QS Study

South Asian Preferential Trade Agreement (SAPTA)

In 1991 the meeting of SAARC was held in Sri Lanka and by this meeting the representatives of member country of SAARC agreed to create South Asian Preferential Trading Arrangement (SAPTA) later. On 11 April in 1993 at Dhaka the meeting of SAARC was held and the SAPTA agreement was signed and 8, December, 1995 this agreement was activated. The goal is to increase trade between Asian countries and to assist less economically advantaged members through preferential treatment.

A preferential trade area (also preferential trade agreement, PTA) is a trading community that gives privileged right of entry to assured products from the participating countries. This is done by reducing tariffs but not by abolishing them totally. The major objective of SAPTA agreement was to reduce the trade barriers of the member countries of SAARC. As a result the balance of trade of this region is reduced.

China has shown her interest in joining the SAARC and in the 14th summit the members have supported this issue. Iran has also shown her awareness in joining the SAARC on observer category. The matter was deferred for the next meeting.

Critics have however observed that the SAPTA has not been functioning efficiently due to argument between India and Pakistan. Further, the SAARC members lack important trade prospective and eagerness such as in the case of ASEAN members.