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1、This paper assesses the potential economic impacts of South Asian Free Trade Areathat was signed in 2004, on Pakistan's trade using the GTAP Model which is aComputable General Equilibrium Model.The proliferation of regio
2、nalism and openingup of economies towards free trade has led to creation of SAFTA.The need foreconomic development for South Asian countries has also led to the need for such anagreement.The problem statement of the pape
3、r is "How will South Asian Free TradeArea benefit Pakistan's trade and what factors are required to make SAFTA successful?The desirability of this paper lies in the fact that it investigates why there is need forSAFTA wi
4、th focus on Pakistan.It also uses a comparatively newer version of GTAPdatabase with respect to previous literatures.
GTAP database 7 has been used in the paper to assess the possible effects ofcomplete trade libera
5、lization.Actual trade data after the implementation of SAFTAfrom 2006-2014 was used to support and analyze the simulation results.
Several conclusions were drawn.Firstly, SAFTA is beneficial to Pakistan's trade asit
6、 will increase Pakistan's exports at a higher rate than imports; there will be decreasedtrade balance deficit and a trade surplus through trade with SAFTA members howeverat the cost of negative welfare effects.Total intr
7、aregional trade will increase in theregion which is the main purpose of forming SAFTA therefore the trade arrangement isrecommended to be implemented at an accelerated pace.There are issues withimplementation of SAFTA th
8、at need to be corrected which include hostile politicalclimate, lack of political will, supply-side issues and weak SAFTA framework.
Governments need to collaborate and reduce tariff rates at a more accelerated pace
9、.They are already behind schedule.Pakistan's policy makers are advised to take steps tomake sure SAFTA is operational fully to maximize benefits.A separate governmentdivision should be created that monitors and controls
10、the effectiveness of SAFTA on aregular basis and is to be strengthened with more autonomy.Exporting companiesshould be fostered with special attention to investment in research and development,technological advancements
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