Lanka tea traders say Pakistan’s move to reduce duties on its side by 10 per cent on tea imports is not effective enough to curb smuggling into the Islamic nation. Lanka tea traders say Pakistan’s move to reduce duties on its side by 10 per cent on tea imports is not effective enough to curb smuggling into the Islamic nation.
The ten per cent reduction comes on the 30 per cent tariff currently in force. Officials say though commendable, the 10 per cent was not significant when other duties that sit on top of the import duty continue.
Pakistani authorities slap on a sales tax, income tans and infrastructure fee on top of the import duty.
Asia Siyaka Commodity Brokers reported that small duty reductions such as this have taken place in the past but it has never been sufficient to compromise the cost effectiveness of smuggling
Meanwhile, regular importers have continually asked that duties are reduced to a level at which legitimate trade would increase to a point where the government would actually earn more, and the people of Pakistan get a better tea for the price paid.
However, it is understood that Pakistani officials are reluctant to dramatically remove import tariffs and other levies in the near term.
Trade officials here say this issue has made it important for Sri Lank to expedite the free trade agreement with Pakistan.
Earlier this month, a Pakistani delegation was in Sri Lanka to iron out bottle necks and finales the FTA.
Some headway was made with Sri Lanka’s request for duty concessions for its tea exports to Pakistan.
However, Pakistani news services later quoted senior government officials saying that the “Now they have decided that all items from both sides, which were already agreed for trade under the proposed FTA, would be re-negotiated,” pushing back finalisation of the FTA terms even further.
It is understood that a Lanka delegation is expected to visit Islamabad in July to re-initiate dialogue on the FTA.
Pakistan is the third largest tea importer after Russia and Britain. The importers buy black tea from 17 countries, including Bangladesh, Burundi, China, Congo, India, Indonesia, Kenya, Malawi, Mozambique, Madagascar, Rwanda, Sri Lanka, Uganda, Zaire and Zimbabwe.
Pakistan imported some 43.6 million kilos of tea upto April, of which Sri Lanka exported 1.13 million kilos of tea or 2.6 per cent of its imports.
On average Pakistan imports some 160 million kilos of tea annually.
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