets.
The SAFTA Agreement was signed on 6 January 2004 during Twelfth SAARC Summit held in Islamabad, Pakistan. The Agreement entered into force on 1 January 2006, and the Trade Liberalisation Programme commenced from 1 July 2006. Under this agreement, SAARC members will bring their duties down to 20 percent by 2009. Following the Agreement coming into force the SAFTA Ministerial Council (SMC) has been established comprising the Commerce Ministers of the Member States. In 2012 the SAARC exports increased substantially to US$354.6 billion from US$206.7 billion in 2009. Imports too increased from US$330 billion to US$602 billion over the same period. But the intra-SAARC trade amounts to just a little over 1% of SAARC’s GDP. In contrast, in ASEAN (which is actually smaller than SAARC in terms of the size of the economy) the intra-bloc trade stands at 10% of its GDP.
BRICS
BRICS is the acronym for an association of five major emerging national economies: Brazil, Russia, India, China and South Africa. Originally the first four were grouped as “BRIC” (or “the BRICs”), before the induction of South Africa in 2010. The BRICS members are known for their significant influence on regional affairs; all are members of G20. Since 2009, the BRICS nations have met annually at formal summits. China hosted the 9th BRICS summit in Xiamen on September 3, 4 and 5, 2017.
In 2015, the five BRICS countries represent over 3.1 billion people, or about 41% of the world population; all five members are in the top 25 of the world by population, and four are in the top 10. As of 2018, these five nations have a combined nominal GDP of US$18.6 trillion, equivalent to approximately 23.2% of the gross world product, combined GDP (PPP) of around US$40.55 trillion (32% of World’s GDP PPP) and an estimated US$4.46 trillion in combined foreign reserves. Overall the BRICS are forecasted to expand 4.6% in 2016, from an estimated growth of 3.9% in 2015. The World Bank expects BRICS growth to pick up to 5.3% in 2017. The BRICS have received both praise and criticism from numerous commentators. Bilateral relations among BRICS nations have mainly been conducted on the basis of non-interference, equality, and mutual benefit.
First BRIC summit
The BRIC grouping’s first formal summit, also held in Yekaterinburg, commenced on 16 June 2009, with Luiz Inácio Lula da Silva, Dmitry Medvedev, Manmohan Singh, and Hu Jintao, the respective leaders of Brazil, Russia, India and China, all attending. The summit’s focus was on means of improving the global economic situation and reforming financial institutions, and discussed how the four countries could better co-operate in the future. There was further discussion of ways that developing countries, such as 3/4 of the BRIC members, could become more involved in global affairs. In the aftermath of the Yekaterinburg summit, the BRIC nations announced the need for a new global reserve currency, which would have to be “diverse, stable and predictable”.Although the statement that was released did not directly criticise the perceived “dominance” of the US dollar – something that Russia had criticised in the past – it did spark a fall in the value of the dollar against other major currencies.
Entry of South Africa
In 2010, South Africa began efforts to join the BRIC grouping, and the process for its formal admission began in August of that year. South Africa officially became a member nation on 24 December 2010, after being formally invited by the BRIC countries to join the group. The group was renamed BRICS – with the “S” standing for South Africa – to reflect the group’s expanded membership. In April 2011, the President of South Africa, Jacob Zuma, attended the 2011 BRICS summit in Sanya, China, as a full member.
Developments
The BRICS Forum, an independent international organisation encouraging commercial, political and cultural cooperation between the BRICS nations, was formed in 2011. In June 2012, the BRICS nations pledged $75 billion to boost the lending power of the International Monetary Fund (IMF). However, this loan was conditional on IMF voting reforms. In late March 2013, during the fifth BRICS summit in Durban, South Africa, the member countries agreed to create a global financial institution which they intended to rival the western-dominated IMF and World Bank. After the summit, the BRICS stated that they planned to finalise the arrangements for this New Development Bank by 2014. However, disputes relating to burden sharing and location slowed down the agreements.
At the BRICS leaders meeting in St Petersburg in September 2013, China committed $41 billion towards the pool; Brazil, India and Russia $18 billion each; and South Africa $5 billion. China, holder of the world’s largest foreign exchange reserves and who is to contribute the bulk of the currency pool, wants a greater managing role, said one BRICS official. China also wants to be the location of the reserve. “Brazil and India want the initial capital to be shared equally. We know that China wants more,” said a Brazilian official. “However, we are still negotiating, there are no tensions arising yet.” On 11 October 2013, Russia’s Finance Minister Anton Siluanov said that a decision on creating a $100 billion fund designated to steady currency markets would be taken in early 2014. The Brazilian finance minister, Guido Mantega stated that the fund would be created by March 2014. However, by April 2014, the currency reserve pool and development bank had yet to be set up, and the date was rescheduled to 2015. One driver for the BRICS development bank is that the existing institutions primarily benefit extra-BRICS corporations, and the political significance is notable because it allows BRICS member states “to promote their interests abroad… and can highlight the strengthening positions of countries whose opinion is frequently ignored by their developed American and European colleagues.”
