Battle In a Tea Cup

This follows attempts to clamp down on illegal smuggling that has plagued the country
quote s legal tea trade with imports falling by 12 percent in the first quarter of this year.

Volumes of smuggled tea as at the end of the fiscal year 2001-02 is expected to range between 25,000 to 40,000 tons as compared to the 25,000 to 30,000 tons in 2000-01.

The black market for tea is also seen to be gaining momentum as war-to Afghanistan endash a thriving trade route for illegal teas into Pakistan, slowly limps back to normalcy.

Illegal imports have taken its toll on the legal tea trade with imports in February this year standing at 68,262 tons or US$ 108 mn as against the 77,417 tons ($147 mn) for the same period in 00-01

Pakistan has one of the highest duty structures for any tea consuming country, acting as a stumbling block to free trade.

The demand for a reduction in import duties comes even as Sri Lanka steps up efforts to penetrate the Pakistan market.

The local tea trade has been lobbying for duty concessions on imports into Pakistan under a proposed Pakistan-Sri Lanka Free Trade Agreement.

Sri Lanka quote s exports to Pakistan have been falling with exports standing at 2.7 MT or 2.56 percent in 2001 due to a prohibitive duty structure and high prices.

But despite a declining market share over the past few years, Pakistan is still viewed as a prime market with Ceylon tea still enjoying high recognition status.