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Should Bangladesh Join a Regional Free Trade Area?

Author

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  • Peter Warr

    (Peter Warr is at the Research School of Pacific and Asian Studies, Australian National University, Canberra, ACT, Australia 0200:. E-mail: peter.warr@anu.edu.au.)

Abstract

Suppose a regional preferential trading agreement (PTA) is to be formed and a particular country is invited to join. Should it do so? This question arises for Bangladesh in relation to a proposed PTA based upon the BIMST-EC country grouping of Bangladesh, India, Myanmar, Sri Lanka and Thailand. This paper examines the case for Bangladesh joining such a PTA. It is concluded that the net gains from doing so would be very small. There are two reinforcing aspects to this point. The first is the relatively small levels of intra-regional trade between Bangladesh and the other BIMST-EC countries. Although these trade volumes would almost certainly increase under a PTA, they may not do so sufficiently to make the benefits economically significant. The second aspect is that the pattern of trade between Bangladesh and the other BIMST-EC countries suggests that they are not natural trading partners. The trade-creating effects that generate net benefits may be especially small. There may be other strong reasons for forming a PTA among these countries, resting mainly on political considerations, but significant trade-related gains should not be expected.

Suggested Citation

  • Peter Warr, 2005. "Should Bangladesh Join a Regional Free Trade Area?," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 6(1), pages 79-97, March.
    • Handle: RePEc:sae:soueco:v:6:y:2005:i:1:p:79-97
    DOI: 10.1177/139156140500600105
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    References listed on IDEAS

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    1. Wonnacott, Ronald J, 1996. "Free-Trade Agreements: For Better or Worse?," American Economic Review, American Economic Association, vol. 86(2), pages 62-66, May.
    2. Sam Laird, 1999. "Regional Trade Agreements: Dangerous Liaisons?," The World Economy, Wiley Blackwell, vol. 22(9), pages 1179-1200, December.
    3. Anne O. Krueger, 1999. "Are Preferential Trading Arrangements Trade-Liberalizing or Protectionist?," Journal of Economic Perspectives, American Economic Association, vol. 13(4), pages 105-124, Fall.
    4. Arvind Panagariya & Jagdish Bhagwati, 1996. "The Economics of Preferential Trade Agreements," Books, American Enterprise Institute, number 51856, September.
    5. Kelegama, Saman, 2001. "Bangkok agreement and BIMSTEC: crawling regional economic groupings in Asia," Journal of Asian Economics, Elsevier, vol. 12(1), pages 105-121.
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    Cited by:

    1. Salahuddin Ahmed, 2008. "Bangladesh and Global Economy: Does Bangladesh Keep Pace with Economic Globalization?," AIUB Bus Econ Working Paper Series AIUB-BUS-ECON-2008-07, American International University-Bangladesh (AIUB), Office of Research and Publications (ORP), revised Feb 2008.
    2. Dilip K. Das, 2008. "South Asia's Integration with the Rest of Asia: a survey," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 22(1), pages 25-40, May.
    3. Mukul Asher, 2006. "Role of Japan in BIMSTEC," Working Papers id:389, eSocialSciences.

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    More about this item

    Keywords

    Bangladesh; BIMST-EC; PTA; Free Trade;
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