Impact of Sensitive Lists Under SAFTA: Quantitative Assessment Using a Partial Equilibrium Modeling

European Journal of Globalization and Development Research, Vol. 10, No. 1, 2014

24 Pages Posted: 27 Aug 2014

See all articles by Sushil Kumar

Sushil Kumar

Jamia Millia Islamia (A Central University)

Shahid Ahmed

Jamia Millia Islamia (A Central University) - Economics

Date Written: August 25, 2014

Abstract

The long list of product in sensitive list maintained by the member countries is one of the major weaknesses of South Asia Free Trade agreement for its effectiveness. Present study analyzes the impact of sensitive list (Phase II) under the SAFTA at disaggregate level (HS6 digit) by using partial equilibrium modeling. This paper more specifically looked at consumer surplus, trade creation, trade diversion as well as impact on tariff revenues among India, Pakistan, Sri Lanka and Bangladesh as a result of removal of sensitive list.

The study indicates positive effect on consumer surplus and trade flows; and negative effect on tariff revenues. RCA index indicated comparative advantage in textiles, machinery/ electric product, chemicals and allied products and metal products and different categories of textile products. The simulation results shows that aggregate total trade effect is US$ 902.82 million and a surge in export of crude oil, technically specified natural rubber, cotton, smoked sheets, articles of apparel and clothing accessories etc. Finally, the study recommended that each country should reduce the sensitive list.

Keywords: SMART Model, Trade Creation, Trade Diversion, Welfare Effects

JEL Classification: F13, F17

Suggested Citation

Kumar, Sushil and Ahmed, Shahid, Impact of Sensitive Lists Under SAFTA: Quantitative Assessment Using a Partial Equilibrium Modeling (August 25, 2014). European Journal of Globalization and Development Research, Vol. 10, No. 1, 2014. Available at SSRN: https://ssrn.com/abstract=2486738

Sushil Kumar (Contact Author)

Jamia Millia Islamia (A Central University) ( email )

Jamia Nagar
New Delhi, Haryana 122002
India

Shahid Ahmed

Jamia Millia Islamia (A Central University) - Economics ( email )

Jamia Nagar
New Delhi, 110025
India

HOME PAGE: http://jmi.ac.in/economics/faculty-members/Prof_Shahid_Ahmed-1783

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