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GTAP Resource #3037

"Regional Trade Cooperation and Food Prices: An Assessment for South Asian Free Trade Area (SAFTA)"
by Bouët, Antoine and Erwin Corong

The countries of South Asia are now in the midst of an important path towards regionalism. After much anticipation, uncertainty and skepticism, the South Asian Free Trade Area (SAFTA) agreement finally came into force in January 2006, paving way for the most significant step towards intensified trade integration in the region thus far. SAFTA comes after two decades of gradual and arduous political negotiation since the formation of the South Asian Association of Regional Co-operation (SAARC) in 1985, and a decade of limited exchange of trade preferences under the South Asian Preferential Trade Area (SAPTA). The agreement—contracted by four least developing countries (LDC), namely Bangladesh, Bhutan, Maldives and Nepal, and three middle income countries India, Pakistan and Sri Lanka—imposes a detailed schedule to be completed by 2016 and provides for preferential treatment and longer tariff cutting schedule for LDC members.

Since trade is one way by which high food prices can be curbed in South Asia, it is likely that SAFTA could help mitigate food price inflation in the region. Whereas the existing literature has focused mostly on trade diversion issues and economic viability of SAFTA, no analytical work has been done so far to assess the food price mitigating potential of regional trade cooperation in South Asia. This paper fills the gap in the literature by simulating cooperative and non-cooperative scenarios to analyze the likely food price mitigating impact of regional free trade in South Asia.

Resource Details (Export Citation) GTAP Keywords
Category: 2009 Conference Paper
Status: Published
By/In: Presented at the 12th Annual Conference on Global Economic Analysis, Santiago, Chile
Date: 2009
Created: Corong, E. (4/15/2009)
Updated: Batta, G. (10/26/2012)
Visits: 3,110
- Preferential trading arrangements
- Economic development
- Dynamic modeling
- The GTAP Data Base and extensions
- Asia (South-Central)

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