Premium Essay

Prospects of Trade Under Safta

In: Business and Management

Submitted By shamim67
Words 1963
Pages 8
PROSPECTS OF TRADE UNDER SAFTA
Muhammad Khalid Bashir, Khuda Bakhsh and Azid Imdad Faculty of Agricultural Economics and Rural Sociology, University of Agriculture, Faisalabad

ABSTRACT Under the WTO regime it was expected that both the developing and developed nations will benefit from the opening up of the markets in these countries. But uptil now the developing countries are at the suffering end. So theses were being encouraged to explore the regional markets and make some regional free trade areas. The countries of SAARC had decided to sign the SAFTA. Question arises that will it be a support to the economies of these countries? The general perception is that the countries with higher comparative advantage will out weigh rest of the countries. It is further being envisaged incase of SAFTA that there are three possible ways of the workability of it which are; pessimistic, optimistic and moderate. Different empirical evidences and theoretical perceptions are that the current political atmosphere in the region is supportive to the pessimistic outcome of SAFTA. INTRODUCTION The World Trade Organization (WTO) has been established with an aim to enhance international trade with the help of lower trade barriers and providing a forum to negotiate trade and business with agreed upon principles of the trading system. The WTO principles allow a free trading system with no discrimination against foreign products or services. The provision is also there that one country can not provide special treatment to a particular trading partner while other member countries are not given such privilege. Principles of the WTO aim to lower trade barriers to facilitate free trade among the

member countries. It is also promised in the WTO principles that a trading system should be predictable, with foreign companies and governments reassured that trade barriers will not be raised…...

Similar Documents

Premium Essay

Trade

...Bulletin Volume 1, Number 1, 2005 © 2005 by the State Bank of Pakistan. All rights reserved. Reproduction is permitted with the consent of the Editor. OPINIONS Trade between India and Pakistan: Potential Items and the MFN Status Abid Qamar∗ During the last several years, opening up of trade between India and Pakistan has become the most sought after question at many policy forums and among concerned groups. The issue has gained particular importance after India granted the Most Favored Nation (MFN) status to Pakistan, to comply with the principles of World Trade Organization (WTO) regime in 1995, and Pakistan’s reluctance in reciprocating so far. It is believed that increased trade relationship can play a vital role in normalizing the political relationship between the two countries. This will, therefore, benefit millions of people living in both countries as the resources would be diverted from less desirable areas, such as defense spending, to poverty alleviation initiatives. Given the likely impact of trade liberalization between the two countries, the unavailability of any established estimate of potential trade and the items likely to be traded is unfortunate. With a view to come up with some estimates based on some methodology, however simple it is, this note attempts to find the potential of trade between the two countries by identifying the potential items. It estimates the scope for exports and savings by substituting our imports from the rest......

Words: 5232 - Pages: 21

Premium Essay

Present Trade Rekatuin Between India and Pakistan

...Trade Relation between India and Pakistan. Introduction India and Pakistan have been trying, though not very successfully, since the Shimla Agreement, 1972, to create political harmony. Several attempts later, the political and security issues have only become worse. It is imperative to explore the bilateral trade relations between India and Pakistan, so as to seek a way towards a deeper engagement, as these two countries have the potential to change the geopolitical dynamics of Asia.We shall first explore the history of bilateral trade relations between the two nations. History of Trade between India and Pakistan Bilateral trade between India and Pakistan could be of mutual gain to both as they were not separate once. Mumbai and Karachi, their major business centres are near each other, which serves another advantage. But these advantages are marred by disadvantages such as, non-tariff barreiers, poor trade facilitation measures like customs and porcedural barriers, difficult visa regime, poor infrastucture resulting in costly transportation, and many more. At the time of independence, almost3/5th of Pakistan’s total exports were directed towards the Indian market, and 1/3rd of its imports came from India (Sangani and Schaffer 2003). But discord in political relations obstructed bilateral trade. After India’s devaluation of its currency in 1949, Pakistan refused to devalue its currency and later imposed import......

