Agreement On South Asia Free Trade Area (Safta)

The South Asian Free Trade Area (SAFTA) is an agreement reached on 6 January 2004 at the 12th ASAC Summit in Islamabad, Pakistan. It has created a free trade area of 1.6 billion people in Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka to reduce tariffs on all goods traded by 2016. The SAFTA agreement entered into force on 1 January 2006[1] and is operational after the ratification of the agreement by the seven governments. SAFTA called on developing countries in South Asia (India, Pakistan and Sri Lanka) to reduce their tariffs to 20% during the first phase of the two-year period, until 2007. During the last five-year period, which ended in 2012, the 20% fee was reduced to zero in a series of annual reductions. The least developed countries of South Asia (Nepal, Bhutan, Bangladesh, Afghanistan and the Maldives) had an additional three years to reduce tariffs to zero. India and Pakistan ratified the treaty in 2009, while Afghanistan, SAARC`s eighth member state, ratified the SAFTA protocol on 4 May 2011. [2] The aim of SAFTA is to promote and increase common contracts between countries, such as medium- and long-term contracts. State-managed trade contracts, the supply and import insurance of certain products, etc.

This is an agreement on tariff concessions, such as national tariff concessions and non-tariff concessions In accordance with the trade liberalization programme, States Parties must respect the following timetable for tariff reduction. Non-least developing countries should reduce the current tariff to 20% and reduce current tariffs in smaller developing countries by 30%. But the system of trade liberalization is not applicable to the sensitive list, since this list must be negotiated between the contracting countries and then negotiated. A sensitive list will include a common agreement between the States Parties in favour of the least developed States Parties. The SAFTA Council of Ministers (SMC) will participate to review the sensitive list every four years to reduce the list. The main objective of the agreement is to promote competition in the region and to offer equitable benefits to the countries concerned. It must benefit the citizens of countries by bringing transparency and integrity between nations. SAFTA was also created to strengthen the level of trade and economic cooperation between ASARC states by reducing tariffs and trade barriers and to grant specific preferences to least developed countries (LDCs) within SAARC, nations.to create a framework for further regional cooperation. The SEA called on the government to fill a gap in the South Asian Regional Free Trade Pact that was used to circumvent tariffs through imports of palm oil and soybeans from Nepal and Bangladesh.

Nepal imported 54,076 tonnes of palm oil from July to August and exported 35,706 tonnes to India during this period, according to the trade organization, referring to import data.