South Asian Free Trade Area

Countries under the South Asian Free Trade Area

South Asian Free Trade Area or SAFTA is a pact signed in 6 January 2004 that would graThdually eliminate most tariffs and other trade barriers on products and services passing between

Afghanistan

Bangladesh

Bhutan

India

Maldives

Nepal

Pakistan

Sri Lanka

The SAFTA agreement came into force on 1 January 2006 and is operational following the ratification of the agreement by the seven governments. SAFTA requires 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 2012, the 20 percent duty will be reduced to zero in a series of annual cuts. The least developed nations in South Asia (Nepal, Bhutan, Bangladesh, Afghanistan and Maldives) have an additional three years to reduce tariffs to zero. India and Pakistan ratified the treaty in 2009, whereas Afghanistan as the 8th memberstate of the SAARC ratified the SAFTA protocol on the 4th of May 2011.[1] SAFTAs 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.

Contents
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1 History 2 Purpose of the agreement 3 Objective 4 Instruments 5 Trade Liberalisation Programme 6 Sensitive list 7 References 8 See also 9 External links

[edit] History
The Agreement on SAARC Preferential Trading Arrangement (SAPTA)[2] was signed on 11 April 1994 and entered into force on 7 December 1995, with the desire of the Member States of

SAARC (India, Pakistan, Nepal, Sri Lanka, Bangladesh, Bhutan and the Maldives) to promote and sustain mutual trade and economic cooperation within the SAARC region through the exchange of concessions. The establishment of an Inter-Governmental Group (IGG) to formulate an agreement to establish a SAPTA by 1997 was approved in the Sixth Summit of SAARC held in Colombo in December 1991. The basic principles underlying SAPTA are: 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 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.

[edit] 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.

[edit] Objective
The objective of the agreement is to promote good competition in the free trade area and to provide equitable benefits to all the countries involved in the contracts. It aimed to benefit the people of the country by bringing transparency and integrity among the nations. 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 Countries (LDCs)among the SAARC nations.

[edit] Instruments
Following are the instrument involved in SAFTA:

Trade Liberalisation Programme Rules of Origin Institutional Arrangements Consultations and Dispute Settlement Procedures Safeguard Measures

Any other instrument that may be agreed upon.[3]

[edit] Trade Liberalisation Programme

According to the Trade Liberalisation Programme Contracting countries must follow the following tariff reduction schedule. There should be a fall to 20% tariff from the existing tariff by the Non Least Developing Countries and 30% reduction from the existing tariff by the Least Developing Countries. But trade liberalisation scheme is not be applied for the sensitive list because this list is to be negotiated among the contracting countries and then to be traded. Sensitive list will involve common agreement among the contracting countries favouring the least developed contracting countries. SAFTA Ministerial Council (SMC) will be participating to review the sensitive list in every four year with view of reducing the list.

[edit] Sensitive list

Sensitive list is a list with every country which does not include tariff concession. Bangladesh has 1,233 products on the sensitive list for the Least Developing countries and 1,241 for the nonLeast developing countries under the SAFTA. Bangladesh will reduce the sensitive list by 246 items for the least developed countries (LDCs) and 248 for the non-LDCs.[4] India has 480 items on the sensitive list for the LDCs and 868 for the non-LDCs. Dr Manmohan Singh announced on the September in Dhaka that he will reduce the Sensitive List by 46.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. Nepal has reduced its list by 259 from its previous list of 1295. Now its 1036 said joint secretary at Ministry of Commerce and Supplies.[5]The Maldives has 681 for all seven SAFTA nations.Pakistan had 1,169 in its sensitive list but has cut its sensitive list by 20%. Now the list has shortened from 1169 to 936.[6]Sri Lanka has 1,042 and Afghanistan has 1,072 items on the negative list.

[edit] References
1. ^ SAARC (November 2, 2011). "SAFTA protocol". SAARC. http://www.saarcsec.org/areaofcooperation/detail.php?activity_id=36. Retrieved 2 November 2011. 2. ^ SAARC Preferential Trading Arrangement 3. ^ A complete agreement of SAFTA 4. ^ BANGLADESH MAKES BIG CUT IN SAFTA 5. ^ NEPAL CUTS ITS SENSITIVE LIST 6. ^ PAKISTAN CUTS ITS SENSITIVE LIST

[edit] See also

Asia Cooperation Dialogue Asia-Pacific Research and Training Network on Trade Asia-Pacific Trade Agreements

Mekong-Ganga Cooperation SAARC SAARC Consortium on Open and Distance Learning

Database Asian Clearing Union BIMSTEC Indian Ocean Rim Association for Regional Cooperation

South Asian Economic Union South Asian Federation of Accountants South Asian Football Federation

[edit] External links

SAARC South Asian Free Trade Area (SAFTA) SAFTA Text World Bank, Data and Analysis on Trade and Regional Integration in South Asia Towards Unity: SAFTA Treaty SAARC proposes South Asian Economic Union, condemns terrorism South Asian Economic Union a growing reality that can change the world [show]

v t e

South Asian Free Trade Area (SAFTA)

[show]

v t e

South Asian Association for Regional Cooperation

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Free trade agreements South Asian Association for Regional Cooperation Trade blocs Treaties of Sri Lanka Treaties of Bangladesh Treaties of Nepal Treaties of Pakistan Treaties of Bhutan Treaties of the Republic of India Treaties of the Maldives Treaties of Afghanistan

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