An Assessment of the Pakistan-Sri Lanka - pbc.org.pk · responsibility of the author(s) and do not necessarily reflect the opinion of the WTO, IMF or UN. ... 5.0 Pakistan Sri Lanka

An Assessment of the Pakistan-Sri LankaFree Trade Agreement

April, 2015

An Assessment of the Pakistan-Sri Lanka Free Trade Agreem

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Acknowledgements:

Team Leader: Samir S. AmirLead Researcher: Danish Hyder

Disclaimer: The findings, interpretations and conclusions expressed herein are those of the author(s) and do not necessarily reflect the views of the Board of Directors and Members of the Pakistan Business Council or the companies they represent.

Any conclusions of analysis based on ITC, IDB, CTS, UNCTSD and WEO data are the responsibility of the author(s) and do not necessarily reflect the opinion of the WTO, IMF or UN.

Although every effort has been made to cross-check and verify the authenticity of the data, the Pakistan Business Council does not guarantee the data included in this work. All data and statistics used are correct as of 1 February, 2015, and may be subject to change.


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The PBC’s Member Companies


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The PBC’s Member Companies


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TABLE OF CONTENTSSection 1: A Brief Introduction to Pakistan-Sri Lanka Trade

1.0 The Pakistan Business Council: An Overview ………………………………… .. 08

Executive Summary

2.0 Key Findings ……………………………………………………………………… ...... 09

2.1. Overview of Pak-Sri Lanka potential for trade ……………………………………… 09

2.2. High Potential Trade Item Lists …………………………………………………….… 10

3.0 Recommendations …………………………………………………………….… ...... 11

3.1. Trade Delegations and Single Country Exhibitions ............................................... 11

3.2. Agreement on changes to FTA terms ................................................................... 11

3.3. Greater involvement of businessmen in drafting of FTA ....................................... 11

3.4. Forums for trade dispute resolution ...................................................................... 11

4.0 Study Objective ................................................................................................ 12

5.0 Pakistan Sri Lanka Free Trade Agreement: Brief Introduction ……… ............ 14

5.1. Short Economy Profiles ......................................................................................... 14

5.2. Top Trading Partners ............................................................................................. 16

5.3. Overview of Pak-Sri Lanka Trade ........................................................................... 18

5.4. Overview of Pakistan’s Exports from the World and to Sri Lanka ........................ 21

5.5. Overview of Pakistan’s Imports from the World and from Sri Lanka………… ....... 26

Section 2: Analysis of Pakistan’s Exports to Sri Lanka under FTA

6.0 Prelimanry Analysis of Pakistani Exports to Sri Lanka Under FTA ..................................................................................... 29

6.1 Comparison of Pakistan and India’s Trade with Sri Lanka ................................... 31

7.0 Analysis of Pakistan’s Exports to Sri Lanka ................................................... 33

7.1. TradePotential≥USD10million .......................................................................... 35

7.2. USD5million≤TradePotential<USD10million ................................................. 37

7.3. USD1million≤TradePotential<USD5million .................................................. 39

7.4. High Trade Potential, Favourable CAGR items with tariff advantage over India … 41

7.5. High Trade Potential, Favourable CAGR items that should receive Tariff concessions ….. ................................................................................ 42

7.6. Two digit HS codes with High Trade Potential ...................................................... 45

7.7. Two digit HS codes with High Trade Potential and favourable CAGR values ...... 46

7.8. Comparison with India for high potential Pakistani products ……… .................... 47

7.9. Items on Sri Lanka’s no concession list with Pakistan RCA advantage …… ........ 48


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Section 3: Analysis of Sri Lanka’s Exports to Pakistan under FTA

8.0 Preliminary Analysis of Sri Lankan Exports to Pakistan Under FTA ........................................................................ 51

8.1. Comparison of Sri Lanka and China trade with Pakistan ...................................... 53

9.0 Analysis Of Sri Lanka’s Exports To Pakistan ................................................... 55

9.1. TradePotential≥USD10million…………………………… .................................. 55

9.2. USD5million≤TradePotential<USD10million ................................................. 57

9.3. USD1million≤TradePotential<USD5million .................................................. 58

9.4. USD500,000≤TradePotential<USD1million………. ...................................... 59

9.5. High Trade Potential, Favourable CAGR items that should receive Tariff concessions ….. ............................................................. 60

9.6. Two digit HS codes with High Trade Potential …… ............................................... 61

9.7. Two digit HS codes with High Trade Potential and favourable CAGR values …. .. 62

9.8. Items on Pakistan’s no concession list with Sri Lankan RCA Advantage ............. 63

Section 4: Concerns and Recommendations

10.0 General Concerns ............................................................................................ 65

10.1. Lack of interest in Pak-Sri Lanka trade .................................................................. 65

10.2. Unilateral changes made to FTA terms …………………………………………… ... 65

10.3. Insufficient involvement of businessmen in drafting of FTA……………………… .. 66

10.4. Lack of effective trade dispute resolution ……………………………………… ....... 66

11.0 Views of Selected High Potential Pakistani Exporters ................................... 66

11.1. Plastics …………………………………………………………………………………. 66

11.2. Fruits and Vegetables …………………………………………………………… ........ 66

11.3. Articles of Iron and Steel (Pipes) ........................................................................... 67

12.0 Recommendations ........................................................................................... 67

12.1. Trade Delegations and Single Country Exhibitions .............................................. 67

12.2. Increased involvement of businessmen in drafting of FTA ................................... 68

12.3. Discussion before change in FTA terms ............................................................... 68

12.4. Forums for efficient resolution of trade disputes .................................................. 69


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Annexures

Annexure A: List of most exportable product lines ................................................. 71

Table of Pakistani Exports to Sri Lanka .......................................................................... 71

Table of Sri Lankan Exports to Pakistan ......................................................................... 86

Annexure B: List of product lines on no concession lists with high RCA .............. 95

Table of high RCA Pakistani products with no concession................................. ........... 95

Table of high RCA Sri Lankan products with no concession ......................................... 98


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Section 1 A Brief

Introduction to Pakistan-Sri Lanka

Trade

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1.0 THE PAKISTAN BUSINESS COUNCIL: AN OVERVIEW

The Pakistan Business Council (PBC) is a business policy advocacy forum, representing private-sector businesses that have substantial investments in Pakistan’s economy. It was formed in 2005 by 14 (now 47) of Pakistan’s largest enterprises, including multinationals, to allow businesses to meaningfully interact with government and other stakeholders. The Pakistan Business Council is a pan-industry advocacy group. It is not a trade body nor does it advocate for any specific business sector. Rather, its key advocacy thrust is on easing barriers to allow Pakistani businesses to compete in regional and global arenas. The PBC works closely with the relevant government departments, ministries, regulators and institutions, as well as other stakeholders including professional bodies, to develop consensus on major issues which impact the conduct of business in and from Pakistan. The PBC has submitted key position papers and recommendations to the government on legislation and other government policies affecting businesses. It also serves on various taskforces and committees of the Government of Pakistan as well as those of the State Bank, SECP and other regulators with the objective to provide policy assistance on new initiatives and reforms. The PBC conducts research and holds conferences and seminars to facilitate the flow of relevant information to all stakeholders in order to help create an informed view on the major issues faced by Pakistan. The PBC’s Founding Objectives:

• Toprovidefortheformationandexchangeofviewsonanyquestionconnectedwiththeconduct of businesses in and from Pakistan.

•Toconduct,organize,setup,administerandmanagecampaigns,surveys,focusgroups,workshops, seminars and field works for carrying out research and raising awareness in regard to matters affecting businesses in Pakistan.

•Toacquire,collect,compile,analyze,publishandprovidestatistics,dataanalysisandotherinformation relating to businesses of any kind, nature or description and on opportunities for such businesses within and outside Pakistan.

•TopromoteandfacilitatetheintegrationofbusinessesinPakistanintotheworldeconomyand to encourage the development and growth of Pakistani multinationals.

• TointeractwithGovernmentsintheeconomicdevelopmentofPakistanandtofacilitate,foster and further the economic, social and human resource development of Pakistan.

The PBC is a Section 42 not-for-profit Company Limited by Guarantee. Its working is overseen by a Board of Directors elected every three years by the Membership with the Board being headed by a Non-Executive Chairman. The day-to-day operations of the PBC are run by a professional secretariat headed by a full-time, paid CEO.

More information on the PBC, its members, and its workings, can be found on its website: www.pbc.org.pk

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Executive Summary

2.0 KEY FINDINGS

2.1. OVERVIEW OF PAK-SRI LANKA TRADE AND POTENTIAL FOR GROWTH

Pakistan and Sri Lanka signed a Free Trade Agreement in July 2002 and it became operational in June 2005. The terms of the FTA were comprehensive and granted 100% immediate concession to major Pakistani exports such as cotton and cement and major Sri Lankan exportssuchasrubberandcoconutproducts.By2010bothcountrieswererequiredtohaveremoved tariffs on all items barring those listed in their respective no-concession lists or those facing Tariff Rate Quotas (TRQ).

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. Pakistan’s exports to Sri Lanka grew from USD 154 million in 2004 to USD 316 million in 2013, but Pakistan could only claim 1.7% of total Sri Lankan imports from the world in 2013. Sri Lanka’s exports to Pakistan grew from USD 46 million to USD 63 million between 2004 and 2013, and Sri Lanka claimed only 0.14% of total Pakistani imports from the world in 2013.

Fig.1 Pakistan-Sri Lanka trade numbers 2004-2013

Trade between the two countries has shown lacklustre growth despite the FTA. 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 toreportzerotrade.ThisisinstarkcontrasttoSriLanka’straderelationswithcountriessuchas India and China, wherein significant and fast-paced growth has occurred.

This Study suggests that fledgling Pakistan-Sri Lanka trade relations cannot be blamed on a paucity of opportunities or lack of potential for trade. Both countries produce goods that have healthy markets in the partner country. The FTA is comprehensive and offers full concession on a variety of important exports. Sri Lanka is currently in a period of reconstruction following the conclusion of long-lasting political conflict and is growing its status as a prime tourist destination. Moreover, Pakistan and Sri Lanka have strong political ties and the goodwill between them is part of what led Pakistan to sign its first free trade agreement with Sri Lanka. Considerable potential remains dormant, and this Study attempts to flesh out the specifics of thispotentialandsuggestwaystoremoveobstructionstoitsrealization.

134.715153.662

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70.9759.79 66.22 55.79 53.37 61.13

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2.2. HIGH POTENTIAL TRADE ITEMS

This Study identifies export items at the 6 digit HS code level which, based on certain favourable metrics, are poised to effectively drive the growth of trade between Pakistan and Sri Lanka. The metrics used are those of trade potential and Compound Annual Growth Rate (CAGR) values. Trade potential represents the extent to which trade can theoretically be increased with another country, and therefore provides an idea of the scope for trade expansion. A CAGR value for growth in, say, exports of an item over a certain period gives us the rate at which the exports would have grown if they grew smoothly, and therefore can function as a rough indicator of a growth trend. If, for a product X, trade potential is high, and the CAGR values of its total world exports by the exporting country and its total world imports by the importing country are high, it can be said that the exporting country is a significant and growing producer and the importing country is a significant and growing consumer of product X. This Study identifies items that exhibit this combination of favourable metrics, but a low or negative CAGR value for their trade between Pakistan and Sri Lanka, suggesting that certain generally positive trends have failed to encompass the Pak-Sri Lanka trade relation.

This further suggests that once the Pak-Sri Lanka specific obstruction to trade is removed, tradecanbeincreasedquicklybyharnessingthepositivetrends.Investigationintotheissuesfaced in Pak-Sri Lanka trade give us some idea of what these obstructions might be.

The following are selected Pakistani export items with high trade potential and favourable CAGR values. Out of the total trade potential of around USD 1.7 billion for the items surveyed at the 6 digit level, USD 500 million is concentrated in items with favourable CAGR values.

Table 1. Pakistani products that have high trade potential and encouraging CAGR values

HS CODES WITH HIGH TRADE POTENTIAL AND FAVOURABLE CAGR VALUES

HS Code Product Label Total Trade Potential in High CAGR Items in USD millions

Number of high potential/CAGR items at 6 digit HS code

73 Articles of iron or steel 53 3

39 Plastics and articles thereof. 34 11

85 Electrical,electronicequipment 29 6

62Articles of apparel and clothing accessories, not knitted or crocheted.

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The following are selected Sri Lankan export item HS codes with high potential and favourable CAGR values at the 6 digit HS code level. Out of the total trade potential of around USD 1 billion for the items surveyed at the 6 digit level, USD 880 million is concentrated in items with favourable CAGR values.

Table 2. Sri Lankan products that have high trade potential and encouraging CAGR values

HS CODES WITH HIGH TRADE POTENTIAL AND HIGH CAGR VALUES

HS Code Product Label Total Trade Potential in High CAGR Items in USD millions

Number of high potential/CAGR items at 6 digit HS code

09 Coffee, tea, mate and spices 316 2


40 Rubber and articles thereof 40 6

21 Miscellaneous edible preparations 31 2

These tables suggest that a lack of trade potential is not the primary impediment to better Pakistan-Sri Lanka trade relations.

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3.0 RECOMMENDATIONS

The major impediment to healthier trade relations between Pakistan and Sri Lanka seems to be disengagement between the countries’ business men as well as their policy makers. This could be due to misconceptions regarding Sri Lanka’s potential as a market for Pakistani goods and the resulting lack of interest in trade with the country. This suggests that the unrealizedpotentialthisStudyidentifiesremainsunrealizedlargelybecauseneithercountryviews the other as a priority market despite an abundance of opportunities. This is evinced by the lack of regular trade delegations and single country exhibitions, which leads to weak ties between the business communities of the two countries, thereby making it difficult to jump-start trade within neglected high potential items. While there are specific items which can be put forward to be considered for further concessions, by and large the FTA terms themselves are comprehensive and do not seem to be in need of any serious amendments.

3.1 TRADE DELEGATIONS AND SINGLE COUNTRY EXHIBITIONS

Trade delegations and single country exhibitions must be held regularly in order to lay the groundwork for stronger ties between the two countries’ business communities, as well as to raise awareness regarding the significant potential that lies in Pak-Sri Lanka trade. One of the major complaints voiced by Pakistani exporters to Sri Lanka is that a lack of interaction with their Sri Lankan counterparts impedes the identification of further opportunities for business in either country and prevents existing partnerships from being deepened. The granting of arrival visas by both sides would be a significant step towards facilitating the kind of interaction requiredtoboosttrade. 3.2 AGREEMENT ON CHANGES TO FTA TERMS

Any changes in tariffs, para-tariffs or no-concession lists that conflict with the terms of the FTA must be discussed by both countries before being brought into effect. There are instances of unilateral changes made by both Pakistan and Sri Lanka that have undermined the spirit of theFTAandconsequentlyseriouslydisruptedbusinessdealingsbetweenthetwocountrieswithin products such as broom corn and steel pipes. Problematic changes such as these will likely become less common as trade between Pakistan and Sri Lanka becomes more significant.

3.3 GREATER INVOLVEMENT OF BUSINESSMEN IN REVIEW OF THE FTA

Industrialists and exporters should have greater involvement in the drafting of future FTAs and the review of this existing FTA. A commonly voiced complaint was that an FTA can only be maximally advantageous if it takes into account the variegated and interwoven issues and concerns of different sectors affected by the FTA. In other words, an item-byitem discussion involving stakeholder is thought to be necessary.

3.4 FORUMS FOR TRADE DISPUTE RESOLUTION

Forums must be set up for the efficient arbitration of trade disputes. Disputes arise with regularity and end up unaddressed due to the lack of efficient mechanisms for their resolution. This has acted as an additional disincentive to trade between Pakistan and Sri Lanka, as the dangerofadelayedresolutionornoresolutionhasresultedinmorefrequentcasesoffraud.

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4.0 STUDY OBJECTIVES

The decade following the signing of the Pakistan-Sri Lanka Free Trade Agreement has witnessed low growth in trade between the two countries. This is particularly troubling becauseinadditiontohavingstrongpoliticaltiesandcomprehensiveFTAtermstocapitalizeon, both countries also seem to possess markets for the other’s major export goods. The primary aim of this Study is to estimate the potential for bilateral trade between Pakistan and Sri Lanka and recommend means for achieving the same. We therefore start by identifying:

a) Items possessing high potential for export from Pakistan to Sri Lanka b) Items possessing high potential for export from Sri Lanka to Pakistan

Sources of Data

The data for this study has been drawn from ITC Trademap for the period ended 2013 , which bases its data on UN Comtrade, maintained by the United Nations Statistics Division (UNSD). AnyquarterlyandmonthlydataisdrawnbyTrademapfromnationalandregionalsources.AlltariffvaluesareequivalentadvaloremtariffsdrawnfromTrademapunlessotherwisenoted.

Methodology

This study provides a list of items at the 6-digit HS code level that exhibit high trade potential, with items possessing favourable CAGR metrics highlighted.

Intuitively, trade potential is the theoretical extent to which trade of a given item can be expanded, which suggests the actual scope for growth in trade of that item. It is given by the followingequation:

Trade Potential

=Min (Pakistan’s exports to the world of X,Sri Lanka’s imports from the world of X)

-Pakistan’s current exports to Sri lanka of X

For instance, if Pakistan exports USD 500 million worth of cement to the world, and Sri Lanka imports USD 300 million worth of cement from the world, and Pakistan exports USD 40 million worth of cement to Sri Lanka, then trade potential is USD 260 million, since Pakistan has the capacity to export USD 260 million worth of cement to Sri Lanka given Sri Lanka’s import requirements.

The Compound Annual Growth Rate (CAGR) is the geometric mean of the individual annual growth rates during a period. It gives you the growth rate that would have gotten your initial value to your final value had the value grown smoothly over the relevant period. It is given by:

If the CAGR for Pakistan’s world exports of a good is high, and the CAGR for Sri Lanka’s world imports of that good is high, but the CAGR for export of that good from Pakistan to Sri Lanka is low or negative, the item has been highlighted, since the removal of an obstruction that is potentially specific to Pakistan-Sri Lanka relations can jump-start trade of the good between the two countries.

1 2013 was the last year for which complete data was available.

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Furthermore, the revealed comparative advantage has been calculated for items on either country’s no concession list to bring attention to items that may be worth considering for further concessions. Revealed comparative advantage is given by:

RCA indicates the relative efficiency of a country in exporting a particular good.

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5.0 PAKISTAN SRI LANKA FREE TRADE AGREEMENT (PSLFTA)

The Pakistan-Sri Lanka Free Trade agreement (PSLFTA) was signed in July 2002 and became operationalfrom12thJune2005.TheFTArequiredbothcountriestoachievezerotariffsona range of items during a certain time-frame. Pakistan granted 100% immediate concession on 206 items at the 6-digit HS level whereas Sri Lanka granted 100% immediate concession on 102 items at the same level. Pakistan’s no concession list ran to 540 items at the 6 digit level while Sri Lanka’s no concession list ran to 697 items, which were cut down to 607 items inApril2013.Furthermore,PakistangrantedSriLankaadutyfreetariffratequota(TRQ)ontea products as well as another TRQ at 35% margin of preference on the MFN rate on various clothing items. Sri Lanka reciprocated by granting Pakistan a duty free TRQ on long grain Basmati riceandpotatoes.Thetermsof theFTArequiredPakistantophaseout tariffsonitems not on its no-concession list by 2008, while Sri Lanka had till 2010 to do the same. Major Pakistani exports that Sri Lanka granted full concession to include cotton, apparel, knitted fabrics and cement. Major Sri Lankan exports granted full concession by Pakistan include rubber, coconut products and vegetable products.

Table 3. Summary of Pak-Sri Lanka FTA terms

Tariff Reduction Pakistan Sri Lanka

100% immediate concession 206 items 102 items

Tariff-phasing out period 3 years 5 years

Sensitive List 540 607 (amended in 2013)

Rules of OriginDirect Value Addition (DVA) is 35% of FOB value. If parts of an input originate from a contracting country, minimum aggregate content must be 35% with minimum domestic input content being 25%.

The most recent year for which comprehensive trade data was available was 2013 and therefore the tariff concessions granted to Sri Lankan import items by the Federal Board of Revenue in April 2014 have not been taken into account.

5.1 SHORT ECONOMY PROFILES

The GDP Average Annual Growth Rate (AAGR) in Sri Lanka averaged 6.59% from 2003 until 2014, whereas Pakistan’s GDP AAGR for the same period was 11.11%

Fig. 2 GDP Growth rates of Pakistan and Sri Lanka

From 2004 to 2013 Sri Lanka’s total trade with the world grew by 110% whereas Pakistan’s trade grew by 120%. However, since the FTA was fully implemented in 2010, Sri Lanka’s trade has grown by 35% whereas Pakistan’s trade has grown by only 17%. Both Pakistan and Sri

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Lanka have had negative trade balances over the period 2004-2013, with the Sri Lankan trade imbalance increasing by 232% and the Pakistani trade balance increasing by 308% during this time.

Fig. 3 Pakistan and Sri Lanka’s balances of trade

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5.2 TOP TRADING PARTNERS

Pakistan’s exports have continued to be dominated by the US over the past few years, whereas exports to China have grown over three times since 2007 to make it Pakistan’s second largest export destination in 2013. Both Afghanistan and the UK have shown healthy growth as export markets for Pakistani products over this period though the UAE has fallen off by a small amount.

Table 4. Pakistan’s top five export destinations Figures in USD Billions

Pakistan Export Partner 2007 2008 2009 2010 2011 2012 2013

USA 3.85 3.65 3.22 3.67 3.84 3.67 3.75

China 0.61 0.73 1.00 1.44 1.68 2.62 2.65

United Arab Emirates 2.11 2.01 1.54 1.83 1.92 2.87 1.78

Afghanistan 0.84 1.45 1.37 1.68 2.66 2.10 2.00

United Kingdom 0.97 1.00 0.94 1.11 1.26 1.25 1.43

The UAE has emerged as Pakistan’s major origin of imports over the period under consideration, and while imports from the rest of the top five import partners showed overall growth during this time, Saudi imports fell by a small amount.

