Pakistan removes Import Trade Price on Sri Lankan MDF Board

• First trade success from November 2014 talks in Colombo
• Effective from 29 January 
• Bilateral trade surges post-FTA 

Pakistani Commerce Minister Khuram Dastgir Khan (left side, third from left) leads the Pakistani team (at left) while Minister of Industry and Commerce Rishad Bathiudeen (third from right-right side) makes his opening remarks leading the Lankan team at the Bilateral Trade Talks session on 11 November in Colombo

The Sri Lanka-Pakistan talks held November 2014 have resulted in a new trade concession for Lankan exporters and boosted bilateral trade between both countries.

The first relief as a result of post-November talks is the removal of Import Trade Price slapped by Pakistan on Medium Density Fiberboard (MDF Board) exported from Sri Lanka to Pakistan.

Medium Density Fiberboard (MDF Board) is one of the major export products to Pakistan from Sri Lanka. It represents nearly 10% of Sri Lanka’s total exports to Pakistan and Sri Lanka is the second largest supplier of MDF to Pakistan after Malaysia as Sri Lankan exporters have been enjoying the duty free market access under the Pakistan – Sri Lanka Free Trade Agreement (PSFTA).

However, Pakistani authorities placed a valuation rule (the minimum value) for all MDF Board imports as “Import Trade Price (ITP)” in order to eliminate under-invoicing. Initially, the valuation rule applied to all countries and later the Pakistani authorities introduced a new valuation rule which discriminates Sri Lanka from other exporting countries.

At the bilateral discussion, during the visit of Federal Minister of Commerce of Pakistan in November 2015, Minister Rishad Bathiudeen along with the Department of Commerce raised this issue with the Pakistan delegation as this hinders Sri Lanka’s exports to Pakistan. This was further discussed at the recently concluded Commerce Secretary Level Meeting of PSFTA between Sri Lanka and Pakistan.

Ministry of Industry & Commerce and the Department of Commerce made several interventions through the Consulate General of Sri Lanka in Karachi to the respective Pakistani authorities for early settlement of this issue due to serious injury to the Sri Lankan MDF manufacturing industry as Pakistan is one of the major buyers of MDF Boards from Sri Lanka besides India.

After considering the appeal made by Sri Lankan authorities, the Pakistan government amended the valuation ruling effective from 29t January which treats MDF Boards from Sri Lankan on par with other exporting countries. This move has been welcomed by Sri Lankan exporters as it would lead to enhancing bilateral trade relations of both countries as well as facilitate achieving a 20 billion exports target of Sri Lankan Government by 2020.

The 11th session of Sri Lanka – Pakistan Joint Economic Commission was held in Colombo on 27 November. Minister Bathiudeen, addressing the openings session of the Commission, said: “The business communities, of both the countries need to play a vital role in this process. This would of course, demand the business entrepreneurs of the two countries engage themselves in vibrant and vigorous trade and investment promotional activities.” Pakistan is the second largest trading partner of Sri Lanka in the SAARC region after India. The YoY bilateral trade has increased by 6% in 2012 to $ 433.69m. A substantial growth in bilateral trade is seen in both exports and imports, especially after Free Trade Agreement between the two countries was implemented in 2005. The value of total trade between the two countries has increased by 174% from $ 158m in 2005 to $. 433.69m in 2012.