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

Arsalan Ahmed, Inam Ur Rahman and Samana Jauhari
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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

Margin: The Journal of Applied Economic Research, 2022, vol. 16, issue 3-4, 392-432

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

Keywords: Trade Creation; Trade Diversion; Trade Welfare; PCFTA; Intra-union Terms of trade; Extra-union Terms of Trade; Trade Liberalisation (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:sae:mareco:v:16:y:2022:i:3-4:p:392-432

DOI: 10.1177/09738010231155015

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