Free Trade Agreement Between Pakistan And Sri Lanka Case Analysis

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Countries No of products in early sensitive list No of products in revised sensitive list(w.e. from. 1 January, 2012) Bangladesh 1233(LDCs) 1241(NLDCS) 987(LDCs) 993(NLDCS) Bhutan 150 156 India 480(LDCs) 868(NLDCS) 25(LDCs) 614(NLDCS) Maldives 681 154 Nepal 1257(LDCs) 1295(NLDCS) 998(LDCs) 1036(NLDCS) Pakistan 1169 936 Sri Lanka 1042 837(LDCs) 963 (NLDCS) Afghanistan 1072 858 1.3. Pakistan-Sri Lanka: The free trade agreement between Pakistan and Sri Lanka (PSFTA) became effective from June 12, 2005. Under this treaty, Pakistan and Sri Lanka have established to offer better market access to each other’s’ goods by way of granting tariff reductions. Sri Lanka would be able…show more content…
2. Literature Review: Numerous studies have been done to find the relationship between FTAs/PTAs and trade volume of between two countries. Trade incorporation is playing a vital role to surge trade flows between member countries. The number of FTAs and PTAs has increased rapidly during the past decades, involving developed and developing countries in all regions. There are various studies that discuss the trade integration between North-South, South–South and North-North region, trade gain among developing and developed countries, and the modelling approaches used to examine the effect of FTAs/PTAs on bilateral trade flows among member countries. Very few studies on FTAs and trade volume have been done in case of Pakistan. While going through different studies some of them have find mixed and inclusive result like (Abrams, 1980 and Frankel et al, 1995), Most of the recent studies found that FTAs/PTAs has raised the trade volume between associated countries.( Baier & Bergstrand, 2007). However, the increase in trade volume is not similar in developed and developing countries. The less developed countries are un-natural trading partners because of their similar comparative advantage, same endowments, limited economic sizes and higher trade costs (Krugman, 1991 and Magee, 2003). Southern countries can play better role in North-South agreements than agreements among themselves, because of having
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