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Potential Implications of SAFTA on Pakistan

Partner: CUTS International

Year: 2008

Team Members: Shakeel Ahmad, Muhammad Hamza Abbas


As elucidated in trade theory, liberalizing trade regimes is not a neutral process. It impacts the economic and social structures and also impacts the character structure of production systems, the people involved in such systems, and also the consumers of the produce. This country case study was carried in collaboration with CUTS India was primarily designed to investigate the implications of SAFTA for Pakistan.

SAARC’s Islamabad declaration in 2004 promised the establishment of a South Asian Free Trade Area (SAFTA) which came into force on July 1, 2006 six months later than the envisaged January 1, 2006. SAFTA is designed to be fully implemented by 2015. All the issues pertaining to tariff restrictions, rules of origin, safeguards, institutional structures, and dispute settlement are to be sorted out by various committees such as Committee of Experts which reports to the Ministerial Council every six months. The agreement primarily calls for e1imination of all quantitative restrictions and allows a sensitive list of products on which preference will not be accorded. This list is reviewed at four-year intervals with the aim of reducing the list and expanding the free trade coverage of the agreement.

Objectives of the paper were to come up with a trend analysis of Pakistan’s trade and investment links with other countries within the South Asia region, to depict the current status of SAFTA, present a review of the studies on potential complications of SAFTA on Pakistan. The study also tried to assess the role of Pakistan in making SAFTA a success especially in the context of multilateralism and emerging regionalism. The case study also tried to develop, research-based recommendations on making SAFTA an effective tool for trade led growth in Pakistan and South Asia. Main finding of the study was that Pakistan should develop itself to face more competition and build competitiveness as well as increase economic freedom.

For More Information, Contact the Following Person:

Babar Jamal , Naveeda Nazir , Vaqar Ahmed