Impact of ASEAN-India FTA on IndiaÃ¢â‚¬â„¢s Plantation Commodities : A Simulation Analysis
The present study attempts a quantitative assessment of the impact of recently signed ASEAN-India FTA (AIFTA) for selected plantation commodities (coffee, tea and pepper) in India. We use partial equilibrium modeling approach (SMART model and gravity model) to simulate the likely import increase of the plantation commodities under the proposed tariff reduction schedule of the AIFTA. Overall, the results suggest that the AIFTA will cause significant increase in Indias import of plantation commodities. The increase in imports is mostly driven by trade creation rather than trade diversion. From the economic efficiency point of view, trade creation improves welfare as the new imports replace the high-cost domestic production. The analysis shows that the proposed tariff reduction may lead to significant tariff revenue loss to the government. However, the gain in consumer surplus (due to the fall in domestic price and the consequent reduction in dead-weight loss) outweighs the loss in tariff revenue leading to net welfare gain. By and large, the simulations based on the SMART and gravity models provide similar results on the magnitude of total increase in imports. The surge of new imports may have adverse impact for the livelihood of the Indian farmers engaged in the production of these commodities. Farmers will have to realign the structure of production according to the changing price signals and hence it is critical to provide adjustment assistance to the affected farmers.
|Date of creation:||Jan 2010|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.eaber.org
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Hiau Looi Kee & Alessandro Nicita & Marcelo Olarreaga, 2008.
"Import Demand Elasticities and Trade Distortions,"
The Review of Economics and Statistics,
MIT Press, vol. 90(4), pages 666-682, November.
- Kee, Hiau Looi & Nicita, Alessandro & Olarreaga, Marcelo, 2004. "Import Demand Elasticities and Trade Distortions," CEPR Discussion Papers 4669, C.E.P.R. Discussion Papers.
- Hiau Looi Kee & Nicita, Alessandro & Olarreaga, Marcelo, 2004. "Import demand elasticities and trade distortions," Policy Research Working Paper Series 3452, The World Bank.
- Leamer, Edward E. & Levinsohn, James, 1995.
"International trade theory: The evidence,"
Handbook of International Economics,
in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 26, pages 1339-1394
- Leamer, E. & Levingsohn, J., 1994. "International Trade Theory: The Evidence," Working Papers 368, Research Seminar in International Economics, University of Michigan.
- Edward E. Leamer & James Levinsohn, 1994. "International Trade Theory: The Evidence," NBER Working Papers 4940, National Bureau of Economic Research, Inc.
- Fidrmuc, Jarko & Fidrmuc, Jan, 2001.
"Disintegration and trade,"
ZEI Working Papers
B 24-2001, ZEI - Center for European Integration Studies, University of Bonn.
- Jarko Fidrmuc & Jan Fidrmuc, 2000. "Disintegration and Trade," William Davidson Institute Working Papers Series 353, William Davidson Institute at the University of Michigan.
- Fidrmuc, Jan & Fidrmuc, Jarko, 2000. "Disintegration and Trade," CEPR Discussion Papers 2641, C.E.P.R. Discussion Papers.
- Jarko Fidrmuc & Jan Fidrmuc, 2001. "Disintegration and Trade," LICOS Discussion Papers 9901, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
- James Harrigan, 2001.
"Specialization and the volume of trade: do the data obey the laws?,"
140, Federal Reserve Bank of New York.
- James Harrigan, 2001. "Specialization and the Volume of Trade: Do the Data Obey the Laws?," NBER Working Papers 8675, National Bureau of Economic Research, Inc.
- Barry Eichengreen & Douglas A. Irwin, 1996.
"The Role of History in Bilateral Trade Flows,"
NBER Working Papers
5565, National Bureau of Economic Research, Inc.
When requesting a correction, please mention this item's handle: RePEc:eab:microe:22777. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shiro Armstrong)
If references are entirely missing, you can add them using this form.