The South Asian Association for Regional Cooperation (SAARC) Preferential Trading Agreement (SAPTA) is a trade agreement signed by the member nations of the SAARC in 1993. The objective of SAPTA is to promote and enhance liberalized trade and economic cooperation among the SAARC member nations by reducing and eventually eliminating tariffs on selected products.
SAPTA is considered the first step towards the establishment of a free trade area in South Asia. The Agreement aimed to promote regional trade by providing preferential treatment to the member nations through tariff reductions on selected goods. The agreement provides preferential tariffs to member countries on around 3,000 products, including agricultural and industrial goods.
SAPTA covers the following countries: Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka. All member countries are required to provide a preferential tariff rate for at least 20% of their total imports from other member countries. The agreement also includes provisions for the removal of non-tariff barriers to trade and the promotion of trade in services.
SAPTA has helped to increase intra-regional trade among the member nations. In 1995, intra-regional trade among the SAARC member nations accounted for only 4.3% of their total trade. However, by 2018, this figure had increased to 6.8%. While this may seem like a small increase, it represents a significant improvement in economic cooperation between the member nations.
However, SAPTA has faced several challenges in its implementation. One of the major challenges has been the lack of political will among member nations to implement the agreement fully. Some countries have been reluctant to offer preferential tariffs, while others have not been able to ratify the agreement due to domestic political considerations.
Moreover, SAPTA has been criticized for being too limited in its scope, as it only covers a limited number of products and does not include trade in services. The agreement also does not provide for dispute settlement mechanisms, which could lead to challenges in resolving disputes between member nations.
In conclusion, SAPTA is an important agreement that has helped to promote regional trade and economic cooperation among the SAARC member nations. While the agreement has faced some challenges in its implementation, it remains an essential step towards the establishment of a free trade area in South Asia. As the region continues to grow and develop, it is hoped that member nations will work towards implementing SAPTA fully and expanding its scope to include trade in services and other areas.