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Presented by: Mudassir Raza Hemani Muhammad Zubair Aziz. An article by M. Asaduzzaman ; “TRADE LIBERALIZATION AS AN INSTRUMENT FOR REGIONAL COoPeRATION ”. Introduction. South Asia is home to nearly 1.4 billion people, almost 25% of total World Population.
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Presented by: Mudassir RazaHemani Muhammad Zubair Aziz An article by M. Asaduzzaman; “TRADE LIBERALIZATION AS AN INSTRUMENT FOR REGIONAL COoPeRATION”
Introduction • South Asia is home to nearly 1.4 billion people, almost 25% of total World Population. • The countries in this region vary like India, Bangladesh, Maldives, Sri Lanka, Pakistan, Nepal and Bhutan. • The people in this region share, by and large, the same basic culture with some local variations. • Its only natural that the countries of the region band together to show a united face to the world.
Although the political culture and British colonial rule has created a kind of gulf among South Asian nations. • Of course, there are certain beneficiaries of the present tension and they continue to enable them to profit from it. • Whereas, the interests of vast citizenry in all these countries is little served by this atmosphere of conflict. • This is the reason why the leaders of these countries have finally agreed and established SAARC.
SAARC (South Asian Association for Regional Cooperation • SAARC has been working, with different degrees of success, in some of them. • The degree of success depends on interest of the countries and whether or not a country is interested to resolve an issue. • There had been attempts to create trading arrangements and later to create SAFTA (South Asian Free Trade Area). • SAFTA was to be launched in 2002, but now revised the launching date for 2006.
South Asian countries are being pulled to at the same time which creates a situation of confusion in finding the optimal mix of policy actions for most, if not all, of them. • There is a little understanding about how domestic policies may interact with the Trade Liberalization and Regional Cooperation. • Whereas, It can provide the greatest benefits to the countries in the region.
Agricultural trade Liberalization • Breton Woods Institutions started in the mid 1980s in Agriculture: • Privatization of agricultural inputs, general prices were deregulated. • Restrictions related to import and purchase of irrigation equipments. • These are not done in India & to an extent in Pakistan.
Nepal has 97% labor force employed in Agriculture. • India has 61%. • Sri Lanka has 40%. • Therefore, agriculture remains one of the most dependent source for labor employment.
Issues related to Trade Liberalization • A considerable extent to the future food security. • It could cheapen the cost of food. • Imports of seeds and agricultural material may increase input price whereas could reduce output prices.
There was an exercise on model studies, analyzing the assumptions of Free trade agreements. The results were as follows: • SAFTA alone with trade restrictions removed, can have a change in welfare of US $111 mn which is 5% if the whole world has a Global Free Trade Policy. • If only India & Bangladesh form a bilateral free trade area, the gains in welfare will be US $ 120 mn. • If Global Free Trade Policy is implemented, the total welfare will be US $ 9.3 bn.