IMPACT OF PAK-INDIA RELATIONSHIP ON RICE TRADE ON ECONOMY OF PAKISTAN BY USING COMPUTABLE GENERAL EQUILIBIUM MODEL (CGE)

Faiz Muhammad Shaikh Assistant Professor SZABAC-Dokri-Larkana-Sindh Pakistan Email:faizanmy2000@hotmail.com Dr.Nadeem Bhatti 68 Corporate Drive, Suite # 1626 Scarborough, ON, M1H 3H3, Canada nadbhatti@yahoo.com, Ph. 01-416-575-6024 Dr.Anwar Ali Shah G.Syed Pro-Vice Chancellor Sindh University Campus Dadu Email:faizanmy2000@hotmail.com Dr.Nanik Ram Assistant Professor Deptt:of Economics University of Sindh Jamshoro Abstract


Presentation: Trade liberalization was the key component of this new arrangement bundle and it involved
dependence on duties, substitution of quantitative limitations including import permitting by a reexamined arrangement of levies and in addition the unwinding of different controls on exchange. With a specific end goal to empower both household and outside speculation, the Government offered a progression of motivating forces, while endeavoring to make a domain helpful for venture. As of late, on the other hand, the center of Pakistan's exchange approach has apparently moved towards regionalism, which Pakistan considers a springboard for more extensive exchange liberalization. The method of reasoning for provincial collaboration depends on various components, not all of which are fundamentally monetary in nature. Until the late 1970s, Pakistan's financial improvement fixated on an internal arranged advancement procedure in view of import substitution industrialization performed essentially by state claimed firms. Both tax and non-tax obstructions were broadly used to secure residential financial exercises. Exchange prohibitive arrangements were joined by other administrative approaches, for example, control on remote trade, account and outside direct speculation. These prohibitive financial arrangements had extreme unfavorable ramifications on general monetary development, specifically development of fares. Pakistan presented broad financial changes in 1971-72 turning into the first nation in the South Asian locale to do as such. The economy was liberated from the internal arranged procedure, and received an outward-situated fare drove improvement methodology, which was trailed by numerous East Asian nations around then. This examination starts with a survey of Pakistan's financial changes and their scope. The system, will offer a brief portrayal of CGE Modeling including the GTAP. At that point we will talk about trial plans are examined. Through the model we frame one-sided and territorial exchange liberalization, as an establishing individual from the WTO, Pakistan as a part immovably dedicated to the multilateral exchanging framework and has as of now set up countless with regards to the GATT/WTO standards. In any case, this study will audit the result of multilateral exchange Liberalization. The GTAP model reenactment will be investigated.

Targets
• The targets of the present study are to examine and measure the potential monetary cost and advantages of the imminent Rice exchange in the middle of India and Pakistan Trade on GDP, Export and Imports.