Words: 3656 - Pages: 15

Premium Essay

Enhancing Intra-Saarc Trade: Pruning India’s Sensitive List Under Safta

...Enhancing Intra-SAARC Trade: Pruning India’s Sensitive List under SAFTA Nisha Taneja Saon Ray Neetika Kaushal Devjit Roy Chowdhury April 2011 List of Abbreviations FTA - Free Trade Agreement ISLFTA - India-Sri Lanka Free Trade Agreement LDC - Least Developed Contracting State NLDC - Non-Least Developed Contracting State RCA - Revealed Comparative Advantage SAARC - South Asian Association for Regional Cooperation SAFTA - South Asia Free Trade Agreement WITS - World Integrated Trade Solution Key words Revealed Comparative Advantage Is a ratio of the shared of given product in a country’s export to its share in world export. The revealed comparative advantage is an index used in international economics for calculating the relative advantage or disadvantage of a certain country in a certain class of goods or services as evidenced by trade flows. Concessions-mean tariff and non-tariff privileged by agreement under Tariff Liberalization Programme. Sensitive list-A list of items agreed by all member countries which are vulnerable to competition. It is the products of which will not be subject to tariff reduction. Notified Sensitive List- Is the original list at the time inception of SFTA Operational Sensitive List-Is the list constructed after taking all Central Board of Excise Customs notification into account Non-tariff measures- Include any measure, regulation or practice other than tariff Introduction The last two decades have witnessed a number...

Words: 1843 - Pages: 8

Premium Essay

Trade Union in Belgium and Germany and Their Prospects in the Future

...Introduction What is a trade union? The definition of a trade union varies in different countries. A commonly used definition of a trade union is by Webbs (1984), which states that a trade union is “a continuous association of wage earners for the purpose of maintaining or improving the conditions of their employment”. Trade unions were well-received by the workers during the age of the industrial revolution. During that period of time, workers are in a weaker position as they do not have the power to choose their job, as opposed to their employers choosing their workers (Williams and Adam-Smith 2006). Labours are mainly made up of unskilled or semi-skilled workers. Unskilled workers do not possess any skills thus having the weakest power in employee relations. Semi-skilled workers on the other hand possess some firm-specific skill which gives them some power like in wage settings (Grosfeld and Nivet 1999). Since the goal of the employer is to employ workers at the lowest cost and workers have weak power, they are unable to secure a good wage or benefits. There is also managerial prerogative in which managers have “the right to manage” because they are the “legitimate agent of the employer” and have the possession of certain skills (William and Adam-Smith 2006) resulting in workers having no voice in decision-making. As a result of the difference in power between workers and employers and the lack of voice in decision making, this entices workers to join a trade union.......

Words: 6098 - Pages: 25

Premium Essay

Trade

...in the absence of the tariff (i.e., under free trade). You may assume that transportation costs are zero and that demand and supply curves are linear. | With $5 per unit Tariff | Free Trade | World price of shirts | $20 | $20 | Tariff per unit | $5 | $0 | Price per unit of shirts | $25 | $20 | Quantity of Shirts (‘000s) | 200 | 250 | Quantity of Shirts (‘000s) | 120 | 50 | (a) Calculate the quantity imported under free trade and with the tariff. Import quantity = domestic consumption – domestic production Under free trade: 250 – 50 = 200 With the tariff: 200 – 120 = 80 (b) Use a diagram to illustrate the effect of the tariff on prices and quantities in this case, and then calculate the changes in consumer surplus, producer surplus, and tariff revenue resulting from the tariff. Changes in: Consumer surplus = -(a+b+c+d) = (200x5) + 0.5(50x5) = -$1,125,000 (loss) Producer surplus= a = (50x5) + 0.5(70x5)= $425,000 (gain) Tariff revenue = c = 80x5 = 400,000 (gain) Net national welfare = -(b+d) = -0.5[(70x5) + (50x50] = - $300,000 (loss) P($) D S 25 Pw+t a b c d 20 Pw 50 120 200 250 Question 2: The following table summarizes two hypothetical situations in the market for T-shirts in a large economy. The first column depicts the situation in the presence of a $10 per unit tariff on imported T-shirts. The second column represents the situation under free trade. You may assume that demand and......

