PTA with Sri Lanka: Pakistan advised to seek export of broken rice, onions

A study of the Ministry of Commerce on Free Trade Agreement (FTA) between Pakistan and Sri Lanka has recommended that the Pakistani authorities should seek access to Sri Lankan market for supplying broken rice, onions, maize, ceramic sinks and ethyl alcohol which are currently on Sri Lanka's 'No Concession List'.
Sources told Business Recorder here on Sunday that the Ministry of Commerce has drafted a working paper on 'Evaluation of Trade Agreements--A case study of Pakistan-Sri Lanka FTA', written by Pakistan Institute of Trade and Development (PITAD) research team.
According to the working paper, Pakistan-Sri Lanka FTA (PSFTA) came into effect in June 2006, with the objective of enhancing bilateral trade relations. In order to analyse the impact in bilateral trade flow five years after the implementation of the agreement, PITAD team conducted research study using competitive indices. The scope of the study was defined as follows:
First, quantitative analysis of bilateral trade flows in pre- and post-FTA periods in between 2005 and 2009 at the tariff line level (HS 8 digit level for both countries).
Second, evaluate performance of products with duty-free access 10 percent immediate access Tariff Rate Quotas, no concessions.
Third, obtain the perception of traders and the impact of PSFT.
Fourth, the study also identified potential products for further liberalisation in future negotiations.
Fifth, the study would evaluate the trade performance of India in Sri Lanka market.
The study showed that between 2005 (when PSFTA came into effect) and 2009, Pakistan exports to Sri Lanka rose by 41 percent, reaching the level of $ 216 million in 2009, whereas Pakistan's imports from Sri Lanka fell by 5.7 percent to $55.79 million in 2009 against $59.18 million in 2005.
He paper further said that Pakistan's top performing products in the Sri Lanka market included woven cotton fabrics, knitted fabrics, cement, basmati rice, potatoes, cumin, pharmaceuticals, tubes and pipes. Sri Lanka's top performing products in Pakistan included betel leaves, rubber and coconut. Tea, a major product for Sri Lanka, failed to achieve export growth despite being the beneficiary of large trade preferences.
The study findings also shwed that Pakistan's main competitor in the Sri Lankan market is India which has also signed an FTA with Sri Lanka. Pakistan and India directly compete in the Sri Lankan market for cotton fabrics, knitted fabrics, denim, cement, tubes and pipes. The quantum of India exports in Sri Lanka market is higher than Pakistan in most categories. However, after availing preferences under PSFTA, Pakistan has been able to make inroads and erode India's share.
The policy recommendations, stemming from this study, are: The GoP should give the quantum of trade, negotiate the expansion of the quota allocated by Sri Lanka for basmati rice and potatoes. Pakistan should also seek access for broken rice, onions, maize, ceramic sinks and ethyl alcohol which are currently on Sri Lanka's 'No Concession' list. The study also suggests that the process of issuing Certificates of Origin to Pakistani exporters should be simplified.