The South Asian Free Trade Area (SAFTA) is the free trade agreement of the South Asian Association for Regional Cooperation (SAARC). The agreement entered into force in 2006 and came into force with the 1993 ASAC preferential trade agreement. SAFTA`s signatory countries are Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka. The aim of SAFTA is to promote and increase common contracts between countries, such as medium- and long-term contracts. State-managed trade contracts, the supply and import insurance of certain products, etc. It provides for an agreement on tariff concessions, such as national customs concessions and non-tariff concessions This document provides a quantitative assessment of the potential impact of SAFTA and its possible extension to the North American Free Trade Agreement (NAFTA), the European Union (EU) and the Association of Southeast Asian Nations (ASEAN), and more 3.7. , the institutional aspects of SAFTA and the existing empirical work on SAFTA. Section III describes methodology and empirical results. The document assesses the economic impact of trade agreements (trade flows, trade balance and customs revenues). A key outcome is that South Asia would gain greater economic benefits by extending to other APAs.

However, what is considered a block for South Asia cannot apply to all Member States, creating a need for compensation mechanisms. Section IV. This agreement came into force in 2006 and is not currently fully operational. Bandara and Yu (2003) use a similar argument to explain the decline in social benefits that an SA-ASEAN trade agreement would have for South Asian countries. The South Asian Free Trade Area (SAFTA) is an agreement reached on 6 January 2004 at the 12th ASAC Summit in Islamabad, Pakistan. It has created a free trade area of 1.6 billion people in Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka to reduce tariffs on all goods traded by 2016. The SAFTA agreement entered into force on 1 January 2006[1] and is operational after the ratification of the agreement by the seven governments.