Regional trade: Consumer gains galore

Bilateral trade among South Asian countries has remained a dicey proposition. Developing economies of the world have galloped in terms of economic growth by forming regional trade blocs.
But South Asia remains one of the least integrated regions in the world where the share of intra-regional trade in total trade in the region has only marginally improved from 2.5 percent to 4.8 percent during 1995 to 2010.
The fear of the impact of imports is a major concern among the countries of this region. Due to the apprehensions of domestic industry, these countries have put large numbers of products on their respective sensitive lists.
But if trade in the region is liberalised, consumers will win big, asserts a research report issued recently by a consortium of think tanks including the Asia Foundation, SDPI and CUTS, among others.
The "cost of economic non-cooperation to consumers in South Asia" report also asserts that consumers in Pakistan would be particularly benefited by liberalising trade with India. The countrys consumers can count on savings of about 206.18 million dollars each year, if 44 items currently on the countrys sensitive list are allowed to be imported freely from within the region.
The magnitude of the savings for domestic consumers is significant; tallying at about 60 percent of the total value of imports of these product lines to the country. A whopping 99 percent of this gain can be achieved by allowing free import from India, of six product lines that are currently on the sensitive list.
Pakistani consumers of pharmaceuticals, electrical and electronics equipment would be benefited most, deriving 84 percent and 13.8 percent of the consumer gains, respectively.
Domestic industries such as pharmaceuticals are able to sway the Pakistani government, just as the domestic industries of other countries in the region affect the international trade preferences of other countries in the region.
But this influence of protectionism is coming at the expense of the consumers who are missing out on potential gains in the form of cheaper and better quality of products and services. The countries of the region must reassess their economic priorities to be more mindful of the interests of domestic consumers.