SAARC PREFERENTIAL TRADING ARRANGEMENT : A PRELIMINARY ANALYSIS

This article provides a preliminary analysis of the SAARC Preferential Trading Arrangement (SAPTA), which was signed in 1993 and was in the process of being operationalized. It examines the key features and modalities of SAPTA, which aimed to promote intra-regional trade through the exchange of tariff concessions. The study assesses the potential for trade creation and trade diversion that could result from the agreement. The research identifies the major challenges to the success of SAPTA, including the limited complementarity of the regional economies, the prevalence of non-tariff barriers, and the deep-seated political mistrust, particularly between India and Pakistan. The paper argues that while SAPTA was a politically significant first step, its immediate economic impact was likely to be modest. The analysis concludes that the success of the arrangement would depend on the political will of the member states to move towards deeper and more comprehensive trade liberalization.

The signing of the SAARC Preferential Trading Arrangement (SAPTA) in 1993 was a landmark event, representing the first concrete step by the South Asian nations towards regional economic integration. This paper offers a preliminary analysis of this crucial arrangement. The study begins by detailing the main provisions of the SAPTA agreement, explaining its product-by-product approach to tariff negotiations and its inclusion of special provisions for the Least Developed Countries (LDCs) within the bloc. The core of the article is an assessment of the potential economic impact of SAPTA. It provides an analysis of the existing patterns of intra-regional trade, which were abysmally low, and evaluates the potential for SAPTA to boost these figures. However, the paper adopts a cautious tone, highlighting the significant structural and political obstacles that stood in the way. It argues that the real barriers to trade in South Asia were not just high tariffs, but a host of non-tariff barriers, poor transport infrastructure, and a profound lack of political trust. The findings suggest that SAPTA, in its initial form, was more a symbol of intent than a powerful instrument of economic integration. The paper concludes that for SAPTA to be effective, it would need to evolve into a more ambitious South Asian Free Trade Area (SAFTA), a process that would require a far greater degree of political commitment to resolving the region's long-standing conflicts.