S Asia paying higher cost on outside regional imports

* Joint study of SDPI, CUTS reveals trade liberalisation among South Asian countries can yield minimum consumer welfare gain of approximately $2bn a year

Staff Report

ISLAMABAD: Despite being home to most of the world’s poor and conflict-ridden, South Asia is the least economically integrated region in the world, which results into higher costs to consumers on account of costlier imports from outside the region.

Speakers lamented this while sharing the findings of research study ‘Cost of Economic Non-cooperation to Consumers in South Asia (COENCOSA)’.

The study reveals that though Pakistan receives only 10.5 percent of total gains, the lowest in region, it stands to save 59.04 percent on its current import expenditure on selected products. Among other factors, Pakistan’s least connectedness with other SA countries and also worsening energy situation hinder its progress on this front.

Sustainable Development Policy Institute (SDPI) Executive Director Dr Abid Qaiyum Suleri, The Asia Foundation Director of Programmes Shahid Fiaz and SDPI Economic Growth Research Fellow/Head Unit Dr Vaqar Ahmed shared the findings of the study and urged Pakistan and all South Asian countries to enhance the regional economic cooperation to facilitate the poor consumers of the region. The study is jointly conducted by CUTS international in partnership with a group of like-minded organisations including SDPI with the support of The Asia Foundation. The study assesses potential benefits of opening up trade between South Asian countries mainly Pakistan, India, Bangladesh, Nepal and Sri Lanka to consumers.

Dr Suleri was of view that there exists a common ambiguity among masses on a number of issues including trade relations among South Asian countries. He underscored the South Asian governments including Pakistan to enhance regional cooperation while citing the State Bank of Pakistan’s report, which had also recommended country’s trade among South Asian countries would be useful for Pakistan.

Terming the government’s decision of trade in local currency as a ‘positive development’, he said government’s efforts for regional trade and economic cooperation has to be supported in the larger interest of consumers. “We need to improve our production and exports but not at the cost of our local consumers,” he underlined. He hoped Pakistan’s industry can compete if domestically strengthened particularly provision of unhindered supply of energy to industry is ensured.

Competition: Dr Vaqar said South Asia continues to be one of the poorest regions in the world. A big role in this poverty is played by non-connectedness of this region in terms of trade, transport and logistics. He said this study is an effort to look at consumer welfare gains from trade liberalisation. “Our estimates obtained from 12 cities across South Asia reveal that annually South Asian consumers will gain by $2 billion. Within this Pakistani consumers of South Asian products will have a gain of 59 percent in their welfare,” he added. He said we believe trade agreements signed by Pakistani government should also have a consumer perspective. “We will continue our advocacy and outreach efforts to safeguard the interests of Pakistan consumer,” he further said. He hoped the study will act as a reminder to national governments in South Asia to meet their unfulfilled commitments under SAFTA adding that political considerations, no matter how strong, should not adversely impact consumers’ welfare in the region. Fiaz said South Asia is the world’s poorest region while the regional countries are spending largest portions of their incomes on arms and defence. He said we need to move towards regional cooperation, which will create a win-win situation for all. “Cooperation not only means trade alone but a situation where we are spending less on defence and security,” he added. He was of the view that cost of no trade is much higher than $1.5 billion to $2 billion. He said such researches help to enhance further research, regional dialogue and prospects for peace and stability in the situations like this region has today.

The study also discloses that trade policies and agreements have not highlighted consumers’ gains from trade liberalisation and lack of awareness about consumer welfare gains lowers stakeholders’ expectations from intra-regional trade. The study stresses to separate political issues plaguing the region for better economic cooperation and suggests increased media and policy spaces on consumer welfare gains will change stakeholders’ perceptions on the virtues of enhanced and improved intra-regional trade.

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