The South Asian Free Trade Area (SAFTA)
Posted by Ripon Abu Hasnat on Friday, June 13, 2014 | 0 comments
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 of 1.6 billion people in Bangladesh, Bhutan, India, Maldives, Nepal,
Pakistan and Sri Lanka (as of 2011, the combined population is 1.8 billion
people). The seven foreign ministers of the region signed a framework agreement
on SAFTA to reduce customs duties of all traded goods to zero by the year 2016.
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.
The basic principles underlying
SAFTA are as under;
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.
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