SAARC Preferential Trading Arrangement or SAPTA

Posted on 19 April 2023 Category : For Beginners

taining import and

supply commitments in respect of specific products, buy-back arrangements, state

trading operations, and government and public procurement.

(8) "Tariffs" means customs duties included in the national tariff schedules of the

Contracting States.

(9) "Para-tariffs" means border charges and fees, other than "tariffs", on foreign trade

transactions of a tariff-like effect which are levied solely on imports, but not those

indirect taxes and charges, which are levied in the same manner on like domestic

products. Import charges corresponding to specific services rendered are not

considered as para-tariff measures.

(10) "Non-tariffs" means any measure, regulation, or practice, other than "tariffs" and

"para-tariffs", the effect of which is to restrict imports, or to significantly distort

trade.

(11) "Products" means all products including manufactures and commodities in their

raw, semi-processed and processed forms.

Article - 2

Establishment and Aims

1. By the present Agreement, the Contracting States establish the SAARC Preferential Trading

Arrangement (SAPTA) to promote and sustain mutual trade and the economic cooperation among

the Contracting States, through exchanging concessions in accordance with this Agreement.

2. SAPTA will be governed by the provisions of this Agreement and also by the rules,

regulations, decisions, understandings and protocols to be agreed upon within its framework by the

Contracting States.

Article - 3

Principles

SAPTA shall be governed in accordance with the following principles:-

(a) SAPTA shall be based and applied on the principles of overall reciprocity and

mutuality of advantages in such a way as to benefit equitably all Contracting States,

taking into account their respective levels of economic and industrial development,

the pattern of their external trade, trade and tariff policies and systems;

(b) SAPTA shall be negotiated step by step, improved and extended in successive stages

with periodic reviews;

recognised and concrete preferential measures in their favour should be agreed upon;

(d) SAPTA shall include all products, manufactures and commodities in their raw,

semi-processed and processed forms.

Article - 4

Components

SAPTA may, inter-alia, consist of arrangements relating to:-

(a) tariffs;

(b) para-tariffs;

(d) direct trade measures.

Article - 5

Negotiations

1. The Contracting States may conduct their negotiations for trade liberalisation in accordance

with any or a combination of the following approaches and procedures:-

(a) Product-by-product basis;

(b) Across-the-board tariff reductions;

(d) Direct trade measures.

2. Contracting States agreed to negotiate tariff preferences initially on a product-by-product

basis.

3. The Contracting States shall enter into negotiations from time to time with a view to further

expanding SAPTA and the fuller attainment of its aims.

Article - 6

Additional Measures

1. Contracting States agree to consider, in addition to the measures set out in Article 4, the

adoption of trade facilitation and other measures to support and complement SAPTA to mutual

benefit.

2. Special consideration shall be given by Contracting States to requests from Least Developed

Contracting States for technical assistance and cooperation arrangements designed to assist them in

expanding their trade with other Contracting States and in taking advantage of the potential benefits

of SAPTA. The possible areas for such technical assistance and cooperation are listed in Annex - I.

Article - 7

Schedules of Concessions

The tariff, para-tariff and non-tariff concessions negotiated and exchanged amongst

Contracting States shall be incorporated in the National Schedules of Concessions. The initial

concessions agreed to by the Contracting States are attached as Annex - II.

Article - 8

Extension of Negotiated Concessions

The concessions agreed to under SAPTA, except those made exclusively to the Least

Developed Contracting States in pursuance of Article 10 of this Agreement, shall be extended

unconditionally to all Contracting States.

Article - 9

Committee of Participants

A Committee of Participants, hereinafter referred to as the Committee, consisting of

representatives of Contracting States, is hereby established. The Committee shall meet at least once

a year to review the progress made in the implementation of this Agreement and to ensure that

benefits of trade expansion emanating from this Agreement accrue to all Contracting States

equitably. The Committee shall also accord adequate opportunities for consultation on

representations made by any Contracting State with respect to any matter affecting the

implementation of the Agreement. The Committee shall adopt appropriate measures for settling

such representations. The Committee shall determine its own rules of procedures.

