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| Sunday, 19 June 2005 |
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Editorial
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Lanka to benefit more from Pakistan's FTAby Elmo Leonard The trade agreement Sri Lanka signed with Pakistan, the second largest economy among the SAARC member nations, last week is seen by analysts to be more beneficial to the island nation than to its neighbour. Sri Lanka's first trade accord with India, the largest economy in South Asia, which came into effect in 2000 has improved reciprocal trade between the two nations. Such trade pacts also help improve business and commerce between other member nations of trade blocs. Besides, trade accords are stepping stones to global trade, President, of the SAARC Chamber of Commerce and Industry of Sri Lanka, Macky Hashim said. Trade blocs are the norm of the day and expansion among regional blocs is commonplace. The 25-nation European Union and NAFTA stand out. SAARC has a long way to go in regional cooperation, compared to the European Union, where there is by and large a common currency and free trade. With the Islamabad declaration of 2004, SAARC was to implement SAFTA from 2006. With this trade agreement with Pakistan, Sri Lanka has now gained access to a population of 1.3 billion people in the sub continent. Sri Lanka's exports to Pakistan in 2002 amounted to $29 million, 2003 - $36 million, 2004 - $39 million and up to April this year - $10 million. Sri Lanka's imports from Pakistan in 2002 amounted to $66 million, 2003 - $71 million, 2004 - $108 million and up to April 2005 - $36 million. Following the free trade agreement, India has set up industries here to gain access to South Asian countries. Pakistan, too is likely to set up industrial units in the island. Sri Lanka could go into joint ventures with Pakistani industrialists in the fields of light engineering, pharmaceutical, surgical equipment, leather and textiles in an attempt to gain a gateway to other SAARC member nations, Hashim said. With the free trade agreement, Sri Lanka gets an immediate 100 percent duty concession for 206 products, including coconut products, fish, vegetables, edible nuts, spices, fruits and fruit juices, graphite, essential oils such as cinnamon and pepper oils, rubber, leather, wood based articles, iron and steel, furniture and precious and semi-precious stones, according to the Department of Commerce. Sri Lanka also gets quotas at zero duty for 10,000 tonnes of tea per year, 1,200 tonnes of betel leaves. Also, three million pieces of textiles and apparel at a reduced rate of 35 percent on applied duties. For ceramics, there is no quota, but a reduced duty of 20 percent. There are over 4,000 products where duties will be phased out and for the first year there will be a duty reduction of 34 percent. After two years the reduction in duty will be 67 percent of duties paid before the pact came into force. After three years these 4,000 products will come under zero duty concession. Sri Lanka also has a negative list of 697 products for which it will not give duty concessions when imported from Pakistan. These include fish, agricultural products, small and medium scale industrial products, frozen chicken, full cream milk and other products, vegetables, fruits and spices, rice and sugar, manufactured products include sweet biscuits, processed vegetables, cooked food, fruit mixes and ice cream. Sri Lanka has given Pakistan immediate duty concessions of 100 percent
for 102 products such as apples, oranges, fennel seed, tube and hallow
pipes, blades, scissors, machinery for sugar manufacture and for processing
food, ball bearings, wire ropes and cables, sanitaryware, cummin seed and
frozen orange pieces. |
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