South Asian Free Trade Area Research Articles

What Does Regional Trade in South Asia Reveal about Future Trade Integration? Some Empirical Evidence

In 1995 the seven South Asian countries - Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan, and Sri Lanka - initiated a multilateral framework for regionwide integration under the South Asian Preferential Trade Agreement (SAPTA). In a recent initiative, members agreed that SAPTA would begin the transformation into a South Asian Free Trade Area (SAFTA) by the beginning of 2006, with full implementation completed between 2009 and 2013. The impetus toward regional preferential trading arrangements and greater regional economic integration raises many important issues, both for the South Asian region as a whole and for the individual countries. Pitigala uses the trading partners hypothesis as the empirical criterion to assess the potential success of a South Asian trading bloc. Using various definitions of the natural trading partner hypothesis - based on trade volume, geographic proximity, and the complementarity approaches - the author demonstrates that the South Asian countries can be characterized only moderately as natural trading partners. This characterization is, however, largely a consequence of previous impediments to trade among regional members. The author further demonstrates through additional statistical measures - including revealed comparative advantage indices, trade concentration, and trade competition profiles - that the trade structures that have evolved among the South Asian Countries may not facilitate a rapid increase in intra-regional trade. But there is evidence that previous unilateral trade liberalization efforts in the South Asian countries have already had a positive impact in boosting both intra- and extra-regional trade. Continuing the process of unilateral liberalization, in parallel with regional integration, would aid the South Asian countries to continue to diversify their still narrow export bases and potentially evolve new comparative advantages and complementarities that could facilitate the successful implementation of SAFTA. This paper - a product of the Trade Team, Development Research Group - is part of a larger effort in the group to analyze regional integration and trade policies.

South Asian Free Trade Area and Indo-Pakistan Trade

Preferential trading is one of the mildest forms of an integrative arrangement. Under the arrangement, the Contracting States (CS) offer a preferential margin with respect to trade barriers in relation to their MFN rates. CS having disparate levels of development as well as trade regimes, find this an acceptable instrument for initiating regional trade liberalisation. Such an arrangement nevertheless provides the building blocks towards accelerated regional trade liberalisation culminating in a free trade area within a defined time frame. Under a free trade area the CS eliminate all trade restrictions on their mutual trade, while maintaining restrictions in their trade with non-CS at a level they deem appropriate. When all CS decide on a common external tariff, then the arrangement translates itself in a more cohesive customs union. The arrangement translates to a common market when all CS agree not only to allow free movement of goods and services, but all the factors of production including capital and labour. Finally, the most comprehensive form of an integrative arrangement results from an economic union, which integrates national economic policies of CS and leads to the adoption of a common currency. The Agreement on South Asian Preferential Trading Arrangement (SAPTA), which became operational since December 7th, 1995 thus, symbolises the beginnings of the very first stage of an integrative arrangement among the member countries of SAARC. The decision made at the Twelfth SAARC Summit at Islamabad in January 2004 to launch South Asian Free Trade Agreement (SAFTA) from January 2006 would mark the second stage of the process of integration in the region. The main focus of this paper is to assess the impact of SAPTA on Indo-Pak trade.

A Trade Linkage System for Saarc

The significant success, which has made through regional economic co-operation in different parts of the world like EC, NAFTA, LAFTA, ASEAN and so on, are reflected in the initiatives that emerged in South Asia in the mid-eighties through formation of South Asian Association for Regional Cooperation (SAARC) in 1985. In the 12th SAARC summit, held in Islamabad in 2004, the SAARC member countries have decided to establish South Asian Free Trade Area (SAFTA). Macro-econometric models have been used, in general, extensively in recent years not only for forecasting purposes but also to analyze the effects of certain policy measures on the economy. It has been usual practice to construct macro-models for respective countries without specifying any specific linkages with trading partners. It is the econometric trade link system, through which we can study individual economy focusing the aspect of economic interdependence among member countries. The main objective of this paper is to construct a suitable trade linkage system for SAARC. This paper also presents the impact of SAFTA on member countries. Further, the trade relation with non-SAARC countries has also been studied in this paper.

