Broadening the Scope of FTA Vital
By Ishara Gamage
With a view to broadening the scope of the Free Trade Agreement (FTA), ‘Pakistan-Sri Lanka Business Opportunities Conference’ was organised by Rawalpindi Chamber of Commerce and Industry, Pakistan, in collaboration with High Commission of Pakistan, Colombo, on Monday.
The Commercial Secretary of the Pakistan High Commission in Colombo, Asmma Kamal, in her address said,
“Bilateral trade relations between Pakistan and Sri Lanka can be further strengthened by broadening the scope of Free Trade agreement (FTA) to include services and investment, adoption of Mutual Recognition Agreements, elimination of para-tariffs, establishing dispute settlement mechanism.
“Business to Business (B to B) and Government to Government (G to G) engagements, MoUs between key Government and Private Sector institutions will facilitate trade, investment and cooperation in social and economic sectors.
“Other than tapping potential in trade in goods, investment and services hold immense potential for both countries.”
According to her observations, trade in goods can be further enhanced by removal of additional and regulatory duties as the market access/Margin of preference granted to each other gets eroded due to additional duties.
“Trade in agricultural goods can be increased manifold if compliance issues and standards are overcome. It is important to establish dispute settlement mechanism to increase trade flows and avoid disruptions and find expeditious resolution to the trade related disputes,” she stated.
There is a need for business communities of both countries to engage, as well as up the engagement at the Government level as many forums of bilateral engagement exist, but the frequency with which they interact is low.
Sri Lanka enjoys an exceptional status with Pakistan having signed its first ever FTA.
Pakistan-Sri Lanka Free Trade Agreement (PSLFTA), which was signed in August 2002, came into effect on 12 June 2005. The Agreement granted favourable concessions to Sri Lanka with substantial exports including cement and cotton.
As a result, the trade volume had doubled from $212 million in 2005 to around $400 million in 2017.
Due to favourable concessions granted to both countries under the PSLFTA, Pakistan’s exports to Sri Lanka grew from US$ 97 million in 2004-5 to over US$ 298 million in 2017-18, almost over four folds higher than the period of 14 years ostensibly due to the positive impact of PSLFTA on trade.
Similarly, Sri Lanka’s exports to Pakistan grew from USD 47 million in 2004-5 to US$ 103.4 million in 2017-18, almost double over the same period.
Despite unprecedented challenges presented by COVID-19 pandemic and global disruptions of supply chains, Pakistan’s exports to Sri Lanka in FY 2020-21 have equaled to exports of FY 2019-20 due to sustained efforts.
Sri Lanka’s exports to Pakistan have also surpassed the FY2019-20 figures and data suggests that they are well on their way in the current FY to surpass the last two years’ performance.
However, despite the remarkable increase since the FTA came into effect, the bilateral trade volume remains well below potential.