WORLD TRADE  
ORGANIZATION  WT/COMTD/RTA/2/1 
21 April 2009 
 (09-1900) 
Committee on Trade and Development 
Dedicated Session on Regional Trade Agreements  
 
 
     
 
 
FACTUAL PRESENTATION 
 
Free Trade Agreement between  
Pakistan and Sri Lanka 
(Goods) 
 
Report by the Secretariat 
 
 
 
 This report, prepared for the considera tion of the Free Trade Agreement between 
Pakistan and Sri Lanka has been drawn up by the WTO Secretariat on its own 
responsibility and in full consultation with the Parties.  The report has been drawn 
up in accordance with the rules and pro cedures contained in the Decision for a 
Transparency Mechanism for Regiona l Trade Agreements (WT/L/671).  
 
Any technical questions arising from this report may be addressed to Ms Juneyoung 
Lee (tel: +41 22 739 67 91). WT/COMTD/RTA/2/1 
Page iii 
 
 
TABLE OF CONTENTS 
 
 
  Page 
I. TRADE ENVIRONMENT 1  
A. MERCHANDISE TRADE  1  
II. CHARACTERISTIC ELEMENTS OF THE AGREEMENT 5  
A. BACKGROUND INFORMATION  5  
B. NATIONAL TREATMENT AND MARKET ACCESS PROVISIONS OF THE AGREEMENT  6  
1. Import duties and charges, and quantitative restrictions 6  
(a) General provisions 6  
(b) Liberalization of trade and tariff lines 6  
(c) Pakistan's liberalization schedule 8  
(d) Sri Lanka's liberalization schedule 9  
(e) Tariff-rate quotas 10  
2. Rules of origin 11  
3. Export duties and charges, and quantitative restrictions 12  
C. REGULATORY PROVISIONS OF THE AGREEMENT  12  
1. Standards 12  
(a) Sanitary and phytosanitary measures 12  
(b) Technical barriers to trade 12  
2. Safeguard mechanisms 12  
(a) Global safeguards 12  
(b) Bilateral safeguards 12  
(c) Special safeguards 13  
(d) Balance of payment measures 13  
3. Anti-dumping and subsidies 13  
4. Other regulations 13  
(a) Customs-related procedures 13  
(b) State trading enterprise 13  
D. SECTOR -SPECIFIC PROVISIONS OF THE AGREEMENT  13  
E. GENERAL PROVISIONS OF THE AGREEMENT  13  
1. Transparency 13  
2. Exceptions 14  
3. Accession and withdrawal 14  
4. Institutional framework 14  
5. Dispute settlement 14  
6. Relationship with other agreements concluded by the Parties 14  
ANNEX I 16 
ANNEX II 19 
 WT/COMTD/RTA/2/1 
Page 1 
 
 
I. TRADE ENVIRONMENT 
1. The Free Trade Agreement (FTA) between Pakistan and Sri Lanka (hereinafter referred to as 
"the Agreement") is Pakistan's third (follo wing China and Malaysia) and Sri Lanka's second 
(following India) bilateral trade agreement (R TA) which they have notified to the WTO. 
2. The two countries have quite different economic  structures.  In 2007, Pakistan's GDP was 
US$143.59 billion, while that of Sri Lanka was US$ 32.35 billion.  While in Pakistan, manufacturing 
accounts for the bulk of merchandise exports (80.1% in 2007), in Sri Lanka agriculture accounts for 
an important share of exports (26.5%, with manufact uring at 68.2%).  With total merchandise exports 
of US$17.83 billion and imports of US$32.59 billion, Pakistan ranked as the world's 66th largest 
exporter and 52nd largest importer in 2007;  with mercha ndise exports of US$7.74 billion and imports 
of US$11.3 billion, Sri Lanka ranked as the world's 87th largest exporter and 83rd largest importer in 
2007.1 
3. Bilateral trade between the Parties is relativel y small.  In 2005, Pakistan was Sri Lanka's 
22nd largest merchandise export market and 21st largest source of imports (respectively 0.7% and 1.4% 
of Sri Lanka's exports and imports ).  Sri Lanka was Pakistan's 21st largest export destination and 
44th largest source of imports (respectively 1% and 0.2%  of Pakistan's exports and imports).  In 2007, 
the latest data available from the United Nations' Comtrade database, and two years after the entry 
into force of the Agreement, Sri Lanka was Pakistan's 18th largest export destination and 48th largest 
import source (respectively 1.2% and 0.2%  of Pakistan's exports and imports).2  
A. MERCHANDISE TRADE  
4. Recent developments in global and intra-Party trade are presented in Charts I.1. and I.2.  Over 
the period surveyed (1999-2007 for Pakistan, 1999-2005 , the latest data available, for Sri Lanka), 
trade between the Parties has grown since 2002.  Pa kistan's exports to Sri Lanka, after declining 
initially during this period, have grown steadily especially since 2004, so much so that in spite of a growing trade deficit with the world, its trad e surplus with Sri Lanka has been widening. 
 
