3. What is SAFTA? The South Asian Free Trade Area or SAFTA is a pact signed in 6 January 2004 It would gradually eliminate most tariffs and other trade barriers on products and services passing between Bangladesh, Bhutan, Nepal, Pakisthan, Afghanisthan and Srilanka The pact would effectively create a free-trade bloc among the eight countries of South Asia SAFTA’s main provisions called for the gradual reduction of tariffs, customs duties, and other trade barriers between the seven members, with some tariffs being removed immediately and others over periods of several years. SAFTA ensured eventual duty-free access for a vast range of manufactured goods and commodities traded between the signatories.

4. Objectives of SAFTA Promoting and enhancing mutual trade and economic cooperation by eliminating barriers in trade Promoting conditions of fair competition in the free trade area, Ensuring equitable benefits to all Establishing a framework for further regional cooperation to expand the mutual benefits of the agreement. creating effective mechanism for the implementation and application of this Agreement, for its joint administration and for the resolution of disputes;

5. Principles of SAFTA . Governed by the Provisions of this Agreement 1 2. Existing Rights and Obligations 3. Overall Reciprocity 4. Free Movement of Goods 5. Adoption of Trade Facilitation and Other Measures 6. Recognization of the Needs of LDCs

6. Instruments Trade Liberalization Program  Rules of Origin Institutional Arrangements Consultations and Dispute Settlement Procedures Safeguard Measures Any other instrument that may be agreed upon

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7. Trade Liberalization Program 8. Rules Of OriginNon LDC 40% value addition criteriaLDC 30% value addition criteria

9. Sensitive listS. No. Name of the No of tariff lines for No of tariff lines for Consolidated list Contracting States LDCS Non- LDCS (Total (total number of number of sensitive list) sensitive list) 1 Bangladesh 1249

-----.• Long sensitive lists of members will lower the benefits of trade. Likely Effects of SAFTA : Positive Views SAFTA will bring significant gains for the small economies of the region. Likely Effects of SAFTA : Negative Views• SAFTA does not meet the standard economic criteria for successful integration (other than high pre-FTA tariff and geographical contiguity).1254 ------. high degree of trade complementarity. SAFTA will lead to trade diversion. SAFTA will contribute to the “Spaghetti bowl” phenomenon.----.6 times the existing trade.----.  11. where many applicable tariff rates and multiple sources of origin will create confusion and difficulty among customs officials and producers. Elimination of tariffs will increase intra-regional trade by 1.• Other requisite criteria are high levels of international trade before the formation of the FTA. secure market access (no tariff. Some member countries may even lose  12.1335 6 Pakistan ----. It will be a step toward better political relations and peace.2 Bhutan ----. . the expansion of intra-regional trade will be limited.4 Maldives --------. Part of the informal trade will be diverted to official channels and bring revenue and other benefits.• SAFTA will benefit India the most.1065  10.  It will attract foreign capital.137 3 India 744 865 -----.----. Dynamic gains will be more significant than static gains. no NTBs).671 5 Nepal ----.1183 7 Sri Lanka --. Likely Effects of SAFTA : Negative Views Contd/1 Because of similar production structures in member countries.

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