Motor Vehicles Agreement : A major regional initiative

Earlier this week, India, Nepal, Bhutan and Bangladesh signed a landmark Motor Vehicles Agreement (MVA) for the Regulation of Passenger, Personnel and Cargo Vehicular Traffic among the four South Asian neighbours in Thimphu, Bhutan. This major initiative between sub-grouping of four SAARC nations, Bangladesh, Bhutan, India and Nepal (BBIN) is expected to pave the way for a seamless movement of people and goods across their borders for the benefit and integration of the region, thereby galvanising economic development in South Asia at large. India only has bilateral motor vehicle agreements with Nepal and Bangladesh but a multilateral pact would go a long way in boosting trade in the region. The agreement opens up the possibility of turning border roads into economic corridors which could increase inter-regional trade within South Asia by 60%.

Transport Minister Nitin Gadkari signed the pact on India’s behalf and underscored India’s rationale for pushing this initiative by suggesting that this agreement “would further need to be supplemented through building and upgrading roads, railways and waterways infrastructure, energy grids, communications and air links to ensure smooth cross-border flow of goods, services, capital, technology and people.” A joint statement released by the four countries said, “We recognise that the BBIN agreement is a complementary instrument to the existing transport agreements or arrangements at the bilateral levels that the contracting parties will continue to honour.

Implementation difficulties, if any, will be resolved based on provisions of the motor vehicle agreement.”

Taking note of the finding that transforming transport corridors into economic corridors could potentially increase intraregional trade within South Asia by almost 60% and with the rest of the world by over 30%, the joint statement read, “We acknowledge that apart from physical infrastructure, the development of economic corridors within and between our countries requires the implementation of policy and regulatory measures, including the BBIN MVA, which will help address the nonphysical impediments to the seamless movement of goods vehicles and people between our four countries.”

What is interesting about New Delhi’s move is that it comes after Pakistan decided not to support the agreement during the SAARC summit held in Kathmandu in November 2014, on the ground that it needs more time to consult all its provinces. A broader SAARC agreement would have allowed free movement of vehicles of each country — cargo as well as passenger vehicles — in territory of other country through authorised operator.

After Pakistan’s obstructionist stance could not be cleared, India decided to tap its eastern neighbours and the framework of the new agreement was finalised in a meeting of the transport secretaries of the four countries at the South Asia Subregional Economic Cooperation (SASEC) —– another grouping of south Asian countries which includes India, Bangladesh, Bhutan, Maldives, Nepal and Sri Lanka — held in Kolkata earlier this year in February. Pakistan is not part of this grouping. SASEC was set up in 2001 to bring together these six countries to promote regional prosperity and boost trade by improving cross border connectivity. If Pakistan persists in its obstructionist agenda, New Delhi is signalling it would find itself marginalised in the larger South Asian dynamic.

India is now pursuing a similar framework between India, Myanmar and Thailand in order to get access to the larger ASEAN market through seamless passenger and cargo movement. Consensus has reportedly been reached on the text of the agreement as well.

That the MVA project has great potential is underscored by the fact that the Asian Development Bank (ADB) has been intimately involved in its Planning operationalisation. The ADB, which has been involved as a major donor in developing transport corridors in the BBIN countries through the South Asia Subregional Economic Cooperation (SASEC) programme, provided technical assistance in preparing the BBIN MVA.

The ADB has identified 30 road projects worth US$ 8 billion over the next five years to fill and upgrade critical connections in the BBIN area. However, it is important for the BBIN countries to implement appropriate transport facilitation measures. The ADB has also made it clear that non-tariff barriers continue to impede trade within the region and that it can cost much more for a South Asian country to trade with another in the sub-region than outside it.

Covering at least 1.5 billion people across India, Pakistan, Bangladesh, Nepal, Sri Lanka, Bhutan, Maldives and Afghanistan, the South Asian Association for Regional Cooperation (SAARC ) established in 1985 is one of the largest regional organisations in the world. But its achievements so far have been so minimal that even its constituents have become lackadaisical in their attitudes towards it. The success of MVA can change the narrative if governments in South Asia demonstrate political resolve to tackle this initiative with a degree of seriousness not seen before. This can move the region beyond the blinkers created by Partition, whereby the region has more often than not missed the larger picture in pursuit of short-sighted rivalries. In South Asia, the security dynamics between a large India and its smaller neighbours have  ensured that the road to economic and political cooperation will be a bumpy one. And after the emergence of China, that road has become an even more difficult one to traverse. So it is all the more imperative for New Delhi to resolutely push the project of greater regional economic cooperation forward. 

A BBIN Friendship Motor Rally has been planned for October 2015 to highlight the sub-regional connectivity and the scope and opportunities for greater people-to-people contact and trade. But it is time for the region to look beyond such photo-ops towards greater substance in regional connectivity. 

The author teaches at King’s College, London