1. Cost of Economic Non Cooperation to Consumers in South AsiaCOENCOSAAn Overview of the ProjectProject Launch MeetingJaipur, April 16, 2011

2. Content • Background and Purpose • Objectives • Activities • Methodology • Desk research • Field research (perception survey) • Output – Chapter plan • Expected Outcomes

3. Background and Purpose(1) • Intra-regional trade in South Asia is about 5% compared to 20%-60% in other economic blocs • Economic non-cooperation among the South Asian countries has resulted in high costs to consumers • India’s tariff rate is 47.47% (agricultural sector) and 12.04% (non-agricultural sector) for SAARC Nations • India’s tariff rate is 62.83% (agricultural sector) and 15.67% (non-agricultural sector) for non-SAARC Nations • In 1993 SAARC member states formed SAPTA • 8.4% tariff lines covered in case of imports from non-LDCs • 6.2% tariff lines covered in case of imports from LDCs

4. Background and Purpose(2) • In 2004 SAFTA was formed which is a goods only agreement with following shortcomings: • Minimalistic provisions on non tariff measures • A number of value-addition requirements • Does not include trade in services and investment • The success of India-Sri Lanka Free Trade Agreement has led to a change in the situation • Indo-Sri Lanka trade rose by 128% in 2004 • Between 2000-2004, India’s exports to Sri Lanka increased by 113% and Sri Lanka’s exports to India increased by 342%

5. Background and Purpose(3) Some recent developments • In 2010 services included in SAFTA • India is providing duty-free access to a large number of products from LDCs (positive list approach to South Asian LDCs) • Bangladesh has agreed to provide transit facilities to Indian vehicles • Secretary level talks between India and Pakistan is expected to resume soon The purpose of this project is to give some further momentum to these positive developments.

6. Objectives • Analyse the economic and political reasons behind economic non-cooperation between South Asian countries • Assess the costs thereof in terms of loss in consumer welfare • Propose possible solutions for minimising such loss through enhanced regional economic cooperation

7. Activities • Literature review – from the point of view of enhancing consumer welfare through regional economic integration • Perception survey of selected stakeholders • Regional conference in Kathmandu • Publication and dissemination of the study The Project will be completed by December 2011.

8. Methodology(1) • Meta-analysis of the relevant literature - actual vs. potential impact of economic cooperation on consumer welfare • Perception survey in 12 cities across 5 South Asian countries: • Bangladesh: Dhaka and Chittagong • India: Chennai, Delhi, Kolkata and Mumbai • Nepal: Biratnagar and Kathmandu • Pakistan: Islamabad, Karachi and Lahore • Sri Lanka: Colombo 25 stakeholders will be interviewed in each city with the help of a semi-structured questionnaire.

9. Methodology (2) • Tabulation of survey data/information and its analysis • Inferences from meta-analysis and perception survey • The final draft will be peer reviewed by experts

10. Output – Chapter Plan • Introduction- Impact of Trade Liberalisation on Consumer Welfare • Trade Liberalisation and Consumer Welfare in South Asia: Stocktaking of the Progress • Trade Liberalisation and Consumer Welfare in South Asia: Potential Extent and Possible Impact • Prospective of Enhancing Consumer Welfare in South Asia: A Comparative Analysis of Actual and Potential Impact of Trade Liberalisation • Stakeholders’ Perceptions and Associated Political Economy Factors • Conclusion and Recommendations

11. Expected Outcomes • Further awareness generation amongst South Asian policy makers regarding loss of consumer welfare on account of economic non-cooperation. • Expected policy actions leading to enhancement of intra-regional trade and investment relations in South Asia and resultant gains in consumer welfare.