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58 QUANTIFICATION OF BENEFITS FROM ECONOMIC COOPERATION IN SOUTH ASIA Table 7.11 Effect of 100% Tariff Cuts on Revenue: Maldives ($ ‘000) Partner Country Revenue Effect: Using Revenue Effect Revenue Effect Maldives Imports SMART Simulations (using simple average) (using weighted average) India–Maldives –12,821 –17,016 –14,517 83,865 Bangladesh–Maldives –5 – Nepal–Maldives –1 Pakistan–Maldives –156 –550 –194 2,875 Sri Lanka–Maldives –3,192 –9,056 –8,558 42,576 Total effects –16,175 –26,622 –23,269 Impact on Maldives Tables 7.11 and 7.12 indicate bilateral revenue, welfare and trade effects in case Maldives cuts tariff by 100% for SAFTA member countries. • Revenue losses to Maldives are about $0.016 billion on the basis of SMART simulation while it is also approximately $ 0.026 and 0.023 billion on the basis of simple and weighted average tariff. Results are quite consistent in both the approaches. Maximum revenue loss of $0.012 billion is due to tariff cut by 100% on imports from India (Table 7.11). • There are welfare gains for Maldives and other SAARC countries from the 100% tariff reduction by India. Welfare gains for all seven countries amounts to be $3.4 million and maximum welfare gains are due to Maldives and India (Table 7.12). Table 7.12 Effect of 100% Tariff Cuts on Welfare and Trade: Maldives ($ ‘000) Partner Country Welfare Effect Total Trade Effect India–Maldives 2,850 21,941 Bangladesh–Maldives 1 3 Nepal–Maldives 0 2 Pakistan–Maldives 33 192 Sri Lanka–Maldives 531 4,029 Total effect 3,415 26,166 • In case of 100% tariff reduction by Maldives, trade increased by approximately $0.026 billion (Table 7.12). Impact on Nepal Tables 7.13 and 7.14 indicate bilateral revenue, welfare and trade effects in case Nepal cuts tariff by 100% for SAFTA member countries. • Revenue losses to Nepal are about $0.053 billion on the basis of SMART simulation while it is also approximately $0.1 billion on the basis of simple and weighted average tariff (Table 7.13). • There are welfare gains for Nepal and other SAARC countries from the 100% tariff reduction by Nepal. Welfare gains for all seven countries amounts to be $ 24 million and maximum welfare gains ($23 million) are due to Nepal and India (Table 7.14). Table 7.14 Effect of 100% Tariff Cuts on Welfare and Trade: Nepal ($ ‘000) Partner Country Welfare Effect Total Trade Effect Bangladeh–Nepal 32 133 India–Nepal 23,996 148,675 Sri Lanka–Nepal 118 365 Pakistan–Nepal 19 214 Total effect 24,164 149,387 Table 7.13 Effect of 100% Tariff Cuts on Revenue: Nepal Partner Country Revenue Effect: Using Revenue Effect Revenue Effect Nepal Imports SMART Simulations (using simple average) (using weighted average) Bangladeh–Nepal –58 –114 –60 662 India–Nepal –53,071 –117,232 –124,916 863,273 Sri Lanka–Nepal –137 –63 –44 295 Pakistan–Nepal –1 –550 –194 3,605 Maldives–Nepal Total effect –53,266 –117,960 –125,213 ($ ‘000)
R EVENUE AND WELFARE IMPLICATIONS OF SAFTA: PARTIAL EQUILIBRIUM ANALYSIS 59 • In case of 100% tariff reduction by Nepal, trade increased by approximately $0.014 billion (Table 7.14). CONCLUSION The results of SMART simulations indicate that there will be revenue losses to all member countries of SAFTA. However, in most of the countries trade creation appears to compensate for the revenue loss, except for Bangladesh and Nepal. Welfare and trade effects are found to be positive in all member countries. Whether the revenue loss following SAFTA will be recoverable through other means like increased trade and welfare is questionable, especially for small LDCs like Nepal. Revenue loss following a free trade agreement, whether bilateral or regional, needs to be approached with alternative solutions.
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QUANTIFICATION OF BENEFITS FROM ECO
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QUANTIFICATION OF BENEFITS FROM ECO
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Preface Our consultations with seni
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viii CONTENTS 7. Revenue and Welfar
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Executive Summary OBJECTIVE This st
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EXECUTIVE SUMMARY xiii Table 1 EAMA
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EXECUTIVE SUMMARY xv India A full S
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EXECUTIVE SUMMARY xvii indicates th
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EXECUTIVE SUMMARY xix ments on basi
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Part I BENEFITS FROM TRADE, INVESTM
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4 QUANTIFICATION OF BENEFITS FROM E
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APPENDICES
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Appendix 8 Intra SAARC FDI Collabor
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Appendix 11 Table A11.1 On an Emplo
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Appendix 12 Original Commitments/In
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Appendix 14 Table A14.1 Telecommuni
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Appendix 15 REFERENCE PAPER Scope T
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Bibliography Abelson, P. (1996),
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BIBLIOGRAPHY 241 Cuba (2002), Negot
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BIBLIOGRAPHY 243 (2004), Impacts of
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BIBLIOGRAPHY 245 Silva, Patricia an
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BIBLIOGRAPHY 247 (1998), Tourism Se
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