Table 5. Pakistan’s top five origins of imports Figures in USD Billions

Pakistan Import Partner 2007 2008 2009 2010 2011 2012 2013


China 4.16 4.74 3.78 5.25 6.47 6.69 6.63

Kuwait 1.85 3.44 1.80 2.61 3.89 4.21 3.95

Saudi Arabia 4.01 5.95 3.50 3.84 4.67 4.28 3.85

Malaysia 1.16 1.69 1.61 2.05 2.73 2.13 1.92

Sri Lanka’s exports have flowed primarily to the EU and the US over the past few years, with the US gradually gaining importance as an export destination until 2013 when it was only 4.6% lower than exports to the EU. India has held on to a distant third place in the top Sri Lankan import partners and has shown little growth as a market for Sri Lankan goods between 2007 and 2013.

Table 6. Sri Lanka’s top five export destinations Figures in USD Billions

Sri Lanka Export Partner 2007 2008 2009 2010 2011 2012 2013

EU 2.39 2.49 2.33 2.53 2.80 2.94 2.69

USA 1.98 1.89 1.59 1.77 2.14 2.12 2.57

India 0.52 0.42 0.33 0.47 0.52 0.60 0.54

Russia 0.20 0.22 0.19 0.24 0.28 0.26 0.28


India has been Sri Lanka’s major source of imports over this period, though China has asserted itself as a serious competitor for the Sri Lankan market by more than doubling its exports to the country since 2007. The table suggests that the Sri Lankan market for foreign goods is healthy and growing, and this should be a guiding idea in assessing Pakistan’s fledgling trade relationship with the country.

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Table 7. Sri Lanka’s top five origins of import Figures in USD Billions

Sri Lanka Import Partner 2007 2008 2009 2010 2011 2012 2013

India 2.59 2.84 1.72 3.31 4.45 3.81 4.75

China 1.39 1.63 1.57 1.99 2.99 3.00 3.44

Singapore 0.83 0.99 0.76 1.20 1.33 1.56 1.96

EU 1.17 1.19 1.00 1.22 1.56 1.49 1.38


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5.3 OVERVIEW OF PAKISTAN-SRI LANKA TRADEFig. 4 Pakistan-Sri Lanka trade numbers 2004-2013

Pakistan is Sri Lanka’s second largest source of imports in South Asia behind India, which also has an FTA with Sri Lanka that became operational in 2000 and was in full effect by 2008. However, India, China and Singapore dominated Sri Lankan imports in 2013 with 26.5%, 16.5% and 10% of total Sri Lankan imports respectively as compared to Pakistan’s negligible 1.7% share.

The following graphs show that while Pakistan’s exports to Sri Lanka have registered net growth during the 2004-2013 period, asides from a spike around 2009-2010 when Sri Lanka completed its trade liberalization, Pakistan’s percentage share of Sri Lankan imports hasremained stagnant at a very low level.

Fig. 5 Pakistan’s annual exports to Sri Lanka 2003-2013

Fig. 6 Pakistan’s percentage share of Sri Lanka’s world exports

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In 2004 Pakistani exports to Sri Lanka were USD 154 million, which was 1.15% of total Pakistani exports and 2.8% of Sri Lankan imports. By 2013 they were USD 316 million, which was 1.26% of total Pakistani exports and 1.7% of Sri Lankan imports. It is therefore clear that the period over which the FTA gradually came into effect Pakistan’s absolute level of exports to Sri Lanka increased by 105% but its share of Sri Lanka’s total imports actually fell, which is cause for concern since Pakistan’s share of the Sri Lankan import goods market was very small to begin with.

For comparison, India, Sri Lanka’s other FTA partner, had exports to Sri Lanka of USD 1.4 billion in 2004, which were 17.8% of Sri Lanka’s total imports and by 2013 exports were USD 4.8 billion, and 26.5% of Sri Lanka’s total imports. So, prima facie, India was able to better capitalizeonitsFTAwithSriLankathanPakistanwasonthePSLFTA.

On the other hand, Sri Lanka’s exports to Pakistan were USD 46 million (0.83% of Sri Lankan exports) in 2004 and USD 63 million (0.63% of Sri Lankan exports) in 2013. So Pakistan has remained an insignificant export destination for Sri Lankan products during the period the FTA has come into effect. Sri Lanka’s exports to India were USD 333 million (6.1% of Sri Lankan exports) in 2004 and USD 515 million (5.15 % of Sri Lankan exports) in 2013, suggesting that while there is a significant absolute rise in exports to India, Sri Lankan exports are finding other priority markets or have been unable to overcome India’s significant non-tariff barriers. It should be kept in mind, however, that while the current state of trade between Sri Lanka and Pakistan is not entirely encouraging, both are markets for the other’s primary exports. Pakistan is an important export market for tea, which is a top Sri Lankan export item, and it is also a significant importer of copra and rubber, which are also important Sri Lankan exports. Sri Lanka is an important market for textile products, machinery and pharmaceuticals along with other products that Pakistan records significant exports of. Therefore a more fruitful trading partnership seems to lie within reach for the two countries.

Table 8. Pakistan and India’s exports to Sri Lanka in 2004 and 2013

2004 2013

Pakistani Exports to Sri Lanka 154 million 316 million

Indian Exports to Sri Lanka 1.4 billion 4.8 billion

Table 9. Pakistan and India’s imports from Sri Lanka in 2004 and 2013

2004 2013

Pakistani Imports from Sri Lanka 46 million 63 million

Indian Imports from Sri Lanka 313 million 515 million

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The following graphs show that Sri Lanka’s major trade partners exhibited aggressive growth not just in absolute exports but also in their share of the Sri Lankan market during 2004-2013, whereas Pakistan remained a bit player in the Sri Lankan market.

Fig. 7 Composition of Sri Lanka’s total imports by country of origin

Fig. 8 Sri Lankan world imports by partner country percentage shares

It should be noted that Pakistan has been a major trading partner of Sri Lanka’s in the past: in 1990 Pakistan accounted for 27.6% of Sri Lanka’s imports from SAARC countries (South Asian Association for Regional Cooperation), and for 45.8% of Sri Lanka’s exports to the same region. However, the FTA does not seem to have done enough to counteract the falling off of Pakistan-Sri Lanka trade relations since their heyday.


Fig. 8Sri Lankan world imports by partner country percentage shares

0

1

2

3

4

5

2004 2006 2008 2010 2012

US

D B

ILLI

ON

S

Sri Lankan Import Composition by Import origin

Pak Exports

India Exports

China Exports

Singapore Exports

0

5

10

15

20

25

30

2004 2006 2008 2010 2012

Trade Partner Percentage Share in Sri Lankan Imports

Pak % Share

India % Share

China % share

Singapore % share


Fig. 8Sri Lankan world imports by partner country percentage shares

0

1

2

3

4

5

2004 2006 2008 2010 2012

US

D B

ILLI

ON

S

Sri Lankan Import Composition by Import origin

Pak Exports

India Exports

China Exports

Singapore Exports

0

5

10

15

20

25

30

2004 2006 2008 2010 2012

Trade Partner Percentage Share in Sri Lankan Imports

Pak % Share

India % Share

China % share

Singapore % share

21


ent

5.4 OVERVIEW OF PAKISTAN’S EXPORTS TO THE WORLD AND TO SRI LANKA

Pakistan’s export mix has remained consistent over the period 2007-2013, with cotton, textile products and cereals dominating. High growth in a number of export items is worth noting- export of cereals grew by 75%, salt, sulphur etc. by 187%, sugar exports grew over 900% and pearls and precious stones grew by 260%.

Table 9. Pakistan’s world exports 2007-2013 Figures in USD MillionsPAKISTAN’S EXPORTS TO THE WORLD

HS Code Product labelExported value in

2007

Exported value in

2008

Exported value in

2009

Exported value in

2010

Exported value in

2011

Exported value in

2012

Exported value in

2013

52 Cotton 3,440 3,596 3,204 4,013 5,097 5,226 5,334

63Other made textile articles, sets, worn clothing etc

3,179 3,146 2,918 3,285 3,570 3,285 3,685

10 Cereals 1,244 2,508 1,823 2,280 2,807 2,061 2,181

61Articles of apparel, accessories, knit or crochet

1,851 1,888 1,681 1,982 2,239 2,006 2,105

62Articles of apparel, accessories, not knit or crochet

1,371 1,361 1,206 1,462 1,775 1,694 1,855

42Articles of leather, animal gut, harness, travel goods

692 767 578 619 681 674 744

25Salt, sulphur, earth, stone, plaster, lime and cement

252 601 563 514 571 714 723

17 Sugars and sugar confectionery 61 239 112 88 67 254 634

41Raw hides and skins (other than fur skins) and leather

392 383 270 416 468 457 530

27Mineral fuels, oils, distillation products, etc

994 1,230 715 1,203 1,312 331 527

39 Plastics and articles thereof 187 296 306 408 544 521 450

71Pearls, precious stones, metals, coins, etc

120 240 479 590 469 1,634 437

8 Edible fruit, nuts, peel of citrus fruit, melons 125 145 203 254 311 348 434

55 Manmade staple fibres 386 285 300 511 606 449 418

22 Beverages, spirits and vinegar 156 231 122 187 273 173 364

90Optical, photo, technical, medical, etc apparatus

241 280 257 261 302 319 348

22


ent

The table on the following page is suggestive with regards to the importance of Pakistani imports to Sri Lanka. A number of top Pakistani exports to Sri Lanka registered significant growthinabsolutetermsduring2004-2013,thoughthisislargelyaconsequenceofverylowexport numbers in 2004 to begin with. While several exports exhibit this unarguably positive trajectory, growth in percentage shares of the Sri Lankan market suggests that the trend was not strong enough to carve out a space for Pakistan as a significant Sri Lankan trade partner. In other words, most Pakistani export items held onto only a marginal presence in Sri Lanka’s import market during this period. Notable exceptions to this were cotton (18.6%), raw hides (28.4%), milling products (21.5%) and sugar (12%), which all managed to capture a major part of their respective markets. On the other hand, market share in HS 63 (other textile articles) and HS 03 (fish, crustaceans etc.) dropped significantly from 68% and 13% to 24% and 4% respectively of total Sri Lankan imports.2

2The most recent year for which comprehensive trade data was available was 2013 and therefore the tariff concessions granted to Sri Lankan import items by the Federal Board of Revenue in April 2014 have not been taken into account in this report.

PAKISTAN’S EXPORTS TO THE WORLD

HS Code Product labelExported value in

2007

Exported value in

2008

Exported value in

2009

Exported value in

2010

Exported value in

2011

Exported value in

2012

Exported value in

2013

03Fish, crustaceans, molluscs,aquaticinvertebrates nes

161 218 193 231 261 292 333

07Edible vegetables and certain roots and tubers

73 46 86 120 259 188 249

11Milling products, malt, starches, inulin, wheat gluten

110 24 22 47 368 263 227

95 Toys, games, sports requisites 211 226 172 212 225 219 221

23


ent

Tab

le 1

0. P

akis

tani

imp

ort

s’ s

har

e o

f th

eir

mar

ket

in S

ri L

anka

Fi

gur

es in

US

D M

illio

ns

PA

KIS

TAN

’S S

HA

RE

OF

SR

I LA

NK

AN

IMP

OR

TS

HS

Co

de

Pro

duc

t La

bel

Exp

ort

s to

Sri

La

nka

2004

Sri

Lan

ka’s

im

po

rts

fro

m

wo

rld

200

4

% s

har

e o

f to

tal

Sri

Lan

kan

imp

ort

s

Exp

ort

s to

Sri

La

nka

2013

Sri

Lan

ka’s

im

po

rts

fro

m

wo

rld

201

3

% s

har

e o

f to

tal

Sri

Lan

kan

imp

ort

s

Ch

ang

e in

ex

po

rts

Ch

ang

e in

%

shar

e o

f S

ri

Lank

an Im

po

rts

Eq

uiva

lent

ad

va

lore

m t

ariff

ap

plie

d b

y S

ri L

anka

to

P

akis

tan

52C

otto

n60

527

11.5

0%10

254

918

.60%

427.

20

25S

alt,

sulp

hur,

eart

h,

ston

e, p

last

er, l

ime

and

cem

ent

097

0%45

587

7.70

%45

7.6

0.6

10C

erea

ls21

262

8.20

%38

355

10.7

0%16

2.5

6.9

17S

ugar

s an

d su

gar

conf

ectio

nery

212

81.

50%

3528

912

%33

10.4

12.3

07E

dibl

e ve

geta

bles

an

d ce

rtai

n ro

ots

and

tube

rs5

845.

80%

1828

66.

20%

130.

414

.9

30P

harm

aceu

tical

pr

oduc

ts5

103

5.20

%17

330

5.30

%12

0.1

0.2

73A

rtic

les

of ir

on o

r st

eel

414

03.

10%

1537

03.

90%

100.

92.

3

60K

nitte

d or

cro

chet

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fabr

ic2

343

0.50

%5

620

0.80

%3

0.3

0

03Fi

sh, c

rust

acea

ns,

molluscs,aquatic

inve

rteb

rate

s ne

s6

4113

.50%

511

74%

-1-9

.54.

5

11M

illin

g pr

oduc

ts, m

alt,

star

ches

, inu

lin, w

heat

gl

uten

07

0.10

%4

1921

.50%

421

.40.

6

41R

aw h

ides

and

ski

ns

(oth

er th

an fu

rski

ns)

and

leat

her

09

2.40

%4

1528

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425

.90.

6

39P

last

ics

and

artic

les

ther

eof

627

92.

10%

459

50.

60%

-2-1

.52.

3

22B

ever

ages

, spi

rits

and

vine

gar

018

0%3

535.

60%

35.

681

.5

52C

otto

n60

527

11.5

0%10

254

918

.60%

427.

20

25S

alt,

sulp

hur,

eart

h,

ston

e, p

last

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ime

and

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ent

097

0%45

587

7.70

%45

7.6

0.6

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ls21

262

8.20

%38

355

10.7

0%16

2.5

6.9

24


ent

PA

KIS

TAN

’S S

HA

RE

OF

SR

I LA

NK

AN

IMP

OR

TS

HS

Co

de

Pro

duc

t La

bel

Exp

ort

s to

Sri

La

nka

2004

Sri

Lan

ka’s

im

po

rts

fro

m

wo

rld

200

4

% s

har

e o

f to

tal

Sri

Lan

kan

imp

ort

s

Exp

ort

s to

Sri

La

nka

2013

Sri

Lan

ka’s

im

po

rts

fro

m

wo

rld

201

3

% s

har

e o

f to

tal

Sri

Lan

kan

imp

ort

s

Ch

ang

e in

ex

po

rts

Ch

ang

e in

%

shar

e o

f S

ri

Lank

an Im

po

rts

Eq

uiva

lent

ad

va

lore

m t

ariff

ap

plie

d b

y S

ri L

anka

to

P

akis

tan

17S

ugar

s an

d su

gar

conf

ectio

nery

212

81.

50%

3528

912

%33

10.4

12.3

07E

dibl

e ve

geta

bles

an

d ce

rtai

n ro

ots

and

tube

rs5

845.

80%

1828

66.

20%

130.

414

.9

30P

harm

aceu

tical

pr

oduc

ts5

103

5.20

%17

330

5.30

%12

0.1

0.2

73A

rtic

les

of ir

on o

r st

eel

414

03.

10%

1537

03.

90%

100.

92.

3

60K

nitte

d or

cro

chet

ed

fabr

ic2

343

0.50

%5

620

0.80

%3

0.3

0

03Fi

sh, c

rust

acea

ns,

molluscs,aquatic

inve

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rate

s ne

s6

4113

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.54.

5

11M

illin

g pr

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ts, m

alt,

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, inu

lin, w

heat

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uten

07

0.10

%4

1921

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421

.40.

6

41R

aw h

ides

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ns

(oth

er th

an fu

rski

ns)

and

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her

09

2.40

%4

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425

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6

39P

last

ics

and

artic

les

ther

eof

627

92.

10%

459

50.

60%

-2-1

.52.

3

22B

ever

ages

, spi

rits

and

vine

gar

018

0%3

535.

60%

35.

681

.5

25


ent

The following table is suggestive with regards to Sri Lanka’s importance to Pakistan as a destination for its exports. Items such as pharmaceutical products (10%), articles of iron and steel (8%) and knitted or crotched fabric (16%) are among the few Pakistani export categories that rely significantly on Sri Lankan demand. The table shows that several major exports to Sri Lanka have actually shrunk in their importance as sources of export revenue for Pakistan during 2004-2013, one example being edible vegetables which fell from 12% of Pakistan’s total exports of the item to 7%. Several top Pakistani exports to Sri Lanka account for less than 1% of those items’ total exports by Pakistan, such as raw hides and plastics.

Table 11. Sri Lanka’s share in world exports of Pakistani items Figures in USD Millions

SRI LANKA’S SHARE OF PAKISTAN’S EXPORTS

HS Code Product LabelExports to Sri Lanka

2004

Exports to world

2004

% Share of total world

exports

Exports to Sri Lanka 2013

Exports to world

2013

% Share of total world

exports

Change in % share

52 Cotton 60 2,979 2% 102 5,334 1.90% -0.1

25Salt, sulphur, earth, stone, plaster, lime and cement

0 44 0.10% 45 723 6.30% 6.2

10 Cereals 21 683 3.10% 38 2,181 1.70% -1.4

17 Sugars and sugar confectionery 2 107 1.80% 35 634 5.50% 3.6


5 40 12.10% 18 249 7.10% -5

30 Pharmaceutical products 5 57 9.40% 17 169 10.30% 0.9

73 Articles of iron or steel 4 55 7.80% 15 180 8.10% 0.3

60 Knitted or crocheted fabric 2 179 1% 5 33 16.10% 15.1

03Fish, crustaceans, molluscs,aquaticinvertebrates nes

6 114 4.90% 5 333 1.40% -3.5

11Milling products, malt, starches, inulin, wheat gluten

0 53 0% 4 227 1.80% 1.8

41Raw hides and skins (other than furskins) and leather

0 286 0.10% 4 530 0.80% 0.7

39 Plastics and articles thereof 6 165 3.50% 4 450 0.80% -2.7

22 Beverages, spirits and vinegar 0 29 0% 3 364 0.80% 0.8

08 Edible fruit, nuts, peel of citrus fruit, melons 2 107 1.60% 3 434 0.60% -1

09 Coffee, tea, mate and spices 1 16 5.90% 2 77 3.10% -2.8

63Other made textile articles, sets, worn clothing etc

6 2,353 0.20% 2 3,685 0.10% -0.2


2 1,665 0.10% 2 2,105 0.10% 0

87 Vehicles other than railway, tramway 1 37 2.80% 2 74 2.50% -0.3

55 Manmade staple fibres 1 111 0.70% 2 418 0.40% -0.3

85 Electrical, electronic equipment 1 66 1.20% 1 115 0.80% -0.4

26


ent

5.5 OVERVIEW OF PAKISTAN’S IMPORTS FROM THE WORLD AND FROM SRI LANKA

Major Pakistani imports from the world that registered significant percentage increases include mineral fuels (45%), animal and vegetable fats (34%), and printed books and newspapers (95%).Itemswhoseimportsfellduringthisperiodincludeelectronicequipment(-29%),vehiclesotherthanrailways(-15%)andtramwaysandfertilizers(-23%).

Table 12. Pakistan’s imports from the world 2007-2013 Figures in USD Millions

PAKISTAN’S IMPORTS FROM THE WORLD

HS Code Product labelImported value in

2007

Imported value in

2008

Imported value in

2009

Imported value in

2010

Imported value in

2011

Imported value in

2012

Imported value in

2013

% change in

Imports

27Mineral fuels, oils, distillation products, etc

8,350 14,054 8,838 11,399 14,860 15,947 15,247 45.2

84 Machinery, nuclear reactors, boilers, etc 3,262 3,924 3,120 2,953 2,951 3,060 3,058 -6.7

85 Electrical, electronic equipment 3,448 3,782 2,619 2,442 2,430 2,752 2,682 -28.6

29 Organic chemicals 1,570 1,761 1,518 1,721 2,213 2,038 2,016 22.1

15Animal,vegetable fats and oils, cleavage products, etc

1,301 1,880 1,412 1,852 2,589 2,313 1,980 34.3

72 Iron and steel 1,543 1,629 1,683 1,695 1,680 1,848 1,841 16.2

39 Plastics and articles thereof 1,281 1,360 1,185 1,458 1,679 1,501 1,570 18.4

87 Vehicles other than railway, tramway 1,419 1,184 969 1,308 1,502 1,596 1,238 -14.6

52 Cotton 918 1,209 498 831 909 684 1,047 12.3

89Ships, boats and other floating structures

573 183 399 839 527 544 981 41.6

49Printed books, newspapers, pictures etc

42 78 44 46 33 137 858 95.1

30 Pharmaceutical products 374 433 539 498 534 598 675 44.6

31 Fertilizers 748 729 805 648 1,028 908 606 -23.4

38 Miscellaneous chemical products 393 450 503 555 588 549 583 32.7

55 Manmade staple fibres 280 339 345 505 681 539 532 47.3

54 Manmade filaments 339 315 344 516 703 530 527 35.7


288 305 430 507 562 595 500 42.3

73 Articles of iron or steel 388 622 480 425 387 409 486 20.2

12Oil seed, oleagic fruits, grain, seed, fruit, etc, nes

501 380 459 628 691 616 479 -4.7

40 Rubber and articles thereof 342 365 292 413 536 464 460 25.7

A cursory glance at the table below suggests that Sri Lanka is not a major origin of imports for Pakistan, with the exception of vegetable plaiting materials whose Sri Lankan imports account for 69% of all Pakistani imports of the product. This is also the only HS code that has registered any significant growth in its share of Pakistani imports since 2004, growing its share from 31% to 69%. Several top Sri Lankan imports account for less than 1% of total Pakistani imports of those products, including edible vegetables and manmade filaments.

