Report

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QUANTIFICATION OF BENEFITS FROM ECONOMIC COOPERATION IN SOUTH ASIA
• SAFTA may promote greater rapprochement and
stability. GTAP results suggest that all countries
experience welfare gains, but it would be important
to give flexibilities for countries to protect the
vulnerable sectors – this is particularly the case for
manufacturing sectors in the smaller LDCs.
• SAFTA by including services may be able to harness
much higher gains than otherwise.
The main conclusion of the study is that SAFTA
will contribute to increase in intra-regional trade and
that, while some sectors will lose and some sectors gain
in each country, the net effect on the economy of
individual countries of the region, is positive. The results
suggest that in order to maximise welfare gains, it
would be important to give flexibility to countries to
protect employment intensive manufacturing sectors
in the smaller LDCs. The adoption of a transparent
and effective regional safeguard mechanisms for
agriculture products could help to take care of
sensitivities in agriculture that are bound to exist. Much
higher gains for the region can be secured if SAFTA is
simultaneously implemented with measures to reduce
transaction costs and create more efficient regional
transportation and infrastructure networks. Increasing
the scope for intra-regional trade in energy, improving
road, rail and air links within the region, building
modern border customs crossings, developing
sophisticated
telecommunications
links are all vital to this endeavour.