The South Asian free trade area : an analysis of policy options for Sri Lanka

South Asia was slow to take up the issues of regional economic cooperation, although SAARC was established in 1985 and the creation of the SAFTA remains a widely discussed policy issue in this region. Recently, there has been a proposal, mainly from the business community, to initiate bilateral free trade agreements among the SAARC member countries, particularly with India. In the case of Sri Lanka, for example, its support for the SAFTA was prompted largely by the desire to gain access to the Indian market, an objective which was already achieved under the ILFTA. There is also a proposal to enter into a bilateral trade agreement with Bangladesh. Hence, the benefits that Sri Lanka could gain as a member of the SAFTA is considered as a debatable policy issue. This study compares the impacts of different trade policy options on Sri Lanka using GTAP Version 6 (Database 2001) to determine the impacts on output, employment, welfare and trade. The simulation results indicated that the multilateral trade liberalization is the best trade policy outcome for the Sri Lankan economy. The South Asian Customs Union ensures the next highest welfare for Sri Lanka, followed in order by the SAFTA and the ILFTA. However, the proposed Sri Lanka-Bangladesh FTA cid not reflect significant welfare gains to both trading partners. Furthermore, it was determined that the SAFTA can be formed without having significant trade diversion effects. Moreover, from the results, it was revealed that Sri Lanka's manufacturing sector is benefiting more than the agricultural sector under all of the trade liberalization scenarios. Therefore, the study recommended among different trade policy options under the regionalistic approach that Sri Lanka should instead focus on implementing the SAFTA, as the SAFTA ensures the highest welfare to Sri Lanka among the regional trade policy options considered in the study. In addition, the ILFTA can also be continued to strengthen the SAFTA. The next stage of the SAFTA is transforming the SAFTA into South Asian Customs Union, which is already a component of the agreement. However, this trade policy option is to be negotiated. Finally, it could be appeared that the SAFTA needs still to find its linkages to the multilateral trade liberalization.

南亚在区域经济合作议题上进展缓慢，尽管南亚区域合作联盟（South Asian Association for Regional Cooperation, SAARC）已于1985年成立，且南亚自由贸易区（South Asian Free Trade Area, SAFTA）的建立仍是该地区广泛讨论的政策议题。近期，主要来自商界的提议建议在SAARC成员国之间启动双边自由贸易协定，尤其是与印度的协定。以斯里兰卡为例，其对SAFTA的支持主要源于进入印度市场的愿望——这一目标已通过印斯自由贸易协定（India-Sri Lanka Free Trade Agreement, ILFTA）实现。此外，还有提议与孟加拉国签订双边贸易协定。因此，斯里兰卡作为SAFTA成员所能获得的利益成为一个有争议的政策议题。

本研究使用全球贸易分析项目（Global Trade Analysis Project, GTAP）第6版（2001年数据库），比较不同贸易政策选项对斯里兰卡的影响，以确定其对产出、就业、福利及贸易的作用。模拟结果显示，多边贸易自由化是斯里兰卡经济的最佳贸易政策选择。南亚关税同盟（South Asian Customs Union）为斯里兰卡带来次高福利，其次依次为SAFTA和ILFTA。然而，拟议中的斯里兰卡-孟加拉国自由贸易协定（Free Trade Agreement, FTA）并未给双方贸易伙伴带来显著福利增益。此外，研究确定SAFTA的建立不会产生显著的贸易转移效应。

结果还表明，在所有贸易自由化情景下，斯里兰卡制造业的收益均超过农业。因此，在区域主义路径下的不同贸易政策选项中，研究建议斯里兰卡应专注于SAFTA的实施——因为在本研究考虑的区域贸易政策选项中，SAFTA能为斯里兰卡带来最高福利。此外，ILFTA可继续实施以强化SAFTA。SAFTA的下一阶段是将其转变为南亚关税同盟，这已纳入协定内容，但该贸易政策选项尚待谈判。最后，SAFTA似乎仍需建立与多边贸易自由化的联系。