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58 QUANTIFICATION OF BENEFITS FROM ECONOMIC COOPERATION IN SOUTH ASIA<br />
Table 7.11 Effect of 100% Tariff Cuts on Revenue: Maldives<br />
($ ‘000)<br />
Partner Country Revenue Effect: Using Revenue Effect Revenue Effect Maldives Imports<br />
SMART Simulations (using simple average) (using weighted average)<br />
India–Maldives –12,821 –17,016 –14,517 83,865<br />
Bangladesh–Maldives –5 –<br />
Nepal–Maldives –1<br />
Pakistan–Maldives –156 –550 –194 2,875<br />
Sri Lanka–Maldives –3,192 –9,056 –8,558 42,576<br />
Total effects –16,175 –26,622 –23,269<br />
Impact on Maldives<br />
Tables 7.11 and 7.12 indicate bilateral revenue, welfare<br />
and trade effects in case Maldives cuts tariff by 100%<br />
for SAFTA member countries.<br />
• Revenue losses to Maldives are about $0.016 billion<br />
on the basis of SMART simulation while it is also<br />
approximately $ 0.026 and 0.023 billion on the<br />
basis of simple and weighted average tariff. Results<br />
are quite consistent in both the approaches. Maximum<br />
revenue loss of $0.012 billion is due to tariff<br />
cut by 100% on imports from India (Table 7.11).<br />
• There are welfare gains for Maldives and other<br />
SAARC countries from the 100% tariff reduction<br />
by India. Welfare gains for all seven countries<br />
amounts to be $3.4 million and maximum welfare<br />
gains are due to Maldives and India (Table 7.12).<br />
Table 7.12 Effect of 100% Tariff Cuts on Welfare<br />
and Trade: Maldives<br />
($ ‘000)<br />
Partner Country Welfare Effect Total Trade Effect<br />
India–Maldives 2,850 21,941<br />
Bangladesh–Maldives 1 3<br />
Nepal–Maldives 0 2<br />
Pakistan–Maldives 33 192<br />
Sri Lanka–Maldives 531 4,029<br />
Total effect 3,415 26,166<br />
• In case of 100% tariff reduction by Maldives, trade<br />
increased by approximately $0.026 billion (Table<br />
7.12).<br />
Impact on Nepal<br />
Tables 7.13 and 7.14 indicate bilateral revenue, welfare<br />
and trade effects in case Nepal cuts tariff by 100% for<br />
SAFTA member countries.<br />
• Revenue losses to Nepal are about $0.053 billion<br />
on the basis of SMART simulation while it is also<br />
approximately $0.1 billion on the basis of simple<br />
and weighted average tariff (Table 7.13).<br />
• There are welfare gains for Nepal and other SAARC<br />
countries from the 100% tariff reduction by Nepal.<br />
Welfare gains for all seven countries amounts to<br />
be $ 24 million and maximum welfare gains ($23<br />
million) are due to Nepal and India (Table 7.14).<br />
Table 7.14 Effect of 100% Tariff Cuts on Welfare<br />
and Trade: Nepal<br />
($ ‘000)<br />
Partner Country Welfare Effect Total Trade Effect<br />
Bangladeh–Nepal 32 133<br />
India–Nepal 23,996 148,675<br />
Sri Lanka–Nepal 118 365<br />
Pakistan–Nepal 19 214<br />
Total effect 24,164 149,387<br />
Table 7.13 Effect of 100% Tariff Cuts on Revenue: Nepal<br />
Partner Country Revenue Effect: Using Revenue Effect Revenue Effect Nepal Imports<br />
SMART Simulations (using simple average) (using weighted average)<br />
Bangladeh–Nepal –58 –114 –60 662<br />
India–Nepal –53,071 –117,232 –124,916 863,273<br />
Sri Lanka–Nepal –137 –63 –44 295<br />
Pakistan–Nepal –1 –550 –194 3,605<br />
Maldives–Nepal<br />
Total effect –53,266 –117,960 –125,213<br />
($ ‘000)
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