27


ent

Table 13. Sri Lanka’s share in Pakistan’s total world imports Figures in USD Millions

SRI LANKA’S SHARE OF PAKISTAN’S IMPORTS

HS Code Product Label

Pak Imports from SL

2004

Pak Imports

from world 2004

% Share in Pakistani Imports

Pak Imports from SL

2013

Pak Imports

from world 2013

% Share in Pakistan’s

imports

Change in % share

14Vegetable plaiting materials, vegetable products nes

4 12 31% 17 25 69.20% 38.2

40 Rubber and articles thereof 13 218 5.80% 11 460 2.50% -3.3

44 Wood and articles of wood, wood charcoal 3 54 4.80% 9 110 7.90% 3.1

09 Coffee, tea, mate and spices 7 251 2.60% 7 385 1.80% -0.8

8 Edible fruit, nuts, peel of citrus fruit, melons 4 50 7.40% 6 133 4.30% -3.1


0 106 0% 4 500 0.80% 0.8

54 Manmade filaments 0 156 0.10% 2 527 0.30% 0.2

12Oil seed, oleagic fruits, grain, seed, fruit, etc, nes

11 269 4% 1 479 0.30% -3.7

53Vegetable textile fibres nes, paper yarn, woven fabric

1 32 1.70% 1 51 1.80% 0.1

47Pulp of wood, fibrous cellulosic material, waste etc

0 46 0% 1 107 0.50% 0.5

48

Paper and paperboard, articles of pulp, paper and board

0 225 0.10% 1 441 0.10% 0

62Articles of apparel, accessories, not knit or crochet

0 5 0.60% 1 22 2.40% 1.8

87 Vehicles other than railway, tramway 0 769 0% 0 1,238 0% 0

39 Plastics and articles thereof 1 714 0.10% 0 1,570 0% -0.1

38 Miscellaneous chemical products 0 340 0.10% 0 583 0.10% 0

15Animal,vegetable fats and oils, cleavage products, etc

0 798 0.10% 0 1,980 0% -0.1


0 5 0.80% 0 25 1.20% 0.4

76 Aluminium and articles thereof 0 139 0.10% 0 195 0.10% 0

69 Ceramic products 0 62 0% 0 101 0.20% 0.2

55 Manmade staple fibres 0 149 0.20% 0 532 0% -0.2


ent

Section 2 Analysis of

Pakistan’s Exports to Sri Lanka under

FTA

29


ent

6.0 PRELIMINARY ANALYSIS OF PAKISTANI EXPORTS TO SRI LANKA UNDER FTA

At the 2-digit HS code level 16 of the top 20 items registered net growth over the 2004-2013 period. The major growth items were cotton, which showed an increase of over USD 41 million, and HS 25 (salt, sulphur etc.), which showed an increase of over USD 45 million, albeit from a very low initial level of exports. Other major Pakistani exports to Sri Lanka include cereals and sugar products. Four 2-digit HS code items experienced a net reduction in exports, with the steepest reduction hitting HS 63 (other made textiles), which fell by over 3 million dollars.

Table 14. Pakistan’s major exports to Sri Lanka Figures in USD Millions

PAKISTAN'S EXPORTS TO SRI LANKA

HS Code Product label Value in 2004

Value in 2013 Growth

Equivalent ad valorem tariff applied

by Sri Lanka to Pakistan

52 Cotton 60 102 42 0

25 Salt, sulphur, earth, stone, plaster, lime and cement 0 45 45 0.6

10 Cereals 21 38 16 6.9

17 Sugars and sugar confectionery 2 35 33 12.3

07 Edible vegetables and certain roots and tubers 5 18 13 14.9

30 Pharmaceutical products 5 17 12 0.2

73 Articles of iron or steel 4 15 10 2.3

60 Knitted or crocheted fabric 2 5 3 0

03 Fish,crustaceans,molluscs,aquaticinvertebrates nes 6 5 -1 4.5

11 Milling products, malt, starches, inulin, wheat gluten 0 4 4 0.6

41 Raw hides and skins (other than furskins) and leather 0 4 4 0.6

39 Plastics and articles thereof 6 4 -2 2.3

22 Beverages, spirits and vinegar 0 3 3 81.5

08 Edible fruit, nuts, peel of citrus fruit, melons 2 3 1 8.8

09 Coffee, tea, mate and spices 1 2 1 1.6

63 Other made textile articles, sets, worn clothing etc 6 2 -4 0

61 Articles of apparel, accessories, knit or crochet 2 2 0 0

87 Vehicles other than railway, tramway 1 2 1 15.8

55 Manmade staple fibres 1 2 1 0

85 Electrical,electronicequipment 1 1 0 2.7

An analysis at the 6 digit HS code level further highlights the worrying state of Pakistan-Sri Lanka trade relations over the past decade. Out of a total of 3502 items at full concession for exports from Pakistan, a mere 308 (8.8%) items showed net growth in the 2004-2013 period. 2952 (84.3%) full concession items exhibited no growth during this period, and the remaining 242 (6.9%)items showed a fall in exports. Furthermore, 3121 (89%) items at full concession showed0exportsin2013,and2934(83.7%)itemsalsoshowedzeroexportsin2004.Thissuggests that little diversification of exports has been achieved during the FTA period.

Full concession items accounted for around USD 94 million of exports to Sri Lanka in 2004 and for around USD 214 million in 2013, showing a growth by 129%. However, the extent to

30


ent

whichthetermsoftheFTAcontributedtothisgrowthrequiresfurtheranalysis.

Out of a total of 568 items at no concession (including the items granted partial concessions in the form of TRQs) for which data was available, only 53 (9.3%) items showed net growth. 469 (82.3%) items registered no growth whereas the remaining 46 (8.1%) items fell in exports. 501 (88%)of these items reportedno exports in 2013, and 471(83%)items reported zeroexports in 2004.

Non-concession items accounted for around USD 34 million of exports to Sri Lanka in 2004 and around USD 70 million in 2013, indicating a growth of 51%. Tariff information was not available for 74 items at the 6-digit code HS level. These items accounted for about USD 6 million of total exports to Sri Lanka in 2013.

Table 15. Pakistani export items with positive, negative or zero growth in exports to Sri Lanka

Positive Growth Items

Negative Growth Items

Zero Growth Items

Full Concession Items 8.8% 6.9% 84.3%

No Concession Items 9.3% 8.1% 82.3%

Fig.8 Pakistani export items to Sri Lanka categorized by positive, negative and zero growthFig.8 Pakistani export items to Sri Lanka categorized by positive, negative and zero growth

0

500

1000

1500

2000

2500

3000

3500

Full Concession Items No Concession Items

Pakistani Export Items to Sri Lanka by Growth



No Growth Items

Num

ber

of

Exp

ort

Item

s

31


ent

6.1 COMPARISON OF PAKISTAN & INDIA’S TRADE WITH SRI LANKA

India has emerged as Sri Lanka’s major source of imports and has outperformed Pakistan despite the fact that both countries have signed FTAs with Sri Lanka. A finer-grained comparison of India and Pakistan’s exports to Sri Lanka is necessary to better understand the challenges Pakistan faces with regards to its trade relationship with Sri Lanka.

The total list of Pakistani exports with available data at the 6 digit code comes out to 4070 items.TotalexportstoSriLankafortheseitemsreportedbyPakistanequalaroundUSD292million (this is different from the total reported exports due to missing data for some exports). India’s total exports for these same items amount to around USD 4.7 billion.

India outperforms Pakistan in exports to Sri Lanka in 2834 items on this list of 4070 items, whereas Pakistan outperforms India in a mere 134 items.

Fig 9. Comparison of the levels of Pakistan and India’s exports to Sri Lanka

India has a tariff advantage over Pakistan in 21 of the items with available data. India’s export value for these 21 items exceeds Pakistan’s export value for them by around USD 32 million, which is a mere 0.7% of the total export value differential India has over Pakistan. This suggests that India’s superior performance with regards to Sri Lanka is likely not primarily a result of its tariff advantages over Pakistan.

The 308 items on which Pakistan has a tariff advantage on India also report higher total Indian exports to Sri Lanka by an amount of USD 230 million. This reasserts the fact that differences in tariffs are not the primary factor in India’s relatively stronger trade relation with Sri Lanka, since even in cases where Pakistan enjoys higher concessions from Sri Lanka India is able to outperform it.

Items with higher Indian exports

70%

Items with higher Pakistani exports

3%

Items with equal exports

27%

Pakistan and India Exports to Sri Lanka at 6 digit HS code

32


ent

Fig.9 Items that India exports larger quantities of to Sri Lanka categorised by the tariffs they face

Export Adv on Items with higher tariffs on Pakistan

5%

Export Adv onItems with lowertariffs on Pakistan

1%

Export Adv on Items with equal tariffs on both

94%

India Export Advantage by Tariff Differential

Fig.9 Items that India exports larger quantities of to Sri Lanka categorised by the tariffs they face

33


ent

7.0 ANALYSIS OF PAKISTAN’S EXPORTS TO SRI LANKA

We will now attempt to pinpoint those Pakistani export items to Sri Lanka at the 6 digit HS codelevelthatrequirethemostattentionandhavethehighestpotentialtobeturnedaroundbecause of certain favourable metrics associated with them.

Wewillconsider itemswith tradepotentialhigher thanorequal to1milliondollars.Tradepotential is given by:

Trade Potential therefore gives us a rough picture of the extent to which trade can theoretically be increased for any given item. For example, if Pakistan exports USD 490 million worth of sugar to the world, and Sri Lanka imports USD 260 million worth of sugar from the world, and Pakistan sells USD 30 million worth of sugar to Sri Lanka, Pakistan’s trade potential in this case is (USD 260 million-USD 30 million) USD 230 million.

TofurtherhelpzeroinonhighpotentialitemswewilltakeintoconsiderationtheCompoundAnnual Growth Rates (CAGR) for Pakistan’s exports to Sri Lanka, Sri Lanka’s imports from the world and Pakistan’s exports to the world. The CAGR is the geometric mean of the individual annual growth rates during a period. It gives you the growth rate that would have gotten your initial value to your final value had the value grown smoothly over the relevant period.

If the CAGR for Sri Lanka’s imports of a product X from the world is high, and the CAGR of Pakistan’s exports to the world of product X is similarly high, but the CAGR for Pakistan’s exports of product X to Sri Lanka is relatively low or negative, there is reason to think that somebarrieruniquetoPak-SriLankatraderelationsisimpedingexportsofproductXtoSriLanka. This information coupled with the trade potential for product X can give us a good idea ofwhichitemsrequireurgentattentionduetotheircurrentlywastedpotential.Theexportsof these items to Sri Lanka may be boosted by removing a non-tariff barrier such as a lack of awareness among exporters or prohibitively complex regulations that stand in the way of allowingPakistantocapitalizeontheafore-mentionedpositivetrendsvis-à-visSriLanka.TheCAGR values can also be used to pinpoint those products that are already performing well as Pakistani exports to Sri Lanka.

WecanzeroinevenfurtheronhighpotentialitemsifweconsiderSriLanka’stariffratesonIndia, Sri Lanka’s other South Asian FTA partner, in conjunction with the afore-mentioned metrics. So products that exhibit high trade potential, high-potential CAGR values and a Pakistani tariff advantage over India are particularly deserving of attention. Such items have been compiled into a table later in the report.

Thelistofhighpotentialitemsisorganizedbytradepotentialindescendingorderwithhighpotential CAGR value items highlighted in blue. The total trade potential for items with trade potential exceeding USD 1 million is USD 1.728 billion. Out of a total of these 275 items, 123 or about 45% show high potential CAGR values. These items show a collective trade potential of USD 548 million and so 30% of total trade potential of all items under consideration is concentrated in high CAGR items. In other words, this potential of USD 545 million lies in items that are growing as Pakistani exports to the world and as Sri Lankan imports from the world.

34


ent

This overview suggests that there is a wealth of items that have experienced favourable trends in their supply and demand by Pakistan and Sri Lanka respectively, and yet these trends have conspicuously failed to encompass the trade relationship between the two countries. 21 of the 275 items have a tariff advantage on India, whereas 242 items show no difference in tariffs imposed on India and Pakistan by Sri Lanka.

Only selected items from the total list of 275 are listed in the following tables.

Note: All CAGR values are calculated for the period 2004-2013. CAGR values have only been calculated if there are at least 3 consecutive years of recorded exports and at least one year of recorded exports within the period 2010-2013. This is so that the numbers used are recent and consistent enough to be suggestive of future trends. “_” indicates that these requirementsarenotmet,or in thecaseofnon-CAGRvalues,unavailabilityofdata. “_*”indicates that while export numbers were reported in 2013, the years before did not meet therequirements.Asaresult thisgenerally indicatesveryspottyand/or lowgrowthinthatparticular item and therefore the item should be considered to have not performed well in termsofexportstothecountryunderconsideration.Avalueprecededby“*”indicatesthatwhile there were no recorded exports in 2013, the previous years’ numbers met the afore-mentionedrequirementsforcalculatingaCAGR.ItshouldbenotedthatCAGRvaluesfurnisha suggestive but imprecise picture of growth trends, since very volatile growth cannot be represented accurately using measures such as CAGR or AAGR (Annual Average Growth Rate).

35


ent

7.1 TRADEPOTENTIAL≥USD10MILLION

38% of all items with trade potential exceeding USD 10 million exhibit encouraging CAGR values. Total trade potential in this bracket is USD 978 million, a very high value owing to the lack of several major Pakistani exports to Sri Lanka for which Sri Lanka has significant demand. Items with trade potential values exceeding USD 10 million and high potential CAGR values include HS 730890 (structures and parts of structures), HS 901890 (instruments used in medical sciences), and HS 870190 (wheeled tractors).

Tab

le 1

6. P

akis

tani

exp

ort

item

s to

Sri

Lan

ka w

ith h

igh

CA

GR

item

s h

igh

ligh

ted

Fig

ures

in U

SD

Mill

ions

TRADEPOTENTIAL≥USD10MILLION

HS

Co

de

Pro

duc

t La

bel

Pak

201

3 E

xpo

rt t

o

SL

SL

2013

W

orl

d

Imp

ort

Pak

201

3 W

orl

d

Exp

ort

Trad

e P

ote

ntia

lTa

riff

on

Pak

Pak

-SL

CA

GR

SL

Imp

ort

C

AG

RP

ak E

xpo

rt

CA

GR

Tari

ff o

n In

dia

2523

29P

ortla

nd c

emen

t nes

44.4

431

2.28

506.

6626

7.84

043

.50%

27.8

0%37

.60%

0

1701

99R

efin

ed s

ugar

, in

solid

form

, ne

s34

.39

257.

2448

7.78

222.

857.

5_

9.50

%48

.00%

14.9

3004

90M

edic

amen

ts n

es, i

n do

sage

9.41

73.4

827

9.61

64.0

70

12.4

0%14

.20%

9.10

%0

7308

90S

truc

ture

s&pa

rts

of

structures,i/s(exprefabbldgs

of h

eadg

no.

9406

)0.

0046

.56

50.1

146

.56

00.

00%

9.20

%27

.60%

1.3

8517

12Te

leph

ones

for

cellu

lar

netw

orks

mob

ile te

leph

ones

or

for

othe

r w

irele

0.00

44.3

810

6.25

44.3

80

0.00

%7.

10%

-1.2

0%0

9018

90In

stru

men

ts a

nd a

pplia

nces

us

ed in

med

ical

or

vete

rinar

y sc

ienc

es, n

es0.

2334

.90

296.

8134

.66

01.

30%

5.60

%7.

90%

0

5208

39W

oven

fabr

ics

of

cotton,>/=85%,notmore

than200g/m2,dyed,nes

3.40

46.2

638

.00

34.6

00

8.70

%21

.20%

6.70

%0

8701

90W

heel

ed tr

acto

rs n

es0.

7628

.37

33.9

527

.61

02.

90%

7.20

%17

.90%

0

8414

51Fa

ns: t

able

,roo

f etc

w a

sel

f-co

nt e

lec

mtr

of a

n ou

tput

nt

excd

g 12

5W0.

0817

.98

36.1

617

.89

025

.20%

13.6

0%12

.50%

0

2106

90Fo

od p

repa

ratio

ns n

es0.

0128

.56

17.4

717

.46

13.5

-17.

30%

12.2

0%7.

00%

13.4

6203

42Mens/boystrousersand

shor

ts, o

f cot

ton,

not

kni

tted

0.03

16.0

465

3.12

16.0

10

9.30

%21

.60%

8.30

%0

5209

42D

enim

fabr

ics

of

cotton,>/=85%,morethan

200g/m2

23.4

638

.80

495.

9415

.34

073

.80%

3.10

%28

.10%

0

8507

10Le

ad-a

cid

elec

tric

ac

cum

ulat

ors

of a

kin

d us

d f

star

tg p

isto

n en

gine

s0.

0015

.32

20.3

215

.32

300.

00%

14.4

0%51

.30%

30

5209

39W

oven

fabr

ics

of


200g/m2,dyed,nes

1.25

127.

0416

.48

15.2

30

63.4

0%0.

90%

41.0

0%0

36


ent


HS

Co

de

Pro

duc

t La

bel

Pak

201

3 E

xpo

rt t

o

SL

SL

2013

W

orl

d

Imp

ort

Pak

201

3 W

orl

d

Exp

ort

Trad

e P

ote

ntia

lTa

riff

on

Pak

Pak

-SL

CA

GR

SL

Imp

ort

C

AG

RP

ak E

xpo

rt

CA

GR

Tari

ff o

n In

dia

5208

59W

oven

fabr

ics

of

cotton,>/=85%,notmore

than200g/m2,printed,nes

0.24

38.9

314

.54

14.3

00

-14.

60%

25.7

0%-1

5.80

%0

5211

42D

enim

fabr

ics

of c

otto

n,

<85%mixedwithm-mfib,

morethan200g/m2

1.61

15.7

551

.54

14.1

40

20.3

0%23

.10%

5.00

%0

2401

10To

bacc

o, u

nman

ufac

ture

d,

not s

tem

med

or

strip

ped

0.00

56.2

013

.11

13.1

175

0.00

%5.

10%

41.9

0%75

3903

19P

olys

tyre

ne n

es0.

1513

.20

53.6

813

.05

0-2

43.0

0%9.

30%

23.8

0%0

5205

11Cottonyarn,>/=85%,single

,uncombd,>/=714.29dtex,

nt p

ut u

p0.

5513

.56

155.

4513

.01

018

.20%

-8.9

0%6.

50%

0

37


ent

7.2 USD5MILLION≤TRADEPOTENTIAL<USD10MILLION

45% of all items in this category show high potential CAGR values. Total trade potential in this category is USD 341.9 million.

Tab

le 1

7. P

akis

tani

exp

ort

item

s to

Sri

Lan

ka w

ith h

igh

CA

GR

item

s h

igh

ligh

ted

Fig

ures

in U

SD

Mill

ions

USD5MILLION≤TRADEPOTENTIAL<USD10MILLION

HS

Co

de

Pro

duc

t La

bel

Pak

201

3 E

xpo

rt t

o

SL

SL

2013

W

orl

d

Imp

ort

s

Pak

201

3 W

orl

d

Exp

ort

s

Trad

e P

ote

ntia

lTa

riff

on

Pak

Pak

-SL

CA

GR

SL

Imp

ort

C

AG

RP

ak E

xpo

rt

CA

GR

Tari

ff o

n In

dia

2301

20Fl

our,m

eal&

pelle

t of

fish,crust,mol/othaqua

inve

rt,u

nfit

hum

an c

ons

0.11

9.75

16.9

89.

640

-9.7

0%5.

40%

161.

20%

0

3208

90P

aint

s &

varn

i bas

ed o

n po

lym

ers

diss

olv

in a

non

-aqueoussolvnes

0.00

12.1

99.

439.

4320

0.00

%15

.20%

73.3

0%20

5209

29W

oven

fabr

ics

of


200g/m2,bleached,nes

1.59

20.6

210

.71

9.12

013

.20%

1.30

%0.

40%

0

2515

12M

arbl

e &

trav

ertin

e,m

erel

y cu

t,by

saw

ing

or o

ther

wis

e in

to b

lock

s et

c0.

009.

0650

.26

9.06

00.

00%

11.1

0%32

.70%

0

2309

90A

nim

al fe

ed p

repa

ratio

ns n

es0.

0422

.71

8.80

8.76

0_*

15.9

0%58

.70%

0

6203

49Mens/boystrousersand

shor

ts, o

f oth

er te

xtile

m

ater

ials

, not

kni

tted

0.04

8.66

115.

338.

620

22.3

0%17

.50%

50.5

0%0

0904

20

Frui

ts o

f the

gen

us C

apsi

cum

or

of t

he g

enus

Pim

enta

: D

ried,

nei

ther

cru

shed

nor

gr

ound

0.00

49.0

96.

368.

610

0.00

%0.

00%

2.50

%0

6405

90Fo

otw

ear,

nes

0.00

10.4

18.

598.

597.

20.

00%

21.4

0%-1

.90%

7.2

3004

20A

ntib

iotic

s ne

s, in

dos

age

0.78

9.21

13.1

68.

430

12.5

0%16

.50%

28.9

0%0

7113

19A

rtic

les

of je

wel

lery

&pt

ther

of

of/oprecmetw/nplatd/clad

w p

rec

met

0.13

8.18

400.

808.

050

_25

.30%

36.5

0%0

7113

19A

rtic

les

of je

wel

lery

&pt

ther

of

of/oprecmetw/nplatd/clad

w p

rec

met

0.13

8.18

400.

808.

050

69.7

0%25

.30%

36.5

0%0

5209

59W

oven

fabr

ics

of


200g/m2,printed,nes

0.37

9.66

8.23

7.86

028

.70%

-8.2

0%42

.20%

0

1516

20Ve

g fa

ts &

oils

&fra

ctio

ns

hydrogenatd,inter/re-

esterifid,etc,refd/not

0.00

7.73

150.

557.

730

0.00

%5.

20%

12.6

0%37

.8

38


ent


HS

Co

de

Pro

duc

t La

bel

Pak

201

3 E

xpo

rt t

o

SL

SL

2013

W

orl

d

Imp

ort

s

Pak

201

3 W

orl

d

Exp

ort

s

Trad

e P

ote

ntia

lTa

riff

on

Pak

Pak

-SL

CA

GR

SL

Imp

ort

C

AG

RP

ak E

xpo

rt

CA

GR

Tari

ff o

n In

dia

7005

29Fl

oat g

lass

etc

in s

heet

s, n

on-

wire

d ne

s0.

2910

.98

7.98

7.69

038

.60%

13.6

0%48

.90%

0

0402

21M

ilk a

nd c

ream

pow

der

unsw

eete

ned

exce

edin

g 1.

5% fa

t0.

0024

6.77

7.65

7.65

300.

00%

13.1

0%35

.30%

30

5807

10La

bels

, bad

ges

and

sim

ilar

wov

en a

rtic

les

of te

xtile

m

ater

ials

0.19

12.6

37.

677.

480

53.4

0%-4

.60%

11.1

0%0

7210

49Flatrolledprod,i/nas,platedor

coatedwithzinc,>/=600mm

wid

e, n

es0.