                                                     
 
1 WTO Statistics Database, Trade Profiles (October 2008). 
2 UNSD, Comtrade database (2005 and 2007). WT/COMTD/RTA/2/1 
Page 2  
 
0510152025303540
1999 2000 2001 2002 2003 2004 2005 2006 20070.000.050.100.150.200.250.30US$billion US$billionChart I.1 - Pakistan: Merchandise imports from and exports to 
world and Sri Lanka, 1999-2007
Source : UNSD, Comtrade database.Imports from Sri Lanka
Exports to Sri LankaTotal imports
Total exportsLeft hand scale: Right hand scale:
 
 
0123456789
1999 2001 2002 2003 2004 20050.000.050.100.150.200.250.30US$billion US$billionChart I.2 - Sri Lanka: Merchandise imports from and exports to 
world and Pakistan, 1999-2005
Source : UNSD, Comtrade database.Imports from Pakistan
Exports to PakistanTotal imports
Total exportsLeft hand scale: Right hand scale:
Note:  Data is not available for 2000. 
 
 
5. The commodity structure of trade between the Par ties, as well as of their imports and exports 
to the world in the period 2002-2004, is shown in Chart I.3 on the basis of the Harmonized System 
(HS) sections. WT/COMTD/RTA/2/1 
Page 3 
 
 
6. Pakistan's two largest export product categories – textiles and vegetables – made up 75.9% of 
its total exports in 2002-2004 and accounted for 72.5% of Sri Lanka's imports from Pakistan.  
Sri Lanka's main exports are textiles, vegetabl es and plastics, which accounted for 75.8% of its 
exports in 2002-2004.  In comparison Pakistan's main imports from Sri Lanka are vegetables and 
plastics which accounted for 86.2% of its imports  from Sri Lanka;  textiles which accounted for 
52.3% of Sri Lanka's global exports, however, account ed for only 2.5% of Pakistan's imports from 
Sri Lanka. 
 WT/COMTD/RTA/2/1 
Page 4  
 
Chart I.3
Pakistan and Sri Lanka: product comp osition of merchandi se trade, annual 
average 2002-2004
Pakistan's imports from Sri Lanka Sri Lanka's imports from Pakistan
 Source:  UNSD, Comtrade database.Per cent
Total:  US$40.3 million Total:  US$81.6 million
Total:  US$14 billion Total: US$6.8 billion
Total:  US$11.7 billion Total:  US$5 billionPakistan's global exports Sri Lanka's global exportsPakistan's global imports Sri Lanka's global imports 
Machinery 3.3Animals 2.5
Textiles
68.1Other 
10.6Machinery 13.3
Vehicles 2.3
Base metals 2.8 Textiles 5.7
Miscellaneous  3.5Other
6.7Other
 1.4
Plastics 6.3Other 
5.3
Vehicles  6.8Pulp of wood 3.1
Vegetables 
7.8Machinery 17.8Pearls 4.7Textiles 51.4Plastics
24.1
Chemicals  6.5Chemicals 6.7
Animals 9.2
Minerals 14.6Base metals 3.3Vegetables 61.1Plastics 3.1
Base metals 6.2
Base metals 6.8Plastics 4.4
Raw hides 5.4Vegetables 5.4
Pearls 5.2Vegetable oils 5.0
Textiles 22.3
Textiles 52.3Vegetables 21.1
Minerals
24.4
Prepared foods 4.4
Vegetables 17.2Textiles 2.5 Prepared foods  1.5
Chemicals 2.7
Wood 2.9
Chemicals 15.0Vehicles  7.2Vegetables 5.5Plastics 5.1Other 
8.0
Minerals 2.7Animals 1.5Other 
11.0Raw hides 1.1
 
 WT/COMTD/RTA/2/1 
Page 5 
 
 
II. CHARACTERISTIC ELEMENTS OF THE AGREEMENT 
A. BACKGROUND INFORMATION  
7. The Agreement was signed by Pakistan and Sri La nka (hereinafter referred to as "the Parties") 
on 1 August 2002 and entered into force on 12 June  2005.  The Agreement was notified to the 
WTO by the Parties on 11 June 2008 under paragraph 4( a) of the Enabling Clause.  As the preamble 
and Article I of the Agreement point out, the Agreem ent aims to promote bilateral trade both in goods 
and services, although negotiations on trade in services are not concluded.3  The text is available, 
together with its Annexes and Attachments, on the following official websites:  
Pakistan: http://www.commerce.gov.pk/PSFTA.asp
 
