The formation of the Indian Ocean Rim Association for Regional Cooperation (IOR-ARC) has provided its member states with a vehicle for cooperative action to remove existing impediments to trade and investment within the Indian Ocean region (IOR). There is a need to reform the existing economic and regulatory environment if intra-regional trade and investment is to increase substantially.

Whilst it can be argued that the countries concerned are generally not, at the present time, natural trading partners, there are certain areas of common interest that make for trade complementarity. 1 Evidence indicates that trade is increasing within the IOR. It is also apparent that all members realise the importance of economic and regulatory reform and trade liberalisation and have taken the initial steps to (1) remove impediments to trade and investment and (2) to enhance complementarities over time for the economic progress of the states of the region.

The meeting of the Indian Ocean Rim Business Forum (IORBF) at Mauritius in march 1998 made key recommendations for action, consistent with the charter of the IOR-ARC. the recommendations involved economic cooperation in the areas of trade liberalisation, trade and investment facilitation and economic and technical cooperation. The charter's guiding principal is cooperation, consensus and voluntarism. The policy recommendations that have been advanced in previous meeting and forums are both modest and consistent with initial policy recommendations and priorities of other similar structured regional trading arrangements.

The purpose of this report was tabled for comments at the IOR-ARC meeting at Maputo in March 1999 and circulated by the Secretariat to member states (14 at that time) for comment prior to the report being finalised. Comments were received from Mauritius and Australia.

In january 2000, five more Indian Ocean states joined IOR-ARC, however, as this report was due for final  submission at the next IOR-ARC meeting it was thought best to restrict its coverage to the 14 states represented at the 199 Maputo meeting.

1 Gettingby, G., Recent Development in Australia's Economic Engagement with Indian Ocean Region, (Indian Ocean Centre, Perth, 1998)