Economics and trade are embedded terms from the period of the emergence of economics as a separate discipline till today. Trade has always been an indispensable part of the economy and the impact of trade on economic variables like growth, poverty, and income distribution have engaged researchers from the times of mercantilism up till, the recent era of globalization. World trade organization (WTO) being in the phases of implementation, significance of openness to trade has become a major debate in international economics. The importance of trade has never been underpinned in economics. However, its importance has grown over the years as being a cohesive factor for economic development and growth. Trade, serving as a driving force for development and growth in the world economy. Today‟s globally integrated economic system of the world has stimulated economies to indulge in the enhancement of trade. Exports and imports not merely tender the demand-supply gaps rather they are used to achieve certain goals in the economy, like export led growth or import substituting industrialization. The progressive effect of trade liberalization on the economy has been questioned on several grounds. Its roots can be found in the debates of the early 17th 2 century, where arguments towards protectionism have laid a foundation of mercantilism. But the proponents of free trade have provided a support for trade liberalization. In recent decades broad liberalization and treaties of regional cooperation have changed the outlook of the subject. The protectionist policies diluted over time, regional cooperation‟s like (North American Free Trade Agreement) NAFTA, (General Agreement On Tariff and Trade) GATT, then the formation of the (European Union) EU followed by (Association of South East Asian Nations) ASEAN and (South Asian Association for Regional Cooperation) SAARC and many more have emerged in the recent time transforming not only the economies but also shaping the globalized world. The trade liberalization policies can affect the economy in several ways. These policies can lead to pave a path for growth and development or in some other cases these policies may turn out to be abhorrent. The major cause of trade liberalization not being sterile is due to its impact on trade balance, and this research intends to investigate the impact of trade liberalization on the balance of trade, imports and exports in the SAARC region. Supervisor:- Dr Ejaz Ghani