0217

.85

7.44

7.42

15_*

7.00

%62

.50%

15

3923

21S

acks

and

bag

s (in

clud

ing

cone

s) o

f pol

ymer

s of

et

hyle

ne0.

007.

1918

.40

7.19

21.7

-25.

00%

3.40

%39

.90%

21.7

3923

21S

acks

and

bag

s (in

clud

ing

cone

s) o

f pol

ymer

s of

et

hyle

ne0.

007.

1918

.40

7.19

21.7

0.00

%3.

40%

39.9

0%21

.7

3926

90A

rtic

les

of p

last

ics

or o

f oth

er

mat

eria

ls o

f Nos

39.

01 to

39

.14

nes

0.00

31.8

87.

187.

180

-42.

30%

5.70

%-7

.20%

0

39


ent


46% of all items in this category have high potential CAGR values. The total trade potential for this bracket is USD 462.7 million.

Tab

le 1

7. P

akis

tani

exp

ort

item

s to

Sri

Lan

ka w

ith h

igh

CA

GR

item

s h

igh

ligh

ted

Fig

ures

in U

SD

Mill

ions


HS

Co

de

Pro

duc

t La

bel

Pak

201

3 E

xpo

rt t

o

SL

SL

2013

W

orl

d

Imp

ort

Pak

201

3 W

orl

d

Exp

ort

Trad

e P

ote

ntia

lTa

riff

on

Pak

Pak

-SL

CA

GR

SL

Imp

ort

C

AG

RP

ak E

xpo

rt

CA

GR

Tari

ff o

n In

dia

1108

12Maize(corn)starch

0.00

4.68

12.1

54.

680

*80.58%

17.5

0%27

.60%

0

8705

90S

peci

al p

urpo

se m

otor

ve

hicl

es n

es0.

007.

084.

604.

60_

0.00

%19

.70%

23.9

0%_

1701

13R

aw c

ane

suga

r, (s

ee

subh

eadi

ng n

ote

2.)

0.00

14.4

24.

594.

590

0.00

%_

_0

4411

14M

ediu

m d

ensi

ty fi

breb

oard

M

DF

of w

ood,

of a

thic

knes

s >

9 m

m0.

005.

954.

564.

560

0.00

%17

.10%

53.0

0%0

4811

59P

aper

and

pap

erbo

ard,

su

rface

-col

oure

d, s

urfa

ce-

deco

rate

d or

prin

ted,

0.00

4.48

38.5

54.

4822

.50.

00%

28.1

0%80

.20%

22.5

8502

39E

lect

ric g

ener

atin

g se

ts0.

0011

.81

4.48

4.48

00.

00%

23.1

0%2.

90%

0

8212

10Razorsincludingsafetyrazors

and

open

bla

de ty

pe0.

004.

437.

074.

4318

.10.

00%

8.70

%21

.10%

28.1

1404

90Ve

geta

ble

prod

ucts

nes

0.01

7.12

4.36

4.35

020

.10%

9.50

%53

.20%

0

7326

90A

rtic

les,

iron

or

stee

l, ne

s0.

0028

.04

4.35

4.35

0-7

.40%

16.1

0%17

.00%

0

5513

21P

lain

wea

ve p

olye

ster

staplefibfab,<85%,mixdw/

cotton,<=170g/m2,dyd

0.07

4.39

54.5

84.

320

25.9

0%-1

.90%

29.6

0%0

3809

91Fi

nish

g ag

ents

,dye

ca

rrie

rs&

oth

prep

,nes

,for

use

in th

e te

xtile

indu

st0.

0022

.90

4.28

4.28

0*-2.75%

11.5

0%12

.40%

0

8501

40A

C m

otor

s, s

ingl

e-ph

ase,

nes

0.00

4.26

4.44

4.26

00.

00%

13.0

0%73

.00%

0

8544

49E

lect

ric c

ondu

ctor

s, fo

r a

volta

ge n

ot e

xcee

ding

80

V,

nes

0.03

26.5

04.

254.

220

62.6

0%19

.10%

37.9

0%0

5509

53Ya

rn o

f pol

yest

er s

tapl

e fib

res

mix

ed w

ith c

otto

n, n

ot p

ut

up, n

es0.

004.

2018

.17

4.20

0*25.74%

18.8

0%14

.00%

0

3904

10P

olyv

inyl

chl

orid

e, n

ot m

ixed

w

ith a

ny o

ther

sub

stan

ces

0.00

36.1

54.

144.

140

*-12.85%

2.20

%-1

2.90

%0

40


ent


HS

Co

de

Pro

duc

t La

bel

Pak

201

3 E

xpo

rt t

o

SL

SL

2013

W

orl

d

Imp

ort

Pak

201

3 W

orl

d

Exp

ort

Trad

e P

ote

ntia

lTa

riff

on

Pak

Pak

-SL

CA

GR

SL

Imp

ort

C

AG

RP

ak E

xpo

rt

CA

GR

Tari

ff o

n In

dia

3503

00G

elat

in a

nd g

elat

in d

eriv

s;

isin

glas

s; g

lues

of a

nim

al

orig

in, n

es0.

004.

106.

344.

100

0.00

%13

.70%

10.0

0%0

6109

90T-

shirt

s,si

ngle

ts a

nd o

ther

ve

sts,

of o

ther

text

ile

mat

eria

ls,k

nitte

d0.

004.

0764

.86

4.07

00.

00%

4.20

%39

.00%

0

7801

10Le

ad r

efin

ed u

nwro

ught

0.00

9.54

4.00

4.00

300.

00%

6.70

%61

.70%

30

9403

60Fu

rnitu

re, w

oode

n, n

es0.

013.

974.

143.

970

-15.

00%

11.4

0%-6

.70%

0

9026

80In

stru

men

ts&

appa

ratu

s fo

r m

easu

rg o

che

ck v

aria

bles

of

liqogases,nes

0.00

3.86

13.0

03.

860

0.00

%19

.40%

56.6

0%0

41


ent

7.4 HIGH TRADE POTENTIAL AND FAVOURABLE CAGR ITEMS WITH TARIFF ADVANTAGE OVER INDIA

The following table lists all 6 digit HS code items with trade potential exceeding USD 1 million and high potential CAGR metrics that receive greater tariff concessions from Sri Lanka than does India. The total trade potential of these items is around USD 79 million. These items deserve attention since Pakistan has the ability to supply them, Sri Lanka has a healthy market for them, and Pakistan receives greater tariff concessions on them than does India.

Tab

le 1

8. P

akis

tani

exp

ort

item

s to

Sri

Lan

ka w

ith h

igh

po

tent

ial a

nd t

ariff

ad

v. o

ver

Ind

ia

F

igur

es in

US

D M

illio

ns

HIG

H P

OTE

NTI

AL

ITE

MS

WIT

H T

AR

IFF

AD

V. O

VE

R IN

DIA

HS

Co

de

Pro

duc

t La

bel

Pak

201

3 E

xpo

rt t

o

SL

SL

2013

W

orl

d

Imp

o-r

ts

Pak

201

3 W

orl

d

Exp

ort

s

Trad

e P

ote

ntia

lTa

riff

on

Pak

Pak

-SL

CA

GR

SL

Imp

ort

C

AG

R

Pak

E

xpo

rtC

AG

R

Tari

ff o

n In

dia

Pak

Tar

iff

Ad

v.

3305

90H

air

prep

arat

ions

, nes

0.00

3.73

1.98

1.98

0-1

8.40

%12

.40%

9.00

%30

30

5210

21

Pla

in w

eave

cot

ton

fab,<85%mixdwm-m

fib,n

ot m

ore

than

200

g/m2,bl

0.32

1.51

145.

151.

190

-8.3

0%28

.90%

1.00

%30

30

6006

42

Dye

d fa

bric

s, k

nitte

d or

cro

chet

ed, o

f ar

tific

ial f

ibre

s, o

f a

wid

th o

0.08

37.9

61.

401.

320

-50.

20%

17.6

0%48

.20%

3030

7615

10

Tabl

e, k

itche

n or

oth

er

hous

ehol

d ar

ticle

s an

d pa

rts

ther

eof,

and

pot

scou

rers

and

sco

urin

0.00

1.40

28.3

71.

400

0.00

%12

.70%

167.

00%

3030

8041

0D

ates

, fre

sh o

r dr

ied

0.04

2.45

85.7

22.

416

3.80

%7.

70%

13.3

0%27

21

6206

90

Womens/girlsblouses

and

shirt

s,of

oth

er

text

ile m

ater

ials

,not

kn

itted

0.00

2.64

3.58

2.64

00.

00%

9.50

%25

.10%

1212

4819

10C

arto

ns, b

oxes

and

ca

ses,

of c

orru

gate

d pa

per

or p

aper

boar

d0.

004.

112.

122.

120

0.00

%9.

80%

31.0

0%10

.810

.8

8212

10Razorsincluding

safetyrazorsandopen

blad

e ty

pe0.

004.

437.

074.

4318

.10.

00%

8.70

%21

.10%

28.1

10

6108

29

Womens/girlsbriefs

and

pant

ies,

of o

ther

te

xtile

mat

eria

ls,

knitt

ed

0.00

2.11

1.62

1.62

00.

00%

26.9

0%94

.90%

7.5

7.5

1901

10

Pre

p of

cereals,flour,starch/

milk

f in

fant

use

,put

up

f ret

ail s

ale

0.00

11.2

45.

365.

360

0.00

%12

.30%

55.1

0%5

5

7308

90

Str

uctu

res&

part

s ofstructures,i/s(ex

pref

ab b

ldgs

of h

eadg

no

.940

6)

0.00

46.5

650

.11

46.5

60

0.00

%9.

20%

27.6

0%1.

31.

3

42


ent

Tab

le 1

9. H

igh

po

tent

ial P

akis

tani

exp

ort

item

s to

Sri

Lan

ka f

acin

g t

ariff

s

F

igur

es in

US

D M

illio

ns

HIG

H T

RA

DE

PO

TEN

TIA

L A

ND

CA

GR

ITE

MS

FA

CIN

G T

AR

IFFS

HS

Co

de

Pro

duc

t La

bel

Pak

201

3 E

xpo

rt t

o

SL

SL

2013

Wo

rld

Im

po

rts

Pak

201

3 W

orl

d

Exp

ort

s

Trad

e P

ote

nti-

alTa

riff

on

Pak

Pak

-SL

CA

GR

SL

Imp

ort

s C

AG

R

Pak

E

xpo

rts

CA

GR

Tari

ff o

n In

dia

0402

21M

ilk a

nd c

ream

pow

der

unsw

eete

ned

exce

edin

g 1.

5% fa

t0.

0024

6.77

7.65

7.65

300.

00%

13.1

0%35

.30%

30

0713

10P

eas

drie

d, s

helle

d,

whe

ther

or

not s

kinn

ed o

r sp

lit0.

0018

.43

5.71

5.71

300.

00%

14.8

0%11

8.60

%30

0804

10D

ates

, fre

sh o

r dr

ied

0.04

2.45

85.7

22.

416

3.80

%7.

70%

13.3

0%27

0902

30

Bla

ck te

a (f

erm

ente

d)&

part

ly

ferm

entd

tea

in p

acka

ges

not e

xcee

dg 3

kg

0.00

1.40

3.07

1.40

300.

00%

39.0

0%27

.90%

30

1302

32M

ucila

ges

& th

icke

ners

de

rived

from

locu

st b

eans

&

see

ds o

r gu

ar s

eeds

0.06

2.59

119.

232.

5314

.2-1

.60%

42.6

0%82

.00%

14.2

2106

90Fo

od p

repa

ratio

ns n

es0.

0128

.56

17.4

717

.46

13.5

-17.

30%

12.2

0%7.

00%

13.4

2401

10To

bacc

o, u

nman

ufac

ture

d,

not s

tem

med

or

strip

ped

0.00

56.2

013

.11

13.1

175

0.00

%5.

10%

41.9

0%75

2815

11S

odiu

m h

ydro

xide

(ca

ustic

so

da)

solid

0.07

7.70

1.12

1.05

30-8

.30%

12.3

0%40

.60%

30

3204

17S

ynth

etic

org

anic

pig

men

ts

and

prep

arat

ions

bas

ed

ther

eon

0.00

9.82

1.85

1.85

300.

00%

9.30

%13

.40%

30

3208

90P

aint

s &

var

ni b

ased

on

poly

mer

s di

ssol

v in

a n

on

aqueoussolvnes

0.00

12.1

99.

439.

4320

0.00

%15

.20%

73.3

0%20

3402

90S

urfa

ce-a

ctiv

e pr

epar

atio

ns,

was

hing

and

cle

anin

g pr

epar

atio

ns, n

es0.

007.

901.

181.

1830

0.00

%8.

60%

47.3

0%30

3903

11P

olys

tyre

ne, e

xpan

sibl

e0.

003.

134.

823.

1330

0.00

%6.

30%

24.4

0%30

3917

40Fi

tting

s, p

last

ic0.

003.

681.

401.

4030

0.00

%14

.70%

97.9

0%30

3920

20Fi

lm a

nd s

heet

etc

, non

-ce

llula

r et

c, o

f pol

ymer

s of

pr

opyl

ene

0.69

21.9

87.

486.

8015

1.50

%12

.20%

19.1

0%15

7.5 HIGH TRADE POTENTIAL AND FAVOURABLE CAGR ITEMS THAT SHOULD RECEIVE TARIFF CONCESSIONS

The following table lists the 32 items with trade potential exceeding $1 million and favourable CAGR metrics that face tariffs from Sri Lanka. The collective trade potential of these items is around $700 million. Particular attention should be paid to HS 32 Tanning and dyeing extracts (2 items on list), HS 39 Plastics (4 items on list), HS 61 Articles of Apparel (2 items on list), HS 84 Machinery and Nuclear reactors (3 items on list) and HS 85 Electrical and electronic equipment(3itemsonlist).

43


ent

HIG

H T

RA

DE

PO

TEN

TIA

L A

ND

CA

GR

ITE

MS

FA

CIN

G T

AR

IFFS

HS

Co

de

Pro

duct

Lab

elP

ak 2

013

Exp

ort t

o S

L

SL

2013

Wor

ld

Impo

rts

Pak

201

3 W

orld

E

xpor

ts

Trad

e P

oten

ti-al

Tarif

f on

Pak

Pak

-SL

CA

GR

SL

Impo

rts

CA

GR

Pak

E

xpor

ts

CA

GR

Tari

ff o

n In

dia

3923

21S

acks

and

bag

s (in

clud

ing

cone

s) o

f pol

ymer

s of

et

hyle

ne0.

007.

1918

.40

7.19

21.7

-25.

00%

3.40

%39

.90%

21.7

4811

59P

aper

and

pap

erbo

ard,

su

rface

-col

oure

d, s

urfa

ce-

deco

rate

d or

prin

ted,

0.00

4.48

38.5

54.

4822

.50.

00%

28.1

0%80

.20%

22.5

6110

90P

ullo

vers

,car

diga

ns&

sim

ilar

artic

les

of o

th te

xtile

m

ater

ials

,kni

ttd0.

001.

1181

.24

1.11

8.8

_*37

.50%

37.3

0%8.

8

6116

99G

love

s, m

itten

s an

d m

itts,

nes

, of o

ther

text

ile

mat

eria

ls, k

nitte

d0.

103.

4215

.51

3.32

41.2

3.70

%5.

10%

19.4

0%41

.2

6405

90Fo

otw

ear,

nes

0.00

10.4

18.

598.

597.

20.

00%

21.4

0%-1

.90%

7.2

6910

90C

eram

ic s

inks

, was

h ba

sins

et

c &

sim

ilar

sani

tary

fix

ture

s ne

s0.

006.

506.

646.

5022

.50.

00%

7.70

%8.

50%

21.4

7210

49Flatrolledprod,i/

nas,

plat

ed o

r co

ated

with

zinc,>/=600mmwide,nes

0.02

17.8

57.

447.

4215

_*7.

00%

62.5

0%15

7801

10Le

ad r

efin

ed u

nwro

ught

0.00

9.54

4.00

4.00

300.

00%

6.70

%61

.70%

30

8212

10Razorsincludingsafety

razorsandopenbladetype

0.00

4.43

7.07

4.43

18.1

0.00

%8.

70%

21.1

0%28

.1

8415

10A

ir co

nditi

onin

g m

achi

nes

win

dow

or

wal

l typ

es, s

elf-

cont

aine

d0.

0021

.23

11.4

611

.46

31.2

0.00

%76

5.00

%21

.50%

17

8438

90P

ts o

f mac

h ne

s f t

he in

d prep/mfrfoodetcexfex/

prepvegfat/oil

0.00

1.29

5.83

1.29

17.5

0.00

%6.

90%

29.9

0%17

.5

8451

40W

ashi

ng,b

leac

hg o

r dy

eg

machines(o/tmachinesof

head

g N

o 84

.50)

0.00

8.45

3.82

3.82

150.

00%

1.70

%56

.00%

15

8507

10Le

ad-a

cid

elec

tric

ac

cum

ulat

ors

of a

kin

d us

d f s

tart

g pi

ston

eng

ines

0.00

15.3

220

.32

15.3

230

0.00

%14

.40%

51.3

0%30

44


ent

HIG

H T

RA

DE

PO

TEN

TIA

L A

ND

CA

GR

ITE

MS

FA

CIN

G T

AR

IFFS

HS

Co

de

Pro

duct

Lab

elP

ak 2

013

Exp

ort t

o S

L

SL

2013

Wor

ld

Impo

rts

Pak

201

3 W

orld

E

xpor

ts

Trad

e P

oten

ti-al

Tarif

f on

Pak

Pak

-SL

CA

GR

SL

Impo

rts

CA

GR

Pak

E

xpor

ts

CA

GR

Tari

ff o

n In

dia

8537

20B

oard

s,pa

nels

,incl

udg

num

eric

al c

ontr

ol p

anel

s,fo

r a

volta

ge >

1,0

00 V

0.00

14.9

41.

771.

7721

.70.

00%

-1.5

0%12

9.60

%1.

4

8544

70O

ptic

al fi

bre

cabl

es, m

ade

up o

f ind

ivid

ually

she

athe

d fib

res

0.00

11.3

61.

911.

9130

.60.

00%

19.5

0%79

.30%

30.6

8708

99M

otor

veh

icle

par

ts n

es0.

2111

.24

10.9

210

.71

14-3

.80%

1.60

%-0

.60%

14

9015

80S

urve

yg,h

ydro

grap

hic,

oce

anographic,meteorologic/

geop

hysi

cal i

nst n

es0.

002.

719.

442.

7130

0.00

%30

.40%

42.0

0%30

9617

00Vacuumflasks/vacuum

vesselscompletew/

cases;partso/tglassinners

0.00

1.58

1.77

1.58

150.

00%

2.80

%74

.10%

15

45


ent

7.6 TWO DIGIT HS CODES WITH HIGH TRADE POTENTIAL

The following table lists high trade potential HS codes for Pakistani export items to Sri Lanka. Items within the HS codes that display considerable potential for growth include cement, which is already a major export to Sri Lanka, polystyrene, various clothing items and medical instruments and articles of iron and steel such as plates and rods used in construction.

It should be noted that trade potential values show the theoretical capacity for expanding trade with a particular country. In other words, the values signify the amount of trade Pakistan could do with Sri Lanka if both countries did as much trade with one another as possible (given the supplying capacity of one and the total demand of the other) before moving on to trade with other countries. Therefore trade potential values are not the same as rigorous projectionsofabest-case-scenarioforanygivenexportitemvis-à-visSriLanka.

Table 20. Two digit HS codes with high potential Pakistani exports to Sri Lanka Figures in USD Millions

HS CODES WITH HIGH TRADE POTENTIAL

HS Code Product Name Total Trade Potential in USD Millions

Main Products at 6 Digit HS code with high potential

84Nuclear reactors, boilers, machinery and mechanical appliances; parts thereof

442 Fans, Air conditioners, Refrigerators

25 Salt, sulphur, earth, stone, lime and cement 297 Portland Cement, Gypsum,

Cut Marble

52 Cotton 244 Woven cotton fabrics, denim fabrics

17 Sugars and sugar confectionary 233 Refined sugar

39 Plastics 107 Polystyrene

85

Electricalmachineryandequipmentand parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers, and parts and accessories of such articles.

103 Telephone sets

30 Pharmaceutical products 79 Medicaments

73 Articles of iron or steel 75 Plates, rods etc. for use in structures

62 Articles of apparel and clothing accessories, not knitted or crocheted. 72 Jackets,blazers,trousersetc.

55 Manmade staple fibres 66 Woven fabrics, plain weave polyester

87Vehicles other than railway or tramway rolling-stock, and parts and accessories thereof.

61 Wheeled tractors, motor vehicle parts

90

Optical, photographic, cinematographic, measuring, checking, precision, medical or surgical instruments and apparatus; parts and accessories thereof.

50 Medical instruments

7 Edible vegetables and certain roots and tubers 43 Onions, shallots, potatoes

61 Articles of apparel and clothing accessories, knitted or crocheted. 30 T-shirts, gloves

46


ent

7.7 TWO DIGIT HS CODES WITH HIGH TRADE POTENTIAL AND FAVOURABLE CAGR VALUES

The following table lists 2 digit HS codes that have the highest concentration of trade potential within favourable CAGR items at the 6 digit HS code level. This is to say that several items within these 2 digit HS codes have witnessed growth as Pakistani exports and as Sri Lankan imports and also have high trade potential, and yet their flow between the two countries has decreased or stagnated. It should be noted that several HS codes from the previous table are listed here as well, suggesting that many high potential HS codes also exhibit favourable CAGR values. These HS codes indicate a breadth of opportunity for expansion in Pak-Sri Lankatrade,sincefavourabletrendsarealreadyfirmlyinplace-whatisrequiredistheremovalofobstructionsuniquetoPak-SriLankatrade.

Table 21. Two digit HS codes with Pakistani exports to Sri Lanka with high CAGR items Figures in USD Millions

HS CODES WITH HIGH TRADE POTENTIAL AND FAVOURABLE CAGR VALUES

HS Code Product Label Total Trade Potential in USD millions

Number of high potential items at 6 digit HS code

73 Articles of iron or steel 53 3

90

Optical, photographic, cinematographic, measuring, checking, precision, medical or surgical instruments and apparatus; parts and accessories thereof.

