The economic cooperation organization: Current status and future prospects

Abstract

THIS ARTICLE DISCUSSES THE PROSPECTS for regional integration within the Economic Cooperation Organization (ECO). Since its expansion in 1992 to include six newly independent former Soviet republics, ECO has attracted interest as a large regional organisation and as the most significant prospect for reorienting Central Asian trade-given its pre-existing Secretariat, preferential trading arrangements and plans for common institutions. Although various former Soviet republics are members of other regional organisations, these are either broad-ranging with little substance (such as Black Sea Economic Cooperation) or single-issue fora (such as those bringing together Caspian Sea states or on the Aral Sea). The first section describes the origins of ECO and its evolution. The focus so far has been on the introduction of preferential tariffs and the establishment of common institutions. There have also been efforts to establish a regional transport strategy and to facilitate trade. The second section compares the disappointing outcome of the ECO strategy for preferential tariff reduction and establishment of common institutions with the outcomes of similar strategies adopted by other regional organisations. The strategy has had a poor track record, because ECO members are reluctant to offer meaningful preferential tariff cuts and to agree on the function and location of common institutions. The evolutionary approach followed by the Association of Southeast Asian Nations (ASEAN) in the 1980s and 1990s, based on unilateral liberalisation and coordinated trade facilitation and common negotiation with third countries, has been more fruitful. Recently the ECO Secretariat has promoted a similar approach as ECO members have adopted market-oriented reforms and shown greater interest in outward-oriented development strategies. The third section analyses the prospects for regional integration within ECO. As transport links are improved trade between the new landlocked ECO members and the three original members will increase as previous distortions are removed. The