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India’s Vacillation Stalls APTA Benefits

Oct 23, 2010 3:28:51 PM - thesundayleader.lk

Ravi Ratnayake, Director, Economic and Social Commission for Asia and the Pacific, Trade and Investment Division says intra-regional trade can play a large role in reducing poverty, but barriers to trade among the region’s developing countries remain relatively high. “By simply eliminating all tariffs among each other, the region can reduce the number of people living on less than $1 a day by 43 million.” (Source: ESCAP)

The three giants in the Asia Pacific Trade Agreement (APTA), namely Korea, India and China are prepared to recognize Sri Lanka (SL) as a Least Developed Country (LDC) and give it a near zero  (90%) duty concessionary entry into their markets on an average under certain tariff lines, a Commerce Department (CD) official said.
CD Director General Gomi Senadheera speaking at a seminar on Trade Agreements (TAs) on Monday said that currently the duty concession is around 20%.
However reaching a consensus under the 4th round of APTA talks which would make these concessions a reality has been delayed due to disagreements by India, but those disagreements are not with SL, he said.
SL exported about US$ 50 million worth of goods to APTA (formerly Bangkok Agreement) member countries last year.  China topped the list with US$ 29 million, followed by India (US$ 13 million) and Korea (US$ six million).
Coir products were the island’s biggest export with US$ 24.5 million followed by natural rubber (US$ 14.5 million). Other exports under APTA included rubber products, fish “products,” floor tiles and tea.
APTA is the biggest trade agreement after the Indo-Lanka Free Trade Agreement (ILFTA), said Senadheera.
The objective of APTA is to cover at least 40% of tariff lines.
But studies have shown that Sri Lanka has under-utilised APTA concessions by 50%, he said.
CD plans to educate exporters about APTA.
Senadheera’s talk however didn’t cover the EU and US markets, SL’s number 1 and number 2 export destinations respectively.
Exports to the EU have been hit due to the withdrawal of the GSP + concession, while certain exports to the USA are under threat because of the labour GSP issue.
“There are a large number of exports made to the USA which could enjoy the GSP duty free concession, resulting in the saving of millions of dollars in duties,” said Senadheera. This ignorance is either on the part of the exporter, or of the importer, he said.
A number of these concessions are tied to the rules of origin criterion, ie the requirement of a minimum local value addition. For instance under APTA, the local value addition should be a minimum of 45%.
Senadhira said that GSP are non-reciprocal concessions/TAs. Other TAs touched upon by Senadhira in his speech were the ILFTA, Sri Lanka-Pakistan FTA (smoked rubber sheets topped the list last year with US$ 10 million worth of exports under this agreement), South Asian Preferential Trade Arrangement (under which arrangement SL made US$ 1.77 million worth of exports last year) and South Asian FTA (some US$ 608,624 worth of exports to India and Pakistan last year, including US$ 579,420 worth of ekel broom sticks to Pakistan). The seminar was organized by the Spices and Allied Products,’ Producers’ and Traders’ Association. (See also page 37)