Words: 713 - Pages: 3

Premium Essay

Exploring the Prospects for U.S-China Trade

...Exploring the prospects for U.S-China trade With the significant development of economy, China has already exceeded Japan, becoming the second largest economic entity in the world. From 1949 to the present, China's economy grew annually from 4 to 10 percent. There is no doubt that the export contributes a lot to China’s GDP; meanwhile, United States just replaced the European Union, turning into China’s largest trade partner last year. It is obvious that China and U.S. are closely connected in the modern economy. Since U.S. and China are inextricably linked, I would like to analyze the trade between U.S. and China in this paper, and find out what are influencing the value of trade between the two countries. First of all, there are some economic concepts that need to be explained. China has a favourable balance of trade, which means nowadays China exports more than imports; however, U.S. has run a trade deficit every year for more than thirty years, which means U.S. imports more. The import and export are always connected with the exchange rate. For instance, if you are exporting and your local currency becomes strong then your products become more expensive for your buyers. If you are importing and your local currency becomes weak then the products you are importing become more expensive. As we can see, China is exporting more to the U.S., so I would assume that one of the reason why U.S. would import more from China may be the exchange rate of China’s currency Yuan is......

Words: 2007 - Pages: 9

Premium Essay

Balance of Trade

...Balance of Trade shows the difference between the total amount of incoming and outgoing currencies through import and export. Balance of Payment (BOP) is a summary of economic activities between the residents of country and the rest of the world during a given period, usually one year. The main purpose of keeping these records is to inform government authorities about the overall international economic position of the country in order to assist them in arriving at decisions on monetary and fiscal policy, on the one hand, and trade and payments policy on the other. Balance of payments statistics are therefore helpful to government authorities charged with maintaining macroeconomic stability.BOT is a part of BOP, but it is significant for the economy because import and export is one of the most important economic activities of a nation. Moreover the balance of trade shows whether the external sector of a particular country is doing well or not. Along with BOT,BOP depicts the overall economic balance of a nation and the health of foreign reserve of that nation. So I agree that in the context of Bangladesh balance of trade is an external sector indicator than balance of payments. A common misconception is that balance of trade deficits are always bad for the economy. This is not necessarily true. In the short term if a country is importing a high volume of goods and services this acts as a short-term boost to living standards since it allows consumers to buy a higher level of......

Words: 505 - Pages: 3

Premium Essay

Prospects and Challanges of Islanic Banking

...ensure the Islamic nature of these branches such as separation and compliance with Shariah. Separation of Islamic banking branches includes separation of capital, accounts, staff employed and office. However, the most important thing is compliance with Shariah. There should be strong Shariah supervisory boards in order to prepare the model agreement, to approve the structure of every new operation, and lay down the basic guidelines for each and every mode of financing. (Ahmad, A. U. F., & Hassan, M. K. 2007). The major part of the operational financial resources of Islamic banks is derived from different types of deposits mobilized on the principles of Al-Wadia (safe custodianship) and Al-Mudaraba (trust financing). Utilization of fund under the framework of Islamic banking has opened a multifarious way for making loan (the term “loan” in conventional banking is called "Investment" in the Islamic banking system) conforming to Islamic Shariah. Since Islamic banks can not lend on interest, they have devised different types of interest-free financing devices. (Alam, M. N. 2000). Total deposits of the Islamic banks and Islamic banking branches of the conventional banks stood at Taka 532.6 billion at end December 2010. This was 29.7 percent of the deposits of all private commercial banks and 17.5 percent of the deposits of the total banking system at the end of December 2010. Total investment of the Islamic banks and the Islamic banking branches of the conventional......