 Sri Lanka: http://www.doc.gov.lk/web/pakissrilanka_freetrade.php  
 8. The Agreement is composed of 17 Articles w ithout Chapters and has related Annexes and 
Attachments, as follow: 
Articles, Annexes and Attachment Title/description 
Preamble  
Article I Objectives 
Article II Definitions 
Article III Elimination of tariffs, para-tariffs and non-tariff barriers 
Article IV General exceptions 
Article V National treatment 
Article VI State trading enterprises 
Article VII Rules of origin 
Article VIII Safeguard measures 
Article IX Domestic legislation 
Article X Balance of payment measures 
Article XI Joint committee 
Article XII Consultations 
Article XIII Settlement of disputes 
Article XIV Duration and termination of Agreement 
Article XV Amendments 
Article XVI Annexes to be finalized 
Article XVII Entry into force 
Annex A  
Attachment I No concession list of Pakistan 
Attachment II 100% imme diate concession list 
Attachment III Products subj ect to tariff-rate quotas 
Attachment IV List of products for which Pakistan agr eed to grant a margin of preference on 
applied MFN rate 
Annex B  
Attachment I No concession list of Sri Lanka 
Attachment II 100% imme diate concession list 
Attachment III Products subj ect to tariff-rate quotas 
Annex C Rules of origin 
Annex D Tariff phasing out schedule 
Source : Free Trade Agreement between Pakistan and Sri Lanka. 
                                                      
3 According to the Parties, as of April 2009, two rounds of negotiations on trade in services have been 
held in January and May 2008. WT/COMTD/RTA/2/1 
Page 6  
 
B. N
ATIONAL TREATMENT AND MARKET ACCESS PROVISIONS OF THE AGREEMENT  
1. Import duties and charges, and quantitative restrictions 
(a) General provisions 
9. The Parties agree to eliminate tariffs in acco rdance with Annexes A and B.  Apart from 
tariffs, the Agreement defines "para-tariff" as borde r charges and fees, other than tariffs on imports, 
but excluding indirect taxes and charges, which are levied in the same manner on like domestic 
products (Article II.2).  The Parties commit not to increase existing para-tariffs, or introduce new or 
additional ones without mutual consent (Article III.3).  The Agreement does not explicitly state 
quantitative restrictions. 
10. The Parties reaffirm their commitment to nati onal treatment in accordance with Article III of 
the GATT 1994 (Article V). 
11. Article 13 of Annex C prohibits imports contai ning any inputs originating from states with 
which a Party does not have economic and commercial relations. 
(b) Liberalization of trade and tariff lines 
12. Tariff liberalization under the Agreement consists  of: i) immediate elimination of customs 
duties from the entry into force of the Agreement;  ii) partial liberaliza tion under tariff-rate quotas 
(TRQs);  and iii) gradual elimination within four year s for Pakistan, and five years for Sri Lanka.  In 
addition, there are products for which no concessions are granted. 
13. For products subject to gradual tariff elimina tion, Pakistan's remaining duties on Sri Lankan 
imports will be eliminated in 2008/09;  and Sri Lanka's remaining duties on imports from Pakistan 
will be eliminated in 2010/11.  The first tariff re ductions/eliminations took place on the date of entry 
into force of the Agreement for both Parties;  sub sequent reduction/elimination of duties take place on 
1 July for Pakistan and 1 June for Sri Lanka.  In pr actice, however, it appears that the tariff reductions 
that have taken place thus far were im plemented by Pakistan on 12 June 20054 and on 16 September 
2006.5 
14. The Parties do not have fixed base rates for tariff reductions throughout the implementation 
period.  Pakistan's base rate depends on the app lied MFN rate in effect on the date when a goods 
declaration is filed.6  Thus, in its calculations of tariff reducti ons for Pakistan, the Secretariat has used 
the MFN applied rate in 2004/05 and 2005/06 as both ha ve been used as base rates to determine tariff 
reductions.  In the case of Sri Lanka, the base rate is the current applied MFN rate for each year.  As 
Sri Lanka's most recent MFN applied tariff is for 200 8/09, the Secretariat has based its calculations of 
tariff reductions for 2009/10 on this latest MFN tariff;   the MFN tariff for s ubsequent years is of 
course subject to change and consequently the resulting preferential tariffs for 2009/10 may also 
change. 
                                                      
