Bilateral Free Trade Agreements In Sri Lanka

Products of Indian origin exported under the ISFTA to Sri Lanka are currently duty-free, with the exception of 1,180 TL products that are included in the Netherlands under the ISFTA. Pl. visit India`s website for ISFTA tariff concessions and other India customs information: It doesn`t make much sense to get concessions under a trade agreement if the country is unable to deliver the requested goods – this can be a constraint in the case of a small country like Sri Lanka. This is evident from Sri Lanka`s strawberry exports to India. This list includes sensitive products that are exempt from tariff concessions under the agreement. The negative list should be drawn up in consultation with local stakeholders, taking into account revenues, as well as the impact on local industry and livelihoods that may be affected by trade liberalization. However, it is important to keep negative lists as high as possible to ensure that a significant portion of tariff lines and products are covered by the agreement. The criteria of origin used to determine the country of origin under a free trade agreement are different in free trade agreements in South Asia. SAFTA and ISFTA require a four-digit rate classification change.

[i] This rule was difficult to comply with given the significant processing of the product; For example, Sri Lankan tea exporters discovered that they could not comply with this rule, even though they mixed Sri Lankan tea and Indian tea. As a result of experience with the ISFTA, less restrictive criteria of origin were defined in the PSFTA negotiations. The main difference between the rules of origin of ilFTA and PSFTA is the modification of the tariff classification criteria – the PSFTA adopts a change in the 6-digit HS tariff position, which is more favourable to Sri Lanka. As a result, more value-added exports from Sri Lanka were processed duty-free in order to gain access to the Pakistani market. In addition, all three agreements adopted the same criteria for domestic addition – 35% of the PRODUCT`s FOB value. When negotiating a trade agreement, it is therefore important to relax and simplify the rules of origin so that they are easily understandable to traders and can comply with them, while ensuring that the necessary controls are put in place to prevent fraud. Sri Lanka has preferential and free trade agreements with India, Pakistan, Iran, Egypt, Singapore and Israel. It is in the process of extending its agreement with India to a much broader agreement. If negotiations reduce tariffs, non-tariff measures (NIM) or ”behind border barriers” can reduce the implementation of agreements if they are not dealt with effectively. NIMis should be identified at the outset and addressed at the same time as fee reductions/eliminations. In this regard, there should be binding commitments.

Many non-domestic exporters have had difficulty entering the Indian market because NMs, such as government taxes, standards and administrative procedures,[v] do not fall within the scope of ILFTA tariff reductions. Given the asymmetry of economic size, Sri Lanka has received special and differentiated treatment under existing free trade agreements. Thus, at the beginning of the agreement, Sri Lanka, as a small economy, benefited from a longer withdrawal period, a longer negative list, immediate duty-free access for several products and more favourable rules of origin under SAFTA, ISFTA and PSFTA. For example, India experienced a three-year tariff exit period, while Sri Lanka liberalized its customs plan over an eight-year period.