The negotiation process on the concession plan, which is part of the agreement, began in 1993. To this end, the Government Group on Trade Liberalization (IGG) has been established. The IGG met six times in different capitals. At the sixth meeting held in Kathmandu on 20 and 21 April 1995, delegations held intensive rounds of bilateral and multilateral negotiations and agreed on the national list of concessions that each Member State should grant to other Member States under the SAPTA Convention. Four rounds of trade negotiations have been concluded under SAPTA for more than 5,000 commodities. Each round contributed to a gradual trend in product coverage and the deepening of tariff concessions compared to previous rounds. During the first and second cycles, trade negotiations were conducted on a product-by-product basis. During the third and fourth cycles, negotiations were conducted on a chapter-by-chapter basis. Maintenance of the SAPTA concession The welfare effect of AFTA in its member countries is less than the welfare effect of SAFTA. This result can be explained by Table 9. Footnote 12 Table 9 shows the number of RTAs owned by all SAFTA and afTA members. On average, SAFTA member countries have concluded 9.71 regional trade agreements. On the other hand, AFTA member countries have an average of 16.67 regional trade agreements, or more than 60% of SAFTA member countries.

The largest number of RTAs belong to an AFTA member, which is 33 for Singapore, while India has the highest (28 ARAs) among SAFTA members. Thus, after the abolition of these two RTAs, AFTA member countries would lose less than SAFTA member countries, as they have more trading options than SAFTA. On the other side of the spectrum, less developed and smaller countries earn more than developed and larger countries. Small countries with small economies, such as Bangladesh, Bhutan, Nepal and Brunei Darussalam, would lose more than large countries with larger economies after the abrogation of the respective trade agreements. Although Singapore`s economic size is much higher than that of other members, it would lose more because the country`s size is smaller, i.e. smaller countries need more trade options. The intuition behind this is that large countries have their own natural market for trade (Arkolakis et al. 2012). Assuming rtAs are exogenous, from the introduction of the gravitational equation to the 90s, several studies attempt to measure the impact of regional trade agreements (e.g. B, free trade agreements and the customs union) on bilateral trade flows or welfare gains.

Most of them found very little positive or negative effect on trading. Trefler (1993) systematically addressed the simultaneous identification of U.S. multilateral imports and U.S. multilateral non-tariff barriers in a cross-sectoral analysis. Trefler noted that the policy`s impact on U.S. imports has increased tenfold after taking into account the endogeneity of trade policy. Therefore, the study on bilateral international trade flows and bilateral RTAs is the subject of the same criticism that RTAs are not exogenous. SaFTA`s objective is to promote and increase joint contracts between countries, such as medium- and long-term contracts. Contracts relating to trade with States, security of supply and import of certain products, etc. It involves the agreement of tariff concessions such as domestic tariff concessions and non-tariff concessions The possible reason why the joint SAFTA and AFTA do not have significant effects on welfare can be interpreted in different ways. First, SAFTA and AFTA already exist and, therefore, according to the joint agreement between SAFTA and AFTA, the member of these two trade agreements has nothing to gain from safta and AFTA members.

For example, Bangladesh and India will gain nothing because of the joint SAFTA-AFTA agreement, but only from SAFTA. Second, most SAFTA member countries have concluded their individual trade agreements with most AFTA member countries. This is why Bhutan, Maldives and Nepal benefit from the joint SAFTA-AFTA agreement, i.e. they do not have a trade agreement with most AFTA members. Therefore, the joint agreement between SAFTA and AFTA could bring prosperity to these countries. Thirdly, the effect of trade diversion on the world and the third country is almost negligible, since the trade diversion effect of SAFTA and AFTA individually is already very small. Consequently, the joint agreement between SAFTA and AFTA would not change anything in third countries. Grant JH, Lambert DM (2008) Do regional trade agreements increase members` agricultural trade? Am J Agr Econ 90(3):765–782 In the reference scenario, third countries gain an average of 0.02% and global losses 0.14%. The effect of trade diversion is greater for third countries than for the conditional DGA scenario. So far, it seems, no study finds the general equilibrium comparative analysis (including partial effect, conditional GE effect, and full GE effect) of SAFTA and AFTA, which is one of the most important features of the structural gravity model in determining the potential effect of RTAs. In addition, this paper is the first to discover the potential ex ante effect on the well-being of joint SAFTA and AFTA, as the discussion on the formation of several RTAs between the member countries of these two RTAs is on the table, e.B.

BIMSTECFootnote 2 (Bay of Bengal Initiative for Multisectoral Technical and Economic Cooperation). Taking into account the endogeneity of the partial ATR estimate and using the GEPPML estimator by Anderson et al. (2015) I note that the commercial effect of SAFTA and AFTA between member countries is positive and significant; on the other hand, the effect of trade diversion on non-Members is negligible. The joint agreement between SAFTA and AFTA will bring more prosperity to these two regional trade agreements for small economic countries. In Table 3, I include AFTA`s neighbouring countries to see the diversion effect of AFTA trade on its neighbouring countries (. B for example, Bangladesh, India and Pakistan), as well as some major economies that are distant countries (. B for example, France, Germany, the United States and the United Kingdom) from the Asian region, in order to observe the diversion effect of AFTA trade. The removal of the AFTA from the ACR variable has a significant negative impact on the real GDP of member countries. The welfare effects of three regional trade agreements are heterogeneous not only between trade agreements, but also within the member countries of an agreement. Welfare losses resulting from the abolition of NAFTA are higher in member countries than in two other RTAs. In the case of the joint agreement between SAFTA and AFTA, the effect on well-being is less.

Intuition is explained in advance. If a SAFTA member country and a member country (e.B Brunei Darussalam and Nepal) of AFTA have not had a trade agreement between them before, they will achieve a significant share of GDP when SAFTA and AFTA enter into force together. This result actually certifies the effect of RTAs on well-being. The rest of the article is organized as follows: In the third section of my article, I discuss several studies that examine the effects of regional trade agreements using the traditional and structural equation of gravity since 1962. The fourth section contains the discussion of data. The fifth section deals with the identification strategy of my analysis. In the sixth section, I examine the results of the ex post and ex ante analysis of the welfare of two Asian regional trade agreements and a possible accession agreement between these two trade agreements. In the seventh section, I have a comparative discussion of my three counterfactual analyses. In the last section, I draw the conclusion from my result. Hirantha SW (2003) From SAPTA to SAFTA: gravity analysis of South Asian free trade, Mimeo, Department of Economics, Nagoya University, Japan Cipollina M, Salvatici L (2010) Reciprocal trade agreements in gravity models: a meta analysis. Rev Int Econ 18(1):63–80 Thus, subject to reservations, all estimates are limited to baseline estimates and changes are made to the respective trade policy variables and multilateral resistance conditions.

One important thing that needs to be mentioned here is that in order to get conditional GE indices, exits and outputs must remain constant at this stage. Anderson et al. (2015) prefer PPML estimators to estimate basic “β” trade cost elasticities to assess the conditional and complete GE effect of the elimination of international boundaries, which is limited in the conditional and complete general equilibrium phases. However, they also argue that any estimator can be used to estimate the elasticities of basic “β” trade costs, although this can be drawn from studies that have regularly estimated the equation of gravity. .