Colombo agrees to address FTA fears

The News - International, Pakistan

Colombo agrees to address FTA fears

28 March 2007

ISLAMABAD: In a major development, Colombo has agreed to work out permanent solution to Islamabad’s fears over the import of auto parts keeping in view the likely investment by India in Sri Lanka, a government official told The News.

The trade under Free Trade Agreement between Sri Lanka and Pakistan had begun on June 12, 2005. Sri Lanka is also in trade with India under FTA and there are reports that India is going to invest in auto sector in Sri Lanka. Islamabad fears that the auto parts to be made in Sri Lanka by India would be exported to Pakistan.

In a recent meeting of the Joint Committee of both the countries that was held in Islamabad on March 16, Sri Lanka assured Pakistan that it would not issue certificate of origin on tariff lines of auto sector indicated by Pakistan. In addition, a permanent solution for this issue will also be worked out.

The Joint Committee of Pakistan and Sri Lanka was co-chaired by Humayun Akhter Khan, Minister for Commerce and Prof GL Peiris, Minister for Export Development and International Trade. Joint Committee of Pakistan and Sri Lanka at Ministerial level was established as per the Article XI of FTA to review the implementation or progress of the bilateral agreement.

In return, the official said that Pakistan agreed to raise tariff concessions on margin of preferences on betel leaves from 35 per cent to 20 per cent and remove the quantitative restriction of 1,200 tonnes. In addition Pakistan would also provide tariff concessions on herbal cosmetics manufactured and marketed by the National Brands of Sri Lanka on margin of preferences of 50 per cent.

To a question the official said that in the bilateral FTA with Sri Lanka, Pakistan had provided tariff reduction of 35 per cent on the import of 1,200 tonnes of betel leaves. Now increasing the duty concession and removal of 1,200 tonnes of betel leaves will give a positive political signal to Sri Lanka.

Since Pakistan is also in very good trade in defence sector and Islamabad always attaches paramount importance to relations with Sri Lanka, so extending the tariff concession more in case of betel leaves would further improve and cement the existing ties with Sri Lanka to a question, the official said that reducing import duty on herbal cosmetics of Sri Lanka national brands will only have a minor revenue implications. The official said that since the implementation of trade under FTA, Pakistan’s exports to Sri Lanka have increased by 5 per cent and imports by 30 per cent.

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