Both countries Pakistan and Sri Lanka failed to fully utilize the FTA that came into effect in 2005 due to which bilateral trade remains range bound with an average of $350 million for the last six years. The Trade Development Authority of Pakistan (TDAP) Secretary Rabiya Javeri Agha said that it aims to double its exports to Sri Lanka in a year’s time effectively using the duty concession under the Free Trade Agreement (FTA) from the current $267 million to $500 million.

The trade balance is heavily in favour of Pakistan. Its exports to Sri Lanka amounted to $267 million while Sri Lankan exports to Pakistan were worth just $58 million, according to the Pakistan Bureau of Statistics data (2014-15).

Pakistan to boost exports plans to organize a single-country exhibition from January 15-17 in Colombo. The TDAP has prioritized sectors such as textile, pharmaceutical, engineering goods and small and medium enterprises (SMEs) for the exhibition.

Agha said that they have given priority to these sectors as they believe these are the areas where Pakistan has the potential to multiply its exports. Their next target will be to increase exports to $1 billion but that obviously will take a few more years.

In the fiscal year 2014-15 , out of the total $267 million worth of exports to Sri Lanka, $89 million or 33% constituted only cotton cloth – a traditional Pakistani export item.

Pakistan has only utilised 29% of the FTA concessions so far, therefore, its target is to utilize the FTA first by exporting those products that have huge demand in Sri Lanka, explained Agha.

Sri Lanka mainly exports textile products like men’s T-shirts while it imports bed wear, trousers, silk and synthetic textile and other ready-made garments. Pakistan’s exports are slowly growing and it can further increase its share.

Pakistan needs to move from traditional cotton cloth to value-added garments to increase its exports. Moreover, the engineering sector has a huge potential among top-25 products that Sri Lanka imports and Pakistan exports.

In May 2015, the Pakistan Business Council (PBC), a not-for-profit research-based business advocacy forum that represents Pakistan’s 47 largest businesses, noted that Pakistan and Sri Lanka had the potential to increase bilateral trade over six times to $2.7 billion by just effectively utilizing the FTA. The PBC also noted the absence of single-country exhibitions in each other’s country.

Agreeing with the findings of the PBC report, Agha said that both countries should establish connections between business communities that have been one of the top hindrances in the way of bilateral trade.

According to the PBC report Pakistan’s exports to Sri Lanka grew from $154 million in 2004 to $316 million in 2013, an increase of 105% in nine years. On the hand other Sri Lankan’s exports to Pakistan grew from $46 million to $63 million, an increase of just 37%. In 2013, Pakistan accounted for 1.7% of total Sri Lankan imports while Sri Lanka had only 0.14% share in Pakistan’s import from around the world.