Automotive imports: Tread carefully in FTA with Sri Lanka, says PAMA

India could take advantage of deal, warns association official.

LAHORE: The Pakistan Automotive Manufacturers Association (Pama) has urged the government to tread carefully on its trade agreement with Sri Lanka as it indirectly provides market access to India, which could take advantage of the venture and dump its subsidised products in Pakistan.

In a letter written to the Ministry of Industries, Pama Director General Abdul Waheed pointed out that in January 2008 the Pakistan-Sri Lanka Free Trade Agreement (FTA) negotiators admitted that Sri Lanka does not have the potential to export different auto parts.

The letter further said that during the 2008 meeting the concerns of Pakistani auto sector were duly recorded in the minutes stating that, “Sri Lanka has agreed to allow Pakistan to place 49 direct tariff lines in its No Concession List”, and “the remaining 38 tariff lines relating to auto sector will be discussed in the next meeting along with Sri Lanka’s request list tabled during the meeting. Meanwhile, Sri Lanka will not issue certificates of origin for these products for export to Pakistan under the FTA.”



However, it seems that the expected potential investment into Sri Lanka is now materialised and, most likely, the source of this investment is India.

“This is a major concern for the auto industry and should be equally alarming for the Ministry of Commerce (MOC). A mistake that was committed at the time of the first negotiation should not be made again, as it will undermine Pakistan’s thriving vending Industry,” Pama DG wrote in the letter.

“Our industry is already facing a hostile tariff regime where the local vending industry is importing castings and forging at 20 percent duty.

If finished products like gears are allowed to be imported at 5 percent or less duty from Sri Lanka, the local industry will suffer massive hemorrhage. “

Parts like ignition coils, CD units and parts and accessories for motorcycles including mopeds, etc. are attracting basic custom duty of 35 percent and an additional duty of 15 percent. These parts if imported from Sri Lanka, will come at 5 percent duty or less.

“We will be giving away our market to Indian products routed through Sri Lanka at the cost and peril of a domestic value adding industry,” the letter quoted.

The official requested that the MOC should refer back to the minutes of the review meeting along with subsequent meetings and negotiate on other lines that are of interest to Sri Lanka.



It is not wise to allow 38 lines to be opened to the concessionary imports and leave the position of auto related items unchanged, said the letter.

Published in The Express Tribune, October 3^rd, 2014.

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