ISLAMABAD, July 13: Pakistan will sign a free trade agreement (FTA) with Sri Lanka when President Pervez Musharraf visits Colombo on July 31, that could give existing $130 million bilateral trade an 80 per cent boost.

“We are trying to get the agreement signed during the visit of president to Sri Lanka beginning on July 31”, said Commerce Minister Abdul Razak Dawood on Saturday.

Dawood who returned from Colombo early this week told a news conference that Sri Lankan prime minister and commerce minister were very supportive of the FTA. He said that in this connection Sri Lankan foreign minister and commerce minister would visit Islamabad on July 15 and July 24 respectively.

Pakistan has provided a list of 315 exportable items it wanted Sri Lanka to allow into its market either at zero rated duty or with reduced duty rates. Sri Lanka, in return, has asked Pakistan to provide same treatment to its 1,288 items.

The minister did not give exact number of items on which the two countries have so far agreed to and stated that technical teams were still in discussion to finalize these items. The two-way $130 million bilateral trade is in Pakistan’s favour at the moment but this figure should go up by between $50-100 million with the proposed FTA, the minister said.

The FTA with Sri Lanka would benefit two major Pakistani sectors including Engineering and Chemical Industry. Engineering products that would then be able to compete Indian products include pumps, motors, transformers, ACs, refrigerators, cycles, rickshaws, buses, pick-ups and G.I. pipes in the engineering and PVC, rayon and pet rayon.

It would be of little contribution to textiles as Colombo was already importing yarn and cloth from Islamabad at zero duty rate, the minister said. Sri Lanka in return benefit in rubber, coconut, tea and some fruits.

Razak did not subscribe a notion that the FTA with Sri Lanka had been delayed due to New Delhi’s pressure on Colombo. “I got no evidence that India pressurized Sri Lanka not to sign agreement with Pakistan”, said the minister.

He, however, confirmed that the visit of ministerial delegation from Colombo to Islamabad was scheduled and postponed for more than five times and then alternatively he had to travel to Colombo to pursue the agreement but added that delay was mainly because of last December elections in that country.

Answering a question, the minister said that Sri Lanka was not happy with its FTA with India because it heavily tilted towards New Delhi but now it was being balanced out.

He said that a number of countries have FTAs with other trading partners that would ensure them preferences in bilateral trade for their respective benefit even after the elimination of all trade barriers and preferences under the World Trade Organization regime.

This would be Pakistan’s first FTA with any country though Sri Lanka is a very small island. A softer arrangement, short of FTA, has already been ensured with the European Union which has started bearing fruits, the minister said.

Another FTA with Morocco is currently under negotiations. Senior commerce ministry officials led by Dr. Akbar Ahmad are now in Morocco to go through the trade records and technical details.

The minister was of the opinion that consultations on FTAs required a lot of killing academic and paper work and it would be an achievement if the new administration in Islamabad could sign the agreement with Morocco by July next.