4 Government of Pakistan, Ministry of Finance, Economic Affairs and Revenue (Revenue Division) 
Notification (Customs) S.R.O.570(I)/2005 , 6 June 2005.  
5 Government of Pakistan, Ministry of Finance, Economic Affairs and Revenue (Revenue Division) 
Notification (Customs) S.R.O.1062(I)/2006 , 20 October 2006. 
6 For example, for a goods declaration filed between 1 January and 30 June 2006, the base rate is the 
MFN applied tariff for 2005/06 while for a goods declaration filed between 1 July and 15 September 2006, the 
base rate is the MFN applied tariff for 2006/07.   WT/COMTD/RTA/2/1 
Page 7 
 
 
15. The overall tariff elimination under the Agreemen t is depicted in Tables II.1.A and II.1.B 
below.  Pakistan did not have any duty-free tariff lines on an MFN basis in 2004/05 and 2005/06.7  
Upon the entry into force of the Agreement, 255 tariff lines (4% of Pakistan's tariff lines) 
corresponding to 62.2% of imports by value from Sr i Lanka became duty-free.  A further 5,361 tariff 
lines are to become duty-free (84.6% of the tariff) in 2008/09 amounting to 12.4% of the value of 
imports from Sri Lanka.  Thus, a total of 88.6% of tariff lines are to be liberalized under the 
Agreement, corresponding to 74.6% of imports by  value from Sri Lanka for the period 2002-2004. 
Table II.1 
Tariff elimination commitments under the Agreement and corresponding average trade 
A. Pakistan 
Duty phase-out period Number of lines % of total lines in 
Pakistan's tariff 
schedule Value of Pakistan's imports 
from Sri Lanka (2002-2004) 
in US$ million  
 % of Pakistan's total 
imports from Sri 
Lanka 2002-2004 
MFN duty-free 
(2004/05 and 2005/06) 0 n.a. n.a. n.a. 
Preferential duty-free in      
2004/05 255 4.0 25.7 62.2 
2008/09 5,361 84.6 5.1 12.4 
Remain dutiable 721 11.4 10.5 25.4 
Total 6,337 100.0 41.3 100.0 
 
n.a.:  not applicable. 
 
Note: Based on HS 2002 nomenclature.  For tariff lines subject to TRQs only the out-of-quota duty is included in the tariff-rel ated 
calculations. 
 
Source : WTO Secretariat based on data pr ovided by Pakistan and WTO-IDB. 
 
16. In the case of Sri Lanka, before the entry in to force of the Agreement 635 tariff lines were 
duty-free on an MFN basis;  an additional 106 lin es became duty-free also on an MFN basis during 
2006/07-2008/09 (a total of 11.6% of Sri Lanka's tariff).8  Upon entry into force of the Agreement, an 
additional 135 tariff lines (2.1% of the tariff) became duty-free for impor ts from Pakistan;  as a result, 
12% of Sri Lanka's tariff lines became duty-free corresponding to 57.7% of imports by value from Pakistan.  An additional one line of stainless stee l (HS 730630) with an MFN rate of 15% became 
duty-free in 2008/09.  The implementation period e nds in 2010/11 with 82.2% of tariff lines and 
71.6% of imports by value from Pakistan being duty-free. 
 
                                                     
 
7 Pakistan's MFN 2004/05 and 2005/06 tariff is composed of 6,337 tariff lines at HS 8-digit level, of 
which, 6,289 contain ad valorem  duties, 48 contain non ad valorem  duties.  Of these non ad valorem  duties, 45 
are subject to specific duties and 3 compound.  For the lines with non ad valorem  duties, ad valorem  equivalents 
were not provided.  The Secretariat has used only the ad valorem  component of the tariff lines subject to 
compound duty rates in the tariff calculations in this presentation. 
8 Sri Lanka's tariff is composed of 6,402 tariff lines at HS 6 and 8-digit level, of which: i) for MFN 
2005/06, 6,316 contain ad valorem  duties, 86 contain non ad valorem  duties.  Of these non ad valorem  duties, 
45 are subject to specific duties and 41 mixed.  ii) for  MFN 2006/07, 6,312 contain ad valorem  duties, 90 
contain non ad valorem  duties.  Of these non ad valorem  duties, 46 are subject to specific duties and 44 mixed.  
iii) for  MFN 2007/08, 6,293 contain ad valorem  duties, 109 contain non ad valorem  duties.  Of these non ad 
valorem  duties, 46 are subject to specific duties and 63 mixed.  iv) for  MFN  2008/09, 6,299 contain ad 
valorem  duties, 103 contain non ad valorem  duties.  Of these non ad valorem  duties, 45 are subject to specific 
duties and 58 mixed.  For the lines with non ad valorem  duties, ad valorem  equivalents were not provided.  The 
Secretariat has used only the ad valorem  component of the tariff lines subject to mixed duty rates in the tariff 
calculations in this presentation.   WT/COMTD/RTA/2/1 
Page 8  
 
