Sri Lankan Exporters Should Make Use of Free Trade Deals

20th October 2010, www.lankabusinessonline.com

Sri Lankan exporters are still not making enough use of free trade deals giving duty free or preferential access to big markets, a senior trade official said.

Gomi Senadhera, Director General of the Department of Commerce, said rates of utilisation of key trade deals like the Asia - Pacific Trade Agreement (APTA) and South Asia Free Trade Agreement (SAFTA) were low.

"Utilisation rates are not very high either because exporters are not obtaining certificates of origin from the department of commerce or because the importer is not presenting it and getting duty concessions," he told a forum.

The seminar on free trade agreements was organized by the Spices & Allied Products Producers’ & Traders’ Association (SAPPTA) of the Ceylon Chamber of Commerce.

Senadhera said APTA, previously known as the Bangkok agreement, was becoming more important as it gave exporters like SAPPTA members access to China, India and South Korea.

China's membership of APTA theoretically gives Sri Lanka access to one of the largest markets in the world, he said.

"Under APTA there is a substantially large volume exported without preferences being claimed to China and Korea for which your importer is paying duty when they are entitled to duty free or preferential duty," said Senadhera.

"The rules of origin and other aspects are quite simple," he said. "Its importance today is that we look at APTA largely as a platform for market access with China and Korea."

Although exports under APTA have grown, it was still only about 50 million dollars worth of goods to China, Korea, India and Bangladesh with about 1,800 certificates of origin issued by the commerce department.

"Our utilisation rates are not very high - only around 50 percent," said Senadhera. "It means there's another 50 percent of exports which should benefit and people are not aware of it."

The main products exports under APTA are coir, natural rubber, tea, apparel, rubber products, fish products, activated carbon, floor tiles, and porcelain.

"We must improve exports to China and South Korea," he said. "If we are not using these free trade arrangements exporters should come and see us to find out how best they can use these trade preferences."

Under the South Asia Preferential Trading Arrangement (SAPTA) also total Sri Lankan exports "remains modest," Senadhera said.

Exports have actually fallen to 1.8 million dollars in 2009 from 3.8 million dollars in 2007.

The main products exported are rubber gloves, natural rubber, black tea, bicycle tires, copra, coconut oil, nutmeg, desiccated coconut, activated carbon, coir yarn and coir fibre.

"To China alone we exported last year about 28 million dollars worth of good and to India 13 million dollars worth under APTA," Senadhera said. "Under APTA we exported more to India than under SAPTA."

These trade deals were useful for exporters as a lot of products covered under them are locally produced for the domestic market and therefore eligible for export.

Senadhera said there was a lot of criticism about the free trade deal with India because more products were sent under that deal than under others.

"That's why we don’t hear about other agreements - when you don't export you don;t have problems. Only when goods go and you have to clear them that you have the problems.

"If a trade agreement is successful that should generate problems - no successful trade agreement is without problems."

Sri Lanka GSP trade deal with the United States was also not being used enough.

"There is a substantially large volume exported where exporters do not use GSP," Senadhera said.

"It appears some exporters and importers are paying a few million dollars in duty for which they are entitled to duty free access. We're trying to find out who these exporters are to find out whether they could get the concession."

Related Info :

• South Asian Free Trade Area (SAFTA) - Detailed Information - The Board of Investment of Sri Lanka (BOI)

• Asia– Pacific Trade Agreement (APTA) Formerly the Bangkok Agreement  - Detailed Information - The Board of Investment of Sri Lanka (BOI)