SAARC Preferential Trading Arrangement (SAPTA)

In December 1991, the Sixth Summit held in Colombo approved the

establishment of an Inter-Governmental Group (IGG) to formulate an agreement to establish a SAARC Preferential Trading Arrangement (SAPTA) by 1997.
The Agreement on SAARC Preferential Trading Arrangement

(SAPTA) which envisages the creation of a Preferential Trading Area among the seven member states of the SAARC, namely Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka was signed in Dhaka in April 1993.
Given the consensus within SAARC, the Agreement on SAPTA was

signed on 11 April 1993 and entered into force on 7 December 1995 well in advance of the date stipulated by the Colombo Summit.

Objective Of SAPTA
The objective of the SAPTA is to promote and sustain mutual trade

and the economic co-operation among the member states through exchange of trade concessions. SAPTA therefore is the first step towards higher levels of trade and economic co-operation in region

Basic principles underlying SAPTA

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

Contracting States and agreement on concrete preferential measures in their favor.

Inclusion of all products, manufactures and commodities in

their raw, semi-processed and processed forms.

Establishment and Aims

Arrangement (SAPTA) to promote and sustain mutual trade

and the economic cooperation among the Contracting States, through exchanging concessions in accordance with this Agreement.
SAPTA will be governed by the provisions of the Agreement

and also by the rules, regulations, decisions, understandings and protocols to be agreed upon within its framework by the Contracting States.

Main Components of SAPTA

Tariff Para Tariff Non Tariff

SAPTA specified four negotiating approaches namely, product by product basis, across the board tariff reduction, sectoral basis and direct trade measures.
However it was agreed that tariff concessions would initially be

negotiated on a product - by- product basis. The agreement also provides for negotiation of tariff concessions to be an ongoing process.
The SAPTA envisages that concessions on tariff Para-tariff and non

tariff measures will be negotiated step -buy step improved and extended in successive stages.

National Schedules For Concession

The process of negotiation on the schedule of concession, which forms

an integral part of the Agreement, commenced in 1993.

Four rounds of trade negotiations were concluded under SAPTA

covering over 5000 commodities. Each Round contributed to an incremental trend in the product coverage and the deepening of tariff concessions over previous Rounds.
During the first and the second rounds, trade negotiations were

conducted on a product by product basis. In the third and the fourth rounds, negotiations were conducted on chapter wise.

Maintenance of SAPTA concession

The Agreement on the South Asian Free Trade Area (SAFTA) which

was implemented with effect from 1st January 2006 will supersede the SAARC Preferential Trading Arrangement (SAPTA).
SAPTA concessions would cease for LDC member states. However,

if any item on which SAPTA concessions are available to LDC, appear in the sensitive lists of non-LDC, they shall maintain the same level of concession through derogation. The Committee has further agreed that if the items under TLP enjoy tariff preferences under SAPTA, the Non-LDCs shall reduce their tariff on those items to a rate not higher than the rate applicable for LDCs under SAPTA on the date agreed for base rate for TLP.