Article - 10

Special Treatment for the

Least Developed Contracting States

1. In addition to other provisions of this Agreement, all Contracting States shall provide,

wherever possible, special and more favourable treatment exclusively to the Least Developed

Contracting States as set out in the following sub-paragraphs:

(a) Duty-free access, exclusive tariff preferences or deeper tariff preferences for the export

products,

(b) The removal of non-tariff barriers,

(d) The negotiations of long-term contracts with a view to assisting Least Developed

Contracting States to achieve reasonable levels of sustainable exports of their products,

(e) Special consideration of exports from Least Developed Contracting States in the application

of safeguard measures,

(f) Greater flexibility in the introduction and continuance of quantitative or other restrictions

provisionally and without discrimination in critical circumstances by the Least Developed

Contracting States on imports from other Contracting States.

Article - 11

Non-application

Notwithstanding the measures as set out in Articles 4 and 6, the provisions of this Agreement

shall not apply in relation to preferences already granted or to be granted by any Contracting State to

other Contracting States outside the framework of this Agreement, and to third countries through

bilateral, plurilateral and multilateral trade agreements, and similar arrangements. The Contracting

States shall also not be obliged to grant preferences in SAPTA which impair the concession

extended under those agreements.

Article - 12

Communication, Transport and Transit

Contracting States agree to undertake appropriate steps and measures for developing and

improving communication system, transport infrastructure and transit facilities for accelerating the

growth of trade within the region.

Article - 13

Balance-of-Payments Measures

1. Notwithstanding the provisions of this Agreement, any Contracting State facing serious

economic problems including balance of payments difficulties may suspend provisionally the

concessions as to the quantity and value of merchandise permitted to be imported under the

Agreement. When such action has taken place, the Contracting State which initiates such action,

shall simultaneously notify the other Contracting States and the Committee.

2. Any Contracting State which takes action according to paragraph 1 of this Article shall

afford, upon request from any other Contracting State, adequate opportunities for consultations with

a view to preserving the stability of the concessions negotiated under the SAPTA. If no satisfactory

adjustment is effected between the Contracting States concerned within 90 days of such notification,

the matter may be referred to the Committee for review.

Article - 14

Safeguard Measures

If any product, which is a subject of a concession with respect to a preference under this

Agreement, is imported into the territory of a Contracting State in such a manner or in such

quantities as to cause or threaten to cause, serious injury in the importing Contracting State, the

importing Contracting State concerned may, with prior consultations, except in critical

circumstances, suspend provisionally without discrimination, the concession accorded under the

Agreement. When such action has taken place the Contracting State which initiates such action shall

simultaneously notify the other Contracting State(s) concerned and the Committee shall enter into

consultations with the concerned Contracting State and endeavour to reach mutually acceptable

agreement to remedy the situation. In the event of the failure of the Contracting States to resolve the

issue within 90 days of the receipt of original notification, the Committee of Participants shall meet

within 30 days to review the situation and try to settle the issue amicably. Should the consultations

in the Committee of Participants fail to resolve the issue within 60 days, the parties affected by such

action shall have the right to withdraw equivalent concession(s) or other obligation(s) which the

Committee does not disapprove of.

Article - 15

Maintenance of the Value of Concessions

Any of the concessions agreed upon under this Agreement shall not be diminished or

nullified, by the application of any measures restricting trade by the Contracting States except under

the provisions as spelt out in other Articles of this Agreement.

Article - 16

Rules of Origin

Products contained in the National Schedules of Concessions annexed to this Agreement

shall be eligible for preferential treatment if they satisfy the rules of origin, including special rules of

origin, in respect of the Least Developed Contracting States, which are set out in Annex - III.

Article - 17

Modification and Withdrawal of Concessions

1. Any Contracting State may, after a period of three years from the day the concession was

extended, notify the Committee of its intention to modify or withdraw any concession included in its

appropriate schedule.

2. The Contracting State intending to withdraw or modify a concession shall enter into

consultation and/or negotiations, with a view to reaching agreement on any necessary and

appropriate compensation, with Contracting States with which such concession was initially

negotiated and with any other Contracting States that have a principal or substantial supplying

interest as may be determined by the Committee.

3. Should no agreement be reached between the Contracting States concerned within six

months of the receipt of notification and should the notifying Contracting State proceed with its

modification or withdrawal of such concessions, the affected Contracting States as determined by

the Committee may withdraw or modify equivalent concessions in their appropriate schedules. Any

such modification or withdrawal shall be notified to the Committee.

