Great trade since ISFTA!

Indo-Lanka FTA study team arrives in Colombo

• First ever ISFTA scoping study underway

• ‘Great trade since ISFTA’-Rishad
• ‘Not just policy BLAH but specific issues’-ISEC’s Prof Pattnaik
• Trade under ISFTA up by 40% in ‘13
• First research at $20000
• Biggest supplier to SL in 2013 was India

In a new development in the on-going Indo-Lanka trade dialogue, an independent survey team has arrived in Colombo to map barriers to FTA trade, as revealed on 19 November-and the first round of this ground-breaking bilateral study would conclude in early 2015. “After the FTA was entered into, bilateral trade improved tremendously. I welcome your efforts to identify aspects where improvements are needed in our Free Trade dialogue” said a pleased Rishad Bathiudeen (Minister of Industry and Commerce) on 19 November in Colombo.

Minister Bathiudeen was addressing the visiting independent study team from Indian led by Prof Binay Kumar Pattnaik (Director, Institute of Social and Economic Change (ISEC), Bangalore, India) on 19 November in Colombo. Director Pattnaik is in town with his seven member team which is tasked by the Asia Foundation with the mapping of Non-Tariff Barriers in the historic Indo-Lanka FTA.

“We are an independent, semi-government and Asia Foundation promoted study team consisting of three PhDs and other researchers from various Indian think tanks including Institute of Social and Economic Change (ISEC).  I want to stress that this study is not done by the government of India but by autonomous research institutions in India including ISEC and Centre for Policy Research (CPR)” said Director Pattnaik andadded: “Ever since we signed the FTA, there is substantial improvement in bilateral trade.  We, as a study team, prefer to work on more specific issues in this study rather than of talking of broad trade policy issues. We want to identify areas of concern-in that, NTBs in the FTA process- so that they could be listed, rectified and workable solutions are devised. It is time this NTB issue is taken head-on! The findings of the first round of our study will be published in early 2015 after which we will select few focal areas to study in depth in the second round. We started this effort in May 2014 in India. At this moment our visit to Sri Lanka is a fact-finding one and we will return for bigger work. We already met with the Chamber of Commerce in Colombo and Department of Commerce through whom we will be speaking to Lankan exporters and importers to identify their issues. ISEC is the lead agency in the study along with CPR; On its part, ISEC itself has engaged five full time researchers on this study. The cost of first round is $20000.”

According to the Department of Commerce of Sri Lanka, India became the biggest product supplier to Sri Lanka in 2013, followed by China. Total trade ‘under ISFTA’ stood at $748.2 Mn and it jumped by a strong 40% in 2013 from 2012’s $536 Mn.

Addressing Director Pattnaik, Minister Bathiudeen said: “After the FTA was entered into, bilateral trade improved tremendously. I greatly welcome your efforts to identify aspects where improvements are needed in our Free Trade dialogue. Last year, India became the biggest supplier to Sri Lanka with more than $ 3 billion exports to Sri Lanka. At the same time, after the FTA our exports to India increased greatly. Sometimes, our exporters face certain concerns, in the form of Non-Tariff Barriers. Removing such NTBs will enhance our bilateral trade significantly. What is more important is we can also identify non-exploited product lines of FTA at both sides and start moving these products too.”

Under the FTA, more than 4000 product lines are now open ‘tariff free’ to exporters at both ends. In 2013, total Indo-Lanka trade stood at $3.636 Bn with imports from India reporting no less than $3.09 Bn and 65% of Lanka’s total exports to India were ‘exports under ISFTA’ at $ 354 Mn. The balance of trade between India and Sri Lanka remains in favour of India due to the increased outlay on major import items such as petroleum products and automobiles.