Table II.1 
Tariff elimination commitments under the Ag reement and corresponding average trade  
B. Sri Lanka 
 
Duty phase-
out period Number of lines % of total lines in Sri 
Lanka's tariff 
schedule Value of Sri Lanka's 
imports from 
Pakistan (2002-2004) 
in US$ million  % of Sri Lanka's 
total imports from 
Pakistan 2002-2004 
2005/06 635 9.9 47.9 53.7 
2006/07 99 1.5 0.3 0.3 
2007/08 6 0.1 0.1 0.1 
2008/09 1 0.0 0.0 0.0 MFN  
Duty Free 
Total 741 11.6 48.3 54.1 
2005/06 135 2.1 3.6 4.0 
2008/09 1 0.0 2.0 2.2 Preferential  
Duty Free 
2010/11 4,383 68.5 10.2 11.4 
Remain dutiable 1,142 17.8 25.3 28.4 
Total 6,402 100.0 89.3 100.0 
 
Note: Based on HS 2002 nomenclature. 
 
Source : WTO Secretariat based on data provided by Sri Lanka. 
 
(c) Pakistan's liberalization schedule 
17. Table II.2 shows Pakistan's tariff elimination commitments vis-à-vis Sri Lanka by HS section 
product categories.  Of the 6,337 tariff lines formi ng Pakistan's tariff schedule, no tariff lines were 
duty-free on an MFN basis in 2004/05 and 2005/06;  the 255 lines liberalized upon the entry into 
force of the Agreement are across most HS secti ons except animal or vegetable fats and oils;  
footwear, headgear;  arms and ammunition;  and wo rks of art.  In 2008/09, an additional 5,361 lines 
covering all the HS sections are subject to elimination with the largest share of elimination in 
chemicals and chemical products;  machinery;  a nd textiles and textiles articles.  The 721 lines which 
remain subject to duties at the end of the implem entation period are mainly in textiles and textiles 
articles;  plastics and rubber;  and transport equi pment.  The average final tariff for the remaining 
dutiable lines is 23.9%, with the highest rates in  prepared food (53.2%) and transport equipment 
(34.9%). 
Table II.2 
Pakistan: Tariff elimination under the Agreement, by HS section 
MFN 
average%  Number of duty-free lines - 
Preferential HS section and description  
04/05 05/06 Total 
No of 
lines  2004/05 2008/09 Remain 
dutiable  Average 
Final 
Tariff 
(Dutiable)  
I Live animals and animal products 12.1 12.1 239 1 231 7 25.0 
II Vegetable products 11.8 11.8 305 18 277 10 12.8a 
III Animal or vegetable fats and oils 14.1 14.1 55  29 26 b 
IV Prepared foods etc. 24.7 23.8 226 20 175 31 53.2 
V Minerals 10.9 9.9 197 4 193   
VI Chemicals and chemical products 9.0 8.6 1,096 12 1022 62 16.1a 
VII Plastics and rubber 16.4 16.2 260 33 116 111 18.7 
VIII Hides and skins 12.4 12.4 82 7 75   
IX Wood and articles 14.5 14.5 91 10 79 2 20.0 
X Pulp, paper etc. 17.7 17.7 181 3 166 12 23.3 
XI Textiles and textiles ar ticles 18.5 18.9 915 48 666 201 23.2 
XII Footwear, headgear 23.1 23.1 59  48 11 25.0 
XIII Articles of stone 21.3 21.2 165 10 143 12 22.1 
XIV Precious stones, etc. 5.3 5.3 60 5 52 3 10.0 
Table II.2 (Cont'd) WT/COMTD/RTA/2/1 
Page 9 
 