Article - 18

Withholding or Withdrawal of Concessions

A Contracting State shall at any time be free to withhold or to withdraw in whole or in part

any item in its schedule of concessions in respect of which it determines that it was initially

negotiated with a State which has ceased to be a Contracting State in this Agreement. A Contracting

State taking such action shall notify the Committee, and upon request, consult with Contracting

States that have a substantial interest in the product concerned.

Article - 19

Consultations

1. Each Contracting State shall accord sympathetic consideration to and shall afford adequate

opportunity for consultations regarding such representations as may be made by another Contracting

State with respect to any matter affecting the operation of this Agreement.

2. The Committee may, at the request of a Contracting State, consult with any Contracting

State in respect of any matter for which it has not been possible to find a satisfactory solution

through such consultation under paragraph 1 above.

Article - 20

Settlement of Disputes

Any dispute that may arise among the Contracting States regarding the interpretation and

application of the provisions of this Agreement or any instrument adopted within its framework shall

be amicably settled by agreement between the parties concerned. In the event of failure to settle a

dispute, it may be referred to the Committee by a party to the dispute. The Committee shall review

the matter and make a recommendation thereon within 120 days from the date on which the dispute

was submitted to it. The Committee shall adopt appropriate rules for this purpose.

Article - 21

Withdrawal from SAPTA

1. Any Contracting State may withdraw from this Agreement at any time after its entry into

force. Such withdrawal shall be effective six months from the day on which written notice thereof is

received by the SAARC Secretariat, the depositary of this Agreement. That Contracting State shall

simultaneously inform the Committee of the action it has taken.

2. The rights and obligations of a Contracting State which has withdrawn from this Agreement

shall cease to apply as of that effective date.

3. Following the withdrawal by any Contracting State, the Committee shall meet within 30

days to consider action subsequent to withdrawal.

Article - 22

Entry into Force

This Agreement shall enter into force on the thirtieth day after the notification issued by the

SAARC Secretariat regarding completion of the formalities by all Contracting States.

Article - 23

Reservations

This Agreement may not be signed with reservations nor shall reservations be admitted at

the time of notification to the SAARC Secretariat of the completion of formalities.

Article - 24

Amendments

This Agreement may be modified through amendments to this Agreement. All amendments

shall become effective upon acceptance by all Contracting States.

Article - 25

Depositary

This Agreement shall be deposited with the Secretary- General of SAARC who shall

promptly furnish a certified copy thereof to each Contracting State.

IN WITNESS WHEREOF the undersigned being duly authorized thereto by their

respective Governments have signed this Agreement on the SAARC Preferential Trading

Arrangement.

Done at DHAKA this ELEVENTH day of APRIL One Thousand Nine Hundred Ninety Three

in eight originals in the English language.

A.S.M. MOSTAFIZUR RAHMAN DAWA TSERING

Minister of Foreign Affairs Minister of Foreign Affairs

People's Republic of Bangladesh Kingdom of Bhutan

DINESH SINGH FATHULLA JAMEEL

Minister of External Affairs Minister of Foreign Affairs

Republic of India Republic of Maldives

MAHESH ACHARYA MOHAMMAD SIDDIQUE KHAN KANJU

State Minister of Finance Minister of State for Foreign Affairs

His Majesty's Government of Nepal Islamic Republic of Pakistan

HAROLD HERAT

Minister of Foreign Affairs.

Democratic Socialist Republic of Sri Lanka

Annex - I

ADDITIONAL MEASURES IN FAVOUR OF

LEAST DEVELOPED CONTRACTING STATES

(a) The identification, preparation and establishment of industrial and agricultural projects in the

territories of Least Developed Contracting States which could provide the production base

for the expansion of exports of Least Developed Contracting States to other Contracting

States, possibly linked to co-operative financing and buy-back arrangements;

(b) the setting up of manufacturing and other facilities in Least Developed Contracting States to

meet intra-regional demand under co-operative arrangements;

the field of trade to assist Least Developed Contracting States in expanding their exports and

in maximising their benefits from SAPTA;

(d) the provision of support to export marketing of products of Least Developed Contracting

States by enabling these countries to share existing facilities (for example, with respect to

export credit insurance, access to market information) and by institutional and other positive

measures to facilitate imports from Least Developed Contracting States into their own

markets;

(e) bringing together of enterprises in other Contracting States with project sponsors in the Least

Developed Contracting States (both public and private) with a view to promoting joint

ventures in projects designed to lead to the expansion of trade;

(f) the provision of special facilities and rates in respect to shipping.