In March 2014, at a meeting on the margins of the Nuclear Security Summit in The Hague, the BRICS Foreign Ministers issued a communique that “noted with concern, the recent media statement on the forthcoming G20 Summit to be held in Brisbane in November 2014. The custodianship of the G20 belongs to all Member States equally and no one Member State can unilaterally determine its nature and character.” In light of the tensions surrounding the 2014 Crimean crisis, the Ministers remarked that “The escalation of hostile language, sanctions and counter-sanctions, and force does not contribute to a sustainable and peaceful solution, according to international law, including the principles and purposes of the United Nations Charter.” This was in response to the statement of Australian Foreign Minister Julie Bishop, who had said earlier that Russian President Vladimir Putin might be barred from attending the G20 Summit in Brisbane.
Association of Southeast Asian Nations ( ASEAN)
The Association of Southeast Asian Nations (ASEAN) is a regional intergovernmental organisation comprising ten Southeast Asian countries which promotes Pan-Asianism and intergovernmental cooperation and facilitates economic, political, security, military, educational and socio-cultural integration amongst its members and other Asian countries, and globally. Since its formation on 8 August 1967 by Indonesia, Malaysia, the Philippines, Singapore and Thailand, the organisation’s membership has expanded to include Brunei, Cambodia, Laos, Myanmar and Vietnam. Its principal aims include accelerating economic growth, social progress, and sociocultural evolution among its members, alongside the protection of regional stability and the provision of a mechanism for member countries to resolve differences peacefully. ASEAN is an official United Nations observer, as well as an active global partner. It also maintains a global network of alliances, and is involved in numerous international affairs.
Foundation and charter
ASEAN was preceded by an organization formed in 31 July 1961 called the Association of Southeast Asia (ASA), a group consisting of the Philippines, Federation of Malaya, and Thailand. ASEAN itself was created on 8 August 1967, when the foreign ministers of five countries: Indonesia, Malaysia, the Philippines, Singapore, and Thailand, signed the ASEAN Declaration. The creation of ASEAN was motivated by a common fear of communism, and a thirst for economic development.
As set out in the Declaration, the aims and purposes of ASEAN are to accelerate economic growth, social progress, and cultural development in the region, to promote regional peace, collaboration and mutual assistance on matters of common interest, to provide assistance to each other in the form of training and research facilities, to collaborate for better utilisation of agriculture and industry to raise the living standards of the people, to promote Southeast Asian studies and to maintain close, beneficial co-operation with existing international organisations with similar aims and purposes.
Political-Security Community Blueprint
During the 14th ASEAN Summit, the group adopted the ASEAN Political-Security Community Blueprint (APSC). This document is aimed at creating a robust political-security environment within ASEAN, with programs and activities outlined to establish the APSC by 2016. The document is based on the principles and purposes of the ASEAN charter, the ASEAN Security Community Plan of Action, the Vientiane Action Program, and other relevant decisions. The APSC aims to create a rules-based community of shared values and norms, a cohesive, peaceful, stable and resilient region with a shared responsibility toward comprehensive security and a dynamic and outward-looking region in an increasingly integrated and interdependent world.
The ASEAN Defence Industry Collaboration (ADIC) was proposed at the 4th ASEAN Defence Ministers’ Meeting on 11 May 2010 in Hanoi. The emergence of this concept was triggered by the fact that the majority of member states are regular importers of defence products. One of the purposes of this concept is to reduce defence imports from non-ASEAN countries by half (i.e., from US$25 billion down to US$12.5 billion a year) and to further develop the defence industry in the region. It was formally adopted during the 5th ASEAN Defence Ministers’ Meeting (ADMM) on 19 May 2011, in Jakarta, Indonesia, in line with the ADMM agreement to enhance security co-operation in maritime security, humanitarian assistance and disaster relief, counter-terrorism, and military medicine. The main focus is to industrially and technologically boost the security capability of ASEAN, consistent with the principles of flexibility and non-binding and voluntary participation among the member states. The concept revolves around education and capability building programs to develop the skills and capabilities of manpower, sharing in the production of capital for defence equipment, components, and spares, and the provision of repair and maintenance services to address all the defence and security needs of each ASEAN country. It also aims to develop the defence trade by encouraging member states to participate in the intra-ASEAN defence trade and support trade shows and exhibitions. ADIC aims to establish a strong defence industry relying on the local capabilities of each member state, and limit annual procurement from original equipment manufacturers (OEMs) outside the region. Countries like the USA, Germany, Russia, France, Italy, UK, China, South Korea, Israel, and the Netherlands are among the major suppliers to ASEAN. Military expenditures in ASEAN reached US$35.5 billion in 2013 (excluding Brunei and Myanmar), which surpassed the 2004 figure (US$14.4 billion) by 147% and is expected to exceed US$40 billion.
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