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Asia-Pacific Development Journal

The Asia-Pacific Development Journal (APDJ) is published twice a year by the United Nations Economic and Social Commission for Asia and the Pacific. The primary objective of the APDJ is to provide a platform for the exchange of knowledge, experience, ideas, information and data on all aspects of economic and social development issues and concerns facing the region and aims to stimulate policy debate and assist policy formulation. The APDJ provides a scholarly means for bringing together research work by eminent social scientists and development practitioners from the region and beyond for use by a variety of stakeholders. The Journal aims to stimulate policy debate and assist policy formulation in the region.

English

Should agriculture be exempt from trade policy reforms in South Asia?

Contracting parties to the Agreement on South Asian Free Trade Area (SAFTA) are committed to trade liberalization within a fixed time frame. Most contracting parties have kept agriculture out of their tariff liberalization commitments. A key question therefore is: should agriculture receive dispensation given the sector’s important contribution to South Asia’s economic structure? An enhanced multi-household framework within a multi-country computable general equilibrium (CGE) approach was used to assess the impacts on trade flows, government fiscal revenues and income distribution among households in countries that are contracting parties to SAFTA, assuming full trade liberalization and trade liberalization with the protection of the agricultural sector. The results indicate that, although both policies would facilitate economic growth and lead to a reduction in income disparity among household groups in all South Asian countries, the overall welfare gains would be greater under full trade liberalization. Hence, the removal of agricultural sector tariffs should be an important consideration in future SAFTA discussions; such a step would be a principal means for strengthening intraregional trade.

English

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