PROSPECTS OF TRADE UNDER SAFTA
Muhammad Khalid Bashir, Khuda Bakhsh and Azid Imdad Faculty of Agricultural Economics and Rural Sociology, University of Agriculture, Faisalabad

ABSTRACT Under the WTO regime it was expected that both the developing and developed nations will benefit from the opening up of the markets in these countries. But uptil now the developing countries are at the suffering end. So theses were being encouraged to explore the regional markets and make some regional free trade areas. The countries of SAARC had decided to sign the SAFTA. Question arises that will it be a support to the economies of these countries? The general perception is that the countries with higher comparative advantage will out weigh rest of the countries. It is further being envisaged incase of SAFTA that there are three possible ways of the workability of it which are; pessimistic, optimistic and moderate. Different empirical evidences and theoretical perceptions are that the current political atmosphere in the region is supportive to the pessimistic outcome of SAFTA. INTRODUCTION The World Trade Organization (WTO) has been established with an aim to enhance international trade with the help of lower trade barriers and providing a forum to negotiate trade and business with agreed upon principles of the trading system. The WTO principles allow a free trading system with no discrimination against foreign products or services. The provision is also there that one country can not provide special treatment to a particular trading partner while other member countries are not given such privilege. Principles of the WTO aim to lower trade barriers to facilitate free trade among the

member countries. It is also promised in the WTO principles that a trading system should be predictable, with foreign companies and governments reassured that trade barriers will not be raised