Words: 10394 - Pages: 42

Premium Essay

International Trade

...A troubling trajectory; International trade Competition in smartphones has intensified thanks to lower-cost rivals such as China's Xiaomi. It uses a similar supply chain, but slightly fewer parts are imported: the growing sophistication of Chinese manufacturers means that more components are being made at home. The rapid spread and subsequent slight retreat of such far-flung supply chains provides one possible explanation to a puzzle that is troubling policymakers: why international trade has been growing no faster than global GDP in the past few years. The notion of "peak trade" is being taken increasingly seriously. The composition of global demand could yet move back towards greater trade intensity, for several reasons. Whether trade is declining relative to GDP and why may not be clear for years. Yet one thing is: were more barriers to be lifted, especially in areas like services and farming where many still remain, it would probably lead to a new spurt in the evolution of supply chains that would lift trade far above today's "peak". Fears are growing that trade's share of the world's GDP has peaked. But that is far from certain WHEN Apple launched the iPhone in 2007, it deployed a state-of-the-art global supply chain. Although the pioneering smartphone was designed in America, and sold first to consumers there, it arrived in stores from Shenzhen, China. It had been assembled there by Foxconn International from parts made by two firms in Singapore, six in Taiwan and...

Words: 1438 - Pages: 6

Free Essay

Prospect House

...Prospect House Some people have more difficulties finding their spot in life. They are having a hard time finding out who they are and what they are supposed to do with life. The majority of them are usually kids who have had a pretty hard childhood. That is the stereotype of the residents of a prospect house. That is what the narrator, Kim, is like in Prospect House by Frances Childs. She has a rough time finding her place in society and she is working hard to get her life back on track. The story takes place in Winchester, south of England, and it could have been written today. It is a first person narrator, and we see that already from the beginning: (line 1) “When I first arrived at Prospect House […]” It only gives us her point of view. We see the world through her eyes and it forces us to take her side and feel sympathy for her. Kim is a girl in her late teens who probably has had a rough childhood in London, and that might make her think she is stronger than everybody else: (lines 2-4) “I’d come from London you see, the city. I might think I was harder than them, might want to throw my weight around.” and yet she is terrible at fighting (line 139). Before she came to the prospect house she did not look out for herself, for instance, she got hep B and a STD from a guy she does not even remember the name of (lines 7-9), and she did not care that she got fired from her job at a home for deprived children. She actually found it funny because she saw herself more...

Words: 993 - Pages: 4

Free Essay

India and China- Prospects and Challenges

...International Research Journal of Social Sciences_____________________________________ ISSN 2319–3565 Vol. 2(8), 48-54, August (2013) Int. Res. J. Social Sci. India and China: Prospects and Challenges Mehraj Uddin Gojree Department of Political Science, Aligarh Muslim University, U.P., INDIA Available online at: www.isca.in Received 16th July 2013, revised 27th July 2013, accepted 12th August 2013 Abstract This paper seeks to assess the future prospects and challenges of the relationship between the two rising giants of Asia namely China and India. As they both are rising as great powers, their mutual relationship will have a significant impact not only on Asia, but on the whole world. At present, the nature of their relationship is something mixed i.e., growing cooperation in the field of trade and commerce along with distrust and mutual suspicions in the strategic fields whether political or geographical. For these apparent factors, the future relationship between India and China can be characterised by the cooperation in those fields whether mutual, regional or international which may be beneficial for the peaceful rise of both these states and confrontation, competition, and even hostility in some other areas where the respective interests of both the giants clash with each other, for example, the border issue, relationship with other countries particularly US and Pakistan, their encirclement policies, competition for energy resources, nuclear arms......

Words: 5602 - Pages: 23

Premium Essay

Business Prospects of Djpl

...about the international business. They are required to know about the concept of international trade theories, international business environment (Political, economic, socio-cultural and Technological), different modes of entry into international businesses. Students are also expected to have basic idea about national polices related with international trade and investment implemented by Government of Nepal. | Learning Unit | Learning Unit OneNet contact hours – 2 | 1 Introduction to International business and Globalization 2.1 Concept of International business and its terminology 2.2 How international business differs from domestic business? 2.3 Concept of globalization and its forces 2.4 Trade Liberalization 2.5 Movement of labor and capital across borders; opportunities and threats to LDCs | Learning Unit TwoNet contact hours – 6 | 2 The basic concept about Economics of Trade Policy 3.6 Why trade? 3.7 Real Trade Costs 3.8 Barriers to trade; Tariff and Non-tariff barriers to trade 3.9 Preferential trade 3.10 Regional Trading Agreements; trade creation and diversion; European Union, SAFTA, BIMSTEC; Major features of regional trade blocs; Impact of regional trade blocks on Nepalese international trade 3.11 Significance of double tax avoidance treaties and bilateral investment treaties for the promotion of trade and investments. | Learning Unit ThreeNet contact hours – 6 hrs | 3 Multilateral......

