Pak Sri Lanka Free Trade Agreement
The aim of this study is to analyse the results achieved so far in the free trade agreement and to highlight the opportunities available to both partners to increase bilateral trade. The study also highlights some sectors that, if encouraged, could potentially increase trade between the two countries. These include Pakistan`s cement and motorcycle industry, as well as Sri Lanka`s clothing and clothing industry, tourism and tea. Tariff quotas (TRQs) are specific quantities of products for which the importing country would be agreed to grant either duty-free access or preferential duty if imported by the other contracting party to the agreement. Products that go beyond the agreed TRQ are subject to the normal tariffs applied by the importing country to these products. Sri Lanka granted Pakistan, duty-free, a tariff quota of 6,000 m/t of Basmati rice and 1,000 m/t of potatoes per calendar year (January-December). However, the importation of potatoes is only permitted during the low season of Sri Lankan lands. (2/3, which will be introduced in June – July and 1/3 in October – November each year). The Pakistan-Sri Lanka Free Trade Agreement came into force in July 2005, after it was signed in August 2002. As part of the free trade agreement, Sri Lanka received immediate duty-free access for 206 products.
Pakistan, on the other hand, has been granted duty-free access to 102 products. Other concessions were agreed in November 2010. Since the signing of the free trade agreement, bilateral trade with Sri Lanka has mainly been destined for Pakistan. Pakistan`s exports more than doubled between 2005 and 2011, while imports remained relatively stable; In 2011, Pakistan had the largest trade surplus, at $287 million. Exports declined after 2011 and reached $269 million through 2017. In contrast, imports have increased by about 60% since 2011 and peaked at $103 million in 2017. Pakistan`s trade surplus with Sri Lanka was $166 million in 2017. Sri Lanka has identified a total of 102 six-digit shS tariff lines, on which Pakistan will have 100% duty-free access. The Pakistan-Sri Lanka Free Trade Agreement (PSFTA) was signed between the two governments in August 2002 and came into force in July 2005. Sri Lanka gained immediate duty-free access for 206 products, while Pakistan gained duty-free access to 102 products.