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The Impact of FTA on Trade Volume and Terms of Trade between Pakistan and China

Author

Listed:
  • Arsalan Ahmed

    (Arsalan Ahmed (corresponding author) is an Assistant Professor, University of Southampton, Iskandar Puteri, Johor, Malaysia.)

  • Inam Ur Rahman

    (Inam Ur Rahman is a Lecturer, Sarhad University of Science and IT, Peshawar, Pakistan. E-mail: inamaerc@gmail.com)

  • Samana Jauhari

    (Samana Jauhari is an MPhil Research Scholar, University of Karachi, Pakistan. E-mail: samana.jauhari91@gmail.com)

Abstract

The primary purpose of this study is to examine the impact of free trade agreements on trade volume and terms of trade between Pakistan and China. It examines the effect of the Pakistan–China Free Trade Agreement (PCFTA) on sector-wise trade welfare for both countries. Using the model of Lloyd and Maclaren, this study has quantified the trade welfare effect for both countries through trade volume, intra-union terms of trade and extra-union terms of trade in the context of PCFTA. The study concludes that the trade welfare increases for China and decreases for Pakistan after the complete execution of PCFTA. Also, there has been a trade creation for China and trade diversion for Pakistan by the PCFTA. JEL Codes: F15, F10, F13, I30, F60, F02

Suggested Citation

  • Arsalan Ahmed & Inam Ur Rahman & Samana Jauhari, 2022. "The Impact of FTA on Trade Volume and Terms of Trade between Pakistan and China," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 16(3-4), pages 392-432, August.
    • Handle: RePEc:sae:mareco:v:16:y:2022:i:3-4:p:392-432
    DOI: 10.1177/09738010231155015
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    More about this item

    Keywords

    Trade Creation; Trade Diversion; Trade Welfare; PCFTA; Intra-union Terms of trade; Extra-union Terms of Trade; Trade Liberalisation;
    All these keywords.

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F10 - International Economics - - Trade - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General
    • F60 - International Economics - - Economic Impacts of Globalization - - - General
    • F02 - International Economics - - General - - - International Economic Order and Integration

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