Sri Lanka-Pakistan trade:
Minor hiccups, major hindrance
By Gamini WARUSHAMANA
Negative trade balance is not always negative. It could be looked in
a broader context said the Head of Chancery of the Pakistan High
Commission in Sri Lanka Balal Akram. Referring to the negative trade
balance between the countries which is favourable to Pakistan Akram said
that 35 per cent of Sri Lankan imports from Pakistan are raw material
for the apparel industry.
They are the best quality with lowest price. The apparel manufactured
using the raw materials are exported to Europe and the US which makes
positive trade balance with Sri Lanka, he said.
He was addressing a meeting of Sri Lankan traders and officials of
the Pakistan High Commission in Colombo last week. The meeting was held
to discuss the issues in implementing the Free Trade Agreement (FTA)
between the two countries and explore the untapped potentials and
opportunities in the bilateral trade.
The meeting was organised by the National Chamber of Commerce of Sri
Lanka (NCCSL). At the discussion the President of the NCCSL Chandra Lal
de Alwis said that after signing the FTA, trade has increased between
the countries. Sri Lankan industries, especially the apparel industry
benefits from the FTA and Pakistan produces high quality cotton yarn and
textiles, inputs for the garment industry, Alwis said.
Once upon a time, Sri Lanka was the largest tea exporter to Pakistan
but later Kenya took over the market. Betel, copra and spice exports to
Pakistan has been affected due to smuggling of these products from India
via Kashmir border. Rubbe, the main export from Sri Lanka to Pakistan
was affected due to technical issue in HS codes, traders complained.
The Third Secretary of the Pakistan High Commission Mariam Saeed said
that in an open market economy comparative advantage is the rule of the
game.
She said that Sri Lankan betel exports to Pakistan was lost to India
and Bangladesh after the abolition of the margin of preference.
Though Sri Lankan betel, with of high quality the Indian and
Bangladesh products are cheaper and therefore in a competitive market
price is also crucial, she said.
Referring to tea exports to Pakistan she said that Dilmah Tea
dominates a segment of the Pakistan market especially in Karachi and
Islamabad. Value added tea products from Sri Lanka has a high demand in
Pakistan. Therefore, exporters should understand the market situation.
Kenyan tea captured the Pakistan market because of its lower price.
Another factor is that Pakistan people prefer strong tea as they use
them with milk. Normally Sri Lankan tea is light and exporters should
realise these specifications, she said. Saeed said, that political
hiccups affect the trade between the countries despite the FTA.
For instance Pakistan produces the world’s best mango and under the
FTA, Pakistan can export mango to Sri Lanka at zero duty. Dates, apple,
apricot and other varieties of fruits and agro products can be imported
to Sri Lanka from Pakistan at a lower price, but Sri Lanka imports these
products from far away countries such as Saudi Arabia and USA at a
higher price. Due to political reasons Comprehensive Preferential Trade
Agreement between the two countries is held.
She said that finding complementaries will be beneficial for both
countries. Entering into collaborative projects and starting on joint
economic ventures will create win win situation for both countries.
The two parties agreed to have discussions on trade issues and
provide information.
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