 
MFN 
average%  Number of duty-free lines - 
Preferential HS section and description  
04/05 05/06 Total 
No of 
lines  2004/05 2008/09 Remain 
dutiable  Average 
Final 
Tariff 
(Dutiable)  
XV Base metals and  base metal 
products 14.3 13.7 718 46 615 57 19.7 
XVI Machinery 12.0 10.9 1,056 19 957 80 20.1 
XVII Transport equipment 33.0 30.0 163 4 70 89 34.9 
XVIII Precision equipment 7.8 8.2 279 5 272 2 25.0 
XIX Arms and ammunition 20.5 20.5 22  22   
XX Misc. manufactured articles 20.5 20.7 161 10 146 5 24.0 
XXI Works of art, etc. 5.7 5.7 7  7   
Total 14.4 14.0 6,337 255 5,361 721 23.9 
a Combination of ad valorem  and specific duties (for tariff lines with non ad valorem  components, only the ad valorem  part of the 
rate was included in the calcula tion of the tariff averages). 
b Purely specific duties. 
 Note: Based on HS 2002 nomenclature.  For tariff lines subject to TRQs only the out-of-quota duty is included in the tariff-rel ated 
calculations. 
 
Source:   WTO estimates based on data pr ovided by Pakistan and WTO-IDB. 
 
(d) Sri Lanka's liberalization schedule 
18. Table II.3 shows Sri Lanka's tariff elimination commitments vis-à-vis Pakistan by HS section 
product categories.  Of the remaining 5,526 tariff lines s ubject to duty after the entry into force of the 
Agreement, the largest share of the tariff, 4,383 lines,  across all HS sections, is to be fully liberalized 
only at the end of the implementation period in 2010/11.  Machinery;  chemicals and chemical 
products;  and base metals and base metal products make up the largest share of these lines.  The 
1,142 tariff lines that will remain dutiable after full implementation are found mainly in transport 
equipment, prepared foods, and base metals and b ase metal products.  As for Pakistan, the average 
final tariff for the remaining dutiable lines is 23.4%, with the highest tariff (44%) in prepared foods. 
Table II.3 
Sri Lanka: Tariff elimination under the Agreement, by HS section  
Number of duty-free lines MFN average%  MFN Preferential  HS section and 
description  
05/06 
06/07 
07/08 
08/09 Total 
No. of 
lines  
05/06 
06/07 
07/08 
08/09 
05/06 
08/09 
10/11 
Remain 
dutiable  Average 
Final 
Tariff 
(Dutiable)  
I Live animals and animal 
products 19.1 19.0 19.0 19.0 265  6 2    199 58 18.8 
II Vegetable 
products 23.1 23.0 23.0 23.0 374 2    21  244 107 25.6a 
III Animal or 
vegetable fats 
and oils 23.7 23.7 23.7 23.7 54       43 11 25.6 
IV Prepared 
foods etc. 33.1 33.0 33.0 33.0 242     2  108 132 44.0a 
V Minerals 7.3 7.2 7.2 7.0 185 14 3 1  5  152 10 17.6 
VI Chemicals 
and chemical products 5.0 4.9 4.9 5.0 917 40 24 1  17  808 27 24.2
a 
VII Plastics and 
rubber 14.7 14.1 14.1 14.6 291  1   5  210 75 21.6 
VIII Hides and 
skins 19.9 19.9 19.9 19.9 78       75 3 15.0 
IX Wood and 
articles 11.7 11.7 11.7 11.7 95       90 5 28.0 
X Pulp, paper 
etc. 14.6 13.6 13.6 14.1 186 18 3 2 1   112 50 22.8 
Table II.3 (Cont'd)  WT/COMTD/RTA/2/1 
Page 10  
 
Number of duty-free lines MFN average%  MFN Preferential  HS section and 
description  
05/06 
06/07 
07/08 
08/09 Total 
No. of 
lines  
05/06 
06/07 
07/08 
08/09 
05/06 
08/09 
10/11 
Remain 
dutiable  Average 
Final 
Tariff 
(Dutiable)  
XI Textiles and textiles articles 6.7 6.7 6.7 6.7 890 518    6  335 31 24.2 
XII Footwear, 
headgear 25.2 25.3 25.3 25.3 58     3  26 29 26.7a 
XIII Articles of 
stone 20.0 19.7 19.7 20.0 175       126 49 26.4a 
XIV Precious 
stones, etc. 7.1 7.1 7.1 7.1 58 42      13 3 28.0 
XV Base metals 
and  base metal products 10.7 10.6 10.6 10.6 655 1 1   30 1 494 128 20.8 
XVI Machinery 7.7 7.4 7.4 7.5 1,068  53   28  874 113 16.8 
XVII Transport 
equipment 12.9 12.9 12.9 12.9 335  2   10  122 201 16.6a 
XVIII Precision 
equipment 13.9 12.9 12.9 13.0 254  6   7  226 15 23.3 
XIX Arms and 
ammunition 9.0 9.0 9.0 9.0 21       21   
XX Misc. 
manufactured 
articles 20.1 20.1 20.1 20.1 194     1  98 95 26.5 
XXI Works of 
art, etc. 15.0 15.0 15.0 15.0 7       7   
Total 11.9 11.8 11.8 11.8 6,402 635 99 6 1 135 1 4,383 1,142 23.4 
a Combination of ad valorem  and specific duties (for tariff lines with non ad valorem  components, only the ad valorem  part of the 
rate was included in the calcula tion of the tariff averages). 
 