43 4

39 Plastics and articles thereof. 34 11

87Vehicles other than railway or tramway rolling-stock, and parts and accessories thereof.

31 3

85

Electricalmachineryandequipmentand parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers, and parts and accessories of such articles.

29 6

84Nuclear reactors, boilers, machinery and mechanical appliances; parts thereof

27 9

21 Miscellaneous edible preparations. 17 1

62 Articles of apparel and clothing accessories, not knitted or crocheted. 16 3

61 Articles of apparel and clothing accessories, knitted or crocheted. 15 6

52 Cotton 14 2

This table indicates that a mere 48 items at the 6 digit HS code have a total trade potential of over USD 275 million along with high potential CAGR values that have so far not been used to bolster trade between the two countries. It should be noted that cotton and articles of iron and steel are already within the top ten Pakistani exports to Sri Lanka, and this suggests that it will be relatively easier to boost exports of products within these HS codes owing to established traderelationships.Furthermore,HS61ArticlesofApparelandHS85Electricalequipmentare in the top 20 Pakistani exports to Sri Lanka.

HS codes on this high potential list that face significant tariffs from Sri Lanka are HS 39 Plastics, HS 61 Articles of Apparel, HS 84 Machinery and Nuclear reactors and HS 85 Electrical equipment.TheseHScodesaccountforUSD105milliontradepotential,andthefactthattheyfacetariffssuggeststhatconcessionsmaybeanimportantsteptowardsrealizingthispotential.

47


ent

7.8 COMPARISON WITH INDIA FOR HIGH POTENTIAL PAKISTANI PRODUCTS

Pakistan’s total volume of trade in these 275 items is a little over USD 206 million, whereas India’s total volume of trade in these items is over USD 1.4 billion. India outperforms Pakistan in exports to Sri Lanka in 84% of the items within this category, whereas Pakistan outperforms India in only 9%.

Fig.10 Comparison between India and Pakistan in items with high potential for Pakistani exports to Sri Lanka

These high trade potential items already account for around 65% of Pakistan’s total exports to Sri Lanka, whereas they account for only 29% of India’s total exports. This suggests that India’s primary exports to Sri Lanka lie in items other than these, and therefore Pakistan does not have to go up against India’s primary exports in its attempt to expand its high potential items.

Out of the 275 high trade potential items considered Pakistan has a tariff advantage on India in 21 items, whereas India has a tariff advantage over Pakistan on 5. Therefore around 91% of these items offer a level playing field to both countries with regards to the Sri Lankan market. This strongly suggests that Pakistan’s relatively lacklustre performance within these high potential items is not primarily due to tariff advantages afforded to India.

Items with Indian

advantage84%

Items with Pakistani

advantage9%

Items with equal

exports7%

India and Pakistan Comparison for Pakistan's High Potential Items

48


ent

7.9 ITEMS ON SRI LANKA’S NO-CONCESSION LIST WITH PAKISTAN RCA ADVANTAGE

As already discussed, the central impediments to Pakistan’s exports to Sri Lanka do not seem to be the level of tariffs imposed. Even so, a closer look at Sri Lanka’s no-concession list shows that Pakistan exhibits a revealed comparative advantage in 56 items out of the total 568 items with available data. Revealed comparative advantage is given by the following equation:

It indicates a country’s relative efficiency in exporting a good, since it compares the share of an export item in a country’s bundle of export goods to the same export item’s share in the world’s bundle of export goods. If the latter exceeds the former, RCA>1 and the country can besaidtobe“disproportionately”goodatexportingthegoodinquestionandthereforehavea revealed comparative advantage in it.

The table on the following page which shows a selection of these items suggests that Pakistan has both trade potential and significant RCA advantage in both rice and potatoes which face Tariff Rate Quota restrictions from Sri Lanka. These 56 items have a total trade potential of about USD 47 million, and should be considered for tariff concessions.

49


ent

Tab

le 2

1. P

akis

tani

exp

ort

item

s o

n no

co

nces

sio

n lis

t w

ith a

n R

CA

ad

v. o

ver

Sri

Lan

ka

F

igur

es in

US

D M

illio

ns

PA

KIS

TAN

RC

A A

DV

AN

TAG

E IT

EM

S W

ITH

NO

CO

NC

ES

SIO

N

HS

co

de

Pro

duc

t La

bel

Pak

Exp

ort

s

2013

to

SL

SL

Wo

rld

Im

po

rts

2013

Pak

Wo

rld

E

xpo

rts

2013

Tari

ff o

n P

akTr

ade

po

tent

ial

Gro

wth

20

04-2

013

Pak

RC

AS

L R

CA

Pak

RC

A

Ad

v.

4113

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athe

r fu

rthe

r pr

epar

ed a

fter

tann

ing

or

crus

ting

"incl

. par

chm

ent-d

r0.

342.

1015

8.95

111.

760.

2112

9.34

43.

7612

5.58

4

0813

40Fr

uits

, drie

d ne

s0.

010.

2374

.93

300.

220.

0173

.696

073

.696

8214

20M

anic

ure

or p

edic

ure

sets

and

in

stru

men

ts (

incl

udin

g na

il fil

es)

0.00

0.09

49.5

030

0.09

0.00

73.6

960

73.6

96

1006

30R

ice,

sem

i-mill

ed o

r w

holly

mill

ed,

whetherornotpolishedorglazed

10.3

917

.53

1,79

0.21

297.

14-1

0.25

66.1

761.

8864

.296

0204

50Goatmeat,fresh,chilledorfrozen

0.00

0.56

19.0

830

0.56

0.00

46.6

243.

7642

.864

5608

90Knottdnettgoftwine/cordage/

rope

,nes

,and

mad

e up

net

s of

oth

tex

mat

0.00

0.82

11.3

530

0.82

0.00

51.1

369.

441

.736

1006

20R

ice,

hus

ked

(bro

wn)

0.00

0.01

64.2

519

0.01

0.00

41.3

60

41.3

6

2207

20E

thyl

alc

ohol

and

oth

er s

pirit

s, d

enat

ured

, of

any

str

engt

h0.

230.

4382

.49

136

0.20

0.23

36.0

960

36.0

96

2207

10U

nden

atur

d et

hyl a

lcoh

ol o

f an

alco

hol

strgthbyvolof80%vol/higher

2.76

8.74

274.

0722

05.

972.

7629

.328

1.88

27.4

48

1207

40S

esam

um s

eeds

, whe

ther

or

not b

roke

n0.

010.

0857

.64

300.

08-0

.02

15.7

920

15.7

92

0710

10Potatoes,frozen

0.97

0.02

3.36

14_

0.97

15.7

920

15.7

92

0701

90P

otat

oes,

fres

h or

chi

lled

nes

12.0

928

.39

130.

2664

16.3

09.

2126

.32

13.1

613

.16

3401

19S

oap&

orgn

sur

f pr

ep,s

hapd

,nes

;pap

ers&

nonw

oven

s impregwsoap/prep,nes

0.00

0.04

28.6

530

0.04

0.00

12.7

840

12.7

84

0402

29M

ilk a

nd c

ream

pow

der

swee

tene

d ex

ceed

ing

1.5%

fat

0.00

1.91

11.2

031

1.91

0.00

15.7

923.

7612

.032

9404

90Articlesofbedding/furnishing,nes,

stuf

fed

or in

tern

ally

fitte

d0.

080.

3690

.80

300.

280.

057.

520

7.52


ent

Section 3 Analysis of Sri

Lanka’s Exports to Pakistan under

FTA

51


ent

8.0 PRELIMINARY ANALYSIS OF SRI LANKAN EXPORTS TO PAKISTAN UNDER FTA

All top 20 items at two digit HS code with the exception of HS 39 (Plastics), which experienced a reduction of 500,000 dollars, have experienced growth in their imports by Pakistan, though the absolute level of Sri Lankan imports remains low. The highest growth occurred in HS09 (Coffee, tea) imports, which grew by over 12 million dollars.

Table 22. Major Sri Lankan exports to Pakistan Figures in USD Millions

TOP SRI LANKAN EXPORTS TO PAKISTAN

HS Code Product label Value in 2004 Value in 2013 Growth in Exports

Equivalent ad valorem tariff

applied by Pakistan to Sri Lanka

09 Coffee, tea, mate and spices 6.87 19.51 12.64 3.4

40 Rubber and articles thereof 10.79 14.47 3.68 5.5

14 Vegetable plaiting materials, vegetable products nes 3.66 11.96 8.30 17.1

08 Edible fruit, nuts, peel of citrus fruit, melons 2.50 9.96 7.47 6.4

44 Wood and articles of wood, wood charcoal 2.23 9.72 7.49 4.4

07 Edible vegetables and certain roots and tubers 0.00 3.46 3.46 1

23 Residues, wastes of food industry, animal fodder 0.08 1.93 1.85 3.7

58 Special woven or tufted fabric, lace, tapestry etc 0.00 1.61 1.61 8.2

38 Miscellaneous chemical products 0.04 1.25 1.21 3.1

47 Pulp of wood, fibrous cellulosic material, waste etc 0.00 1.12 1.12 0.8

54 Manmade filaments 0.00 0.82 0.82 6.1

15 Animal,vegetable fats and oils, cleavage products, etc 0.40 0.80 0.40 16.1

53 Vegetable textile fibres nes, paper yarn, woven fabric 0.37 0.74 0.38 5.6

62 Articles of apparel, accessories, not knit or crochet 0.00 0.63 0.63 22.7

48 Paper and paperboard, articles of pulp, paper and board 0.29 0.62 0.33 6.9

69 Ceramic products 0.02 0.51 0.49 9.7

33 Essential oils, perfumes, cosmetics, toileteries 0.02 0.49 0.48 9.8

61 Articles of apparel, accessories, knit or crochet 0.07 0.40 0.34 22.8

39 Plastics and articles thereof 0.88 0.37 -0.50 9.5

76 Aluminium and articles thereof 0.14 0.36 0.22 3.9

A look at the available data at the 6-digit HS code level further fills in this grim picture. Out of 4905 items at full concession, a meagre 134 items showed growth, 65 showed contraction in exports, and 4706 showed no change, with all of the unchanged items reporting 0 exports in both 2004 and 2013. Only 147 items reported any exports at all in 2013, which is 3% of total concession items. This was up from 1.7% of all concession items showing any exports in 2004.

52


ent

There were total concession item exports by Sri Lanka in 2013 to Pakistan of about USD 66 million, up from exports of about USD 29 million in 2004, a rise of 130%.

Out of a total of 540 no concession items, data was available for 484. 44 no concession items showed growth, 16 fell in Sri Lankan exports to Pakistan, and 424 remained unchanged, all of these having reported 0 exports in both 2004 and 2013. 51 non-concession items reported exports in 2013, up from 25 in 2004.

There were total non-concession item exports by Sri Lanka to Pakistan of USD 17.2 million in 2013, up from exports of USD 10.4 million in 2004, a rise by 64%.

This brief overview confirms that the Pakistan-Sri Lanka FTA has failed to improve either country’s fortunes very significantly. We have already seen that huge potential exists for Pakistani exports to Sri Lanka, confirmed by trends in supply and demand, unhindered by excessive tariffs. A similar analysis of Sri Lankan exports at the 6 digit HS code level will revealwhetherasimilaramountofpotentialtradeisgoingunrealizedforgoodscomingintoPakistan from Sri Lanka.

Table 23. Sri Lankan export items with positive, negative or zero growth in exports to Pakistan



Zero Growth Items

Full Concession Items 2.7% 1.4% 95.9%

No Concession Items 9% 3.3 % 87.7%

Fig.11 Sri Lankan export items to Pakistan categorized by positive, negative and zero growthFig.11Sri Lankan export items to Pakistan categorized by positive, negative and zero growth

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

Full Concession Item No Concession Items

Sri Lankan Exports to Pakistan by Growth



No Growth

Num

ber

of

Exp

ort

Item

s

Items

53


ent

8.1 COMPARISON OF SRI LANKA AND CHINA TRADE WITH PAKISTAN

It may be useful to compare China and Sri Lanka’s trade relationships with Pakistan since in addition to Pakistan and China having an FTA, a China-Sri Lanka FTA is currently under negotiation. China’s dominance in Pakistani imports is unsurprising, (Sri Lankan imports to Pakistan are around 1% of China’s USD 6.6 billion exports to Pakistan), but a closer look at trade figures can reveal any disproportionate advantages conferred by tariff differentials.

For the 5445 export items at the 6 digit HS code level for which data is available for Sri Lanka, there are a corresponding 4226 items with available data for China. China’s total exports of these 4226 products to Pakistan amount to around USD 6.6 billion (nearly the entirety of its exports to Pakistan), whereas Sri Lanka’s exports of these 4226 products comes out to USD 63 million. China outperforms Sri Lanka in the exports of 3261 items to Pakistan, whereas Sri Lanka outperforms China in 55 items.

China has a tariff advantage over Sri Lanka on a mere 278 items out of the total 4226 for which data is available, and within these items it’s export advantage over Sri Lanka is a little over USD 300 million. Therefore, the 7% of export items that have tariff advantages account for 5% of China’s total export advantage over Sri Lanka, suggesting that the items with tariffs favouring China are not benefitting from the tariff policy to a disproportionate extent. Moreover, Sri Lanka faces greater concessions from Sri Lanka than does China in 3372 items, 80% of the items under consideration, once again suggesting that the fledgling state of Pakistan-Sri Lanka relations cannot be accounted for primarily by lack of tariff concessions.

Fig. 12 Comparison between China and Sri Lanka export items to Pakistan

The following chart indicates the relative insignificance of items with higher Pakistani tariffs on Sri Lanka in terms of China’s export differential over Sri Lanka.

Items with higher Chinese exports

77%

Items with higher Sri Lankan exports

1%

Items with equal exports

22%

China and Sri Lanka exports to Pakistan at 6 digit HS code

54


ent

Fig 13. Items that China exports larger quantities of to Pakistan categorised by the tariffs they face

Export Adv on Items with higher tariff on Sri Lanka

4%

Export Adv on Items with lower

tariffs on Sri Lanka 94%

Export Adv on Items with equal

tariffs2%

China Export advatage on Sri Lanka by Tariff differential

55


ent

9.0 ANALYSIS OF SRI LANKA’S EXPORTS TO PAKISTAN

We will now use the same approach as in our analysis of Sri Lankan imports from Pakistan to try and determine which Sri Lankan exports to Pakistan should be considered high priority itemsduetothemetricsassociatedwiththem.Wewillonceagainbecategorizingtheitemsby trade potential while also bringing to bear CAGR information on our outlook.

There are 247 items with trade potential exceeding USD 500,000, out of which 161 (65%) items show high potential CAGR values. The total trade potential for these 247 items is USD 1.08 billion. The total trade potential for the 161 favourable CAGR items is USD 878 million, indicating that most of the trade potential for Sri Lankan exports to Pakistan lies in products that already face trends conducive to the expansion of trade.

This brief overview suggests that Sri Lanka too has export items that have experienced favourable trends in Pakistani demand and Sri Lankan supply but that have failed to make headwayinthePakistanimarket.Moreover,thefactthat91%ofthe247itemsfacezerotariffsfrom Pakistan strongly suggests that the lacklustre state of trade here too is not primarily a consequenceoftariffdisadvantages.Onlyselecteditemsfromthetotal247arelistedinthefollowing tables.

9.1 TRADEPOTENTIAL≥USD10MILLION

79% of the 19 items in this category have high potential CAGR values associated with them. ThetotaltradepotentialinthiscategoryequalsUSD656million.Thehighestamountoftradepotential resides in HS 090240 (Black Tea) which faces a Tariff Rate Quota from Pakistan, whereinitonlyutilizesaround20%ofitsduty-freeallowance.However,nootheritemsinthiscategory face any tariffs. The items are listed in the table on the following page.

56


ent

Tab

le 2

4. S

ri L

anka

n ex

po

rt it

ems

to P

akis

tan

with

hig

h C

AG

R it

ems

hig

hlig

hte

d

Fig

ures

in U

SD

Mill

ions


HS

Co

de

Pro

duc

t la

bel

SL

2013

E

xpo

rt t

o

Pak

Pak

201

3 W

orl

d

Imp

ort

s

Sri

Lan

ka

2013

W

orl

d

Exp

ort

s

Trad

e P

ote

ntia

lS

L-P

ak

CA

GR

Pak

Im

po

rts

CA

GR

SL

Exp

ort

s C

AG

RTa

riff

on

SL

0902

40B

lack

tea

(fer

men

ted)

& p

artly

ferm

ente

d te

a in

pac

kage

s ex

ceed

g 3

kg2.

1831

3.15

800.

6931

0.96

-10.

90%

5.06

%6.

65%

10

2710

19O

ther

pet

role

um o

ils a

nd p

repa

ratio

ns0.

007,

164.

5931

.12

31.1

20.

00%

18.2

6%16

.03%

0

2106

90Fo

od p

repa

ratio

ns n

es0.

0142

.63

30.1

530

.14

0.00

%17

.32%

23.6

1%0

2309

90A

nim

al fe

ed p

repa

ratio

ns n

es0.

0030

.00

38.7

530

.00

0.00

%21

.14%

88.3

3%0

4907

00Unusdpostage,revenuestamps;chequeforms,banknotes,bond

cert

ific,

etc

0.00

815.

8028

.67

28.6

70.

00%

137.

52%

22.2

5%0

8504

31Tr

ansf

orm

ers

elec

tric

pow

er h

andl

ing

capa

city

not

exc

eedi

ng 1

KVA

, ne

s0.

0026

.77

28.4

226

.77

0.00

%54

.36%

5.79

%0

9503

00Tr

icyc

les,

sco

oter

s, p

edal

car

s an

d si

mila

r w

heel

ed to

ys; d

olls

'' car

r0.

0024

.02

27.4

924

.02

0.00

%6.

70%

5.65

%0

9031

80M

easu

ring

or c

heck

ing

inst

rum

ents

, app

lianc

es a

nd m

achi

nes,

nes

0.00

21.5

025

.19

21.5

0-2

5.98

%11

.30%

17.1

2%0

8538

90P

arts

for

use

with

the

appa

ratu

s of

hea

dg n

o. 8

5.35

,85.

36 o

r 85

.37,

nes

0.00

20.8

021

.65

20.7

9_*

6.23

%10

.28%

0

8537

10Boards,panels,includgnumericalcontrolpanels,foravoltage<=1000

V0.

0028

.55

19.9

619

.96

0.00

%31

.69%

25.2

8%0

4016

99A

rtic

les

of v

ulca

nise

d ru

bber

nes

, oth

er th

an h

ard

rubb

er0.

0017

.84

55.5

517

.84

0.00

%14

.20%

17.5

5%0

4011

20P

neum

atic

tire

s ne

w o

f rub

ber

for

buse

s or

lorr

ies

1.06

168.

1318

.21

17.1

554

.91%

9.31

%12

.35%

0

4707

90W

aste

&sc

rap

of p

aper

or

pape

rboa

rd,n

es (

incl

udg

unso

rted

w

aste

&sc

rap)

0.48

20.8

817

.45

16.9

773

.95%

7.14

%17

.39%

0

4016

93G

aske

ts, w

ashe

rs a

nd o

ther

sea

ls o

f vul

cani

sed

rubb

er0.

0016

.72

14.8

614

.86

0.00

%20

.85%

9.38

%0

0802

80A

reca

nut

s0.

0072

.92

11.7

611

.76

0.00

%_*

_*0

7801

10Le

ad r

efin

ed u

nwro

ught

0.00

90.7

011

.65

11.6

50.

00%

27.5

9%11

4.73

%0

2401

20To

bacc

o, u

nman

ufac

ture

d, p

artly

or

who

lly s

tem

med

or

strip

ped

0.00

11.1

737

.06

11.1

70.

00%

33.4

5%45

.31%

0

8544

49E

lect

ric c

ondu

ctor

s, fo

r a

volta

ge n

ot e

xcee

ding

80

V, n

es0.

0042

.96

10.8

510

.85

-41.

29%

22.3

5%-1

0.25

%0

57


ent

Tab

le 2

5. S

ri L

anka

n ex

po

rt it

ems

to P

akis

tan

with

hig

h C

AG

R it

ems

hig

hlig

hte

d

Fig

ures

in U

SD

Mill

ions


HS

Co

de

Pro

duc

t la

bel

SL

2013

E

xpo

rt t

o

Pak

Pak

201

3 W

orl

d

Imp

ort

s

Sri

Lan

ka20

13

Wo

rld

E

xpo

rts

Trad

eP

ote

ntia

lS

L-P

ak

CA

GR

Pak

Im

po

rts

CA

GR

SL

Exp

ort

s C

AG

RTa

riff

on

SL

6911

10Ta

blew

are

and

kitc

henw

are

of p

orce

lain

or

chin

a0.

219.

5326

.96

9.32

31.3

2%3.

08%

0.66

%20

7010

90C

arbo

ys, b

ottle

s, fl

asks

, jar

s, p

ots,

phi

als

and

othe

r co

ntai

ners

, of

0.00

7.49

11.8

07.

490.

00%

10.5

7%66

.34%

0

5510

11Yarn,>/=85%ofartificialstaplefibres,single,notputup

0.00

7.11

20.7

77.

110.

00%

22.4

0%17

.95%

0

8534

00P

rinte

d ci

rcui

ts0.

007.

0816

.74

7.08

0.00

%14

.55%

38.3

1%0

8802

30A

ircra

ft ne

s of

an

unla

den

wei

ght >

2,0

00 k

g bu

t not

ex

ceed

g 15

,000

kg

0.00

9.53

6.89

6.89

0.00

%63

.43%

128.

87%

0

3926

90A

rtic

les

of p

last

ics

or o

f oth

er m

ater

ials

of N

os 3

9.01

to

39.1

4 ne

s0.

0034

.03

6.53

6.53

-24.

47%

8.99

%1.

32%

12.2

7113

19Articlesofjewellry&pttherofof/oprecmetw/nplatd/clad

w p

rec

met

0.00

6.39

12.1

36.

390.

00%

59.0

6%-2

.48%

0

4411

14M

ediu

m d

ensi

ty fi

breb

oard

MD

F of

woo

d, o

f a th

ickn

ess

> 9

mm

3.64

9.95

20.6

46.

3222

6.00

%-3

.20%

57.6

7%0

8537

20B

oard

s,pa

nels

,incl

udg

num

eric

al c

ontr

ol p

anel

s,fo

r a

volta

ge >

1,0

00 V

0.00

12.7

56.

