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Trade Liberalization & Consumer Welfare


Trade Liberalization & Consumer Welfare in South Asia

Trade Liberalization & Consumer Welfare in South Asia

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  • 1. Trade Liberalization & Consumer Welfare in South Asia Dr. Vaqar Ahmed Sustainable Development Policy Center 1
  • 2. Outline• Need for this study• Trade liberalization – Gains for South Asia• Trade liberalization – Gains for Pakistan• Which commodities gain in Pakistan?• Way forward 2
  • 3. Need for this Study• 1/5th of world poor living in South Asia• Intra-regional trade can enhance consumer welfare• Trade agreements do not effectively highlight consumer gains• Need to highlight consumer view point in South Asia• Separating political issues from economic cooperation 3
  • 4. Need for this Study (Post SAARC Summit) • Consensus on reducing size of distortionary lists • Even in case of Pakistan granting MFN to India  consensus on trade of intermediate goods 4
  • 5. Methodology• Quantitative (Partial Equilibrium) Approach – Secondary trade statistics• Countries: Bangladesh, India, Nepal, Pakistan & Sri Lanka• Data from 12 cities of South Asia• Saperate questionnaires for documenting stakeholder views and perceptions in each city. 5
  • 6. How much South Asian Consumers Benefit? Summary of Results on Aggregate Consumer Welfare GainsCountry Product Consumer Current Value Percentage of Lines in Welfare Gains Imports of Consumer Sensitive (in US $ million) Country from Welfare Gains Lists ROW in Imports (%) (in US $ million)Bangladesh 50 398.56 2781.33 14.33India 161 597.29 1095.45 54.52Nepal 73 457.50 1068.27 42.83Pakistan 44 206.18 349.24 59.04Sri Lanka 27 288.61 918.54 31.42Total 355 1948.15 6212.83 31.36 6
  • 7. How much Pakistani Consumers Benefit? 7
  • 8. How much Pakistani Consumers Benefit? 8
  • 9. In which Commodities Pakistani Consumers Benefit? (Percentage Increase) 1.49 13.79 Pharmaceuticals Electronic Equipment Others 84.72 9
  • 10. Usefulness of these Estimates The estimation method helps to identify products with maximum potential consumer welfare gains for each country and therefore, qualifies for removal from their respective sensitive list The estimates form the basis for more detailed studies on the effects of reduction in transportation costs and other trade facilitation measures on consumer welfare The estimates will facilitate comparison with other trade costs and relative merits of tariff liberalisation in each product category can be assessed 10
  • 11. Way Forward Opinion about SAFTA as an effective instrument for enhancing regional trade is regardless of opinion on the importance of regional trade integration SAFTA’s future critically depends on the extent to which non-trade issues are disentangled from trade negotiations Make trade agreements pro-consumer as well Awareness generation on consumer welfare impacts of regional trade can increase regional trade discourse more participatory and balanced 11
  • 12. Thank You, 12