South Asian Free Trade Agreement Countries

South Asian Free Trade Agreement Countries

This policy letter analyzes trade data on India`s and China`s trade with Afghanistan, Bangladesh, Bhutan, Maldives, Myanmar, Nepal, Pakistan and Sri Lanka, collectively referred to as “South Asia” or N8. This policy letter analyzes the share of Indian trade with its neighbors. The data used comes from the World Bank`s World Integrated Trade Solution (WITS) database and the International Monetary Fund`s (IMF) Direction of Trade Statistics (DOTS) database. All commercial values are expressed in U.S. dollars (US$). For India`s trade with South Asia, the volumes and shares of imports and exports analyzed are from 1988 to 2018; However, China`s trade figures with South Asia (excluding India) are between 1992 and 2018. Strengthening trade in the South Asian region is not only economically beneficial, but also strategic for integrating India into the global economy. Regional integration in South Asia requires the processing of several NTBs and a further reduction of the “sensitive lists” held by countries in order to ensure the effectiveness of trade agreements. In addition, best practices from other regions need to be adapted to the South Asian context in order to facilitate the removal of reported barriers to trade. For example, sub-Saharan Africa has referred to DNTBs through an online mechanism composed of national supervisory committees in each country to facilitate the removal of notified trade barriers.

[14] India and its neighbours need greater political will to tackle trade barriers in the region, especially after the COVID-19 crisis, which could lead to a new wave of protectionist measures. [15] Despite the benefits of proximity, the absence of South Asia has a long history of mistrust, conflict, and political upheaval. In addition, India`s presence as a “big brother” in the region has been careful for its smaller neighbors to take the initiative. In the future, policies should focus on removing barriers and improving connectivity in all fields, so as to build trust and balance China`s growing relations with its neighbors India. The potential and benefits of trade must be realized by the countries of the region in order to ensure reciprocal economic benefits. The following recommendations are based on the extensive literature on trade and regional integration in South Asia. Several agreements exist to facilitate trade in the region. The SAARC Preferential Trading Arrangement (SAPTA) was signed in 1994, followed by the South Asian Free Trade Area (SAFTA) agreement a decade later in 2004 (which entered into force in 2006).

India`s bilateral trade with Myanmar is carried out under the 1994 Indo-Myanmar Border Agreement and the 2009 ASEAN-India Agreement. In addition, India and Sri Lanka signed the Indo-Sri Lanka Free Trade Agreement (NAFTA) in 1998. The agreement entered into force in 2000. States Parties shall establish the South Asia Free Trade Area (SAFTA) to promote and enhance economic trade and cooperation among States Parties by exchanging concessions in accordance with this Agreement. China`s trade with N8`s neighbours is mainly export-oriented (Figure 4), making it one of the main sources of products for South Asia. [11] Despite regional and bilateral free trade agreements, India`s trade volume with its neighbors has remained significantly lower than that of China, which has only one free trade agreement in the region (Figure 2). . . .

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