1 Cost of Economic Non Cooperation to Consumers in South Asia COENCOSA An Overview of the Project Project Launch Meeting Jaipur, April 16, 2011

2Content –Background and Purpose –Objectives –Activities –Methodology Desk research Field research (perception survey) –Output – Chapter plan –Expected Outcomes

3 Background and Purpose (1) Intra-regional trade in South Asia is about 5% compared to 20%-60% in other economic blocs Economic non-cooperation among the South Asian countries has resulted in high costs to consumers  India’s tariff rate is 47.47% (agricultural sector) and 12.04% (non-agricultural sector) for SAARC Nations  India’s tariff rate is 62.83% (agricultural sector) and 15.67% (non-agricultural sector) for non-SAARC Nations In 1993 SAARC member states formed SAPTA  8.4% tariff lines covered in case of imports from non-LDCs  6.2% tariff lines covered in case of imports from LDCs

Background and Purpose (2) In 2004 SAFTA was formed which is a goods only agreement with following shortcomings:  Minimalistic provisions on non tariff measures  A number of value-addition requirements  Does not include trade in services and investment The success of India-Sri Lanka Free Trade Agreement has led to a change in the situation  Indo-Sri Lanka trade rose by 128% in 2004  Between , India’s exports to Sri Lanka increased by 113% and Sri Lanka’s exports to India increased by 342%

Background and Purpose (3) Some recent developments In 2010 services included in SAFTA India is providing duty-free access to a large number of products from LDCs (positive list approach to South Asian LDCs) Bangladesh has agreed to provide transit facilities to Indian vehicles Secretary level talks between India and Pakistan is expected to resume soon The purpose of this project is to give some further momentum to these positive developments.

6 Objectives Analyse the economic and political reasons behind economic non- cooperation between South Asian countries Assess the costs thereof in terms of loss in consumer welfare Propose possible solutions for minimising such loss through enhanced regional economic cooperation

7 Activities Literature review – from the point of view of enhancing consumer welfare through regional economic integration Perception survey of selected stakeholders Regional conference in Kathmandu Publication and dissemination of the study The Project will be completed by December 2011.

8 Methodology (1) Meta-analysis of the relevant literature - actual vs. potential impact of economic cooperation on consumer welfare Perception survey in 12 cities across 5 South Asian countries: Bangladesh: Dhaka and Chittagong India: Chennai, Delhi, Kolkata and Mumbai Nepal: Biratnagar and Kathmandu Pakistan: Islamabad, Karachi and Lahore Sri Lanka: Colombo 25 stakeholders will be interviewed in each city with the help of a semi-structured questionnaire.

Methodology (2) Tabulation of survey data/information and its analysis Inferences from meta-analysis and perception survey The final draft will be peer reviewed by experts 9

10 Output – Chapter Plan Introduction- Impact of Trade Liberalisation on Consumer Welfare Trade Liberalisation and Consumer Welfare in South Asia: Stocktaking of the Progress Trade Liberalisation and Consumer Welfare in South Asia: Potential Extent and Possible Impact Prospective of Enhancing Consumer Welfare in South Asia: A Comparative Analysis of Actual and Potential Impact of Trade Liberalisation Stakeholders’ Perceptions and Associated Political Economy Factors Conclusion and Recommendations

11 Expected Outcomes Further awareness generation amongst South Asian policy makers regarding loss of consumer welfare on account of economic non-cooperation. Expected policy actions leading to enhancement of intra- regional trade and investment relations in South Asia and resultant gains in consumer welfare.