Annex - II

National Schedules of Concessions

(published separately. Can also be accessed at Secretariat’s website http://www.saarc-sec.org )

Annex - III

RULES OF ORIGIN

(as amended by Twenty-first Session of SAARC Council of Ministers, Nuwara Eliya, Sri Lanka, 18-19 March 1999)

RULE 1: Originating products - Products covered by preferential trading arrangements within the

framework of the SAPTA imported into the territory of a Contracting State from another

Contracting State which are consigned directly within the meaning of Rule 5 hereof, shall be eligible

for preferential concessions if they conform to the origin requirement under any one of the following

conditions:

(a) Products wholly produced or obtained in the exporting Contracting State as defined

in Rule 2; or

(b) Products not wholly produced or obtained in the exporting Contracting State,

provided that the said products are eligible under Rule 3 or Rule 4.

RULE 2: Wholly produced or obtained - Within the meaning of Rule 1 (a) the following shall be

considered as wholly produced or obtained in the exporting Contracting State:

(a) raw or mineral products extracted from its soil, its water or its seabeds: 1

(b) agricultural products harvested there; 2

(d) products obtained from animals referred to in paragraph (c) above;

(e) products obtained by hunting or fishing conducted there;

(f) products of sea fishing and other marine products taken from the high seas by its

vessels; 3/4

(g) products processed and/or made on boards its factory ships 4/5 exclusively from

products referred to in paragraph (f) above;

(h) used articles collected there, fit only for the recovery of raw materials;

(i) waste and scrap resulting from manufacturing operations conducted there;

(j) goods produced there exclusively from the products referred to in paragraph (a) to (i)

above.

RULE 3 : Not wholly produced or obtained

(a) Within the meaning of Rule 1(b), products worked on or processed as a result of

which the total value of the materials, parts or produce originating from

non-Contracting States or of undetermined origin used does not exceed 60 per cent

of the f.o.b. value of the products produced or obtained and the final process of

manufacture is performed within the territory of the exporting Contracting State shall

be eligible for preferential concessions subject to the provisions of Rule 3(c) and

Rule 4.

(b) Sectoral agreements 6

(i) The c.i.f. value at the time of importation of materials parts or produce where

this can be proven: or

(ii) The earliest ascertainable price paid for the materials, prices or produce of

undetermined origin in the territory of the Contracting State where the

working or processing takes place.

RULE 4: Cumulative rules of origin - Products which comply with origin requirements provided

for in Rule 1 and which are used by a Contracting State as input for a finished product eligible for

preferential treatment by another Contracting State shall be considered as a product originating in

the territory of the Contracting State where working or processing of the finished product has taken

place provided that the aggregate content originating in the territory of the Contracting State is not

less than 50 percent of its f.o.b. value7.

RULE 5 : Direct consignment - The following shall be considered as directly consigned from the

exporting Contracting State to the importing Contracting State:

(a) if the products are transported without passing through the territory of any

non-Contracting State:

(b) the products whose transport involves transit through one or more intermediate

non-Contracting States with or without transhipment or temporary storage in such

countries, provided that:

(i) the transit entry is justified for geographical reason or by considerations

related exclusively to transport requirements;

(ii) the products have not entered into trade or consumption there; and

(iii) the products have not undergone any operation there other than unloading

and reloading or any operation required to keep them in good condition.

RULE 6: Treatment of packing - When determining the origin of products, packing should be

considered as forming a whole with the product it contains. However, packing may be treated

separately if the national legislation so required.

RULE 7: Certificate of Origin - Products eligible for preferential concessions shall be supported

by a Certificate of Origin8 issued by an authority designated by the government of the exporting

Contracting State and notified to the other Contracting States in accordance with the Certification

Procedures appearing on pages 15 and 16 of this Annex.

RULE 8:

(a) In conformity with Article 15 of the Agreement on SAPTA and national legislations,

any Contracting State may prohibit importation of products containing any inputs

originating from States with which it does not have economic and commercial

relations.

(b) Contracting States will do their best to co-operate in order to specify origin of inputs

in the Certificate of Origin.

