Exporters hail concessions to boost trade with neighbours

Exporters hailed the move by Pakistan to remove the import trade price slapped on Medium Density Fibreboard (MDF Board) exported from Sri Lanka.

General Secretary and CEO, National Chamber of Exporters (NCE), Shiam Marikar said any trade concession granted by our close neighbours such as India and Pakistan will benefit our exporters and such a move will help strengthen trade relations with neighbouring countries.

Sri Lanka hopes to hold a trade exhibition in Pakistan following the Single Country trade show held by Pakistan last month. The visit of Pakistan Prime Minister Nawz Sharif and Indian Prime Minister Narendra Modi is an impetus to trade development between Sri Lanka and the two neighbours.

The Sri Lanka-Pakistan talks held in November 2014 resulted in a new trade concession for Lankan exporters and boosted bilateral trade between both countries.

The first relief as a result of post-November talks is the removal of import trade price slapped by Pakistan on Medium Density Fibreboard (MDF Board) exported from Sri Lanka to Pakistan.Medium Density Fibreboard (MDF Board) is one of the major export products to Pakistan from Sri Lanka.

It represents nearly 10% of Sri Lanka’s total exports to Pakistan. Sri Lanka is the second largest supplier of MDF to Pakistan after Malaysia as Sri Lankan exporters have been enjoying duty free market access under the Pakistan–Sri Lanka Free Trade Agreement (PSFTA).

However, Pakistani authorities placed a valuation rule (the minimum value) on all MDF Board imports as ‘Import Trade Price (ITP)’ to eliminate the under-invoicing.

Initially, the valuation rule applied across the board to all countries and later the Pakistani authorities introduced a new valuation rule which discriminates Sri Lanka from other exporting countries.

During the visit of Federal Minister of Commerce of Pakistan in November 2015, Minister Rishad Bathiudeen along with officials of the Department of Commerce raised this issue with the Pakistan delegation as this is injurious and hindering Sri Lanka’s exports to Pakistan. This was further discussed at the recently concluded Commerce Secretary Level Meeting of PSFTA between Sri Lanka and Pakistan.

The Ministry of Industry and Commerce and the Department of Commerce made several interventions through Consulate General of Sri Lanka in Karachi to the Pakistani authorities for early settlement of this issue due to serious injury to the Sri Lankan MDF manufacturing industry as Pakistan is one of the major buyers of MDF Boards from Sri Lanka besides India.

After considering the appeal by Sri Lankan authorities, the Pakistan government amended the valuation ruling effective from January 29 which treats MDF boards from Sri Lanka on a par with other exporting countries. This move has been welcomed by Sri Lankan exporters as it would enhance bilateral trade relations of both countries and facilitate achieving the US $ 20 billion export target of the Government by 2020.

The 11th session of the Sri Lanka–Pakistan Joint Economic Commission was held in Colombo on November 27. Pakistan is the second largest trading partner of Sri Lanka in the SAARC region after India. The YoY bilateral trade had increased by 6% in 2012 to $ 433.69 mn. A substantial growth in bilateral trade was seen in exports and imports, especially after the Free Trade Agreement between the two countries was implemented in 2005. The value of trade between the two countries increased by 174% from US $ 158 mn in 2005 to US $. 433.69 mn in 2012.