Note: Based on HS 2002 nomenclature.  The calculation of the preferential tariff rates for 2009/10 is based on the applied MFN tariff in 
2008/09. 
 
Source:  WTO estimates based on data provided by Sri Lanka.  
 
(e) Tariff-rate quotas 
(i) Pakistan 
19. Pakistan maintains tariff-rate quotas (TRQs) on products of tea;  betel leaves (subject to 
paragraph 22 below);  and articles of apparel, bot h knitted or crocheted and not knitted or crocheted 
(Attachment III, Annex A).  Annex II of this pr esentation gives a detailed description of the TRQs 
under the Agreement.   
20. On tea originating from Sri Lanka, Pakistan allows duty-free access within an annual limit9 of 
10,000 metric tonnes (MT) as of the date of entr y into force of the Agreement;  above this quota 
volume, the full applied MFN rate of duty is applicable. 
21. On articles of apparel, both knitted or crochete d and not knitted or crocheted, originating in 
Sri Lanka, Pakistan grants a 35% margin of pref erence over the applied MFN rate for annual imports 
of up to 1,200 MT as of the date of entry into force of the Agreement; above this quota volume, the 
full applied MFN rate of duty is applicable.   
22. On betel leaves originating in Sri Lanka, Pakist an initially agreed to grant a 35% margin of 
preference over the current applied MFN rate for an nual imports of up to 1,200 MT as of the date of 
entry into force of the Agreement;  above this quota volume, the full applied MFN rate of duty was 
applicable.  The TRQ was removed on 16 March 2007;   imports of betel leaves from Sri Lanka are 
                                                      
9 Pakistan's TRQ is allocated on the basis of financial year July to June. WT/COMTD/RTA/2/1 
Page 11 
 
 
now subject to a preferential tariff with a 20% margin of preference over the applied MFN rate.10  The 
Parties indicate that further liberalization of th e remaining TRQs on tea and articles of textiles and 
clothing may be negotiated if considered necessary. 
(ii) Sri Lanka 
23. Attachment III under Annex B provides for duty-free access to the Sri Lankan market for 
Pakistan through TRQs on long grain basmati rice and potatoes.  See Annex II of this presentation for 
a more detailed description of the TRQs under the Agreement. 
24. As of the date of entry into force of the Ag reement, duty-free access is provided for imports 
of basmati rice from Pakistan, within the TRQ volume of 6,000 MT per calendar year;   above this 
quota volume, the full applied MFN rate of duty is applicable.  Imports of potatoes originating in 
Pakistan are duty-free up to 1,000 MT per year with  the arrangement that two-thirds of the total 
quantity be imported by Sri Lanka during June to July and one-thirds during October to November 
every year.  The TRQ on potatoes is also implemente d as of the date of the entry into force of the 
Agreement.   Above this quota volume, the full MFN rate of  duty is applicable.  According to the 
Parties, further liberalization of the TRQ on the produ ct can be negotiated, if they consider it essential. 
2. Rules of origin 
25. Disciplines regarding rules of origin are set out  in Article VII and Annex C.  The general 
requirement for a good to be considered originating is if the good: 
(a) is wholly produced or obtained in the territory of the exporting Party11;  or 
(b) is not wholly produced or obtained in the territory of the exporting Party, provided 
that the products are eligible under Articles 8 (not wholly produced or obtained) or 9 
(cumulative rules of origin) of Annex C.   
26. Under Articles 8.(b)-(e) and 9 of Annex C, produc ts worked on or processed are eligible for 
preferential treatment if the total value of the material, parts or pr oducts originating from third parties 
or of undetermined origin used does not exceed 65%  of the free on board (FOB) value of the products 
produced or obtained, and the final process of manuf acture is performed within the territory of the 
exporting Party (Article 8.(a) of Annex C).  Non-originating materi als shall be considered to be 
sufficiently worked or processed when the product obtai ned is classified in a different HS heading at 
the six-digit level from that in which all the non-or iginating materials used in its manufacture are 
classified (Article 8.(b) of Annex C).  The value of the non-originating materials, parts or products 
shall be the cost, insurance and freight (CIF) value at the time of import, where this can be proven 
(Article 8.(e) of Annex C) or the earliest ascertainable price paid for the materials, parts or products of 
undetermined origin in the territory of the Par ties where the working or processing takes place.   
                                                      
