SAFTA (SOUTH ASIAN FREE TRADE

AREA)

PRESENTED BY – Kaife Hassan

Abdus Samad
Fahad ul amin
Arsalan Ahmad
Arbaz alam
Faraz jawed
 South Asian Association for
Regional Cooperation (SAARC)
 The South Asian Association for Regional
Cooperation (SAARC) is the
regional intergovernmental organization
and geopolitical union of states in South Asia.
 It aims to accelerate the process of economic
and social development in its member states
through increased intra-regional cooperation.
 SAARC was founded in Dhaka on 8 December
1985.Its secretariat is based in Kathmandu,
Nepal.
 It comprises 21% of world's population, 3% of
world's area, 3.8% of global economy.
 SAARC was founded by seven states in
1985. The SAARC member states imposed
a stipulation for Afghanistan to hold
a general election and then Afghanistan
joined SAARC as its eighth member state
in April 2007
 It provides a platform for the peoples of
South Asia to work together in a spirit of
friendship, trust and understanding.
South Asian Free Trade Area (SAFTA)

 The South Asian Free Trade Area (SAFTA) is the

free trade arrangement of the South Asian
Association for Regional Cooperation (SAARC).
This agreement reached on January 6, 2004, at
the 12th SAARC summit in Islamabad, Pakistan,
then came into force in 1January 2006,
 The purpose of SAFTA is to encourage and
elevate common contract among the countries
such as medium and long term contracts.
 Promote and sustain mutual trade & economic
cooperation within the SAARC region.
 SAFTA required the developing countries in
South Asia (India, Pakistan and Sri Lanka) to
bring their duties down to 20 percent in the first
phase of the two-year period ending in 2007.
  In the final five-year phase ending in 2012, the
20 percent duty was reduced to zero in a series
of annual cuts. 
 India and Pakistan ratified the treaty in 2009,
whereas Afghanistan as the 8th member state
of the SAARC ratified the SAFTA protocol on 4
May 2011.
SAFTA signatory countries

 It created a free trade area of 1.6 billion people

in 8 countries  Afghanistan,  Bangladesh, 
Bhutan,  India,  Maldives,  Nepal, Pakistan and 
Sri Lanka to reduce customs duties of all
traded goods to zero by the year 2016.
Objectives

 The main objective of the agreement is to

promote competition in the area and to provide
equitable benefits to the countries involved. 
 It aims to benefit the people of the countries by
bringing transparency and integrity among the
nations. 
 SAFTA was also formed in order to increase the
level of trade and reducing the tariff and barriers
to the Least Developed Countries (LDCs).
 Promote and strengthen mutual self-reliance
among the countries of South Asia.
Functions of (SAFTA)

1. To allow member countries to prepare a list of

product which are to be restricted to import for
the protection of national interest.
2. To provide support to the least developed
member countries to promote export
competitiveness.
3. To establish a free trade area in South Asia
through the elimination of tariffs.
4. To form and implement the rules of origin to
ensure that the product is manufactured by the
country which is desirous to export.
Advantages to member nation

 SAFTA will bring significant gains for the

small economies of the region.
 It will attract foreign capital.
 It will be a step toward better political
relations and peace.
 Part of the informal trade will be diverted
to official channels and bring revenues and
other benefits.
 Dynamic gains will be more significant
than static gain
 Mutual trade liberalization creates
opportunities even for small
producers who do not export. 
 Consumers will likely enjoy greater
choice, better quality, and lower
prices with goods from neighboring
countries. 
Trade between member nation

 The importance of trade as growth facilitator has

been recognized in SAARC countries as well.
Maldives is highly dependent on external sector
with 161 % trade while Pakistan is least open
country in the SAARC region.
 India has a huge domestic market, hence trade
forms a substantially smaller percentage of GDP.
 The proportion of trade in GDP of SAARC region
increased  significantly from 15.1 percent
during the 1970s to 51.8 percent in 2008.
 During 2000-2006 the total exports of
SAARC countries increased from US$ 63.5
billion to US$ 161.4 billion.
 The growth rate of exports also increased
from 3.9% in 2001 to 23.9% in 2006.
 The percentage share of India's exports
change the SAARC countries was 67.09
percent in 2000 which increased up to
76.02 %
Conclusion
 At last we will say that if the agreement
is maintain full by the member countries,
all the goods will start flowing across the
border without any tariff and extra cost
and the price of the product will
decreases significantly.
 The implementation of SAFTA provide an
institutional framework for the
liberalization of mutual trade in the
region.