The South Asian Free Trade Agreement

Abstract

The South Asian Free Trade Agreement (SAFTA), due to have been implemented starting July 2006, has adopted a negative list approach permitting member countries to potentially exclude a substantial share of intraregional trade from the tariff liberalisation process. This study finds that the excluded trade amounts to nearly 53 per cent of current import trade amongst South Asian countries, bringing into question the future prospects for meaningful economic cooperation under a regional framework. At the very least, if the SAFTA treaty had built on the existing bilateral FTAs in the region, it would eventually have come to supersede such agreements. Unfortunately, the regional initiative has lagged well behind the bilateral process, and is likely to be overtaken by alternative strategic trade policy initiatives cropping up in the region. It seems likely that attempts at economic integration of the South Asian region under the SAARC framework is liable to fragment.