Sri Lanka and Pakistan signed the much-anticipated Free Trade Agreement (FTA) recently, during a three-day official visit by President Chandrika Kumaratunga to Islamabad.
The two countries signed exchange of notes to formalize the Annexures in the bilateral FTA. The FTA was signed after the President met with Pakistan President General P. Musharaff, Prime Minister Shaukat Aziz and Commerce Minister Hamayoon Akthar Khan. A top level Sri Lankan business delegation accompanied the President during her visit.
The two countries agreed on a protocol to the FTA covering services and investments sectors and for the provision of export credit facility of US$ 10 million to Sri Lanka and signed a Memorandum of Understanding on cooperation and collaboration in the agricultural sector. MoUs were also signed between the Sri Lanka-Pakistan Business Council and Pakistan-Sri Lanka Business Forum on cooperation between the private sectors of the two nations, including their respective Chambers of Commerce and Industry. In addition, cooperation and collaboration in the field of gemstones and jewellery was another plus factor.
The two countries also agreed on the promotion of close cooperation in the field of education with a high-powered delegation from Pakistan due to visit Sri Lanka to collaborate in the education field. It was also agreed to waive student visa fees.
Addressing the forum of Pakistani corporate heads as a member of the delegation that accompanied the President, Board of Investment Chairman Saliya Wickramasuriya stated that becoming the first bilateral trading partner of both India and Pakistan emphasized Sri Lanka’s leadership in regional commerce.
He further stated that the operationalization of the FTA adds another 200 million consumers to Sri Lanka’s already substantial preferential market access on the subcontinent. “This large, effectively “domestic” market, coupled with the tariff reductions that Sri Lanka herself has won with the EU, allows us to leverage our geographical position as the region’s business hub”, he added.
With the signing of the FTA, substantial opportunities exist for market-seeking FDI, including the expansion of exports in electrical/electronic items, ceramic products, chocolates and confectionaries, processed meat products, herbal products, rubber products such as solid tyres and dipped products, metal products, gems and jewellery, machinery and tools, computer parts, automobile components, cane furniture and garment accessories.
“We are greatly encouraged by the response of the business communities of both countries, as more investment has been proposed for 2005 in anticipation of the FTA, than all cumulative FDI stock from Pakistan to date,” Wickramasuriya said. “Prospects for synergy in joint ventures coupled with more cost effective sourcing of raw materials will greatly add to the competitiveness of local manufacturing,” he further added.
Promotion of activities and programmes to enhance cultural contacts and joint promotion of tourism, including facilitation of group tours to archaeological and historical sites of the two countries, collaboration at the institutional level in promoting Science and Technology and the promotion of mutual collaboration in the field of information technology and telecommunications, were some of the other key points.
With the next meeting of the Joint Economic Commission (JEC) set for April 2005 in Colombo, it was agreed to explore the possibility of having a single country exhibition in Sri Lanka by the Export Promotion Bureau, Pakistan to coincide with the JEC.
Other areas that the two countries agreed on are the strengthening of juridical and judicial cooperation and improving of the effectiveness of the law enforcement agencies through cooperation’ and mutual legal assistance in criminal matters. An exchange of views took place on a range of international issues.