The South Asian Free Trade Area (SAFTA) was established with the aim of promoting regional economic integration and fostering trade cooperation among the South Asian countries. SAFTA serves as a stepping stone towards the eventual establishment of a South Asian Customs Union, Common Market, and Economic Union.
SAFTA was conceived in 1995 during the Sixteenth session of the Council of Ministers, where the need for a South Asian Free Trade Area was recognized. An Inter-Governmental Expert Group (IGEG) was established in 1996 to outline the necessary steps for progressing towards a free trade area. The Tenth SAARC Summit in 1998 further paved the way for the creation of SAFTA by forming a Committee of Experts (COE) responsible for drafting a comprehensive treaty framework.
The SAFTA Agreement was signed on 6 January 2004 during the Twelfth SAARC Summit held in Islamabad, Pakistan. It entered into force on 1 January 2006, and the Trade Liberalization Programme (TLP) commenced from 1 July 2006. This program aimed to progressively reduce tariff and non-tariff barriers on trade among SAARC member states.
Since the implementation of the Trade Liberalization Programme, SAFTA has witnessed a significant increase in trade volume among member states. As of 13 September 2012, the total f.o.b. (free on board) value of exports by member states under SAFTA had exceeded US$2 billion since the launch of the program in July 2006. This growth demonstrates the positive impact of SAFTA in promoting trade within the region.
Recognizing the developmental asymmetries among member states, SAFTA emphasizes the need for realistic and achievable targets. The Committee of Experts responsible for drafting the SAFTA framework took into consideration the varying levels of economic development within the region. This approach ensures that the benefits of trade liberalization are accessible to all member countries.
| Date and Event | Significance |
| 1995, Sixteenth session of the Council of Ministers | Recognition of the need for SAFTA |
| 1996, Inter-Governmental Expert Group (IGEG) set up | Identifying necessary steps for a free trade area |
| 1998, Tenth SAARC Summit | Creation of Committee of Experts for drafting the SAFTA framework |
| 6 January 2004, SAFTA Agreement signed | Milestone achievement towards regional economic integration |
| 1 January 2006, SAFTA Agreement enters into force | Commencement of the Trade Liberalization Programme |
| 1 July 2006, Trade Liberalization Programme begins | Progressive reduction of tariff and non-tariff barriers |
| Total f.o.b. exports under SAFTA exceed $2 billion | Demonstrates significant trade growth within the region |
SAFTA has played a pivotal role in promoting economic integration among the South Asian countries. By reducing trade barriers and fostering cooperation, SAFTA has facilitated the growth of regional trade and created opportunities for economic development. Despite the challenges posed by asymmetries in development, SAFTA continues to work towards achieving realistic targets and ensuring that the benefits of trade liberalization are accessible to all member states. As SAFTA moves forward, it holds the potential to further strengthen regional cooperation and contribute to the prosperity of the South Asian region as a whole.