REGIONAL COOPERATION IN SOUTH ASIA: FUTURE OF SAFTA

Focusing on implementation rather than aspiration, this article evaluates the early performance of SAFTA and the reforms needed to unlock its potential. It documents the proliferation of sensitive lists that shield large swathes of trade, the complexity of rules of origin that raise compliance costs, and the underdevelopment of trade facilitation—customs automation, risk management and mutual recognition—that keeps border frictions high. The discussion highlights the importance of services trade and investment flows for modern value chains and argues that SAFTA’s tariff-centric design must be complemented by protocols on transit, e-documentation and standards. The article proposes a pragmatic roadmap: reduce sensitive lists on a schedule, adopt electronic certificates of origin, and pilot green-lane programs at high-volume land ports to demonstrate time-and-cost savings.

The body begins by benchmarking intra-SAARC trade shares and identifying the sectors most constrained by exclusions. Section One dissects the architecture of SAFTA’s tariff liberalisation programme, modelling welfare effects under alternative reduction paths and showing how exemptions blunt gains for small producers. Section Two addresses non-tariff measures, focusing on testing, certification and labelling, and explains how equivalence agreements and mutual recognition can lower fixed costs for SMEs. Section Three analyses border processes using time-release studies, proposing risk-based inspections, pre-arrival processing and data exchange to cut dwell times. Section Four explores services—logistics, finance, telecoms—and investment linkages that enable regional value chains in textiles, light engineering and agribusiness. Section Five outlines governance: a trade facilitation committee with private-sector representation, a disputes window for procedural blockages, and a transparent dashboard to track reduction of sensitive lists. The conclusion argues that SAFTA can deliver tangible benefits if members pivot from negotiating tariff lines to implementing border and behind-the-border reforms that firms actually experience.