The significant success, which has made through regional economic co-operation in different parts of the world like EC, NAFTA, LAFTA, ASEAN and so on, are reflected in the initiatives that emerged in South Asia in the mid-eighties through formation of South Asian Association for Regional Cooperation (SAARC) in 1985. In the 12th SAARC summit, held in Islamabad in 2004, the SAARC member countries have decided to establish South Asian Free Trade Area (SAFTA). Macro-econometric models have been used, in general, extensively in recent years not only for forecasting purposes but also to analyze the effects of certain policy measures on the economy. It has been usual practice to construct macro-models for respective countries without specifying any specific linkages with trading partners. It is the econometric trade link system, through which we can study individual economy focusing the aspect of economic interdependence among member countries. The main objective of this paper is to construct a suitable trade linkage system for SAARC. This paper also presents the impact of SAFTA on member countries. Further, the trade relation with non-SAARC countries has also been studied in this paper.

India has put an emphasis on enhancing trade relations with ASEAN region in early 1990s. As a result, India's export to ASEAN has significantly increased in recent years. However, the ASEAN financial crisis had left negative impact on India's export to ASEAN region. From the modelling exercise of the paper, the price and import elasticities of export flows attracts a great deal of attention because of its significant implications on India's export earnings from ASEAN. As the time series data involves non-stationary on their level, the Phillips-Hansen's Fully Modified (FM) method has been applied to get the estimated values of elasticity. The result suggests that India's export is significantly influenced by ASEAN economic growth. Further, it is very much price competitive in the ASEAN market. In other words, the devaluation of India rupee will be helpful for expanding India's export to this region.

Sluggish progress in multilateral trade negotiations has provided an impetus to the growth of bilateral trade agreements the world over. The Indo-Thai Free Trade Agreement (FTA), the first phase of which was operational from September 2004, is one such effort that provides access to the manufacturers of both countries to enter into each others' markets beginning with the phased reduction of tariffs on 82 selected items. Since the signing of the agreement, there have been apprehensions from two Indian industries, namely colour TV & picture tube and auto industry in terms of experiencing likely adverse impact. In this paper, the authors first explore the key provisions of Early Harvest Scheme (EHS) of Indo-Thai FTA and its likely impact on Indian colour TV/colour picture tube and auto industry, especially in post September 2006 era, when the tariffs on 82 items would become zero for both sides. While highlighting the likely impact on Indian industries, the authors have compared and analyzed the import performance of items at HS code-6 and 8 digit levels for 2004 and 2005. A detailed analysis of the short and long term impact on the CTV/CPT and auto industries has been carried out by comparing cost structures, advantages and disadvantages. The paper also includes the major disadvantages being faced by the Indian industries vis-a-vis their Thai counterparts. It concludes with suggestions for Indian manufacturers and policy-makers to counter the likely adverse impact.

India emphasized the look east policy since early nineties. As a part of its export promotion strategy, it is essential to know the key determinants of export of these products to ASEAN. In this direction, the present paper has made an attempt to find the main determinants of India's exports of the major commodity groups to ASEAN. The top ten commodity groups, which have been found in this study, are gems & jewellery, machinery & instruments, dyes & intermediates, primary & semi-finished iron & steel, oil meal, drugs/pharmaceuticals & fine chemicals, transport equipment, electronic goods, inorganic/organic/agro-based chemicals, and manufactures of metals in recent years. Among these items, gems & jewellery, machinery & instruments, dyes & intermediates and transport equipment have registered higher growth in last five years. To explore the determinants, an export demand function has been formulated at the commodity level. As regards to results, it has performed very well in terms of sign and significance of the explanatory variables. It can be said that all the commodities under study, except oil-meal, are not only price competitive in the ASEAN market but also very much elastic in demand. These elasticities are indicative of the fact that real devaluation of Indian rupee against dollar has high impact on India's export of these products to ASEAN market. Further, economic growth in ASEAN region would also be helpful for expanding India's exports of these products to that region. This study reveals valuable insight for policymakers in formulating either a commercial or exchange rate policy.

Foreign trade plays an important role in the economic development and growth of a country. The SAARC region is not exception to the rule. There are reasons for limited market in future for the SAA RC countries. They must find new markets for their exports. ASEAN region belongs to one of such potential export markets. Keeping with the view of future importance, we have constructed a trade linkage model for SAARC countries with ASEAN region within an econometric framework. The estimated results show the impact of the ASEAN import on the exports of the SAA RC countries is positive in most cases. Using the model, we have also examined the impact of ASEAN financial crisis on SAARC economies. The results of this simulation exercise show that the ASEAN crisis left its negative impact on exports of the SAARC regiion.