KARACHI, May 17: It was about a decade ago that the ten-member Economic Cooperation Organization (ECO) was set up to promote regional trade but it has brought no meaningful gains. Pakistan’s trade with the ECO states fell from some $750 million in 2001 to $536 million in 2002, the lion’s share of which is contributed by Afghanistan, Iran and Turkey.

With the ECO stuck in bureaucratic quagmire, its members appear to be losing interest in the regional trade. Turkey is keen to join the European Union. The Central Asian Republics (CARs) still retain much of their trade links with the Russian federation developed before the Soviet Union collapsed. The Iraq war is bringing them closer. The Islamic militants are a source of concern to the CARs as well as the Russian Federation.

The trade route to the central Asia was more or less blocked when Taliban ruled Kabul. Much of that situation persists as the country is divided among the Afghan warlords. However, Pakistan’s exports to Afghanistan continue to improve since the Taliban regime. With the rest of CARs and other ECO members, business levels are low and stagnant. And the ECO has not gone beyond rhetorics.

Those observing its progress are concerned that the ECO may end up as the RCD did. Pakistan is considered as the gateway to the central Asia. It has yet to have a developed infrastructure to make that happen.

Reaping the fruits of independence, the central Asian states have one of the world’s highest growth rates that offer substantial business opportunities. To quote 2002 figures from a Standard Chartered Bank report, the GDP growth rate for Azerbaijan was 10 per cent followed by Kazakhstan (9.4 per cent), Tajikstan (9.1 per cent) and Uzbekistan (4.2 per cent). The only country to suffer a negative growth in 2002 was Kirgyzstan (-2.1 per cent) after a robust growth of 5-5.3 per cent over the previous two years.

An insider says that the draft ECO Trade Agreement, still to be ratified by a number of countries, has yet to be signed by two countries. To implement the agreement, a high-powered group has been set up with no meaningful progress. A number of items have been identified for preferential treatment but no interest has been generated for regional trade in the private sector.

For its success, any organization for regional co-operation has to have trade as its main agenda. Tariff reduction is the essence of regional grouping. For want of tariff incentives, the RCD failed to take off. And joint ventures set up in the public sector like shipping companies and ball bearing factor failed to take off under the RCD umbrella.

The 13th Regional Planning Council met in Teheran on April 20-22 and was attended by Pakistani officials, including chief economist, planning commission, Dr Pervez Tahir. No announcement followed.

Somehow, Pakistan has made no progress to develop a significant regional trade bloc whether it be in south or central Asia or the Middle East. As the regional trade is moving faster than global trade it cannot escape the adverse impact of its unilateralism.

Regional trade would be spurred by the Iraq war, by the split between the Europe and the United States and the prolonged economic slump in America. From next year, the EU would be enlarged by ten new members. It’s combined gross domestic product would be about the same size of the United States. The EU population will increase by 60 per cent. French and German investment will flow into ten new member-countries, bringing more prosperity to the Europe. The Eurozone will be enlarged. The euro will become stronger.

For East Asia, China has emerged as the engine of economic growth. The Chinese currency, the yuan, is seen by many as the future East Asian currency.

Pakistan’s economy, small in size and made much smaller by massive poverty, cannot have production on economies of scale and competitive products without joining a trade bloc.