Department of Commerce Sri Lanka

The Agreement on SAARC Preferential Trading Arrangement (SAPTA) which envisages the creation of a Preferential Trading Area among the seven member states of the SAARC, namely Bangladesh, Butan, India, Maldives, Nepal, Pakistan and Sri Lanka was signed in Dhaka in April 1993. The idea of liberalizing trade among SAARC countries was first mooted by Sri Lanka at the sixth Summit of the South Asian Association for Regional Co-operation (SAARC) held in Colombo in December 1991. It was agreed that SAPTA is a stepping stone to higher levels of trade liberalization and economic co-operation among the SAARC member countries. 

Objective
The objective of the SAPTA is to promote and sustain mutual trade and the economic co-operation among the member states through exchange of trade concessions. SAPTA therefore is the first step towards higher levels of trade and economic co-operation in the region.

The basic principles
. Overall reciprocity and mutuality of advantages
. Step by step negotiations and periodic reviews so as to improve and extend the preferential trade arrangement, in stages
. Inclusion of all products, manufactures and commodities in their raw semi- processes and processed forms
. Special and favourable treatment to Least Developed Contacting States

Main components
. Tariff
. Para Tariff
. Non Tariff
. Direct Trade Measures

SAPTA specified four negotiating approaches namely, product by product basis, across the board tariff reduction, sectoral basis and direct trade measures. However it was agreed that tariff concessions would initially be negotiated on a product - by- product basis. The agreement also provides for negotiation of tariff concessions to be an ongoing process. The SAPTA envisages that concessions on tariff para-tariff and non tariff measures will be negotiated step -buy step improved and extended in successive stages.

National Schedules of Concessions
The process of negotiation on the schedule of concession, which forms an integral part of the Agreement, commenced in 1993. For this purpose, the Inter Governmental Group on Trade Liberalization (IGG) was set up. The IGG met on six occasions in various capitals. At the sixth meeting held in Katmandu on 20 th and 21 st April 1995, the delegations held intensive rounds of bilateral and multilateral negotiations and agreed on the National Schedule of concessions to be granted by individual member states to other member states under the SAPTA Agreement.

Four rounds of trade negotiations were concluded under SAPTA covering over 5000 commodities. Each Round contributed to an incremental trend in the product coverage and the deepening of tariff concessions over previous Rounds.

During the first and the second rounds, trade negotiations were conducted on a product by product basis. In the third and the fourth rounds, negotiations were conducted on chapter wise.

Maintenance of SAPTA Concession
the Agreement on the South Asian Free Trade Area (SAFTA)which was implemented with effect from 1st January 2006 will supercede the SAARC Preferential Trading Arrangement (SAPTA). On the issue of maintaining SAPTA concessions for LDCs, the Committee agreed that once the Non-LDCs member states complete the Trade Liberalization Programme (TLP) for LDC member states, SAPTA concessions would cease for LDC member states. However, if any item on which SAPTA concessions are available to LDC, appear in the sensitive lists of non-LDC, they shall maintain the same level of concession through derogation. The Committee has further agreed that if the items under TLP enjoy tariff preferences under SAPTA, the Non-LDCs shall reduce their tariff on those items to a rate not higher than the rate applicable for LDCs under SAPTA on the date agreed for base rate for TLP. It was also agreed at the first SAFTA Ministerial Council Meeting held in April that LDCs should also maintain concessions under SAPTA for Non LDCs until the completion of TLP irrespective of whether the products are in the sensitive lists or not(Please contact the Department of Commerce for further clarifications).