We are involved in a two-year project on Regional Trade Integration, Violent Conflict, and Peace Building as a global coordinator. This research undertaking seeks to investigate the link between regional trading arrangements and conflict among or within states member of a particular Regional Trading Arrangement (RTA). We examine the case of SAARC, SAFTA, and SAPTA in South Asia.
This project is extremely pertinent in the context of the current impetus for peace between Pakistan and India, and South Asia as a whole. The Pakistan-India peace process is seeking to follow the trade theory model, where enhanced economic interdependence could lead to conflict mitigation. We investigate whether RTAs in South Asia could produce such positive spin-offs.
Our findings suggest an absence of any trade-conflict causality in South Asia. In other words, RTAs do not seem to have had any positive influence in reducing or subsiding conflict in South Asia. On the other hand, a reverse causality, where political tensions and conflict between states have hindered trade ties is apparent in almost every relationship.
Having taken the necessity of forming a robust regional trading block as a given, we end up with a pessimistic outlook towards trade and peace building in South Asia. Our findings suggest that lack of progress on the regional front has led South Asian countries to search for alternate bilateral, sub-regional, and extra regional alliances. India has taken the lead in these developments by forging FTAs and sub-regional groupings in South Asia.
Interestingly, Pakistan is the only country in South Asia that is not part of any sub-regional grouping. During the course of our research, it became clear to us that unless political tensions, especially between Pakistan and India subside (and this is not likely through the RTA route), the likelihood of regional integration in South Asia will remain bleak. This would imply that South Asian states would continue looking outside the region, thus de-emphasizing regionalism further. Any positive by-product through a trade-conflict causality then is unlikely to bear dividends in South Asia.