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I MPACT OF SAFTA ON MEMBER COUNTRIES: GENERAL EQUILIBRIUM ANALYSIS 51<br />
Table 6.8 India Employment-Losing Sectors<br />
(% change)<br />
Losing Sectors<br />
Employment Decrease<br />
Wearing apparel –2.46<br />
Leather products –2.08<br />
Manufactures n.e.c. –1.79<br />
Bovine meat prods –1.37<br />
Metals n.e.c. –1.17<br />
Vegetable oils and fats –0.66<br />
Plant-based fibers –0.45<br />
Wool, silkworm cocoons –0.45<br />
Minerals n.e.c. –0.36<br />
Textiles –0.24<br />
Pakistan<br />
Like India, a full SAFTA for Pakistan will help it double<br />
its exports to South Asia (Table 6.9). Pakistan sees good<br />
results for important employment-intensive agriculture<br />
sectors like wheat, horticulture, meat products (mainly<br />
poultry) and other food products. The textiles sector<br />
which is very important to the Pakistan economy sees<br />
an output expansion of about 0.5%. Also, like India,<br />
Pakistan tends to lose in both wearing apparel and<br />
leather products sectors. It also sees losses in the sugar<br />
sector, perhaps on account of its increased imports of<br />
this product from India.<br />
Table 6.9 Impact of SAFTA on Output, Employment<br />
and Trade: Pakistan (% change)<br />
Year Output Effect on Exports Global Global<br />
Unskilled to Exports Imports<br />
Employ- South<br />
ment Asia<br />
2008-09 0.01 0 5.52 0.17 0.19<br />
2016 0.02 –0.0001 102.41 0.77 1.54<br />
GTAP shows a very interesting result in the case of<br />
both India and Pakistan. Contrary to popular intuition,<br />
India and Pakistan are not the most important markets<br />
vis-à-vis each other. More than 60% of the increase in<br />
exports to the region for both India and Pakistan are<br />
directed towards Bangladesh. A detailed look at<br />
disaggregated data reveals that more than 50% of<br />
Pakistan’s gains from SAFTA, are from increased<br />
exports to Bangladesh in textiles alone.<br />
In terms of impact of SAFTA on employment, the<br />
following sectors gain in terms of employment<br />
generation (Table 6.10).<br />
However, SAFTA leads to loss of employment in<br />
the following sectors (Table 6.11).<br />
Table 6.10 Pakistan Employment Gaining Sectors<br />
(% change)<br />
Winning Sectors<br />
Employment Increase<br />
Food products n.e.c. 5.59<br />
Wheat 2.34<br />
Vegetables, fruit, nuts 2.27<br />
Wool, silkworm cocoons 1.49<br />
Meat products n.e.c. (poultry etc.) 1.21<br />
Machinery and equipment n.e.c. 1.01<br />
Processed rice 0.55<br />
Manufactures n.e.c. 0.55<br />
Cereal grains n.e.c. 0.54<br />
Textiles 0.48<br />
Table 6.11 Pakistan Employment Losing Sectors<br />
(% change)<br />
Losing Sectors<br />
Employment Decrease<br />
Leather products –3.31<br />
Wearing apparel –3.12<br />
Metal products –2.28<br />
Sugar –2.17<br />
Oil seeds –2.12<br />
Sugarcane, sugarbeet –1.66<br />
Chemical, rubber, plastic products –1.20<br />
Paddy rice –1.08<br />
Metals n.e.c. –1.04<br />
Vegetable oils and fats –0.90<br />
Sri Lanka<br />
Sri Lanka’s gains in the first phase of liberalisation are<br />
almost nil (Table 6.12). This is largely because Sri Lanka<br />
already has close to free access to the Indian market,<br />
and also because LDCs and DCs have not committed<br />
to substantial liberalisation vis-à-vis Sri Lanka in the<br />
first phase.<br />
Table 6.12 Impact of SAFTA on Output,<br />
employment and Trade: Sri Lanka (% change)<br />
Year Output Effect on Exports Global Global<br />
Unskilled to Exports Imports<br />
Employ- South<br />
ment Asia<br />
2008-09 0.1 0 2.52 0.05 0.14<br />
2016 0.55 –0.000107 58.78 0.72 1.98<br />
Sri Lanka’s gains are improved in the second phase,<br />
when all countries participate fully (and remove their<br />
negative lists). The increase in output in vegetable oils<br />
corroborates empirical evidence of duty structures that<br />
favour manufacture of edible oils. The textiles sector,<br />
which contributes to about 5% of total output in Sri