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Zero duty for Lankan goods in Pakistan

Sunday Times, Sri Lanka

Zero duty for Lankan goods in Pakistan

29 March 2009

The Department of Commerce said this week that under the Sri Lanka-Pakistan Free Trade Agreement (FTA), Pakistan has confirmed duty free status to 4,500 Sri Lankan products. “The Government of Pakistan has issued the respective notification implementing the 100% tariff reduction for 4,500 ‘Sri Lankan originated’ products, with effect from 20th March 2009,” a Commerce Department official told The Sunday Times FT.

The 4,500 eligible items must show a 35% domestic value addition to get duty free access into Pakistan. With traditional western export markets shrinking due to the global recession, and also becoming increasingly more price competitive, the Department officials are urging local exporters to develop alternative export markets.

Pakistan is the second largest country in the South Asian region with a population of about 200 million. Exports from Sri Lanka to Pakistan have been increasing since the signing of the FTA. In 2007 Sri Lanka exported US$ 57 million worth of goods to Pakistan, a majority using the tariff cuts offered under the FTA. In 2008 this increased to US$ 71.4 million.

However, officials say Sri Lankan exporters are still, for the most part, exporting low value added, ‘primary’ products to Paksitan, despite the potential for higher returns by exporting industrial goods. The main exports to Pakistan at this point, are betel, leaves and copra.