The Agreement on South Asian Free Trade Area (SAFTA) entered its second phase of implementation in 2008. The creation of a free trade area is expected to affect its participants—Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan, and Sri Lanka—very differently given their diversity in terms of size, income, and structure of trade and protection. Using the 2004 MAcMapHS6-v2 database on measures of applied protection at the HS6 level and MIRAGE, a computable general equilibrium global model, this study examines the effects of SAFTA on trade and net income in the region.

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