ISLAMABAD, Jan. 6 (Xinhuanet) -- Leaders of the seven South Asian countries here on Tuesday inked the Framework Agreement of the South Asia Free Trade Area (SAFTA), at the conclusion of the 12th Summit of the South Asian Association for Regional Cooperation (SAARC).

    The SAFTA accord, which topped the agenda of the summit, will enter into force by January 1, 2006, after the completion of the required formalities, including the ratification by all the member states.

    Under the treaty, the non-least developed countries (NLDC) in the region will reduce their tariffs from an average 30 percent in a period of seven years, from the date of coming into force of the agreement.

    The least developed countries (LDC), however, will lower their tariffs to between zero and 5 percent in a period of 10 years.

    Each SAARC member state will be allowed to maintain "a sensitive list" of products on which tariffs will not be reduced. The list will be finalized prior the coming date of the treaty.

    At the 1998's SAARC Summit in Colombo, capital of Sri Lanka, all member states agreed to work out a treaty to deeper tariff concessions, in a bid to gear up the steps towards the establishment of the South Asian Free Trade Area.

    The combined external trade of the seven South Asian countries stands at over 66 billion US dollars. The size of such trade within the region, however, is four percent, a meagre, compared with the around 61-percent size of the kind within the European Union forum.

    High tariffs were the main block in the way to bring the seven countries of the region together in ties. Some less developed nations have long been worrying about the hazard that products from comparatively developed nations might flood in their domestic markets, which slowed down the pace of the progress of the free trade deal.

    South Asian region represents one fifth of the world population. And more than 40 percent of the 1.4-billion population live on less than one US dollar a day, making it home to nearly half of the world's poor.

    The free trade agreement, which was hailed by local media as a landmark of the summit, will hopefully boost the regions economy.

    During the three-day summit, leaders of the seven countries also weighed the possibility of the establishment of a South Asian Economic Union. Enditem