Lahore: The bilateral trade between Pakistan and Sri Lanka has not shown promising growth despite the existence of a Free Trade Agreement (FTA) for a decade, a report compiled by the Pakistan Business Council has claimed.
Pakistan and Sri Lanka signed a Free Trade Agreement in July 2002 and it became operational in June 2005. The FTA is comprehensive and offers full concession on a variety of important exports.
According to a report in Pakistan’s daily The Nation, Pakistan’s exports to Lanka grew from $154 million in 2004 to $316 million in 2013, but only 0.14% of Sri Lanka’s total imports were from Pakistan.
Similarly, Sri Lanka’s exports to Pakistan grew from $46 million to $63 million between 2004 and 2013, and Pakistan could claim only 1.7% of total Sri Lankan imports from the world in 2013.
Although both countries claim significant market shares in precious few exports to the other, trade has continued in roughly the same mix of products that existed prior to the FTA and most tariff lines continue to report zero trade, the Pakistan Business Council report has noted.
Top Pakistani exports to Sri Lanka include cotton products, cement, refined sugar and potatoes. Top Sri Lankan exports to Pakistan include vegetable products, rubber, fibreboard and coconut products.
According to the study, the major impediment to healthier trade relations between Pakistan and Sri Lanka seems to be disengagement between the countries’ businessmen as well as their policy makers.
During President Maithripala Sirisena’s visit to Islamabad in early April, the two countries agreed to strengthen ties and increase the current trade of $ 438 million to $ 1 billion within the next few years.