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Regional Trade Cooperation and Food Prices: An Assessment for South Asian Free Trade Area (SAFTA)

Author

Listed:
  • Bouët, Antoine
  • Corong, Erwin

Abstract

The objective of this paper is to assess the welfare and trade consequences of the SAFTA agreement and to evaluate if it can help reduce the impact of increased volatility of world agricultural prices in South Asia. Two counterfactual policy simulations in particular, classified into cooperative and global non-cooperative scenario are carried out. The former simulates the tariff reduction schedule based on the SAFTA agreement, while the latter analyzes the impact of global food export restrictions on South Asia. It uses a dynamic multi-country multi-sector Computable General Equilibrium model (MIRAGE), combined with detailed tariff line information from the 2004 MAcMap HS6 database. Our findings are that SAFTA leads to moderate gains among its members: in particular this trade agreement is trade diverting. Moreover it alone could not counter the effects of high global food prices, due to the region’s small share in world trade.

Suggested Citation

  • Bouët, Antoine & Corong, Erwin, 2009. "Regional Trade Cooperation and Food Prices: An Assessment for South Asian Free Trade Area (SAFTA)," Conference papers 331870, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:331870
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    File URL: https://ageconsearch.umn.edu/record/331870/files/4307.pdf
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