116.

110.

00%

22.2

4%62

.82%

0

1006

30R

ice,

sem

i-mill

ed o

r w

holly

mill

ed, w

heth

er o

r no

t pol

ishe

d orglazed

0.00

15.1

75.

815.

810.

00%

41.7

8%25

.44%

0

1404

90Ve

geta

ble

prod

ucts

nes

11.9

624

.31

17.7

35.

7759

.59%

16.7

7%17

.33%

15.3

8422

30Machffil/clos/seal/etc.btle/can/box/bag/ctnrnes,machf

aera

tg b

ev0.

0063

.16

5.52

5.52

_*19

.38%

39.6

6%0

6908

90Tiles,cubesandsimnes,glazedceramics

0.30

38.9

85.

755.

4511

8.63

%1.

82%

13.4

4%0

8507

20Le

ad-a

cid

elec

tric

acc

umul

ator

s ne

s0.

0034

.26

5.23

5.23

0.00

%32

.04%

316.

58%

0

5806

20Narrowwovenfab,cntgbywt>/=5%elastomericyarn/

rubb

er th

read

nes

0.00

5.04

11.1

95.

040.

00%

23.5

1%-5

.30%

0


69% of the 16 items in this category exhibit favourable CAGR values. The total trade potential inthiscategoryequalsUSD106million.

58


ent


45% of the 119 items in this category show high potential CAGR values. The total trade potentialinthiscategoryequalsUSD252million.

Tab

le 2

6. S

ri L

anka

n ex

po

rt it

ems

to P

akis

tan

with

hig

h C

AG

R it

ems

hig

hlig

hte

d

F

igur

es in

US

D M

illio

ns


HS

Co

de

Pro

duc

t la

bel

SL

2013

E

xpo

rt t

o

Pak

Pak

201

3 W

orl

d

Imp

ort

s

Sri

Lan

ka

2013

W

orl

d

Exp

ort

s

Trad

eP

ote

ntia

lS

L-P

ak

CA

GR

Pak

Im

po

rts

CA

GR

SL

Exp

ort

s C

AG

RTa

riff

on

SL

4001

21N

atur

al r

ubbe

r in

sm

oked

she

ets

5.09

10.0

513

.50

4.95

-4.2

2%-0

.17%

-5.1

5%0

8704

21D

iese

l pow

ered

truc

ks w

ith a

GV

W n

ot e

xcee

ding

five

to

nnes

0.00

53.4

54.

844.

840.

00%

2.01

%64

.14%

0

0902

20G

reen

tea

(not

ferm

ente

d) in

pac

kage

s ex

ceed

ing

3 kg

0.00

5.11

4.63

4.63

0.00

%17

.46%

21.7

0%0

0813

40Fr

uits

, drie

d ne

s0.

064.

597.

554.

53-1

5.37

%2.

63%

18.4

6%0

4821

10P

aper

labe

ls o

f all

kind

s, p

rinte

d0.

254.

6010

.10

4.36

0.51

%-0

.22%

10.7

8%0

6111

90B

abie

s ga

rmen

ts&

clot

hg a

cces

sorie

s of

oth

er te

xtile

m

ater

ials

,kni

tted

0.00

4.27

10.8

54.

270.

00%

12.8

9%4.

47%

0

3507

90Enzymesnes;preparedenzymesnes

0.04

22.1

64.

224.

18-9

.03%

16.5

5%12

.94%

0

8504

21Liquiddielectrictransformershavgapowerhandlgcapa

<=650KVA

0.00

4.13

8.25

4.13

0.00

%36

.50%

44.8

5%0

0810

90Fr

uits

, fre

sh n

es0.

004.

924.

104.

100.

00%

13.6

7%30

.46%

0

6203

49Mens/boystrousersandshorts,ofothertextilematerials,

not k

nitte

d0.

003.

8346

.26

3.83

0.00

%42

.62%

4.32

%0

8538

10B

oard

s,pa

nels

,etc

for

good

s of

hea

dg n

o. 8

5.37

,not

equippdwtheirapp

0.00

3.78

12.6

13.

780.

00%

8.38

%0.

58%

0

4911

99P

rinte

d m

atte

r, ne

s0.

003.

753.

903.

750.

00%

16.9

0%74

.49%

0

4008

21P

late

s,sh

eets

&st

rip o

f non

cel

lula

r ru

bber

,oth

than

har

d ru

bber

(vu

lc)

0.04

3.57

8.61

3.53

-8.2

1%26

.05%

6.54

%0

5903

90Te

xtile

fabr

ics

impr

egna

ted,

ctd

, cov

, or

lam

inat

ed w

ith

plas

tics,

nes

0.00

7.00

3.29

3.29

0.00

%0.

11%

46.9

5%0

8712

00B

icyc

les

and

othe

r cy

cles

(in

clud

ing

deliv

ery

tric

ycle

s),n

ot

mot

oris

ed0.

023.

1524

.44

3.13

_*11

.78%

14.8

2%0

6116

93G

love

s, m

itten

s an

d m

itts,

nes

, of s

ynth

etic

fibr

es, k

nitte

d0.

013.

076.

213.

06-1

3.53

%27

.14%

0.11

%0

59


ent

9.4 USD500,000≤TRADEPOTENTIAL<USD1MILLION

54% of the 94 items in this category have high potential CAGR values associated with them. The total trade potential in this category comes out to USD 67 million.

Tab

le 2

7. S

ri L

anka

n ex

po

rt it

ems

to P

akis

tan

with

hig

h C

AG

R it

ems

hig

hlig

hte

d

F

igur

es in

US

D M

illio

ns

USD500,000≤TRADEPOTENTIAL<USD1MILLION

HS

Co

de

Pro

duc

t la

bel

Sri

Lan

ka

2013

E

xpo

rt t

o

Pak

Pak

201

3 W

orl

d

Imp

ort

s

Sri

Lan

ka

2013

W

orl

dE

xpo

rts

Trad

eP

ote

ntia

lS

L-P

ak

CA

GR

Pak

Im

po

rts

CA

GR

SL

Exp

ort

s C

AG

RTa

riff

on

SL

1301

90N

atur

al g

ums,

res

ins,

gum

-res

ins

and

bals

am, e

xcep

t ar

abic

gum

0.00

2.35

1.00

1.00

0.00

%9.

78%

0.17

%0

4819

40S

acks

and

bag

s, o

f pap

er, n

es; i

nclu

ding

con

es0.

031.

013.

570.

98_*

4.86

%11

.43%

0

3301

90Conc&aqueousdistlsofessentloils;terpenicby-prodsof

esse

ntl o

ils0.

010.

9822

.59

0.97

_*17

.48%

22.2

2%0

9603

29S

havi

ng,h

air,n

ail,e

yela

sh &

oth

er to

ilet b

rush

es fo

r us

e on

th

e pe

rson

0.00

0.95

1.66

0.95

0.00

%24

.40%

8.49

%0

5508

10S

ewin

g th

read

of s

ynth

etic

sta

ple

fibre

s0.

221.

163.

100.

95-8

.38%

24.7

3%-0

.04%

0

3204

17S

ynth

etic

org

anic

pig

men

ts a

nd p

repa

ratio

ns b

ased

th

ereo

n0.

0021

.63

0.94

0.94

0.00

%1.

95%

4.73

%0

8426

19Tr

ansp

orte

r or

brid

ge c

rane

s0.

0015

.99

0.94

0.94

0.00

%1.

52%

83.3

1%0

9506

91Gymnasiumorathleticsarticlesandequipment

0.00

6.79

0.93

0.93

0.00

%14

.57%

39.3

8%0

9606

21B

utto

ns o

f pla

stic

s, n

ot c

over

ed w

ith te

xtile

mat

eria

l0.

003.

050.

880.

880.

00%

35.6

4%14

.36%

0

4203

10A

rtic

les

of a

ppar

el o

f lea

ther

or

of c

ompo

sitio

n le

athe

r0.

000.

8614

.39

0.86

0.00

%28

.55%

21.2

1%0

4421

90W

ood

artic

les

nes

0.00

0.85

8.15

0.85

0.00

%8.

61%

9.66

%0

7117

19Im

itatio

n je

wel

lery

nes

of b

ase

met

al w

heth

er o

not

pla

td

w p

rec

met

al0.

000.

853.

790.

850.

00%

24.0

2%20

.55%

0

6403

19Sportsfootwear,o/tski,outrsoleofrbr/plas/leather&upper

of le

athe

r0.

005.

610.

840.

84-2

8.86

%8.

27%

-2.0

0%0

0801

11C

ocon

uts,

des

sica

ted

4.06

4.90

59.2

90.

8421

.98%

1.28

%2.

78%

0

7326

90A

rtic

les,

iron

or

stee

l, ne

s0.

0037

.06

0.83

0.83

0.00

%19

.08%

-0.3

2%0

8504

50In

duct

ors,

ele

ctric

0.00

3.39

0.82

0.82

0.00

%26

.25%

20.1

4%0

8543

70E

lect

rical

mac

hine

s an

d ap

para

tus,

hav

ing

indi

vidu

al

func

tions

, n.e

.s.

0.00

13.8

80.

820.

820.

00%

13.9

2%28

2.34

%0

7320

10S

prin

gs, l

eaf a

nd le

aves

ther

efor

, iro

n or

ste

el0.

001.

020.

820.

820.

00%

20.8

7%5.

35%

0

8428

20P

neum

atic

ele

vato

rs a

nd c

onve

yors

0.00

0.86

0.82

0.82

0.00

%6.

62%

72.5

8%0

4819

50C

onta

iner

s, p

acki

ng, n

es (

incl

udin

g re

cord

sle

eves

) of

pa

per

0.00

1.63

0.81

0.81

0.00

%50

.14%

80.3

9%0

6402

99Footwear,outersoles/uppersofrubberorplastics,nes

0.00

3.44

0.80

0.80

0.00

%12

.52%

38.4

0%0

6815

99A

rtic

les

of s

tone

or

of o

ther

min

eral

sub

stan

ces

nes

0.00

0.75

7.77

0.75

0.00

%17

.40%

74.0

5%0

7404

00W

aste

and

scr

ap, c

oppe

r or

cop

per

allo

y0.

004.

430.

750.

750.

00%

11.4

1%11

.15%

0

60


ent

9.5 HIGH TRADE POTENTIAL AND FAVOURABLE CAGR ITEMS THAT SHOULD RECEIVE TARIFF CONCESSIONS

The following table lists 11 items with trade potential exceeding USD 500,000 that have favourable CAGR metrics and face tariffs from Pakistan. The items have a total trade potential of USD 330 million. Particular attention should be paid to HS 39 Plastics, which has 5 items on the table, and HS 15 Animal, Vegetable fats and oils, which has 2 items.

Tab

le 2

8. S

ri L

anka

n ex

po

rt it

ems

to P

akis

tan

with

hig

h C

AG

R it

ems

hig

hlig

hte

d

Fig

ures

in U

SD

Mill

ions

HIG

H T

RA

DE

PO

TEN

TIA

L A

ND

CA

GR

ITE

MS

FA

CIN

G T

AR

IFFS

HS

Co

de

Pro

duc

t la

bel

Sri

Lan

ka

2013

E

xpo

rts

to

Pak

Pak

201

3 W

orl

d

Imp

ort

s

Sri

Lan

ka

2013

W

orl

d

Exp

ort

s

Trad

eP

ote

ntia

lS

L-P

ak

CA

GR

Pak

Im

po

rts

CA

GR

SL

Exp

ort

s C

AG

RTa

riff

on

SL

0902

40B

lack

tea

(fer

men

ted)

& p

artly

ferm

ente

d te

a in

pac

kage

s ex

ceed

g 3

kg2.

1831

3.15

800.

6931

0.96

-10.

90%

5.06

%6.

65%

10

3926

90A

rtic

les

of p

last

ics

or o

f oth

er m

ater

ials

of N

os

39.0

1 to

39.

14 n

es0.

0034

.03

6.53

6.53

-24.

47%

8.99

%1.

32%

12.2

3923

21S

acks

and

bag

s (in

clud

ing

cone

s) o

f po

lym

ers

of e

thyl

ene

0.04

4.79

28.6

54.

75_*

37.8

7%1.

88%

25

6305

33S

acks

, bag

s, p

acki

ng, o

f str

ip p

last

ic m

ater

ial

0.01

2.13

9.91

2.12

_*3.

71%

9.77

%25

1517

90Ediblemx/prepofanimal/vegfats&oils/of

fract

ions

ex

hd N

o 15

.16

0.21

6.68

1.71

1.50

_*37

.95%

8.10

%14

.4

3924

90H

ouse

hold

and

toile

t art

icle

s ne

s, o

f pla

stic

s0.

011.

491.

771.

48_*

0.23

%36

.14%

25

3919

10S

elf-a

dhes

ive

plat

es,s

heet

s,fil

m e

tc,o

f pla

stic

inrolls<20cmwide

0.00

9.85

0.82

0.82

0.00

%9.

48%

17.6

5%17

.5

1511

90P

alm

oil

and

its fr

actio

ns r

efin

ed b

ut n

ot

chem

ical

ly m

odifi

ed0.

081,

610.

010.

710.

63-6

0.42

%11

.88%

36.1

4%30

.1

3305

10H

air

sham

poos

0.02

18.0

60.

570.

5613

.90%

5.59

%17

.21%

12.5

3923

50S

topp

ers,

lids

, cap

s an

d ot

her

clos

ures

of

plas

tics

0.01

9.33

0.54

0.52

_*12

.99%

42.5

9%25

4013

20In

ner

tube

s of

rub

ber

for

bicy

cles

0.00

0.51

2.04

0.51

_*32

.80%

18.0

0%25

61


ent

9.6 TWO DIGIT HS CODES WITH HIGH TRADE POTENTIAL

The following table identifies Sri Lankan export items to Pakistan at 2 digit HS codes which have high trade potential. Items within the HS codes that represent high proportions of the potential include black tea, tires for buses and lorries, food preparations and ethylene sacks andbags.Itshouldbenotedthatwhileteafacesatariffratequota,itsimportsfromSriLankafall far below the allowance that has been made for duty free imports, suggesting that Sri Lanka has lost much of the Pakistani tea market.

Table 29. Two digit HS codes with high potential Sri Lankan exports to Pakistan Figures in USD Millions

HS CODES WITH HIGH TRADE POTENTIAL

HS Code Product Label Total Trade Potential in USD Millions

Main Products at 6 Digit HS code with high

potential

09 Coffee, tea, mate and spices 327 Black tea

85 Electrical,electronicequipment 128 Transformers, numerical control panels, conductors

40 Rubber and articles thereof 82Tires for buses and lorries, articles of vulcanised rubber

49 Printed books, newspapers, pictures etc 36 Postage stamps

21 Miscellaneous edible preparations 31 Food preparations

95 Toys,games,sportsrequisites 28 Wheeled toys

39 Plastics and articles thereof 26Ethylene sacks and bags, clothing accessories (gloves etc.)

62


ent

9.7 TWO DIGIT HS CODES WITH HIGH TRADE POTENTIAL AND HIGH POTENTIAL CAGR VALUES

The following table lists 2 digit HS codes with high trade potential and favourable CAGR metrics, usually within several items at the 6-digit level. Many HS codes from the previous table show up here as well, with more than 50% of the potential within coffee, tea etc., electrical, electronicequipment,rubber,printedbooksetc,toys,miscellaneousediblepreparationsandplastics also showing favourable CAGR values. These HS codes therefore represent prime opportunities for boosting Sri Lankan exports to Pakistan since they experienced positive growth in terms of Sri Lankan exports as well as in terms of Pakistani imports over the period 2004-2013.There is considerable overlap between this and the previous table, indicating that hightradepotentialitemsfrequentlyexhibitfavourableCAGRmetrics.

Table 30. Two digit HS codes with Sri Lankan exports items to Pakistan with high CAGR items Figures in USD Millions

HS CODES WITH HIGH TRADE POTENTIAL AND HIGH CAGR VALUES

HS Code Product LabelTotal Trade Potential in

High CAGR Items in USD millions

Number of items at 6 digit HS code

09 Coffee, tea, mate and spices 316 2


40 Rubber and articles thereof 40 6

21 Miscellaneous edible preparations 31 2

49 Printed books, newspapers, pictures etc 33 3

95 Toys,games,sportsrequisites 27 3

84 Machinery, nuclear reactors, boilers, etc 15 10

24 Tobacco and manufactured tobacco substitutes 13 2

78 Lead and articles thereof 12 1

39 Plastics and articles thereof 18 9

This table indicates that a total of 47 items at the 6-digit HS code have a trade potential of over USD 570 million as Sri Lankan exports to Pakistan. Only HS09 faces any kind of notable import restriction since a TRQ is in effect on tea imports, whereas the other HS codes enjoy full concession in the relevant items with the exception of Plastics and offer trade potential worth about USD 254 million. For instance, thirteen 6-digit HS code electronic items alone represent a total USD 75 million trade potential with favourable CAGR values and full concession. Moreover, HS 40 Rubber faces tariffs on only one of the 6 high CAGR items considered.

63


ent

9.8 ITEMS ON PAKISTAN’S NO-CONCESSION LIST WITH SRI LANKA RCA ADVANTAGE

While the preceding analysis suggests that tariffs are not the primary roadblock in the way of more Sri Lankan exports finding their way into Pakistan, a closer look at Pakistan’s no-concession list reveals a number of items in which Sri Lanka possesses a revealed comparative advantage over Pakistan. Out of a total of 482 items for which data was available 174 items exhibited an RCA advantage in Sri Lanka’s favour. The following table shows a selection of these items.

Tab

le T

able

31.

Sri

Lan

kan

exp

ort

item

s o

n no

co

nces

sio

n lis

t w

ith a

n

R

CA

ad

v. o

ver

Pak

ista

n

Fi

gur

es in

US

D M

illio

ns

SR

I LA

NK

A R

CA

AD

VA

NTA

GE

ITE

MS

WIT

H N

O C

ON

CE

SS

ION

HS

Co

de

Pro

duc

t La

bel

SL

Exp

ort

s in

201

3 to

Pak

Pak

201

3 W

orl

d

Imp

ort

s

Tari

ff o

n S

LTr

ade

Po

tent

ial

Gro

wth

20

04-

2013

SL

RC

AP

ak R

CA

SL

RC

A

Ad

v.

5509

22Yarn,>/=85%ofpolyesterstaplefibres,multiple,notput

up, n

es0.

006.

306.

30.

040.

0063

.92

063

.92

5515

11W

oven

fab

of p

olye

ster

sta

ple

fib m

ixd

w v

isco

se r

ayon

st

aple

fib,

nes

0.00

1.04

150.

420.

0054

.52

0.75

253

.768

0402

21M

ilk a

nd c

ream

pow

der

unsw

eete

ned

exce

edin

g 1.

5% fa

t0.

005.

7325

0.15

0.00

45.1

20.

752

44.3

68

1513

29Palmkernel/babassuoiltheirfract,refindbutnot

chem

ical

ly m

odifi

ed0.

009.

5225

.60.

030.

0041

.36

041

.36

2401

10To

bacc

o, u

nman

ufac

ture

d, n

ot s

tem

med

or

strip

ped

0.00

0.23

50.

230.

0043

.24

3.76

39.4

8

6117

90Partsofgarments/ofclothgaccessories,oftextile

mat

eria

ls,k

nittd

0.00

0.24

250.

240.

0033

.84

033

.84

6212

90C

orse

ts,b

race

s &

sim

ilar

artic

les

& p

arts

ther

eof,o

f tex

tile

mat

eria

ls0.

000.

4125

0.41

0.00

26.3

20

26.3

2

6217

90P

arts

of g

arm

ents

or

of c

loth

g ac

cess

orie

s ne

s,of

tex

mat

,not

kni

ttd0.

000.

125

0.12

0.00

22.5

60

22.5

6

0902

20G

reen

tea

(not

ferm

ente

d) in

pac

kage

s ex

ceed

ing

3 kg

0.00

5.11

104.

630.

0020

.68

020

.68

6215

90Ti

es, b

ow ti

es a

nd c

rava

ts, o

f oth

er te

xtile

mat

eria

ls, n

ot

knitt

ed0.

000.

1025

0.03

0.00

18.8

018

.8

5512

11Wovenfabrics,containing>/=85%ofpolyesterstaple

fibre

s, u

nbl o

r bl

0.00

0.09

150.

010.

0022

.56

4.51

218

.048

4805

40P

aper

, filt

er, i

n ro

lls o

r sh

eets

, unc

oate

d0.

000.

249

0.10

0.00

16.9

20

16.9

2

8703

21A

utom

obile

s w

rec

ipro

catg

pis

ton

engi

ne d

ispl

acg

not

mor

e th

an 1

000

cc0.

0020

6.74

520.

010.

0015

.04

015

.04

5402

52Ya

rn o

f pol

yest

er fi

lam

ents

, sin

gle,

>50

turn

s pe

r m

etre

, no

t put

up

0.00

4.97

6.3

0.12

0.00

13.1

60

13.1

6

5509

21Yarn,>/=85%ofpolyesterstaplefibres,single,notputup

0.00

48.1

96.

30.

000.

0013

.16

013

.16

4013

90In

ner

tube

s of

rub

ber

nes

0.01

0.78

23.8

0.35

0.01

13.1

63.

008

10.1

52

6108

19Womens/girlsslipsandpetticoats,ofothertextile

mat

eria

ls, k

nitte

d0.

000.

0225

0.02

0.00

24.4

415

.04

9.4


ent

Section 4 Concerns and

Recommendations

65


ent

10.0 GENERAL CONCERNS

Table 31. Major concerns about the FTA between Pakistan and Sri Lanka

MAIN CONCERNS VOICED ABOUT PAK-SRI LANKA FTA

1. Sri Lanka perceived as small market by businessmen

2. Few links between Pak-Sri Lanka business communities

3. Unilateral changes that oppose the spirit of the FTA

4. Insufficient involvement of business community in drafting of FTA

5. Lack of awareness about FTA terms and potential of Sri Lankan market

6. Lack of reliable forums for the arbitration of trade disputes

10.1 LACK OF INTEREST IN PAK-SRI LANKA TRADE

Certain exporters within high potential export sectors did not view Sri Lanka as having significant potential as a prospective trading partner. They substantiated this outlook by makingreferencetoSriLanka’ssmallsizewhichintheirmindstranslatedtoasignificantlysmaller market for Pakistani goods than countries such as Malaysia and Indonesia. They argued that establishing a foothold in a new market involved taking risks that the relatively low potential benefits of trade with Sri Lanka could not justify.

