South Asia: Does Preferential Trade Liberalisation Make Sense?

摘要

The early history of preferential trading within the South Asian Association of Regional Cooperation (SAARC) closely paralleled that within the Association for South East Asian Nations (ASEAN). ASEAN was founded in 1967 but the ASEAN Preferential Trade Area was launched only twelve years later in 1977. Even then, the effective sharing of trade preferences remained negligible. In the same vein, SAARC was founded in 1985 and had little success in promoting trade preferences among its members during the first decade of its existence. Though the plans to create the South Asian Preferential Trade Area (SAPTA) were announced in 1993, the actual exchange of preferences remained extremely limited. Reacting to the negotiations for the North American Free Trade Agreement (NAFTA), the ASEAN members signed the ASEAN Free Trade Area (AFTA) agreement in 1992. Though the objective of the AFTA agreement is to create a free trade area among member countries by the year 2003, to-date the exchange of preferences has been minimal. Much of the liberalisation by AFTA members has proceeded along non-discriminatory lines. The SAARC members, on the other hand, now appear poised for a serious exchange of trade preferences. India and Sri Lanka have recently signed a free trade area agreement and there is talk of a similar agreement between India and Bangladesh. Since politics has driven this change in the approach, disappointingly little effort has been made to evaluate the economic impact of these agreements and the general desirability of preferential trade liberalisation in the region relative to alternatives, which include maintaining the status quo.