Despite the fact that the South Asian Free Trade Area (SAFTA) Agreement was signed over a decade ago in January, 2004, and the agreement entered into force in January, 2006, inadequate free trade between South Asian countries is seen as the main reason why SAARC has achieved far below its economic potential so far.
India summed it up at the Kathmandu summit when it said, “Less than 10 per cent of the region’s internal trade takes place under the SAARC Free Trade Area... Today, goods travel from one Punjab to the other Punjab through Delhi, Mumbai, Dubai and Karachi making the journey eleven times longer and the cost four times more. We must shrink the distance between our producers and consumers and use the most direct routes of trade.”
In fact, SAARC has been criticised for not doing enough to transmit tangible economic benefits to the people of the region in contrast to other regional bodies like South-east Asia’s Asean.
In fact, such is the tardy pace that the United States, an observer country, too commented at the summit. “We also strongly support efforts by SAARC to continue its pursuit of a South Asian Free Trade Area. A fully implemented SAFTA would represent one of SAARC’s most significant achievements.”
In fact, SAARC virtually acknowledged that much more needs to be done, when it stated in its Kathmandu Declaration at the end of the Summit, “The leaders (of SAARC) directed the SAFTA Ministerial Council and SAFTA Committee of Experts to accelerate free trade in goods and services in the region putting into operation simplified and transparent rules of origin, implementation of trade facilitation measures, harmonisation of standards relating to technical barriers to trade, streamlined and simplified customs procedures, elimination of non-tariff and para-tariff barriers, and smooth and efficient transit and transport facilities.”
