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South Asian Free Trade Area (SAFTA)

South Asian Free Trade Area (SAFTA)
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The South Asian Free Trade Area (SAFTA) is an agreement reached on January 6, 2004, at the 12th SAARC summit in Islamabad, Pakistan. The agreement was signed in 2004 and came into effect on 1 January, 2006, with the desire of the member states of the SAARC (Afghanistan, Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan and Sri Lanka) to promote and sustain mutual trade and economic cooperation within the SAARC region through the exchange of concessions. 

The basic principles underlying the SAFTA are as follows:

  1. Overall reciprocity and mutuality of advantages so as to benefit equitably all Contracting states, taking into account their respective level of economic and industrial development, the pattern of their external trade, and the trade and tariff policies and systems, 
  2. Negotiation of tariff reform step by step, improved and extended in successive stages through periodic reviews,
  3. Recognition of the special needs of the Least Developed Contracting States and agreement on concrete preferential measures in their favour, 
  4. Inclusion of all products, manufactures and commodities in their raw, semi processed and processed forms.

Purpose of the agreement

The purpose of SAFTA is to encourage and elevate common contract among the countries such as medium and long term contracts. Contracts involving trade operated by states, supply and import assurance in respect of specific products etc. It involves agreement on tariff concession like national duties concession and non tariff concession. 

Objectives

  1. The main objective of the agreement is to promote competition in the area and to provide equitable benefits to the countries involved. 
  2. It aims to benefit to the people of the countries by bringing transparency and integrity among the nations.
  3. The SAFTA was also formed in order to increase the level of trade and economic cooperation among the SAARC nations by reducing the tariff and barriers and also to provide special preference to the Least Developed Nations (LDCs) among the SAARC nations.
  4. To establish framework for further regional corporation.

Instruments

The following are the instruments involved in the SAFTA:

  1. Trade Liberalization Programme
  2. Rules of origin
  3. Institutional Arrangements
  4. Consultations and Dispute Settlement Procedures
  5. Safeguard Measures
  6. Any other instrument that may be agreed upon

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