Lanka, Iran to implement Preferential Trade Agreement soon

The Preferential Trade Agreement (PTA) signed between the governments of Iran and Sri Lanka will be implemented shortly said Trade, Commerce and Consumer Affairs Minister Jeyaraj Fernandopulle addressing the eighth session of the Sri Lanka, Iran Joint Commission for Economic Cooperation from May 27-29.

During the joint commission for Economic Cooperation session committees were established to ensure the implementation of the Preferential Trade Agreement without further delay.

Over the past several years the volume of trade between the two countries has shown considerable growth. During the period 1995-2005 two way trade increased from US$111 million to US$ 573 million almost by 400 percent. Though the growth is high the trade expansion between the two countries has been confined mainly to the basic commodities of tea and coconut products from Sri Lanka and petroleum and crude oil from Iran.

These products represent almost 95% of our bilateral trade transactions which is not satisfactory since there is enormous potential for export diversification for both countries.

We import more than 65% of the country's crude oil requirements from Iran as Sri Lanka considers Iran a reliable and trustworthy source of supply. The country also imports small quantities of a variety of products including petroleum bitumen, synthetic rubber, carbon black, urea, copper waste and scrap.

The Minister thanked the government of Iran for taking prompt action to check the recent adverse campaign against Sri Lankan tea by the Iranian media. Tea accounts for 95% of the total value of exports from Sri Lanka to Iran. In 2005 Sri Lanka exported 25,000 metric tons of tea to Iran. The other items exported by Sri Lanka are coconut products, fibreboard of wood, natural rubber, rubber tyres, garments, footwear, ceramic tableware and kitchenware.

Fernandopulle said that exports by both countries have to be expanded to maximise the mutual benefits while this can be done by product diversification and joint ventures.

He said the two governments have not been able to exploit the full potential in the field of cooperation in investment. The agreement on Avoidance of Double Taxation and the Agreement on Reciprocal promotion and protection of investment between the two countries has already been concluded. To reap the benefits of these two agreements it is necessary to identify areas for active participation.

Minister Fernandopulle also addressed Iranian businessmen and investors during his visit to Iran.