SAPTA AND SAFTA

INTRODUCTION 

SAARC PREFERENTIAL TRADING AGREEMENT (SAPTA): 

SAPTA is an outcome of SAARC Summit held at Colombo in the year 1991 where an draft  agreement was brought about. The agreement was signed and entered into during the 7th summit  held in Dhaka on April 1993 and was entered into force on 7th December 1995. It is the first step  towards the transition of free South Asian Trade.  

The Agreement on SAARC Preferential Trading Arrangement (SAPTA) envisages the creation of  a Preferential Trading Area among the seven member states of the SAARC, namely Bangladesh,  Butan, India, Maldives, Nepal, Pakistan and Sri Lanka. It was agreed that SAPTA is a stepping  stone to higher levels of trade liberalization and economic co-operation among the SAARC  member countries. The objective of the SAPTA is to promote and sustain mutual trade and the  economic co-operation among the member states through exchange of trade concessions. 

SOUTH ASIAN FREE TRADE AREA (SAFTA): 

SAFTA is an outcome of SAPT. After the establishment of SAARC and SAFTA, the need for  progress beyond a preferential trading arrangement so as to move towards a higher level of trade  and economic cooperation in the region was recognised. SAFTA, an agreement between member  countries like Bangladesh, Maldives, Bhutan, Pakistan, India, Nepal and Sri Lanka was signed on  6th January 2004 and came into force on 1st January 2006.

The objective is to promote conditions of fair-trade competition in the free trade area and  promoting and enhancing mutual trade and economic corporation by eliminating trade barriers. 

Feature SAARC Preferential  Trading Arrangements  

(SAPTA) 

Initiation SAPTA is the first step  towards liberalization under SAARC and leading towards a  common economic union like the EU among the member states. 

Member States Bangladesh, Bhutan, India,  Maldives, Nepal, Pakistan and  

Sri Lanka. 

Objectives • To promote and sustain  mutual trade and the economic co-operation  

among the member states through exchange of trade concessions. 

• Moreover, bringing awareness about expansion of trade and  providing greater opportunities of employment by strengthening intra- 

South Asian Free Trade  Area (SAFTA) 

SAFTA is the result of  SAPTA and is a legal platform  to achieve a common  economic trade union in South  Asia. Bangladesh, Bhutan, India,  Maldives, Nepal, Pakistan, Sri  Lanka and Afghanistan. 

• Promoting and enhancing  mutual trade and  economic co-operation by  eliminating barriers of  trade among member  states. 

• Establishing a framework  for further regional co operation to expand the  mutual benefits of the  agreement and promotion  free trade competition in  the free trade area. regional cooperation and  

ultimately increasing the share the total volume of  share of South Asia Trade 

Basic Principles

• Overall reciprocity and  mutuality of advantages 

• Step by step negotiations and periodic reviews so as to improve and extend the preferential trade  

arrangement, in stages 

• Inclusion of all products, manufactures and commodities in their raw semi- processes and  processed forms 

• Special and favourable treatment to Least Developed Contacting States 

Components/ Instruments SAPTA may, inter-alia, consist  of arrangements relating to: - 

(a) tariffs; 

• Creating a effective mechanism for the  implementation and  application of the  agreement and for dispute  reolsution as well as for  joint administration of the  SAFTA. 

• Overall Mutuality and free  movements of goods. 

• Adoption of Trade  Facilitation and Other  Measures. 

• Recognition of the needs  of the Least Developed  Countries. 

• Governed by the law of  agreement and existing rights and obligations  among member states. 

The SAFTA Agreement will  be implemented through the  following instruments: -

(b) para-tariffs; 

(c) non-tariff  measures; 

(d) direct trade measures. 

Limitations • The agreement gives  access to only certain  goods. 

• The dispute resolution  is not advanced and  effective the more powerful members were unwilling to  

accept the legal mechanisms for dispute settlement. 

• Important measures were not taken for import licensing, harmonization of custom clearance, removal of barriers of intra-SAARC investments, etc 

• Trade Liberalisation  Programme 

• Rules of Origin 

• Institutional Arrangements 

• Consultations and Dispute  Settlement Procedures 

• Safeguard Measures

• Any other instrument that  may be agreed upon. 

• The South Asian  region has diversity in socio-political and economic conditions. 

• SAFTA vividly  portrays the inherent dissimilarities and scenarios of unequal distribution of potential gains from the regional cooperation scheme. 

• The intra-regional  flow of capital and technology is very limited moreover, the informal trade in the  

borders of the countries has been increasing since  establishment of  SAFTA. 

Author – Aditi Kamble Symbiosis Law School, Pune