INCREASING TRADE THROUGH INDIAN OCEAN COOPERATION

This article examines the potential for increasing intra-regional trade through the newly established framework for Indian Ocean cooperation, the Indian Ocean Rim Association for Regional Cooperation (IOR-ARC). It analyzes the historical patterns of trade in the region and the factors that have historically inhibited greater economic integration. The study assesses the economic complementarities among the diverse member states of the IOR-ARC, which range from developed economies like Australia to rapidly industrializing nations and least developed countries. The research explores the key pillars of the IOR-ARC's agenda for trade facilitation, including the liberalization of trade policies, the harmonization of standards, and the improvement of transport and communication links. The paper argues that the initiative holds significant promise for unlocking new avenues of trade and investment for its members. The analysis concludes by identifying the major challenges to realizing this potential, particularly the need to overcome political differences and to ensure that the benefits of cooperation are shared equitably.

The establishment of the Indian Ocean Rim Association for Regional Cooperation (IOR-ARC) in the mid-1990s created a new institutional framework for promoting economic cooperation across a vast and diverse region. This paper focuses on the central objective of this new initiative: increasing intra-regional trade. The study begins by providing an economic profile of the Indian Ocean region, highlighting its vast market size, rich natural resources, and strategic location at the crossroads of global trade. The core of the article is an analysis of the specific mechanisms and policy initiatives proposed under the IOR-ARC to boost trade. This includes a discussion of the potential for preferential trade arrangements, the importance of trade facilitation measures to reduce the costs and complexities of cross-border commerce, and the need for investment promotion to create regional supply chains. The paper uses gravity model insights to argue that the existing level of trade among the Indian Ocean countries is far below its potential, suggesting that there are significant gains to be had from greater integration. However, the analysis also provides a realistic assessment of the challenges. It highlights the wide disparities in economic development among member states, the persistence of protectionist policies in some countries, and the logistical difficulties of connecting such a geographically dispersed region. The findings suggest that while the IOR-ARC is a promising start, its success in increasing trade will depend on a sustained political and economic commitment from all its members.