RULE 9: Review - These Rules may be reviewed as and when necessary upon request of one-third

of the Contracting States and may be open to such modifications as may be agreed upon.

RULE 10: Special criteria percentage - Products originating in Least Developed Contracting

States can be allowed a favourable 10 percentage points applied to the percentage established in

Rules 3 and 4. Thus, for Rule 3, the percentage would not exceed 70 per cent, and for Rule 4, the

percentage would not be less than 40 per cent.

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1 Include mineral fuels, lubricants and related materials as well as mineral of metal ores.

2 Include forestry products.

3 "Vessels" - shall refer to fishing vessels engaged in commercial fishing, registered in a

Contracting State's country and operated by a citizen or citizens or governments of

Contracting State or partnership, corporation or association, duly registered in such

Contracting State's country, at cost 60 per cent of equity of which is owned by a citizen or

citizens and/or government of such Contracting State or 75 percent by citizens and/or

governments of the Contracting States. However, the products taken from vessels engaged

in commercial fishing under bilateral agreements which provide for chartering/leasing of

such vessels and/or sharing of catch between Contracting States will also be eligible for

preferential concessions.

4 In respect of vessels or factory ships operated by government agencies the requirement of

flying the flag of a Contracting State does not apply.

5 For the purpose of this Agreement, the term "factory ship" means any vessels, as defined,

used for processing and/or making on board products exclusively from those products

referred to in paragraph (f) above.

6 In respect of products traded within the framework of sectoral agreements negotiated under

SAPTA, provision may need to be made for special criteria to apply. Consideration may be

given to these criteria as and when the sectoral agreements are negotiated.

7 "Partial" cumulation as implied by Rule 4 above means that only products which have

acquired originating status in the territory of one Contracting State may be taken into

account when used as inputs for a finished product eligible for preferential treatment in the

territory of another Contracting State.

8 A standard Certificate of Origin to be used by all Contracting States is annexed and

approved by the Contracting States.

Format of Certificate of Origin

I. General Conditions

To qualify for preference, products must :

a) fall within a description of products eligible for preference in the schedule of

concessions of SAPTA country of destination;

b) comply with SAPTA Rules of Origin. Each article in a consignment must qualify

separately in its own right; and

c) comply with the consignment conditions specified by the SAPTA Rules of Origin. In

general, products must be consigned directly within the meaning of Rule 5 hereof

from the country of exportation to the country of destination.

II. Entries to be made in Box 8

Preference products must be wholly produced or obtained in the exporting Contracting State

in accordance with Rule 2 of the SAPTA Rules of Origin, or where not wholly produced or obtained

in the exporting Contracting States must be eligible under Rule 3 or Rule 4.

a) Products wholly produced or obtained; enter the letter "A" in Box 8.

b) Products not wholly produced or obtained: the entry in Box 8 should be as follows :

1. Enter letter "B" in Box 8, for products which meet the origin criteria

according to Rule 3. Entry of letter would be followed by the sum of the

value of materials, parts or produce originating from non-Contracting States,

or undetermined origin used, expressed as a percentage of the f.o.b. value of

the products; (example "B" 50 per cent);

2. Enter letter "C" in Box 8 for products which meet the origin criteria

according to Rule 4. Entry of letter "C" would be followed by the sum of the

aggregate content originating in the territory of the exporting Contracting

State expressed as a percentage of the f.o.b. value of the exported product;

(example "C" 60 per cent);

3. Enter letter "D" in Box 8 for products which meet the special origin criteria

according to Rule 10.

______

ADDENDUM

Amendment to the SAPTA Rules of Origin

The SAARC Council of Ministers at its Twenty-first Session held in Nuwara Eliya, Sri Lanka on 18-19

March 1999 approved the amendments to the Rules 3(a), 4 and 10 relating to the Rules of Origin (Annex-

II) of the SAARC Preferential Trading Arrangement (SAPTA) with immediate effect.

The new amended rules now read as follows: -

Rule 3: Not wholly produced or obtained –

Within the meaning of Rule 1(b), products worked on or processed as a result of which

the total value of the materials, parts or produce originating from non-Contracting States

or of undetermined origin used does not exceed 60 per cent of the f.o.b. value of the

products produced or obtained and the final process of manufacture is performed within

the territory of the exporting Contracting State shall be eligible for preferential

concessions subject to the provisions of Rule 3(c) and Rule 4.

