Facilitator or obstacle: Pakistan, Sri Lanka to review free trade agreement

Trade volume much below than desired level of $2b by 2012.

ISLAMABAD:

Pakistan and Sri Lanka on Tuesday agreed to hold negotiations for reviewing the six-year-old free trade agreement (FTA) which has become an obstacle instead of becoming a tool for liberalisation.

Both sides agreed to hold an FTA review meeting in addition to negotiating a Comprehensive Economic Partnership Agreement (Cepa) in August in Colombo, said Minister of State for Finance and Foreign Affairs Hina Rabbani Khar.

She was addressing a press conference after the conclusion of 10th Joint Economic Commission meeting between the two countries. The Sri Lankan side was led by Industry and Commerce Minister Rishad Bathiudeen.

Khar said all matters relating to trade will be discussed in detail at the time of FTA review.

Pakistan and Sri Lanka signed FTA in 2005. However, both sides are still managing trade through a “non-concession items list and quota system”, which has hindered trade promotion. Bilateral trade has increased to $338 million from below $100 million before the signing of FTA. The figure is still much below than the target of $2 billion by 2012.

A commerce ministry official said Sri Lanka has asked Pakistan to allow auto parts trade under FTA, which Pakistan has resisted so far. On the other hand, Sri Lankan farmers are blocking duty-free import of Pakistani rice, forcing Colombo to fix quotas.

Khar said both countries agreed to look into all tariff lines including discussions on trade in services, investment and customs cooperation next month under Cepa, which is broader in scope than FTA. She said FTA brought a substantial increase in trade which rose from levels below $100 million to $400 million.

“The meeting concluded on a sincere desire to enhance economic and commercial cooperation,” she added.

“During the negotiations, we agreed to enhance cooperation in the areas of banking, finance, ports and shipping and agriculture,” said the Sri Lankan industry and commerce minister.

Next meeting in Colombo

Both countries agreed to hold regular Joint Economic Commission meetings and the 11th round would be held in 2012 in Colombo. They agreed to encourage regular exchange of trade delegations at least one from each side in a year.

Khar said both sides agreed to revisit their visa policy to make the procedure easy for businessmen and nationals of the two countries. To a question about starting a shipping service, Khar said if the private sector wanted to do that, the respective governments would facilitate.

In December last year, Pakistan had offered $200 million import credit to Sri Lanka. She said the State Bank of Pakistan and Ministry of Finance would communicate with the authorities concerned in Sri Lanka for the purpose of providing necessary clarity and details regarding the supplier credit.

Pakistan reiterated its offer of long-term educational facilities as well as short-term training facilities under Pakistan Technical Assistance Programme (PTAP).

The Sri Lankan side also requested for handicraft training including brassware, ceramics, leather, woodwork and handloom fabrics. It was decided that the agencies concerned will work together for achievement of this objective.

The Pakistani delegation repeated its earlier request that Pakistani students be offered training courses in the field of nursing, to which the Sri Lankan side assured them of conveying its response in due course. Both sides agreed to constitute a joint committee for cooperation in science and technology.

Sri Lanka agreed to send a delegation of technical experts for providing assistance to Pakistan in the field of gems.

Published in The Express Tribune, July 6^th, 2011.