Meeting of the Committee of Experts (Coe) On Drafting a Comprehensive Treaty Regime for a South Asian Free Trade Area (Safta), Saarc Secretariat Kathmandu, 14-17 October 2003 the Report

Meeting of the Committee of Experts (Coe) On Drafting a Comprehensive Treaty Regime for a South Asian Free Trade Area (Safta), Saarc Secretariat Kathmandu, 14-17 October 2003 the Report

How Desirable is the South Asian Free Trade Area? A Quantitative Economic Assessment

The proliferation of preferential trading agreements (PTAs) in different regions of the world has been a significant development over the last two decades. South Asian countries have been slowly moving towards a South Asia Free Trade Area (SAFTA) in recent years. The desirability of SAFTA has been questioned by some observers recently. Will SAFTA create gains for its members or not? Is it better for South Asian countries to promote non‐discriminatory trade liberalisation rather than SAFTA? The main objective of this paper is to address the above questions, especially the desirability of SAFTA, using a global computable general equilibrium (CGE) model. From the existing empirical and theoretical studies, we have identified three viewpoints on the desirability (or viability) of SAFTA: pessimistic, optimistic, and moderate. The results from two policy scenarios (unilateral liberalisation and SAFTA) confirm the pessimistic view by showing that unilateral liberalisation would benefit South Asian countries much more than preferential liberalisation (SAFTA). In fact, under preferential liberalisation, small countries in the region would gain little or even lose. The present political climate in South Asia also seems to support the pessimistic view.

Impact of Free Trade on South Asia with Ref ere nee to India

The world has witnessed formation of several regional economic cooperation in different parts of the world after the World War II The significant success in regional economic cooperation in different parts of the world has been reflected in formation of South Asian Association for Regional Cooperation (SAARC) in 1985 among seven countries of South Asia, namely Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka. In any regional economic cooperation, trade is a key component SAARC is not exception to this. In 1995, they have established South Asian Preferential Trade Area (SAPTA). The idea of economic interdependence within the South Asian region had gained importance after formation of SAPTA, in particular. In the 8th SAARC Summit in 1995, the member countries have decided to form South Asian Free Trade Area (SAFTA) by the year 2005. Therefore, a quantitative economic analysis of any national economy within SAARC should allow its trade relation with member countries. In the present paper, we study the quantitative impact of duty free access to India s market for imports on SAARC countries.

Influence of multiple overload on fatigue crack retardation in high strength low alloy structural steel: Dhar, S.Eng. Fract. Mech. 1988, 31, (3), 534–535

In this paper, we derive time-varying relative export competitiveness (REC) of India’s top agricultural exports (rice, wheat, cotton and sugar) against India’s share of world agricultural exports (REC_WA) and world exports (REC_WE) from 1961 to 2012. We reveal that India’s exports of all four commodities became relatively competitive over time but these were not as competitive as the top, or selected emerging, exporters of the four commodities. We also examine the determinants of REC in these four commodities focusing on factors including crop-specific and aggregate factor endowments, domestic price, export prices, and GDP per capital, preferential trade agreements, export restrictions and bans, and India’s Green Revolution. The regression analysis was mainly confined to the 1981–2012, due to data constraints. We find that the time series regression results are similar in sign and significance for REC_WE and REC_WA. Our key findings suggest the REC in wheat, rice, and cotton deteriorated as a result of export restrictions. Capital had negative effects on cotton REC. Labor and farm size did not influence the REC in the commodities. The Green Revolution improved the REC in rice and cotton (in Phase 3). The WTO had a positive effect on the REC in rice. The South Asian Free Trade Area (SAFTA) Agreement adversely affected the REC in wheat and rice but strengthened the REC in cotton and sugar. Higher domestic price reduced the REC in cotton. Higher per capita income strengthens the REC in wheat with a lag. We explain these results and suggest policy implications.