Free Trade Agreement between People's Republic of China and India: Likely Impact and Its Implications to Asian Economic Community

Open regionalism and trade cooperation between the world's two largest developing countries, the People's Republic of China (PRC) and India, can foster outward-oriented development and intra-regional trade based on comparative advantage and available factor endowments. In view of the recent wave of worldwide subregional and bilateral trade cooperation, and the recent suspension of Doha negotiations by the World Trade Organization, the opportunity costs of not moving toward greater trade integration between the PRC and India could be increasing.

This paper presents the recent trends in the PRC-India trade and examines empirically the likely impact of their preferential and free trade agreements using a gravity model under different comparative-static scenarios. It also discusses the implications of PRC-India trade cooperation on the formation of the Asian Economic Community.

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Comment(s)

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1. S.N.Singh
   (posted 17 May 2007 / 06:34:01 PM)
   
   I reviewed the paper thoroughly and based on the hypothetical model, we cannot access the actual scenario of trade among countries. Several hidden and more effective factors should also be brought into consideration.
   
   Thanks
   Singh S.N
2. Geethanjali Nataraj
   (posted 23 February 2007 / 05:38:04 PM)
   
   I have gone through the article. I think the data on India's trade with China can be easily updated by another year to 2005-06. The ministry of commerce, government of India has posted data up to 2005-06 in its data base. Secondly, the source of most of the tables is also mentioned as CMIE. I am not sure whether it is a good idea to use CMIE database. It is generally considered to be unreliable . To depict trade between two countries, it would be advisable to use international trade sources say for instance COMTRADE.
   Thanks
   geethanjali.