SAPTA was envisaged primarily as the first step towards the transition to a South Asian Free Trade Area (SAFTA) leading subsequently towards a Customs Union, Common Market and Economic Union. In 1995, the Sixteenth session of the Council of Ministers (New Delhi, 18-19 December 1995) agreed on the need to strive for the realization of SAFTA and to this end an Inter-Governmental Expert Group (IGEG) was set up in 1996 to identify the necessary steps for progressing to a free trade area. The Tenth SAARC Summit (Colombo, 29-31 July 1998) decided to set up a Committee of Experts (COE) to draft a comprehensive treaty framework for creating a free trade area within the region, taking into consideration the asymmetries in development within the region and bearing in mind the need to fix realistic and achievable targets.

The SAFTA Agreement was signed on 6 January 2004 during Twelfth SAARC Summit held in Islamabad, Pakistan. The Agreement entered into force on 1 January 2006, and the Trade Liberalization Programme commenced from 1^st July 2006. Following the Agreement coming into force the SAFTA Ministerial Council (SMC) has been established comprising the Commerce Ministers of the Member States. To assist the SMC, a SAFTA Committee of Experts (SCOE) has been formed. SCOE is expected to submit its report to SMC every six months. The SAFTA Agreement states that the “the SMC shall meet at least once every year or more often as and when considered necessary by the Contracting States. Each Contracting State shall chair the SMC for a period of one year on rotational basis in alphabetical order.” The Meetings of SMC and SCOE held so far are:

MEETINGS OF SAFTA COMMITTEE OF EXPERTS

MEETINGS OF SAFTA MINISTERIAL COUNCIL

 Intra-SAARC Trade Flows under SAFTA

The exports under SAFTA have been witnessing considerable upward trend since the launching of the Trade Liberalisation Programme (TLP).

As of 13 September 2012, the total f.o.b. value of exports by Member States under SAFTA has crossed US$ 2 billion since launching of SAFTA Trade Liberalisation Programme (i.e. July 2006) as per details given below:

As indicated above, the figure of total cumulative value of exports under SAFTA has crossed US$ 2 billion but it is far below the potential.  For smooth functioning of the SAFTA, customs notifications for implementing Trade Liberalisation Programme (TLP) are issued as per the agreed timeline by the Member States. While reduction in the size of Sensitive Lists is important to increase the quantum of regional trade, efforts are being made to take out those products out of the Sensitive Lists that are of export interests to the SAARC Member States for trade within South Asia.