from the brain of: Libby Elizabeth

Apr 2021

Free Trade Agreements In Sri Lanka

Sri Lanka granted Pakistan, duty-free, a tariff quota of 6,000 m/t of Basmati rice and 1,000 m/t of potatoes per calendar year (January-December). However, the importation of potatoes is only permitted during the low season of Sri Lankan lands. (2/3, which will be introduced in June – July and 1/3 in October – November each year). Tariff quotas (TRQs) are specific quantities of products for which the importing country would be agreed to grant either duty-free access or preferential duty if imported by the other contracting party to the agreement. Products that go beyond the agreed TRQ are subject to the normal tariffs applied by the importing country to these products. The list of emergency concessions contains a total of 206 six-digit HS (product) tariff lines, and Sri Lanka immediately enjoys 100% duty-free access for these products on the Pakistani market. Sri Lanka has identified a total of 102 six-digit shS tariff lines, on which Pakistan will have 100% duty-free access. The determination of the six-digit HS code change has made the PSFTA`s rules of origin more flexible compared to most other free trade agreements that require the HS code to be amended in four-digit terms. . The agreement contains articles on objectives, definitions, the elimination of tariffs, paratarifs and non-tariff barriers, rules of origin, safeguards, dispute resolution, amendments, annexes, etc. Following the signing of the agreement, the two countries were able, after several rounds of bilateral negotiations, to finalize the annexes of the agreement in December 2004 and February 2005 and exchange diplomatic notes confirming the completion of the annexes.

The Pakistani government has issued the following communications regarding the application of the Pak-Sri Lanka Free Trade Agreement: the products listed in Schedule IV are entitled to a 20% preferential duty margin on the tariff rate applicable to MFN tariffs, without any quantitative limitations. The Ministry of Commerce notified the empty “Rules of Origin” S.R.O.508 (1)/2005 of June 6, 2005 and the operating procedure for issuing and verifying the empty certificate of origin Notification S.R.O.509 (1)/2005) of June 6, 2005. Cumulative rules of origin encourage exporters to source inputs from the other contracting country. However, domestic value added in the exporting country should not be less than 25% of the FOB value of the final product, while the total value added in both parts should be at least 35% of the FOB value. In addition, the products concerned should also comply with the change in the six-digit HS code requirement, as in the case of manufactured products listed in Category B. All products manufactured in category b) should contain at least 35% of the national value added of their FOB value in order to receive preferential treatment.

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