Exporters also claimed that there was a lack of awareness of the Pak- Sri Lanka FTA in the business community. They argued that it was incumbent on the government to work to raise awareness and apprise businessmen of opportunities existing in underdeveloped markets such as Sri Lanka, and this could be done through trade delegations and exhibitions.

Akeyconcernexpressedbyseveralquarterswastheneedforincreasedinteractionbetweenthe business communities of Pakistan and Sri Lanka. Such a back-and-forth is thought to be vital to the advancement of trade. Businessmen and bureaucrats interviewed were of themindthatopportunitiesforgrowthrequirestronglinksbetweenthecountries’businesscommunitiesandtradebodiesinordertoberealized.

10.2 UNILATERAL CHANGES MADE TO FTA TERMS

There were also concerns about unilateral changes made by both countries that are in opposition to the spirit of the FTA. For instance, in April 2014 broomcorn, a significant Sri Lankan export to Pakistan, was placed on the no concession list through Statutory Regulatory Order 280 (SRO 280), despite the fact that it previously faced no restrictions as per the terms of the FTA. This and other unilateral changes were later reversed by SRO 854. On the Sri Lankan side, in 2011 a special commodity levy was imposed on certain fruits and vegetables, such as oranges, onions and potatoes, despite the fact that, with the exception of potatoes which were under a TRQ, none of the items appeared on Sri Lanka’s no concession list. This levy replacedacess thatwaspreviously requiredofSriLankan importers,and led to thecancellation of orders made to Pakistani exporters because of the hike in prices. Similarly, steelpipes,whichareasignificantPakistaniexport-50%oftheSriLankangalvanizedpipemarket was supplied by Pakistani producers in 2013-now face a cess. The imposition of a cess haspushedpricesupby26.5%,andthePakistanishareofthepre-galvanizedtubemarkethas shrunk from 60% in 2011 to 40% in 2013. The cess falls under the category of para-tariff, the impositionofwhichasper theFTA requiresmutualconsentofbothcountries.Thesechanges, like others made by both sides, seem to have been made without consultation with the FTA partner and have therefore been particularly disruptive.

66


ent

10.3 INSUFFICIENT INVOLVEMENT OF BUSINESSMEN IN DRAFTING OF FTA

Several exporters raised concerns about insufficient consultation with the business community during the drafting of trade agreements. This was an issue that was seen to apply across the board and to the Pak-Sri Lanka FTA in particular as well. The contention of the businessmen interviewed was that close attention was needed to ensure that the FTA terms were appreciative of the complex ins-and-outs of their businesses, since otherwise the FTAs may become counterproductive. For instance, one businessman raised concerns about the fact that concessions granted on key raw materials to a small country like Sri Lanka with relatively low production capacity created a difficult situation for the relevant businesses at home. The concern therefore was that since each sector has its own needs and challenges which are best known to stakeholders in those sectors, the government must involve the stakeholders to a greater degree during the drafting process of trade agreements.

10.4 LACK OF EFFECTIVE TRADE DISPUTE RESOLUTION

Another common concern was the arbitration of trade disputes. The current resources for arbitrationwere thought to be insufficient and trade disputes arose frequently due tomisconduct by traders on both sides. The absence of efficient forums for arbitration was taken to be an additional disincentive to parties on both sides.

Concerns were also raised about the potential for and difficulties involved in setting up Pakistani concerns in Sri Lanka. Several stakeholders involved in trade with Sri Lanka thought that investment in the country was a very attractive option, but cited difficulties faced in establishing a presence in the country. Most notable was Thatta Cement, a Pakistani company that suspended its project in Sri Lanka because the Sri Lanka Ports Authority did not execute its land lease agreement. Plans to establish Pakistani sugar mills in Sri Lanka also seem to havestalled.Thegeneralopinionofstakeholderswasthateffortwasrequiredonbothendsto facilitate Pakistani investment into Sri Lanka since there was serious interest from several parties within Pakistan.

11.0 VIEWS OF SELECTED HIGH POTENTIAL PAKISTANI EXPORTERS

11.1 PLASTICS

A key issue voiced regarding the plastics sector was that the Sri Lanka market did not appear to be large enough to merit expanding their exports to the country. However, there was an admission that the Sri Lankan market remains unexplored due to the afore-mentioned lack of linkages between the two countries’ business communities. The high costs of transporting plastic were cited as an additional impediment given the smaller market, though stakeholders said that if freight concessions were offered by Sri Lanka they would provide sufficient incentive to increase exports to the country. It was also suggested that warehouses be allotted by Sri Lanka to house Pakistani plastic products so that buyers may view the items before purchase.There was uneasiness with the terms of the FTA that seemed to have to do as much with the substantive details of the agreement as it did with the perception that the formulation of FTAs does not sufficiently involve businessmen.

11.2 FRUITS AND VEGETABLES

Theexportoffruitsandvegetablesfacesseveralchallengestoexpansionvis-à-visSriLanka.In 2012 the duty structure on certain vegetables such as onions was changed from custom duties to a special commodity levy that charged a fixed duty per kg. This had led to Pakistani exporters suddenly losing much of the benefit of the FTA concessions, and while the structure

67


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reverted to custom duty on certain key exports, exporters have encountered similar difficulties since then. There were complaints that duties were increased by Sri Lankan authorities without prior notice, leading to the disruption of transactions already underway. It was also pointed out that there was misconduct by traders from both countries and that greater attention was requiredbygovernmentbodiestocurbsuchbehaviour.Itwasclaimedthatinstanceswhereintraders perpetrate fraud knowing that the resulting dispute may not be resolved at all are not uncommon. Therefore the need for arbitration bodies was also reiterated.

11.3 ARTICLES OF IRON AND STEEL (PIPES)

As already mentioned, the export of steel pipes has faltered in the face of a cess charged bytheSriLankangovernment.IILpipescommandsthehighestmarketshareofgalvanizedpipes in the Sri Lankan market and has made an official appeal to the Pakistani Ministry of Commerce,butnoprogresshasbeenmadeontheissuesofar.Thisissuerequiresurgentattention since it sets a troubling precedent for those doing business with Sri Lanka, given the fact that the export of a major product has been disrupted by this sudden change that is in opposition to the intentions of the FTA. Furthermore, there were attempts to establish a plant for the production of steel pipes in Sri Lanka but these too stalled.

12.0 RECOMMENDATIONS

The central impediment facing Pak-Sri Lanka trade relations seems to be a relatively low amount of interest by the wider business communities of both countries in trade with the other country, as well as a correspondingly modest investment by government bodies on either side in the development of trade. The relationships between the myriad challenges facing Pak-Sri Lanka trade are complex and interrelated, but the afore-mentioned lack of initiative seems to be the central problem. Related issues such as unilateral changes that conflict with FTA terms and a lack of arbitration bodies adversely impact existing trade and de-incentivise entry into trade, but the primary problem still seems to be the lack of serious intent to build strong ties to begin with. Moreover, the identification of concrete business opportunities and general potential for trade will mitigate the discouragement that results from ancillary problems such as the risk of unresolved trade disputes, since the potential gains will make doing trade worth it. A concerted effort to bring the business communities of either country into regular contact and enable the countries’ trade bodies to work in concert is therefore the likely antidote to the fledgling Pak-Sri Lanka trade relationship. Moreover, an effort to this end will likely be well-served by Pakistan and Sri Lanka’s strong political ties.

Table 32. Recommendations to improve Pakistan-Sri Lanka trade relations

RECOMMENDATIONS

1. Regular trade delegations and single country exhibitions to build ties between business communities

2. Increased involvement of stakeholders in drafting of FTA, item-by-item discussion

3. Discussions before undertaking changes that conflict with FTA terms

4. Reliable and expeditious mechanisms for the resolution of trade disputes

12.1 TRADE DELEGATIONS AND SINGLE COUNTRY EXHIBITIONS

This report has attempted to outline the significant potential for trade that exists between Pakistan and Sri Lanka. Efforts must be made to further explore opportunities for expanding trade between the two countries and give businessmen reasons to focus on Sri Lanka as a trading partner. Trade bodies and business promotion forums must play a central role in raising

68


ent

awareness about the scope of these opportunities. It was suggested by several businessmen andbureaucratsthatSriLanka,despiteitssmallsize,possessesgreatpotentialasatradingpartner and investment destination for Pakistan. This report suggests that much potential arises from both countries being healthy markets for the other’s products. In addition to this, Sri Lanka is currently in the process of rapid development and rebuilding following the conclusion of long-lasting political strife, and Pakistan can play a role in this growth. Sri Lanka has an FTA with India and will soon sign another with China, and therefore investment in Sri Lanka will allow Pakistani companies restriction-free access to these huge markets. With reference to the concern noted in the previous section, it should be kept in mind that while countries such as Malaysia and Indonesia do record greater world imports than Sri Lanka, Pakistan’s exports to Sri Lanka happen to be disproportionately high- in 2013 Pakistan’s exports to Malaysia and Indonesia were around USD 200 million and USD 144 million respectively, whereas exports to Sri Lanka were USD 316 million. In other words, Pakistan is currently a more significant trading partner for Sri Lanka than it is for either Malaysia or Indonesia.

Concerns about the lack of a back-and-forth between the two countries’ business communities arewell-foundedandneedtobeaddressed.Tothisendseveralbusinessmenemphasizedthe need for comprehensive single country exhibitions and regular trade delegations. Single country exhibitions should not be tokenistic and should involve the presence of major producers of relevant export items. Similarly, trade delegations must be composed of key businessmen who have been apprised of the kinds of opportunities available in the other country’s market. It was suggested that more could be done to facilitate Sri Lankan delegations to Pakistan by trade bodies, with particular attention paid to local security concerns that may discourage such visits. Without unhindered communication between Pakistan and Sri Lanka’s business communities trade will continue to stall, since while opportunities exist on paper, a channel for the exchange of ideas and proposals must be developed in order to translate said opportunities into trade figures.As already stated, this appears to be the primary hurdle to better Pak-Sri Lanka relations, since the FTA terms themselves are comprehensive and favourable and the problems that do arise during trade are surmountable. Delegations and single-country exhibitions will also help to raise awareness regarding the FTA in both countries.

12.2 INCREASED INVOLVEMENT OF STAKEHOLDERS IN FORMULATION OF FTA TERMS

Producers and exporters felt that the Pak-Sri Lanka FTA, much like other FTAs signed by Pakistan, did not sufficiently take into account their views and expertise during the drafting phase and suffered for it. However, it should be noted that most of their substantive criticism was directed not towards the terms of the FTA, but rather ancillary issues such as the need for more regular delegations and arbitration forums. Even so, increased participation of stakeholders during the drafting phase of future FTAs will serve to make FTAs more sensitive to Pakistan’s interests while also creating a more inclusive exchange between policy makers and businessmen. While the terms of the Pak-Sri Lanka FTA seems to be by and large in the interests of both sides, businessmen may still take issue on certain points that they feel they were unable to present a case for, and to avoid this a more inclusive drafting process may be in order.

12.3 DISCUSSION BEFORE CHANGES TO FTA TERMS

Both countries must work to make sure any changes made in tariff policy or any other FTA terms follow only after an agreement between Pakistan and Sri Lanka is reached. Sudden unilateral changes to tariff rates or regulations that conflict with the spirit of the FTA act as a disincentive to businessmen who are already reluctant to step into an underdeveloped market. Both governments must acknowledge the importance of the FTA and assure businessmen that the terms will be adhered to.Furthermore, once there are strong ties between the two

69


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countries’businesscommunities,stabilityvis-à-visthetermsofFTAwilllikelyfollowasPak-Sri Lanka trade becomes more and more important.

12.4 FORUMS FOR EFFICIENT RESOLUTION OF TRADE DISPUTES

Efficient forums for the arbitration of trade disputes are sorely needed, as reflected by the reiteration of this issue throughout our survey of businessmen. Pakistan-Sri Lanka trade relationscanbecategorizedasstillbeingnascent,andbusinessmenrequirefurtherincentivesto step into the market. If there are too many instances of unresolved trade disputes many businessmen will simply choose to concentrate elsewhere.


ent

Annexures

71


ent

Annexure A: List of most exportable product lines

Table 1 lists the 275 Pakistani export items to Sri Lanka at the 6 digit HS code with a trade potential greater than or equal to USD 1 million. Items with favourable CAGR metrics are highlighted in blue.

Tab

le T

able

31.

Sri

Lan

kan

exp

ort

item

s o

n no

co

nces

sio

n lis

t w

ith a

n

R

CA

ad

v. o

ver

Pak

ista

n

Fig

ures

in U

SD

Mill

ions

S

RI L

AN

KA

RC

A A

DV

AN

TAG

E IT

EM

S W

ITH

NO

CO

NC

ES

SIO

N

HS

Co

de

Pro

duc

t La

bel

Pak

201

3 E

xpo

rt

SL

2013

W

orl

d

Imp

ort

Pak

201

3 W

orl

d

Exp

ort

Trad

e P

ote

ntia

lP

ak t

ariff

Pak

-SL

CA

GR

SL

Imp

ort

CA

GR

Pak

E

xpo

rt

CA

GR

Ind

ia

Tari

ffP

ak T

ariff

A

dv.

2523

29P

ortla

nd c

emen

t nes

44.4

431

2.28

506.

6626

7.84

043

.5%

27.8

%37

.6%

00

1701

99R

efin

ed s

ugar

, in

solid

form

, nes

34.3

925

7.24

487.

7822

2.85

7.5

_9.

5%48

.0%

14.9

7.4

3004

90M

edic

amen

ts n

es, i

n do

sage

9.41

73.4

827

9.61

64.0

70

12.4

%14

.2%

9.1%

00

7308

90Structures&partsofstructures,i/s(exprefab

bldg

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dg n

o.94

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0.00

46.5

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46.5

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9%0

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5208

39Wovenfabricsofcotton,>/=85%,notmore

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0

2106

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od p

repa

ratio

ns n

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0128

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7.0%

13.4

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6203

42Mens/boystrousersandshorts,ofcotton,not

knitt

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5209

42Denimfabricsofcotton,>/=85%,morethan

200g/m2

23.4

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9415

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72


ent

SR

I LA

NK

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VA

NTA

GE

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WIT

H N

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CE

SS

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HS

Co

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Pro

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201

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rt

SL

2013

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d

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ia

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5205

11Cottonyarn,>/=85%,single,uncom

bd,>/=714.29dtex,ntputup

0.55

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5.45

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3907

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olye

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phth

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2513

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204.

5512

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.0%

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204.

5512

.00

036

.0%

22.2

%11

.7%

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6204

69Womens/girlstrousers&shorts,ofothertextile

mat

eria

ls,n

ot k

nitte

d0.

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63.3

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0%27

.0%

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%0

0

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11.4

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4.2

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0.57

11.8

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-17.

7%13

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0

5205

22Cottonyarn,>/=85%,single,combed,714.29

>dtex>/=232.56,notputup

2.14

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1.70

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0

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21R

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13.5

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19Articlesofjewellry&pttherofof/oprecmetw/nplatd/cladwprecmet

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057

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2009

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572

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95


ent

Annexure B: List of product lines on no concession lists with high RCATable 3 lists Pakistani items on Sri Lanka’s no concession list that Pakistan has a higher RCA in than does Sri Lanka.

PA

KIS

TAN

RC

A A

DV

AN

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chap

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227

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73.6

96

8214

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anic

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(in

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559

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4797

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189

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8211

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242

153.

760

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4106

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262

641

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1352

3883

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00

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60

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97


ent0710

80Vegetables,frozennes

054

1003

554

302.

256

02.

256

2009

90M

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unf

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030

2.25

60

2.25

6

1006

10R

ice

in th

e hu

sk (

padd

y or

rou

gh)

021

2826

2116

.42.

256

02.

256

1604

20Fi

sh p

repa

red

or p

rese

rved

, exc

ept w

hole

or

in p

iece

s0

3759

5337

11.3

2.25

60

2.25

6

6403

99Footwear,outersolesofrubber/plasticsuppersofleather,nes

090

374

610

903

3.4

2.25

60

2.25

6

8212

20Safetyrazorblades,includingrazorbladeblanksinstrips

016

3410

314

1634

2.5

3.76

1.88

1.88

2007

10Homoprep(jams,fruitjelliesetc)ckdprepwhether/ntsugard/

swee

tend

00

873

030

1.50

40

1.50

4

6904

10B

uild

ing

bric

ks0

2092

820

301.

504

01.

504

1902

19U

ncoo

ked

past

a, n

ot s

tuffe

d or

oth

erw

ise

prep

ared

, nes

493

099

0292

617

.51.

504

01.

504

9404

30S

leep

ing

bags

02

1053

217

.51.

504

01.

504

6907

10Ti

les,

cub

es a

nd s

im0

124

469

124

303.

008

1.88

1.12

8

5607

29Tw

ine

nes,

cor

dage

, rop

es a

nd c

able

s, o

f sis

al te

xtile

fibr

es0

3423

734

153.

008

1.88

1.12

8

6405

10Fo

otw

ear

with

upp

ers

of le

athe

r or

com

posi

tion

leat

her,

nes

063

030

2863

06.

83.

008

1.88

1.12

8

98


ent

Tab

le 4

list

s S

ri L

anka

n ite

ms

on

Pak

ista

n’s

no c

onc

essi

on

list

that

Sri

Lan

ka h

as a

hig

her

RC

A in

th

an d

oes

Pak

ista

n.

S

RI L

AN

KA

RC

A A

DV

AN

TAG

E IT

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ITH

NO

CO

NC

ES

SIO

N

HS

Co

de

Pro

duc

t La

bel

SL

Exp

ort

s 20

13 t

o

Pak

Pak

Wo

rld

Im

po

rts

2013

Tari

ff o

n S

LTr

ade

Po

tent

ial

Gro

wth

SL

RC

AP

ak R

CA

SL

RC

A

Ad

v.

5513

19Wovenfabricsofothsynstaplefib,<=170g/m2,unbl/bl

00

150

041

5.48

2.25

641

3.22

4

8701

10P

edes

tria

n co

ntro

lled

trac

tors

065

305

071

.44

071

.44

5509

22Yarn,>/=85%ofpolyesterstaplefibres,multiple,notputup,nes

063

006.

338

063

.92

063

.92

5515

11W

oven

fab

of p

olye

ster

sta

ple

fib m

ixd

w v

isco

se r

ayon

sta

ple

fib,n

es0

1037

1542

20

54.5

20.

752

53.7

68

4022

1M

ilk a

nd c

ream

pow

der

unsw

eete

ned

exce

edin

g 1.

5% fa

t0

5733

2515

30

45.1

20.

752

44.3

68

1513

29Palmkernel/babassuoiltheirfract,refindbutnotchemicallymodifid

095

2225

.633

041

.36

041

.36

2401

10To

bacc

o, u

nman

ufac

ture

d, n

ot s

tem

med

or

strip

ped

022

85

228

043

.24

3.76

39.4

8

6117

90Partsofgarments/ofclothgaccessories,oftextilematerials,knittd

023

825

238

033

.84

033

.84

5402

62Ya

rn o

f pol

yest

er fi

lam

ents

, mul

tiple

, nes

, not

put

up

059

816.

32

026

.32

026

.32

6212

90C

orse

ts,b

race

s &

sim

ilar

artic

les

& p

arts

ther

eof,o

f tex

tile

mat

eria

ls0

405

2540

50

26.3

20

26.3

2

8418

91Furnituredesignedtoreceiverefrigeratingorfreezingequipment

056

825

0-3

26.3

20

26.3

2

6217

90P

arts

of g

arm

ents

or

of c

loth

g ac

cess

orie

s ne

s,of

tex

mat

,not

kni

ttd0

121

512

10

22.5

60

22.5

6

9022

0G

reen

tea

(not

ferm

ente

d) in

pac

kage

s ex

ceed

ing

3 kg

051

1210

4625

020

.68

020

.68

3920

71Fi

lm a

nd s

heet

etc

, non

-cel

lula

r et

c, o

f reg

ener

ated

cel

lulo

se0

101

206

018

.80

18.8

6215

90Ti

es, b

ow ti

es a

nd c

rava

ts, o

f oth

er te

xtile

mat

eria

ls, n

ot k

nitte

d0

9725

250

18.8

018

.8

6108

29Womens/girlsbriefsandpanties,ofothertextilematerials,knitted

249

250

2420

.68

2.25

618

.424

5512

11Wovenfabrics,containing>/=85%ofpolyesterstaplefibres,unblorbl

087

157

022

.56

4.51

218

.048

4805

40P

aper

, filt

er, i

n ro

lls o

r sh

eets

, unc

oate

d0

238

999

016

.92

016

.92

2815

11S

odiu

m h

ydro

xide

(ca

ustic

sod

a) s

olid

059

320

10

16.9

20.

752

16.1

68

3307

41A

garb

atti

& o

ther

odo

rifer

ous

prep

arat

ions

whi

ch o

pera

te b

y bu

rnin

g0

122

.51

015

.04

015

.04

8703

21A

utom

obile

s w

rec

ipro

catg

pis

ton

engi

ne d

ispl

acg

not m

ore

than

100

0 cc

020

6743

525

015

.04

015

.04

5402

52Ya

rn o

f pol

yest

er fi

lam

ents

, sin

gle,

>50

turn

s pe

r m

etre

, not

put

up

049

746.

312

10

13.1

60

13.1

6

5509

21Yarn,>/=85%ofpolyesterstaplefibres,single,notputup

048

186

6.3

40

13.1

60

13.1

6

1404

90Ve

geta

ble

prod

ucts

nes

1196

124

306

15.3

5772

9018

18.8

6.76

812

.032

3907

50A

lkyd

res

ins

015

1020

10

11.2

80

11.2

8

4013

90In

ner

tube

s of

rub

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nes

977

923

.835

38

13.1

63.

008

10.1

52

99


ent

6108

19Womens/girlsslipsandpetticoats,ofothertextilematerials,knitted

017

2517

024

.44

15.0

49.

4

3909

10U

rea

resi

ns; t

hiou

rea

resi

ns0

571

22.5

00

9.4

09.

4

3920

69Fi

lm a

nd s

heet

etc

, non

-cel

lula

r et

c, o

f pol

yest

ers

nes

016

8120

10

9.4

09.

