FPCCI launches publication on Pakistan, Sri Lanka free trade MoU to enhance bilateral trade

The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has launched a publication on the Pakistan and Sri Lanka free trade Memorandum of Understanding (MoU) to enhance bilateral trade.

The objective of the study is to give the readers, stakeholder, business community and policymakers a detail analysis on the prospects on increasing the existing trade between two SAARC nations Pakistan and Sri Lanka under their free trade agreement.

The FPCCI hosted the publication launching ceremony in Marriott Islamabad with the participation of High Commissioner of Sri Lanka to Pakistan Vice Admiral Mohan Wijewickrama. Senate Foreign Affairs Committee Chairman Senator Mushahid Hussain Sayed was the Chief Guest of the ceremony, Business Recorder reported.

Senator Sayed addressing the gathering emphasised the private sector of both countries to play their role to utilise the highlighted trade potential available in each country.

He also draws attention towards potential available in religious tourism and exchange in cultural heritage of both countries. He also invited Sri Lanka to take the advantage of China Pakistan Economic Corridor (CPEC) to enhance its outreach to Central Asian states and European countries.

FPCCI President Anjum Nisar said that COVID-19 pandemic has brought business community much closer through use of new technologies. He said that unfortunately the political issues in the region are the bottleneck in unleashing the true trade potential. He said the Pakistan is always very supportive in enhancing the trade with its neighbouring countries.

Ministry of Commerce Joint Secretary (FT-I) Nauman Aslam said the Government was thinking to review the FTA signed with Sri Lanka with inclusion of services sector and cross-border investments.

He also urged the private sector of both member countries to increase the export basket to enhance the mutual trade.

Vice Admiral Mohan Wijewickrema said that COVID-19 had increased trade challenges between member countries with decrease in foreign remittances.

He added that Pakistan and Sri Lanka had old historic relations and Sri Lanka was the second largest trading Partner of Pakistan in South Asia. He seconded the proposal of earlier panellist regarding addition of more products into export basket of both countries to realise the true potential.

The PSFTA was signed in August 2002 and came into effect in July 2005. The terms of the FTA are comprehensive and grant 100% immediate concession to Pakistan’s major exports and Sri Lanka’s major exports products. As a result of this, the trade volume has doubled from $ 212 million in 2005 to around $ 460 million in 2018.

However, it was found that a considerable trade potential remains unutilised.

The study chalks out the specifics of this potential and suggests ways to remove obstructions to the full realisation of trade between the two countries. The study finds out that over $ 2.7 billion of trade potential exist if both countries fully manage to utilise their FTA. The study revealed that Pakistan enjoyed an increasing surplus in bilateral trade with Sri Lanka. However, Sri Lanka’s bilateral trade with Pakistan is considerably low. In this context, the study uses the trade complementarity index tool as to see whether Sri Lankan exports meet the import demand of Pakistan and also establish the extent of sectoral match and mismatch between the two countries.