Regional trade agreements (RTA) have been on the rise since the mid-1990s. In May 2016, the WTO (World Trade Organization) received some 629 notifications from RTA (including separate goods, services and memberships). 423 of them are in force. These WTO figures correspond to 458 physical ATRs (including goods, services and memberships) of which 270 are currently in force (WTO website). Meanwhile, the share of world trade in the RTA has steadily increased, exceeding 30%, even though intra-EU trade is excluded (Bureau et al. 2015). Magee CS (2003) Endogenous Preferential Agreements: An Empirical Analysis. Contrib Econ Anal Policy 2 (1): 1166 To date, it appears that no studies have found the general equilibrium comparison analysis (including partial effect, conditional GE effect and total GE effect) of SAFTA and AFTA, which is one of the most important features of the structural gravity model to determine the potential effect of RTA. In addition, this document is the first to discover the possible ex-ante welfare effects of the common SAFTA and AFTA, as the debate on the formation of several ATRs between the member countries of these two ATRs is still under discussion. B BIMSTECFootnote 2 (Bay of Bengal Initiative for Multi-Sectal Technical and Economic Cooperation).
In view of the extension of the partial estimate of the RTA and the use of Anderson et al. geppml estimates (2015), I believe that the effect of the commercial creation of SAFTA and AFTA between Member States is positive and significant; on the other hand, the effect of trade diversion on non-members is negligible. The joint agreement between SAFTA and AFTA will bring more prosperity to the smaller countries of the economy in these two regional trade agreements. Egger P, Larch M, Staub K, Winkelmann R (2011) The commercial effects of endogenous preferential trade agreements. A Econ J Econ Policy 3 (3): 113-143 By accepting the RTA as an exogenous, from the introduction of the gravitational equation to the 1990s, several studies are trying to measure the impact of regional trade agreements (e.g. B Free trade agreement and customs union) on bilateral trade flows or welfare gains. Most of them found very little positive or negative effects on trade. Trefler (1993) systematically examined the simultaneous definition of U.S. multilateral imports and non-tariff multilateral barriers in an interprofessional analysis. Trefler noted that the impact of the policy on U.S.
imports has increased tenfold after the endogenous trade policy has been taken into account.