4

3921

12Fi

lm a

nd s

heet

etc

, cel

lula

r of

pol

ymer

s of

vin

yl c

hlor

ide

038

7920

170

9.4

09.

4

4016

95R

ubbe

r ar

ticle

s in

flata

ble

nes,

vul

cani

sed

rubb

er0

121

2012

1-5

9.4

09.

4

7208

54Hotrolliron/steel,notcoil>600mmx<3mm

011

3215

00

9.4

09.

4

7216

69A

ngle

s, s

hape

s an

d se

ctio

ns, c

old

form

ed, n

es0

429

2022

40

9.4

09.

4

3917

21Tu

bes,

pip

es a

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, rig

id; o

f pol

yeth

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e0

538

200

09.

41.

504

7.89

6

3921

13Fi

lm a

nd s

heet

etc

, cel

lula

r of

pol

yure

than

e0

1883

320

40

7.52

07.

52

5402

33Te

xtur

ed y

arn

nes,

of p

olye

ster

fila

men

ts,n

ot p

ut u

p fo

r re

tail

sale

018

1493

6.3

570

7.52

07.

52

7208

53Hotrolliron/steel,notcoil>600mmx3-4.75mm

013

5015

00

7.52

07.

52

7321

12Cookingappliances&platewarmersforliquidfuel,ironorsteel

01

250

07.

520

7.52

8301

30Lo

cks

of a

kin

d us

ed fo

r fu

rnitu

re o

f bas

e m

etal

030

8125

00

7.52

07.

52

8702

10D

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l pow

ered

bus

es w

ith a

sea

ting

capa

city

of >

nin

e pe

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s0

3871

118

.30

07.

520

7.52

1513

19C

ocon

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copr

a) o

il&its

frac

tions

ref

ined

but

not

che

mic

ally

mod

ified

517

4965

20.8

3638

143

5.64

05.

64

1517

10Margarine,excludingliquidmargarine

018

349.

623

50

5.64

05.

64

1518

00Animal/vegfats&oils&fractboildoxid,etc,&indmix/prepnesex15.16

013

1215

.41

05.

640

5.64

3904

10P

olyv

inyl

chl

orid

e, n

ot m

ixed

with

any

oth

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ubst

ance

s0

2254

910

00

5.64

05.

64

8703

22A

utom

obile

s w

rec

ipro

catg

pis

ton

engi

ne d

ispl

acg

> 1

000

cc to

150

0 cc

019

6831

6063

05.

640

5.64

8703

33A

utom

obile

s w

ith d

iese

l eng

ine

disp

laci

ng m

ore

than

250

0 cc

078

409

9032

80

5.64

05.

64

8704

21D

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l pow

ered

truc

ks w

ith a

GV

W n

ot e

xcee

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five

tonn

es0

5344

660

4843

05.

640

5.64

9028

30E

lect

ricity

sup

ply,

pro

duct

ion

and

calib

ratin

g m

eter

s0

1707

257

05.

640

5.64

8418

21R

efrig

erat

ors,

hou

seho

ld ty

pe, c

ompr

essi

on-ty

pe0

3150

250

05.

641.

504

4.13

6

9609

10P

enci

ls a

nd c

rayo

ns, w

ith le

ads

enca

sed

in a

rig

id s

heat

h, n

es0

5643

202

05.

641.

504

4.13

6

1511

90P

alm

oil

and

its fr

actio

ns r

efin

ed b

ut n

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hem

ical

ly m

odifi

ed77

1610

012

30.1

630

773.

760

3.76

1513

11C

ocon

ut (

copr

a) o

il cr

ude

011

5120

.911

51-1

63.

760

3.76

1515

50Sesameoil&itsfractionswhether/notrefind,butnotchemicallymodifid

08

9.6

80

3.76

03.

76

1517

90Ediblemx/prepofanimal/vegfats&oils/offractionsexhdNo15.16

208

6676

14.4

1499

198

3.76

03.

76

2208

30W

hisk

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062

290

570

03.

760

3.76

3901

10P

olye

thyl

ene

havi

ng a

spe

cific

gra

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of l

ess

than

0.9

40

2343

205

520

3.76

03.

76

3905

12Polyvinylacetate,inaqueousdispersion

057

920

470

3.76

03.

76

100


ent

SR

I LA

NK

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CA

AD

VA

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GE

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MS

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H N

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HS

Co

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Pro

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SL

Exp

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s 20

13 t

o

Pak

Pak

Wo

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Im

po

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2013

Tari

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n S

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Po

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Gro

wth

SL

RC

AP

ak R

CA

SL

RC

A

Ad

v.

3907

91P

olye

ster

s ne

s, u

nsat

urat

ed0

382

200

03.

760

3.76

3920

49P

late

s, s

heet

s, fi

lm, f

oil a

nd s

trip

, of n

on-c

ellu

lar

poly

mer

s of

vin

y0

9051

204

-13

3.76

03.

76

4013

20In

ner

tube

s of

rub

ber

for

bicy

cles

151

425

513

-13.

760

3.76

4811

49G

umm

ed o

r ad

hesi

ve p

aper

and

pap

erbo

ard,

sur

face

-col

oure

d, s

urfa

ce-

dec

015

350

20

3.76

03.

76

5401

10S

ewin

g th

read

of s

ynth

etic

fila

men

ts0

9742

6.3

734

-13.

760

3.76

5402

20Hightenacityyarn(o/tsewgthread),ofpolyesterfilaments,notputup

015

76.

315

30

3.76

03.

76

5515

13Wovenfabofpolyesterstaplefibresmixdw/wool/fineanimalhair,nes

256

115

02

3.76

03.

76

7208

40Hotrolliron/steel,notcoil>600mmreliefpattern

054

615

00

3.76

03.

76

7210

30Flatrolledi/nas,electrolyticallyzinccoated>600mm

023

869

14.5

00

3.76

03.

76

7216

31Sections,U,i/nas,nfwthanhotrolld,drawnorextrudd,hght80mmormore

015

5612

.51

03.

760

3.76

7216

33Sections,H,i/nas,nfwthanhotrolld,drawnorextrudd,hght80mmormore

045

4912

.58

03.

760

3.76

8415

83A

ir co

nd m

ach

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not

inco

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g re

frige

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it0

3480

250

03.

760

3.76

8544

70O

ptic

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bre

cabl

es, m

ade

up o

f ind

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ually

she

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025

8025

10

3.76

03.

76

8704

22D

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l pow

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truc

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five

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xc tw

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2825

830

500

3.76

03.

76

6217

10C

loth

ing

acce

ssor

ies

nes,

of t

extil

e m

ater

ials

, not

kni

tted

013

215

1321

05.

642.

256

3.38

4

2836

30S

odiu

m h

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genc

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(so

dium

bic

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)0

1153

200

03.

760.

752

3.00

8

3920

20Fi

lm a

nd s

heet

etc

, non

-cel

lula

r et

c, o

f pol

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s of

pro

pyle

ne1

1463

020

181

3.76

0.75

23.

008

3920

43P

late

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752

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8415

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018

576

21.3

810

3.76

0.75

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6910

90C

eram

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inks

, was

h ba

sins

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& s

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nita

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xtur

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es0

114

2518

05.

643.

008

2.63

2

4011

40P

neum

atic

tire

s ne

w o

f rub

ber

for

mot

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2510

9625

352

213.

761.

504

2.25

6

8211

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239

1037

-14

1.88

01.

88

1514

99Higherucicacidrapeorcolzaoil"fixedoilwhichhasanerucicacid

00

12.5

00

1.88

01.

88

1515

19Li

nsee

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its

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, ref

ined

but

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che

mic

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mod

ified

09

10.3

20

1.88

01.

88

1515

29Maize(corn)oilanditsfractions,refinedbutnotchemicallymodified

030

724

.10

01.

880

1.88

2203

00B

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mad

e fro

m m

alt

047

390

473

01.

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1.88

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150

1.88

01.

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2403

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in a

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221

2522

10

1.88

01.

88

101


ent

3209

90Paints&varnishesbasedonpolymers,dispersedinanaqueous

med

ium

,nes

030

7712

.511

40

1.88

01.

88

3214

10M

astic

s; p

aint

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filli

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022

6317

630

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88

3307

10P

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, sha

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or

afte

r sh

avin

g pr

ep0

1031

12.5

193

01.

880

1.88

3307

20P

erso

nal d

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s &

ant

iper

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027

1012

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00

1.88

01.

88

3814

00O

rgan

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s&th

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mov

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025

2920

108

01.

880

1.88

3901

20P

olye

thyl

ene

havi

ng a

spe

cific

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of 0

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or m

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018

9484

50

01.

880

1.88

3906

90A

cryl

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in p

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032

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01.

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1.88

3909

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1632

200

01.

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1.88

3909

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2553

200

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1.88

3912

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8888

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046

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3917

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015

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01.

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128


ent

Text of Pakistan- Sri Lanka Free

Trade Agreement

105


ent

FREE TRADE AGREEMENT BETWEENTHE ISLAMIC REPUBLIC OF PAKISTAN AND

THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA

The Government of the Islamic Republic of Pakistan and the Government of the Democratic Socialist Republic of Sri Lanka (hereinafter referred to individually as a “Contracting Party” and collectively as the “Contracting Parties”),

CONSIDERING that the expansion of their domestic markets, through commercial cooperation, isan importantprerequisite foraccelerating theirprocessesofeconomicdevelopment,

BEARING in mind the desire to promote mutually beneficial bilateral trade in goods and services,

CONVINCED of the need to establish and promote free trade arrangements for strengthening intra-regional economic cooperation and the development of national economies,

RECOGNIZING that progressive reductions and elimination of obstacles to bilateral trade through a bilateral free trade agreement (hereinafter referred to as “The AGREEMENT”) will contribute to the expansion of bilateral as well as world trade,

HAVE agreed as follows:

ARTICLE I - OBJECTIVES

The Contracting Parties shall establish a Free Trade Area in accordance with the provisions of this Agreement and in conformity with relevant provisions of the General Agreement on Tariffs and Trade, 1994.

2. The objectives of this Agreement are:

(i) To promote through the expansion of trade in goods and services the harmonious development of economic relations between Pakistan and Sri Lanka,

(ii) To provide fair conditions of competition for trade in goods and services between Pakistan and Sri Lanka,

(iii) To contribute in this way, by the removal of barriers to trade in goods and services, to

the harmonious development and expansion of bilateral as well as world trade,

ARTICLE II - DEFINITIONS

For the purpose of this Agreement:

1.“Tariffs” mean basic customs duties included in the national schedules of the Contracting Parties,

2. “Para tariffs” mean border charges and fees, other than “tariffs”, on foreign trade transactions of a tariff-like effect which are levied solely on imports, but not those indirect taxes and charges, which are levied in the same manner on like domestic products. Import charges corresponding to specific services rendered are not considered as para-tariff measures,

106


ent

3. “Non-tariff barriers” mean any measures, regulation, or practice, other than “tariffs” and “para-tariffs”, the effect of which is to restrict imports, or to significantly distort trade within the Contracting Parties,

4. “Products” mean all products including manufactures and commodities in their raw, semi-processed and processed forms.

5. “Preferential Treatment” means any concession or privilege granted under this Agreement by a Contracting Party through the elimination of tariffs on the movement of goods and services,

6. “The Committee” means the Joint Committee referred to in Article Xl,

7. “Serious Injury” means significant damage to domestic producers, of like or similar products, resulting from a substantial increase of preferential imports in situations which cause substantial losses in terms of earnings, production or employment unsustainable in the short term. The examination of the impact on the domestic industry concerned shall also include an evaluation of other relevant economic factors and indices having a bearing on the state of the domestic industry of that product,

8. “Threat of Serious Injury” means a situation in which a substantial increase of preferential imports is of a nature so as to cause “serious injury” to domestic products, and that such Injury, although not yet existing is clearly imminent. A determination of threat of serious injury shall be based on facts and not on mere allegation, conjecture, or remote or hypothetical possibility.

9. “Critical circumstances” mean the emergence of an exceptionalsituation where massive preferential imports are causing or threatening to cause “serious injury” difficult to repair and which calls for immediate action.

ARTICLE III - ELIMINATION OF TARIFFS, PARA TARIFFS

AND NON-TARIFF BARRIERS

1. The Contracting Parties hereby agree to establish a Free Trade Area for the purpose of free movement of goods and services between their countries through elimination of tariffs on the movement of goods and services in accordance with the provisions of Annexes A& B which shall form an integral part of this Agreement.

2. The Contracting Parties further agree to eliminate from the date this Agreement enters into force,allnon-tariffbarriers,andanyotherequivalentmeasureson themovementof goods and services, other than those imposed in accordance with Article IV of this Agreement.

3. The Contracting Parties also agree not to make any increase in the existing para tariffs, if any, or introduce new or additional para tariffs, without mutual consent.

4. In the implementation of this Agreement the Contracting Parties shall pay due regard to the principle of reciprocity.

107


ent

ARTICLE IV - GENERAL EXCEPTIONS

Nothing in this Agreement shall prevent a Contracting Party from taking action and adopting measures, which it considers necessary for the protection of its national security, the protection of public morals, the protection of human, animal or plant life and health, and the protection of articles of artistic, historic, and archaeological value, as is provided for in Article XX and XXI of the General Agreement on Tariff and Trade, 1994 and WTO Agreement on Application of Sanitary and Phytosanitary Measures.

ARTICLE V - NATIONAL TREATMENT

The Contracting Parties affirm their commitment to the principles enshrined in Article III of GATT 1994.

ARTICLE VI - STATE TRADING ENTERPRISES

1. Nothing in this Agreement shall be construed to prevent a Contracting Party from maintaining or establishing a state trading enterprise as understood in Article XVII of General Agreement on Tariff and Trade, 1994.

2. Each Contracting Party shall ensure that any state enterprise that it maintains or establishes acts in a manner that is not inconsistent with the obligations of that Contracting Party under this Agreement and accords nondiscriminatory treatment in the import from and export to the other Contracting Party.

ARTICLE VII - RULES OF ORIGIN

1. Products covered by the provisions of this Agreement shall be eligible for preferential treatment provided they satisfy the Rules of Origin as set out in Annex C to this Agreement which shall form an integral part of this Agreement.

2. For the development of specific sectors of the industry of either Contracting Party, lower value addition norms for the products manufactured or produced by those sectors may be considered through mutual negotiations.

ARTICLE VIII - SAFEGUARD MEASURES

1. If any product which is subject to preferential treatment under this Agreement is imported into the territory of a Contracting Party in such amanner or in such quantities as tocause or threaten to cause serious injury in the territory of that Contracting Party, such Contracting Party may, with prior consultations with the other Contracting Party, except in critical circumstances, suspend provisionally without discrimination, the preferential treatment accorded to that product under the Agreement.

2. When action has been taken by either Contracting Party in terms of paragraph 1 of this Article, it shall simultaneously notify the other Contracting Party and the Joint Committee established in terms of Article Xl. The Committee shall enter into consultations with the Contracting Parties and endeavour to reach mutually acceptable agreement to remedy the situation. If the consultations fail to resolve the issue within sixty days, the Contracting Partyaffectedbysuchactionshallhavetherighttowithdrawtheequivalentpreferentialtreatment in accordance with the WTO Agreement on Safeguards.

108


ent

ARTICLE IX - DOMESTIC LEGISLATION

The Contracting Parties shall be free to apply their domestic legislation to restrict imports in cases where prices are influenced by unfair trade practices like subsidies or dumping. Subsidies and dumping shall be understood to have the same meaning as in the General Agreement on Tariff and Trade 1994 and the relevant WTO Agreements.

ARTICLE X - BALANCE OF PAYMENT MEASURES

1. Notwithstanding the provisions of this Agreement, any Contracting Party, facing balance of payments difficulties, may suspend provisionally the preferential treatment as to the quantityandvalueofmerchandisepermittedtobeimportedundertheAgreement.Whensuch action has taken place, the Contracting Party, which initiates such action, shall simultaneously notify the other Contracting Party.

2. A Contracting Party, which takes action according to paragraph 1 of this Article, shall afford, uponrequestfromtheotherContractingParty,adequateopportunitiesforconsultationswith a view to preserving the stability of the preferential treatment provided under this Agreement.

ARTICLE Xl - JOINT COMMITTEE

1. A Joint Committee shall be established at Ministerial level. The Committee shall meet initially within six months of the entry into force of the Agreement and thereafter at least once a year to review the progress made in the implementation of this Agreement and to ensure that benefits of trade expansion emanating from this Agreement accrue to the ContractingPartiesequitably.ThemeetingsoftheJointCommitteewilltakeplace,totheextent possible, to coincide with the meetings of the Sri Lanka-Pakistan Joint Economic Commission.

2. TheCommitteemaysetupanyotherSub-Committeeand/orWorkingGroupforspecificpurposes as it may consider necessary.

3. In order to facilitate cooperation in customs matters, the Contracting Parties agree to establishaWorkingGrouponcustoms related issues includingharmonizationof tariffheadings.TheWorkingGroupshallmeetasoftenasrequiredandshallreporttotheJointCommittee on its deliberations.

4. (i)TheCommitteeshallaccordadequateopportunitiesforconsultationonrepresentationsmade by either Contacting Party with respect to any matter affecting the implementation of the Agreement.

(ii) The Committee shall adopt appropriate measures for settling any matter arising from such representations within 6 months of the representation having been made. Each Contracting Party shall implement such measures immediately.

5. The Committee shall nominate one apex Chamber of Trade and Industry in each country as the nodal chamber to represent the views of the trade and industry on matters relating to this Agreement.

109


ent

ARTICLE XII - CONSULTATIONS

1. Each Contracting Party shall accord sympathetic consideration to and shall afford adequateopportunityforconsultationsregardingsuchrepresentationsasmaybemadeby the other Contracting Party with respect to any matter affecting the operation of this Agreement.

2. TheCommitteesetupunderArticleXlmaymeetat therequestofaContractingPartyto consider any matter for which it has not been possible to find a satisfactory solution through consultations under paragraph 1 above.

ARTICLE XIII - SETTLEMENT OF DISPUTES

1. Any dispute that may arise between commercial entities of the Contracting Parties shall be referred for amicable settlement to the nodal Chambers. Such references shall, as far as possible, be settled through mutual consultations by the Chambers. In the event of an amicable solution not being found, the matter shall be referred to an Arbitration Tribunal for a binding decision. The Tribunal shall be constituted by the Joint Committee.

2. Any dispute between the Contracting Parties regarding the interpretation and application of this Agreement or any instrument adopted within its framework shall be amicably settled through negotiations failing which a notification may be made to the Committee by any one of the Contracting Parties for settlement of the dispute.

ARTICLE XIV - DURATION AND TERMINATION OF AGREEMENT

This Agreement shall remain in force until either Contracting Party terminates this Agreement by giving six months written notice to the other Contracting Party, through Diplomatic Channels, of its intention to terminate the Agreement.

ARTICLE XV - AMENDMENTS

The Agreement may be modified or amended through mutual agreement of the Contracting Parties. Proposals for such modifications or amendments shall be submitted to the Joint Committee and upon acceptance by the Joint Committee shall be approved in accordance with the applicable legal procedures of each Contracting Party. Such modifications or amendments shall become effective when confirmed through an exchange of diplomatic notes and shall constitute an integral part of the Agreement:

Provided, however, that in emergency situation proposals for modifications may be considered by the Contracting Parties and if agreed, given effect to through an exchange of diplomatic notes.

ARTICLE XVI – ANNEXES TO BE FINALISED

Annex A (Attachments I, II, III, and IV) containing the No Concession lists and tariff preferences to be granted by the Government of Pakistan and Annex B (Attachments I, II, and III) containing the No Concession list and tariff preferences to be granted by the Government of Sri Lanka andAnnexCcontainingtheRulesofOriginundertheAgreementshallbefinalizedwithinaperiod of 90 days of the signing of this Agreement.

All the Annexes shall become effective and shall constitute an integral part of the Agreement when the two Contracting Parties have confirmed through the exchange of Diplomatic Notes.

110


ent

ARTICLE XVII – ENTRY INTO FORCE

The Agreement shall enter into force on the 30th day after the Contracting Parties hereto have notified each other through Diplomatic Channels that their respective constitutional requirementsandprocedureshavebeencompletedinrespectofthisAgreementincludingthe Annexes under Article XVI.

InWitnessWhereoftheundersigned,dulyauthorizedtheretobytheirrespectiveGovernments,have signed this Agreement.

Done in duplicate at Colombo this 1st day of August, 2002 in two originals in the English language.


ent

Sectorial Perspective

regarding effects of the Pakistan-Sri

Lanka FTA

112


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Sectorial Perspective on Effects of Pakistan-Sri Lanka FTA

Shown ahead are the opinions of a Pakistani industry regarding the Pakistan-Sri Lanka FTA,and the perceived effects it has had or may in the future have on the local manufacturing industry. This submission (including, but not limited to interpretations, conclusions and recommendations) is solely reflective of the opinions of the company that has submitted the information, and does not reflect the findings of the report or the views of the Pakistan Business Council. The purpose of including this submission is to allow for a wider range of viewpoints.

Pakistan’s Automobile Industry

The Auto Sector of Pakistan has voiced concerns regarding potential PSFTA concessions allowingtheentryofsubsidizedIndianautoproductsintothePakistanimarketthroughSriLanka. They have noted that Sri Lanka has sought concessions along auto product tariff lines during a review of the PSFTA in 2008 within which it does not itself have export potential. However,investmentfromIndiainSriLankawouldallowbothSriLankaandIndiatocapitalizeon the requestedconcessions.Partssuchas IgnitionCoils (HSCode851130),CDIUnits(Old HS Code 853230 Revised HS Code 851180) and parts and accessories for motorcycles including mopeds (Old HS Code 871419, revised HS Code 871410, this HS Code includes 49localizedparts)etc.facebasiccustomdutyat35%andanadditionaldutyof15%.Thesesame parts, if imported from Sri Lanka, would face a duty of 5 % or less. The view of the auto sector is therefore that concessions to Sri Lanka on such products should be strictly blocked, since they would allow cheaper Indian products to harm a domestic value-adding industry.

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An Assessment of the Pakistan-Sri Lanka - pbc.org.pk · responsibility of the author(s) and do not necessarily reflect the opinion of the WTO, IMF or UN. ... 5.0 Pakistan Sri Lanka