Words: 691 - Pages: 3

Premium Essay

Trades

...ABSTRACT The Indian government’s efforts are directed towards the establishment of a free, fair, transparent and fully informed market with help of the Futures market, so that futures prices are truly determined by the forces of demand and supply. In the long term, the continuing rapid growth of economy in India creates a huge potential for Futures market. This study is an effort to understand the factors under PEST Analysis. For this purpose, data from different sources were collected and later analyzed by using statistical techniques. With an improving agriculture, widening scope of education, a balanced economy, friendlier infrastructure, vividly sketched out laws unstained by any kind of corruption will create the right climate for swift growth of the futures market. The PEST analysis shows that most of the factors considered are indeed going in favour of India’s futures market. INTRODUCTION A futures contract is a legally binding agreement to buy or sell a commodity or financial instrument sometime in the future at a price agreed upon at the time of the trade. While actual physical delivery of the underlying assets seldom takes place, futures contracts are nonetheless standardized according to delivery specifications, including the quality, quantity, and time and location. The only variable is price, which is discovered through the trading process. In this study we are trying to find out the opportunities and challenges of futures trading in India......

Words: 6883 - Pages: 28

Free Essay

Business Prospects in Indai

...Business Prospects in India Business is that giant who resides in the whole world. Until one doesn’t connect globally one can’t come under its clutches thereby missing all the benefits it has to offer. It wasn’t until the early 1990s that India began to reap these benefits with the corroding ‘license raj’ giving way to the economic reform of Liberalization, Privatization and Globalization (LPG). Economic indicators like foreign exchange reserves, that can cover upto 6 months imports now as compared to those that could cover only 2 weeks imports then, substantiate the ameliorated scenario. On the flipside, indicators such as the current account deficit, which is worse (4%) now as compared to that in 1991 (3%), impugn India’s amiability towards businesses. India being rich and diverse in its culture and demography, exhibits a plethora of business avenues. With a population of over 1 billion, a growing middle and upper middle class that aspires for a better standard of living, the market for ventures in retail, education, wealth management, health, telecom, infrastructure development, and insurance sectors is massive. The relatively lower labour costs and a large rural population (83 million) are instrumental in attracting labour intensive IT and social enterprises respectively. In addition, there is a growing pool of consumers demanding customised and ‘indianised’ products and services and opportunities for recreation and self-improvement, which has opened doors for many......

Words: 539 - Pages: 3

Premium Essay

Trade Policy

...Trade Policy Reforms in India Geethanjali Nataraj NCAER, New Delhi For the ICRIER-SABER workshop, 29-30 June p, 2009, New Delhi. Trade Policy in India • Trade Reforms form the crux of the economic reforms in India. • Export Promotion has been and continues to be a major thrust of India’s trade policy • Accordingly, policies have been aimed at creating a friendly environment by eliminating redundant procedures, increasing transparency by simplifying the processes involved in the export sector and moving away from quantitative restrictions, thereby improving the competitiveness of Indian industry and g p reducing the anti-export bias. • Steps have also been taken to promote exports through g g multilateral and bilateral initiatives and giving several incentives to exports to cope with all uncertainties at the global level. Features of Trade Policy Reform in India • • • • • Free imports and Exports Rationalization of tariff structure/reducing tariffs Decanalisation Liberalization of the exchange rate regime. Setting up of trading houses, SEZ’s and Export houses SEZ s promotion industrial parks. • Various exemptions under the EXIM policies to boost exports and imports and make the trade policy regime transparent and less cumbersome. p Towards a more open economy 1990 91 1990-91 Peak Import duties ( Manufactures ) Import Controls Trade goods)/GDP ratio ( %) Software exports ( & billion) Worker remittances ( $ billion) FDI ($ billion) g y Foreign currency reserves......

Words: 1174 - Pages: 5