Writing Review
Territorial exchange understandings (RTAs) have risen as a distinct option for accomplish exchange liberalization as multilateral endeavors have confronted political and monetary obstacles.2,3 The challenges of coming to concurrences on touchy issues like farming and administrations have been apparent in the Doha Round. The past rounds were additionally stamped by mind boggling and moderate transaction forms. For one, as the quantity of members builds, it has been more hard to address every nation's requests for extraordinary contemplations.
RTAs pass on points of interest and also constraints. By decreasing the quantity of members in the arrangement they can extend the examination to incorporate more measurements of monetary coordination. Contrasted and one-sided liberalization, political backing for RTAs likewise is by all accounts more noteworthy given the view of correspondence from other part nations. Then again, since the early work of Viner (1950), these advantages have been weighted against mutilations that RTAs can make. By accepted oppressing nonmembers, RTAs misshape asset distribution, favoring local makers to the potential burden of nearby buyers. Late research additionally stresses the worldwide outcomes of numerous and covering RTAs as far as the exchange costs they force (Feridhanusetyawan, 2005).
In spite of the fact that RTAs have fluctuated parts, these assentions incorporate some or the greater part of the accompanying eight components (Bhagwati and Panagariya, 1996 give an outline): (i) a tax liberalization program-TLP (change of nontariff obstructions, e.g. portions, to their levy comparable and the successive decrease of taxes; exceptional contemplations to slightest created countries4 are not extraordinary); (ii) delicate records (merchandise or administrations to be absolved from the tax lessening program);5 (iii) guidelines of source-ROO (counteractive action of the utilization of the special duties to non territorial products or administrations as characterized by the agreement);6 (iv) institutional courses of action (foundation of a board or regulatory advisory group in charge of the organization and execution of the understanding); (v) exchange assistance strategies (accumulation of instruments to diminish exchange expenses of importing and The writing about exchange assentions is rich in acronyms that mean either their topographical augmentation or their level of exchange hindrance diminishments. RTAs allude to understandings including local accomplices. Facilitated commerce Agreements (FTAs) alludes to understandings that incorporates the full disposal of duties (and exchange hindrances) while Preferential Trade Agreements (PTAs) s allude to assentions including fractional levy end. For instance, SAPTA is South Asia's PTA and SAFTA is South Asia's FTA.Exporting, including homogenization of traditions practices and specialized help exceptionally to the slightest created individuals); (vi) debate settlement instrument (techniques to report and manage infringement to the understanding); (vii) protections measures (suspension of particular treatment on grounds that imports are bringing about or debilitating to bring about genuine harm to the residential mechanical base); and (viii) parallel lessening in outside venture obstructions and/or exchange administrations.
South Asia (Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka) has been included in setting up its own RTA. The South Asian Association for Regional Cooperation(SAARC) was framed in 1985 with the goal of abusing "quickened financial development, social advancement and social improvement in the locale" for the welfare of the people J a n u a r y 2 5 , 2 0 1 6 groups of South Asia (SAARC Secretariat, 2006). In 1995, its comparing RTA (SAPTA) came into power. South Asian Free Trade Agreement (SAFTA) has been confirmed and gone into power in mid-2006. In correlation to other African nations, in the course of recent decades consideration of analysts, government, and givers has been engaged in Kenya's plant and horticulture parts because of their ability to become quickly but then economically to meet universal measures (Jaffee, 2004). The creation exceptionally arranged to fare markets can be track back at the ranch level. While more than 90% of smallholder agriculturists in everything except the parched districts of Kenya produce plant items, under 8% develop other sort of yields (Tschirley, et al, 2004). SAFTA is relied upon to expand provincial (exchange creation) however may do as such to the detriment of exchange streams from more productive non local suppliers (exchange preoccupation). Baysan and others (2006) contend that it is impossible that the most proficient suppliers of the part nations are inside of the area. In view of that and on the limitation of SAFTA's delicate records and standards of beginning, it finishes up the financial benefits of SAFTA are "very frail." Using the static general harmony approach, Bandara and Yu (2003) find that the full disposal of exchange obstructions between South Asian nations would expand the welfare level of India. To examine the impacts of RTAs on exchange streams, regularly the gravity comparison methodology is utilized. In its easiest rendition, it proposes a relationship between the "mass" (GDP) of two nations and their exchange streams. In viable terms, the methodology offers a "contingent general harmony" connection (Anderson and van Wincoop, 2004) in which respective exchange is demonstrated as free of exchange streams with outsider nations.
Gravity comparisons have additionally been utilized to quantify imperceptibly exchange obstructions, to separate between hypothetical exchange models, and to dissect the impacts of exchange approaches (either in an ex-post or ex-stake fashion).11 The last has been liable to evaluates and refinements (e.g., Carrère, 2006) among the most vital being that for the gravity mathematical statement investigation to be suitable one needs to expect (or "condition on") that the arrangement changes being made.    Source-Economic Survey of Pakistan-2012- Source-GTAP-7 Database  Machinery and equipment nec (ome)

