Investment & Trade
SAFTA Agreement (SAARC Free Trade Area)
Executive Summary
The South Asian Free Trade Area (SAFTA) Agreement was signed on 6 January 2004 during the 12th SAARC Summit in Islamabad and entered into force on 1 January 2006. The agreement created a free trade area among the seven SAARC member states (Afghanistan joined later in 2011 as the 8th member). SAFTA provides for phased tariff reduction: Non-Least Developed Countries (India, Pakistan, Sri Lanka) reduce tariffs to 0-5% within 7 years (by 2013), while Least Developed Country members (Bangladesh, Bhutan, Maldives, Nepal, Afghanistan) have 10 years (by 2016). The agreement includes a Sensitive List (negative list) — Bangladesh's sensitive list contains 991 tariff lines as of 2024, down from 1,253 initially. Rules of origin require either 35% domestic value content or a change in tariff subheading (CTSH), with product-specific rules for select chapters. Bangladesh's exports to SAARC countries in FY2023-24 were USD 2.94B (mostly to India).
Key Points
- Signed 6 January 2004, effective 1 January 2006
- 8 SAARC member states (Afghanistan joined 2011)
- LDCs (incl. Bangladesh): tariff reduction to 0-5% by 2016
- Non-LDCs (India, Pakistan, Sri Lanka): 0-5% by 2013
- Bangladesh's Sensitive List: 991 tariff lines (down from 1,253)
- Rules of origin: 35% domestic value content OR CTSH
- Product-specific rules for select HS chapters
- Special treatment for LDCs: longer phase-out, technical assistance
- SAARC Secretariat in Kathmandu is the institutional framework
- Bangladesh-SAARC exports FY2023-24: USD 2.94B (mostly to India)
- Annual review via SAFTA Ministerial Council
Full Details
South Asian Free Trade Area agreement providing preferential tariff rates among SAARC member countries.