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Entrepreneurs apprehensive of Pak-Lanka FTA misuse

Pakistan Link

Entrepreneurs apprehensive of Pak-Lanka FTA misuse

21 March 2005

LAHORE: Upcountry industrialists and business community have asked the economic managers to strictly monitor goods traded under the Free Trade Agreement (FTA) with Sri Lanka.

They apprehend that the Indian exporters might use this low tariff channel to dump their goods into the Pakistani market.

Though the question of ‘origin of exports’ have clearly been mentioned but this is not enough to discourage the routing of Indian goods through Sri Lanka, they said and added that Indian entrepreneurs have already started establishing their industries in Sri Lanka for exporting their production to Pakistan.

They quoted an example the establishment of a LPG cylinder gas facility in Sri Lanka by Indian exporters, which is all set to supply the production to Pakistan. This facility is a subsidiary of Indian steel giant and would be importing its raw material from India, they added.

The President Pakistan Industrial Traders and Associations Front (PIAF) Muhammad Ali Mian, Senior Vice President Sohail Lashari, former LCCI President Mian Anjum Nisar and Yawar Irfan Khan, LCCI’s executive committee members Mian Shafqat Ali, Tahir Manzoor Chaudhary, Irfan Qaiser Sheikh, Chairman Lahore Township Industrial Association (LTIA) Nasrullah Mughal were unanimous that the issue of origin of goods is till a question looming around the future of the first ever FTA singed by Pakistan with any other regional economy.

Former LCCI President Pervez Hanif, who is also the Honorary Counsel General of the Sri Lanka in town, said that in the proposed draft of FTA, it was agreed that in case of 35 per cent value addition in any of the raw materials, the exporting country would have the right to change of origin of that very exportable product.

However, if we take the example of Pakistan, there is at least 35 per cent value addition of electricity in converting raw cotton into yarn. Therefore, Pakistani industry should have to stay vigilant regarding the implementing of this FTA, he said while ruling out the possibility of any reversal of this agreement saying that both the sides for the first three years of agreement can only protest over such routing of product of third country through FTA tariff channels. However, they cannot change the lost of goods mentioned for duty free import and exports.