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South Asian Free Trade Area (Safta)
South Asian Free Trade Area (Safta)
(SAFTA)
INTRODUCTION
• The South Asian Free Trade Area or SAFTA is an
agreement reached on 6 January 2004 at the 12th
SAARC summit in Islamabad, Pakistan
• It created a free trade area between all the then member
countries
• The SAFTA agreement came into force on 1 January
2006
• The purpose of SAFTA is to encourage and elevate
common contract among the countries such as medium
and long term contracts.
• It involves agreement on tariff concession like national
duties concession and non-tariff concession.
COUNTRIES IN SAFTA
The SAPTA experience…
• Signed in Dec 1993, came into force in 1995
• Objective was to create and sustain mutual trade &
economic cooperation through exchange of concession
• Distinction between LDC & developing countries
• 3 rounds of PTA
• In the first round 226 tariff lines included & No discussion
on NTB
• Despite tariff reductions under Sapta, intra-regional trade in
South Asia did not register any noticeable growth in
percentage terms
Reasons for failure of SAPTA
• Sensitive List
• Rules of Origin
• Phase 1- 2006-2008
a) LDC’s
b) NLDC’s
• Phase 2-
a) NLDC’s 2008-2013
b) LDC’s 2008-2016
Non Tariff Barriers (NTB’s)
• India has 480 items on the sensitive list for the LDCs and 868
for the non-LDCs.
• Bhutan has 150 items for both the LDCs and non-LDCs and has
no plan of shortening its list.
• Nepal has 1,257 for the LDCs and 1,295 for the non-LDCs.
• Pakistan had 1,169 in its sensitive list but has cut its sensitive
list by 20%.
• Sri Lanka has 1,042 and Afghanistan has 1,072 items on the
negative list
Issues