Sri Lanka has identified a total of 102 six-digit shS tariff lines, on which Pakistan will have 100% duty-free access. 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). All fully preserved products, such as tea, fish, spices, etc., can easily benefit from tariffs on each other`s markets, provided they can benefit from tariff concessions. 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. 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. Since the signing of the free trade agreement, bilateral trade with Sri Lanka has mainly been destined for Pakistan. Pakistan`s exports more than doubled between 2005 and 2011, while imports remained relatively stable; In 2011, Pakistan had the largest trade surplus, at $287 million. Exports declined after 2011 and reached $269 million through 2017. In contrast, imports have increased by about 60% since 2011 and peaked at $103 million in 2017. Pakistan`s trade surplus with Sri Lanka was $166 million in 2017.
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 Pakistan-Sri Lanka Free Trade Agreement came into force in July 2005, after it was signed in August 2002. As part of the free trade agreement, Sri Lanka received immediate duty-free access for 206 products. Pakistan, on the other hand, has been granted duty-free access to 102 products. Other concessions were agreed in November 2010. The aim of this study is to analyse the results achieved so far in the free trade agreement and to highlight the opportunities available to both partners to increase bilateral trade. The study also highlights some sectors that, if encouraged, could potentially increase trade between the two countries. These include Pakistan`s cement and motorcycle industry, as well as Sri Lanka`s clothing and clothing industry, tourism and tea.
The Pakistan-Sri Lanka Free Trade Agreement (PSFTA) was signed between the two governments in August 2002 and came into force in July 2005. Sri Lanka gained immediate duty-free access for 206 products, while Pakistan gained duty-free access to 102 products. The psFTA conditions granted an immediate concession to Pakistan and Sri Lanka for important export products. Pakistan`s exports to Sri Lanka increased from $97 million in 2004 to $355 million in 2018, nearly 3.6 times more than over the 14-year period, due to the positive impact of the FTSP on trade. Similarly, Sri Lanka`s exports to Pakistan increased from $47 million in 2004 to US$105 million in 2018, almost doubling over the same period. The study, which examines trade between Pakistan and Sri Lanka as part of their Free Trade Agreement (FTA), concludes that the FTAS has given a share of the