BY Sourabh Malhotra

ENROLLMENT NO:07716688512

• 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 Srilanka.

• 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.

Bangladesh, Bhutan, India, Maldives Nepal Pakistan Srilanka Afghanistan

• 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.

• 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.

• The Agreement on SAARC Preferential trading Arrangement (SAPTA) was signed on 11 April 1993 and entered into force on 7 December 1995, with the desire of the Member States of SAARC.

• to promote and sustain mutual trade and economic cooperation within the SAARC region through the exchange of concessions.

• SAARC: The South Asian Association for Regional Cooperation is an organisation of South Asian nations, which was established on 8 December 1985.

Tariff cuts by the Saarc countries were not deep

Majority of the items offered concessions were not relevant to the trade interest of other member countries

Sapta was negotiated on product-by-product basis

Tariff concessions alone could not generate any significant gains in the intra-Saarc trade.

The stringent rules of origin prescribed under Sapta were also partly responsible for its failure

• 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.

• negotiation of tariff reform step by step, improved and extended in successive stages through periodic reviews.

• recognition of the special needs of the Least Developed (LDCS)Contracting States and agreement on concrete preferential measures in their favour.

• inclusion of all products, manufactures and commodities in their raw, semi-processed and processed forms.

• free movement of goods, between contracting states.

To eliminate barriers to trade in, and to facilitate the cross- border movement of goods between the territories of the Contracting States.

To promote conditions of fair competition in the free trade area, and to ensure equitable benefits to all Contracting States, taking into account their respective levels and pattern of economic development .

To increase the level of trade and economic cooperation among the SAARC nations.

To create effective mechanism for the implementation and application of this Agreement.

To establish a framework for further regional cooperation to expand and enhance the mutual benefits of this Agreement.

Trade Liberalization Programme Sensitive List Institutional arrangements Rules of Origin Special and Differential treatment Provision for

LDC Non-Tariff barriers

Trade Liberalisation programme: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.

Sensitive list:Sensitive list is a list with every country which does not include tariff concession.

The Working Group on Reduction in the Sensitive Lists under SAFTA has completed its task of reducing the Sensitive Lists by 20%.

Maldives has reduced its Sensitive List from 681 tariff lines to 152 tariff lines (78% reduction) and

India has reduced its Sensitive List for Least Developed Member States from earlier 480 tariff lines to only 25 tariff lines (95% reduction).

MemberState Number of Products in the earlier Sensitive Lists

Number of Products in the Revised Sensitive Lists (Phase-II)

w.e.f. 1 January 2012

Afghanistan 1072 858

Bangladesh 1233 (LDCs)

1241 (NLDCs)

987 (LDCs)

993 (NLDCs)

Bhutan 150 156

India 480 (LDCs)

868 (NLDCs)

25 (LDCs)

614 (NLDCs)

Maldives 681 154

MemberState Number of Products in the earlier Sensitive Lists

Number of Products in the Revised Sensitive Lists (Phase-II)

w.e.f. 1 January 2012

Nepal 1257 (LDCs)

1295 (NLDCs)

998 (LDCs)

1036 (NLDCs)

Pakistan 1169 936

Sri Lanka 1042 [845 (LDCs)]

906 (NLDCs)

The Contracting States hereby establish the SAFTA Ministerial Council(hereinafter referred to as SMC).

The SMC shall be the highest decision -making body of SAFTA and shall be responsible for the administration and implementation of this Agreement and all decisions and arrangements made within its legal framework.

The SMC shall consist of the Ministers of Commerce/Trade of the Contracting States.

The SMC shall meet at least once every year or more often as and when considered necessary by the Contracting States. Each Contracting State shall chair the SMC for a period of one year on rotational basis in alphabetical order.

The SMC shall be supported by a Committee of Experts (hereinafter referred to as COE), with one nominee from each Contracting State at the level of a Senior Economic Official, with expertise intrade matters.

The COE shall monitor, review and facilitate implementation of the provisions of this Agreement and undertake any task assigned to it by the SMC. The COE shall submit its report to SMC every six months.

The COE will also act as Dispute Settlement Body under this Agreement.

The COE shall meet at least once every six months or more often as and when considered necessary by the Contracting States. Each Contracting State shall chair the COE for a period one year on rotational basis in alphabetical order.

The SAARC Secretariat shall provide secretarial support to the SMC and COE in the discharge of their functions.

The SMC and COE will adopt their own rules of procedure.

Rules of origin:Rules of Origin shall be negotiated by the Contracting States and incorporated in this Agreement as an integral part.

Rules of origin are criteria used to determine the ““nationality””of a product.

NonNon-preferential Rules of Origin To apply basic trade policy during

imports. WTO Harmonization Work programmes.

Preferential Rules of Origin Checking trade deflection of third country

goods. Facilitate value addition in the exporting

country. Augmenting intraregional trade and

investment flows.

special and differential treatment consists of 145 provisions spread across :

The different Multilateral Agreements on Trade in Goods.

The General Agreement on Trade in Services

The Agreement on Trade-Related Aspects of Intellectual Property.

The Understanding on Rules and Procedures Governing the Settlement of Disputes and various Ministerial Decisions.

The Contracting States shall give special regard to the situation of the Least Developed Contracting States when considering the application of anti-dumping and/or countervailing measures.

Greater flexibility in continuation of quantitative or other restrictions provisionally and without discrimination in critical circumstances by the Least Developed Contracting States on imports from other contracting states.

Special consideration shall be given by Contracting States to requests from Least Developed Contracting States for technical assistance and cooperation arrangementsdesigned to assist them in expanding their trade.

Non Tariff barriers:Non-tariff barriers and measures (NTBs) include measures other than border tariffs that affect trade in goods, services, and factors of production.

Taxonomies of NTBs include both narrow and broad categories.

Price control measures: Para-tariffs, surcharges etc.

Finance measures: Regulate access to and the cost of foreign exchange for imports, define the terms of payment.

Automatic licensing measure: Restrain the quantity of imports of any particular good.

Monopolistic measure. Technical measure: Measures referring to

product characteristics such as quality, safety or dimensions, including the applicable administrative provisions, terminology, symbols, testing and test methods, packaging, marking and labeling requirements as they apply to a specific product.

Infrastructure

Procedural

Standardization

Para tariff barriers

Para-Tariffs: means border charges and fees, other than “tariffs”, on foreign trade transactions of a tariff-like effect which are levied solely on imports,

but not those indirect taxes and charges, which are levied in the same manner on like domestic products.

Import charges corresponding to specific services rendered are not considered as para tariffs.

Lack of commitment by Government Self centeredness of the countries in

the block Political issues between member

nations1) India – Pakistan2) China-India-Bhutan3) India-Nepal

Dual Framework with more importance to bilateral agreements.

Lack of proper framework.

en.wikipedia.org www.saarc-sec.org commerce.nic.in www.financialexpress.com www.wto.org www.worldtradelaw.net http://www.unescap.org

THANK YOU