Other Heavy Manufactures(OTHM)
Wood products (lum)   All experiments were conducted with the standard general equilibrium closure of the GTAP model. According to the results Base line tariff for India is 18% SAFTA tariff is 5% and given MFN Tariff is 15% and rest of world is 15%..The first experiment considered the Pakistan's reduction of import tariffs to 15 percent under the unilateral trade liberalization. The impact of this scenario on regional welfare and the resulting percentage changes in sectorial output and trade are reported in Table 9 and 10 respectively. Accordingly, if Pakistan (PAK) reduces its import tariffs to 15 percent unilaterally on a global basis to maintain a uniform external tariff rate, Pakistan's EV US& 4442.63 and GDP 4.35, and India's EV US$ 321 million (3.40 percent of the GDP). Under this scenario, Pakistan's volume of imports rises by 1.23 percent while its volume of exports falls slightly by 0.4 percent reflecting the fact that the pressure to increase imports is stronger than the increase in demand for Pakistan's exports by unilateral liberalization. However, as a result of the composite export price increase by 2.1 percent, Pakistan's experiences a small improvement in the terms-of-trade of 1.5 percent and the real GDP by 0.9 percent. The welfare gains or losses for other regions are quite varied under this simulation. However, since Pakistanis impact on unilateral reduction of import tariffs to 15 percent will not affect other region's real GDP or terms-of-trade significantly. . 0 4 J a n u a r y 2 5 , 2 0 1 6 The trade reform scenario (Experiment-2) was conducted under the regional trade liberalization policy option to examine the impact of South Asian Free Trade Agreement-SAFTA in different contexts from the perspective of Pakistan. As a member of the SAFTA, Pakistan. committed to continue major trade liberalization measures, to establish and promote free trad arrangements for strengthening inter-regional economic co-operation and the development of national economies. In this experiment, it was assumed that Pakistan and each of the SAARC member countries in the model (India and the Rest of South Asia comprising Bangladesh, Bhutan, Maldives, Nepal and Sri lanka) remove their tariffs against each other, while maintaining heir tariffs against the rest of the South Asia. The trade reform scenario (Experiment-2) was conducted under the regional trade liberalization policy option to examine the impact of South Asian Free Trade Agreement-SAFTA in different contexts from the perspective of Pakistan. As a member of the SAFTA, Pakistan. committed to continue major trade liberalization measures, to establish and promote free trad arrangements for strengthening inter-regional economic co-operation and the development of national economies. In this experiment, it was assumed that Pakistan and each of the SAARC member countries in the model (India and the Rest of South Asia comprising Bangladesh, Bhutan, Maldives, Nepal and Sri lanka) remove their tariffs against each other, while maintaining heir tariffs against the rest of the South Asia. According to results in SAFTA 5% tariff the Pakistan industry output .079 compare to India -0.4 that Pakistan's will benefit on SAFTA trade with India The Second experiment considered that Pakistan's reduction of import tariffs to 10 percent under the unilateral trade liberalization. The impact of this scenario on regional welfare and the resulting percentage changes in sectoral output and trade are reported in Table 12, 13. and 14 respectively. Accordingly, if Pakistan reduces its import tariffs to 10 percent unilaterally on a global basis to maintain a uniform external tariff rate, Pakistan's experiences a welfare gain around US$201 million (1.53 percent of the GDP). Under this scenario, Pakistan's volume of imports rises by 3.3 percent while its volume of exports falls slightly by 0.3 percent reflecting the fact that the pressure to increase imports is stronger than the increase in demand for Pakistan's exports by unilateral liberalization. However, as a result of the composite export price increase by 1.1 percent, Pakistan's experiences a small improvement in the terms-of-trade of 1.5 percent and the real GDP by 0.8 percent. The welfare gains or losses for other regions are quite varied under this simulation. However, the impact of Pakistan's unilateral reduction of import tariffs to 10 percent will not affect other region's real GDP or terms-of-trade significantly.
Accordingly, the results suggest that a reduction of import tariffs to 10 percent will increase Pakistan's welfare and terms-of-trade as well. Although one might expect that the reduction of import tariffs would increase the domestic output and therefore increase export sales, this policy reform would adversely affect Pakistan's domestic output in most of the sectors because of foreign competition. A similar impact can be seen in export sales too.

Benefits
Besides the welfare and terms of trade gains suggested by the simulations, regional trade liberalization under SAFTA may have many non-economic benefits to Pakistan particularly social and political benefits; those are difficult to account for in a quantitative way. For example, SAFTA can help its members to speak with one voice in global negotiations and develop a common understanding on several global trade-related issues.
It could also reduce the political disputes among members and make the region a more attractive location for foreign direct investments. Pakistan is c r u c i a l f o r o b t a i n i n g s i g n i f i c a n t b en ef i t s f r om F D I , liberalization of trade and FDI policies needs to be complemented by appropriate policy measures with respect to education, R&D, and human capital accumulation if trade negotiation with India will restore. Table19 presents the percentage changes in sectoral output, and trade by region under the SAFTA liberalization. The percentage changes in industry output in Pakistan's , as shown in panel (a) of Table 19, the performance of the Textile and agriculture sector is remarkable, reporting about 7.9 and 8.5 percent increase, due mainly to the advantages by the cheaper labor and quality of yarn in case of textile garments. The industry output of Auto (3 percent), Pharma (-4 percent), decreased and Insurance (2 percent) decreased as well as Logistics (1) decreased. If Pak-India trade will restore we will win the race in Textile, Agriculture, and auto parts.
The removal of import tariffs under the SAFTA will adversely affect India's domestic output of Agriculture(8 percent), and Textile 11 percent.
As can be seen from panel (b) of Table 19, impact on Import of Pakistan there is a substantial increase in import in Pharmacetical , and tansport and logistics import basket. The overall import bill decreased by 11 percent.