Trade liberalisation among South Asian countries could yield a minimum consumer welfare gain of approximately US$2 billion a year: SDPI-CUTS International Study

The News, Pakistan, March 27, 2012
While sharing the findings of research study ‘Cost of economic non-cooperation to consumers in South Asia (COENCOSA)” the speakers lamented South Asia, despite being home to most of the world’s poor and conflict-ridden, is the least economically integrated region in the world which results into higher costs to consumers on account of costlier imports from outside the region.

The study reveals that, though Pakistan receives only 10.5 per cent of total gains, the lowest in region, it stands to save 59.04 percent on its current import expenditure on selected products. Among other factors, Pakistan’s least
connectedness with other SA countries and also worsening energy situation hinder its progress on this front.

Dr Abid Qaiyum Suleri, Executive Director, Sustainable Development Policy Institute (SDPI), Shahid Fiaz, Director of Programs, The Asia Foundation and Dr Vaqar Ahmed, Research Fellow/Head, Economic Growth Unit, (SDPI) shared the findings of the study and urged Pakistan and all South Asian countries to enhance the regional economic cooperation to facilitate the poor consumers of the region. The study is jointly conducted by CUTS International in partnership with a group of like-minded organizations including Sustainable Development Policy Institute (SDPI) with the support of The Asia Foundation. The study assesses potential benefits of opening up trade between South Asian countries mainly Pakistan, India, Bangladesh, Nepal and Sri Lanka to consumers.

Dr Suleri was of view there exists a common ambiguity among masses on a number of issues including trade relations among South Asian countries. He underscored the South Asian governments including Pakistan to enhance regional cooperation while citing the State Bank of Pakistan’s report which had also recommended country’s trade among South Asian countries would be useful for Pakistan. Terming government’s decision of trade in local currency as a ‘positive development’, he said government’s efforts for regional trade and economic cooperation has to be supported in the larger interest of consumers. ‘We need to improve our production and exports but not at the cost of our local consumers’ he underlined. He hoped Pakistan’s industry can compete if domestically strengthened particularly provision of unhindered supply of energy to industry is ensured.

Dr Vaqar said South Asia continues to be one of the poorest region in the world. A big role in this poverty is played by non-connectedness of this region in terms of trade, transport and logistics. He said this study is an effort
to look at consumer welfare gains from trade libralization. “Our estimates obtained from 12 cities across South Asia reveal that annually South Asian consumers will gain by $2 billion. Within this Pakistani consumers of South Asian products will have a gain of 59 percent in their welfare” he added. He said we believe trade agreements signed by Pakistani government should also have a consumer perspective. “We will continue our advocacy and outreach efforts to safeguard the interests of Pakistan consumer’ he further said. He hoped the study will act as a reminder to national governments in South Asia to meet their unfulfilled commitments under SAFTA adding that political considerations, no matter how strong, should not adversely impact consumers’ welfare in the region.

Shahid Fiaz said South Asia is the world’s poorest region while the regional countries are spending largest portions of their incomes on arms and defense. He said we need to move towards regional cooperation which will create a
win-win situation for all. ‘Cooperation not only means trade alone but a situation where we are spending less on defense and security’ he added. He was of the view cost of no trade is much higher than to 1.5 or 2 billion dollars. He said such researches help to enhance further research, regional dialogue and prospects for peace and stability in the situations like this region has today.

The study also discloses that trade policies and agreements have not highlighted consumers’ gains from trade liberalization and lack of awareness about consumer welfare gains lowers stakeholders’ expectations from intra-regional
trade. The study stresses to separate political issues plaguing the region for better economic cooperation and suggests increased media and policy spaces on consumer welfare gains will change stakeholders’ perceptions on the virtues of enhanced and improved intra-regional trade.

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