March 11, 2007	Sunday	Safar 21, 1428

ISLAMABAD, March 10: Pakistan and Sri Lank will formally start negotiations next week for expanding the list of goods for customs duty reduction and removing irritants under the existing free trade agreement (FTA).

A senior official in the commerce ministry told Dawn on Saturday that both sides would also discuss the possibility of launching talks on the services sectors to be made part of the agreement. The FTA was implemented since June 12, 2005 after three years intense negotiations.

A high-level Sri Lankan technical delegation, led by its commerce minister, would arrive next week for meeting Pakistani counterparts. The three days meeting would start on March 14 with a concluding meeting of the commerce ministers of the two countries.

According to the official, the technical committee of the two sides would further identify a range of items for duty reduction under the FTA. They would also identify the irritants which resulted into hampering of free flow of trade between the two countries.

This would be the first-ever review of the FTA between the two countries after the implementation, the official added. Pakistan’s first-ever initiative to have freer trade with Sri Lanka, appears to be counterproductive as its exports to Sri Lank declined in nominal terms, while its imports mad a quantum jump in the first year of the FTA.

In first year (2005-06) of FTA implementation, Pakistan’s exports to Sri Lanka stood at $159.212 million up by 2.17 per cent in real term as against the pre-FTA export of $155.830 million — a negative phenomenon when seen in the context of overall growth of 41.4 per cent in exports during the same year.

On the other hand, Sri Lanka sold $71.288 million worth of products to Islamabad up by 59.07 per cent from $44.813 million in the pre-FTA year.

Despite the fact that Pakistan continues to be the second largest trading partner of Sri Lanka within the South Asian region, a closer look at the composition of exports reveal that the

majority of the products exported by Pakistan includes cotton, rice, fish products, man-made staple fibres, iron and steel-based products, medicines, fruits and vegetables, such as potatoes, onions, oranges, spices like coriander, cumin and fennel seeds, polymers of propylene, plastic products, textile fabrics etc.

The Sri Lanka's major exports to Pakistan at present are coconut and coconut products, natural rubber, tea, vegetable products, fibre boards of wood, garment accessories, spices, articles of plastics, natural graphite, aluminium-based products, etc.