Rule 4: Cumulative rules of origin –

Products which comply with origin requirements provided for in Rule 1 and which are

used by a Contracting State as input for a finished product eligible for preferential

treatment by another Contracting State shall be considered as a product originating in the

territory of the Contracting State where working or processing of the finished product has

taken place provided that the aggregate content originating in the territory of the

Contracting State is not less than 50 percent of its f.o.b. value.

Rule 10: Special criteria percentage – Products originating in Least Developed

Contracting States can be allowed a favourable 10 percentage points applied to the

percentage established in Rules 3 and 4. Thus, for Rule 3, the percentage would not

exceed 70 per cent, and for Rule 4, the percentage would not be less than 40 per

cent

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SAARC Preferential Trading Arrangement or SAPTA

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SAARC SAPTA Agreement.pdf

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AGREEMENT ON

SAARC PREFERENTIAL TRADING ARRANGEMENT (SAPTA)

Preamble

The Government of the People's Republic of Bangladesh, the Kingdom of Bhutan, the

Republic of India, the Republic of Maldives, the Kingdom of Nepal, the Islamic Republic of

Pakistan and the Democratic Socialist Republic of Sri Lanka hereinafter referred to as "Contracting

States",

Motivated by the commitment to promote regional co-operation for the benefit of their

peoples, in a spirit of mutual accommodation, with full respect for the principles of sovereign

equality, independence and territorial integrity of all States;

Aware that the expansion of trade could act as a powerful stimulus to the development of

their national economies, by expanding investment and production, thus providing greater

opportunities of employment and help securing higher living standards for their population;

Convinced of the need to establish and promote regional preferential trading arrangement

for strengthening intra-regional economic cooperation and the development of national economies;

Bearing in mind the urgent need to promote the intra-regional trade which presently

constitutes a negligible share in the total volume of the South Asian trade;

Recalling the direction given at the Fourth SAARC Summit meeting held in Islamabad in

December 1988 that specific areas be identified where economic cooperation might be feasible

immediately;

Guided by the declared commitment of the Heads of State or Government of the Member

Countries at the Sixth SAARC Summit held in Colombo in December 1991 to the liberalisation of

trade in the region through a step by step approach in such a manner that countries in the region

share the benefits of trade expansion equitably;

Cognizant of the mandate given by the Sixth SAARC Summit in Colombo to formulate and

seek agreement on an institutional framework under which specific measures for trade liberalisation

among SAARC Member States could be furthered and to examine the Sri Lankan proposal to

establish the SAARC Preferential Trading Arrangement (SAPTA) by 1997;

Recognising that a preferential trading arrangement is the first step towards higher levels of

trade and economic cooperation in the region,

Have agreed as follows:

Article - 1

Definitions

For the purpose of this Agreement:

(1) "Least Developed Country" means a country designated as such by the United

Nations.

(2) "Contracting State" means any Member State of the South Asian Association for

Regional Cooperation (SAARC) which has entered into this Agreement.

(3) "Serious injury" means significant damage to domestic producers, of like or similar

products resulting from a substantial increase of preferential imports in situations

which cause substantial losses in terms of earnings, production or employment

unsustainable in the short term. The examination of the impact on the domestic

industry concerned shall also include an evaluation of other relevant economic

factors and indices having a bearing on the state of the domestic industry of that

product.

(4) "Threat of serious injury" means a situation in which a substantial increase of

preferential imports is of a nature to cause "serious injury" to domestic producers,

and that such injury, although not yet existing, is clearly imminent. A determination

of threat of serious injury shall be based on facts and not on mere allegation,

conjecture, or remote or hypothetical possibility.

(5) "Critical circumstances" means the emergence of an exceptional situation where

massive preferential imports are causing or threatening to cause "serious injury"

difficult to repair and which calls for immediate action.

(6) "Sectoral basis" means agreements amongst Contracting States regarding the

removal or reduction of tariff, non-tariff and para-tariff barriers as well as other trade

promotion or cooperative measures for specified products or groups of products

closely related in end-use or in production.

(7) "Direct trade measures" means measures conducive to promoting mutual trade of

Contracting States such as long and medium-term contracts con

SAARC Preferential Trading Arrangement or SAPTA

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