ISLAMABAD, Jan 5: The signing of Free Trade Agreement (FTA) has reportedly been delayed due to reluctance of Pakistan and Sri Lanka to scale down customs duty on their one item each.

Well-placed sources told Dawn on Monday that Sri Lanka wanted Pakistan to allow at zero rate import of tea, while Islamabad asked for zero rate export of rice to Colombo under the proposed treaty.

Pakistan exported around $5 million worth of rice to Sri Lanka during the year 2002-03, while import of tea from Colombo stood at about $4 million during the same year.

According to the sources, the Sri Lankan government was believed to be reluctant to sign the FTA with Pakistan in a hurry until they got maximum benefits from Pakistan.

This is clear from the fact that during the last four months, the Sri Lankan authorities have postponed the dates requested by the Pakistani government for finalizing the proposed treaty for various reasons, the sources added.

Talking to Dawn senior vice-president of Saarc Chamber of Commerce and Industry of Sri Lanka, M. Macky Hashim, said Sri Lanka and India had already entered into the second round of FTA under which India had allowed zero duty on around 1,351 items to Sri Lanka.

In reply to a question, he said Colombo wanted Islamabad to reduce customs duty on import of tea, which was one of the major issue delaying the signing of FTA between the two countries. He said Sri Lanka exported around 15 million kilos of tea to India under FTA.

Similarly, he said that due to local production of rice, Colombo was not willing to reduce customs duty on import of rice from Pakistan under the treaty. Again, he said this was a major demand from Pakistan to export more rice to Colombo.

Mr Hashim said that Pakistan was a big economy and it should give more concessions to Sri Lanka, rather than asking for similar treatment. The FTA framework agreement was signed by the two sides in 2002 during the visit of President Pervez Musharraf to Sri Lanka. But it is yet to be finalized and implemented.

The then Commerce Minister, Abdul Razak Dawood was due to hold final round of meetings with the Sri Lankan trade authorities scheduled for October 22-24, 2002 to finalize the agreement, but it was postponed as power transfer was taking place from the army to the elected government in Pakistan.

Earlier, Pakistan and Sri Lanka were all set to sign the FTA on October 24, 2002, which was supposed to be made effective within the next 30 days. Moreover, duty on some items were reduced by both the countries in their last budgets of 2002, which were earlier demanded for concession. These items were later replaced with fresh items, which were negotiated again, the sources said.

Similarly, following the introduction of harmonized system nomenclature in the budget 2002, the HS code of several items have been changed, including those items that were agreed in the concession lists by both the countries.