The main aim for establishment of SAARC was to promote understanding, harmony and conviction among states in southern Asia. Currently its members are Bhutan, Nepal, India, Bangladesh, Pakistan and Afghanistan. These areas had a high potential for trade and economic growth and could only have been realized if there was common front form where interests of each member country could be considered. This area was converted in to a free trade area through mitigation of challenges involving inter-country movement of goods and unfavorable tax tariffs. In the year 1993 SAARC members agreed to come into a pact that member states would be treated preferentially when it came to matters relating to trade. This led to the formations of south Asian preferential trade agreement (SEPTA). This way a near free trade area among the SAARC member states was realized. The door was open for discussion in SEPTA where by tariffs, nontariff, par tariffs and direct trade measures would be developed over time.
The least developed members were given more consideration such that they would not feel left out; this made it a mutual agreement where every member state owned the pact.
After the establishment of south Asian free trade agreement (SAFTA), a free trade area was realized. This agreement focused on margins of preference, concessions, par tariffs, direct trade measures, SEPTA etc. With SAFTA free trade area was established and still operates, where by no legal restrictions are imposed on goods.
Considering countries like India and Pakistan have the largest economies in southern Asia, the rest of the countries benefit by getting goods produced by the large economies at a lower price. This is due to removal of tariffs and restrictions. Moreover, every country in SAARC has a bilateral agreement with each of the member states. For example, India has bilateral trade agreement for free trade in hydroelectric power. All these developments were officiated in 2004 after the start of this free economy. Up to date the free trade area has opened up each member states market for goods and service from the partners. The exports and imports from among the countries have tremendously increased making the region realize its position as an economic power house in Asia and in the whole world.
It can be clearly deduced that although when compared to other trading blocks which have been in existence for a longer time, SAARC has gained economically and it’s just a mater of time before it catches up with them. Actually since 2003 there has been a record of 40% increase in SAARC countries exports.
The Intra-SAARC imports increased from 3.0 United States dollars in year 2000 up to 9.6 billion United States dollars in 2006. This reflects how advantageous the free trade area has benefited this region. The SAARC members have been able to export to other world industrial power houses like United States of America and the United Kingdom. This has really benefited them considering most states in SAARC have agricultural economy. SAARC has been successful in making sure that trade promotion in southern Asia is realized. Ii has also helped market the area to other countries for exports. This way, the countries in SAARC have gained maximally in their goods.
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