10 Government of Pakistan, Ministry of Finance, Economic Affairs and Revenue (Revenue Division) 
Notification (Customs) S.R.O.818(I)/2007 , 11 August 2007. 
11 "Wholly produced or obtained" applies to goods that are: (i) raw or mineral products extracted from 
its soil, water or seabed;  (ii) vegetable products harveste d in the territory of the exporting Party;  (iii) animals 
born and raised in the territory of the exporting Party;  (iv) products obtained from an imals referred to in (iii);  
(v) products obtained by hunting or fishing conducted in the territory of the exporting Party;  (vi) products of sea 
fishing and other marine products from the high seas by exporting Party's vessels;  (vii) products processed 
and/or made on board the exporting Party's factory ships exclusively from products, referred to in (vi);  
(viii) used articles collected in the ex porting Party, fit only for the recovery  of raw materials;  (ix) waste and 
scrap resulting from manufacturing operation conducted in the exporting Party;  (x) products extracted from the 
seabed or below seabed which is situated outside the e xporting Party's territorial waters, provided that it has 
exclusive exploitation rights, and (xi) goods produced in the exporting Party exclusively from the products 
referred to in (i) – (x). WT/COMTD/RTA/2/1 
Page 12  
 
Lower value addition norms for certain sectors ma y be considered through mutual negotiations 
(Article VII).  According to the Parties, su ch negotiations have not  taken place to date. 
27. Bilateral cumulation is allowed under Article 9 of Annex C.  The value addition in the 
territory of the exporting Party shall not be less than  25% of the FOB value of the exports subject to 
the condition that the aggregate value addition in the Parties is not less than 35% of the FOB value of 
the exports. 
28. Products may be transported through third c ountries with or without transhipment or 
temporary storage as long as they satisfy the conditions  in Article 10.(b) including that the transit is 
justified for geographical reasons or for transporta tion requirements, that the products have not been 
consumed or traded or undergone transformation in the transit country.  When determining the origin 
of goods, packing is considered as forming part of the product it is used for except if treated 
separately in national legislation (Article 11 of Annex C). 
29. Article 15 of Annex C opens possibilities for reviewing and modifying the rules of origin 
provisions upon the request of the Parties. 
3. Export duties and charges, and quantitative restrictions 
30. There are no provisions on export duties and charges in the Agreement. 
C. R
EGULATORY PROVISIONS OF THE AGREEMENT  
1. Standards 
(a) Sanitary and phytosanitary measures 
31. There are no sanitary and phytosanitary measures per se  explicitly stated in the Agreement. 
(b) Technical barriers to trade 
32. The Agreement contains no specific provision w ith regards to technical barriers to trade 
measures. 
2. Safeguard mechanisms 
(a) Global safeguards 
33. The Agreement does not contain a provision on globa l safeguards.  According to the Parties, 
the application of a global safeguard measure by one of them would include imports from the other 
Party. 
(b) Bilateral safeguards 
34. Article VIII sets out the rules that apply to the imposition of a bilateral safeguard measure.  
As a result of the preferential treatment provided under the Agreement, if a good originating in one 
Party is imported into the territory of the other Part y in such a manner or in such quantities that cause 
or threaten to cause serious injury12 in the territory of that other Party, it may apply a bilateral 
                                                      
12 'Serious injury' means significant damage to domes tic producers, of like or similar products, resulting 
from a substantial increase of preferential imports in situations which cause substantial losses in terms of 
earnings, production or employment unsustainable in the short term.  The examination of the impact on the 
domestic industry concerned shall also include an evaluation of other relevant economic factors and indices 
having a bearing on the state of the domestic industry of that product (Article II.7). WT/COMTD/RTA/2/1 
Page 13 
 
 
safeguard measure.  Except critical circumstances13, the affected Party may provisionally suspend the 
preferential treatment subject to prior consultations  with the other Party.  The measure shall be 
immediately notified to the other Party and the Jo int Committee.  A consultation process is initiated 
by the Committee with the Parties to endeavour to  reach a mutually acceptable agreement to remedy 
the situation.  If the consultations fail within 60 da ys, the affected Party can withdraw the equivalent 
preferential treatment in accordance wi th the WTO Agreement on Safeguards. 
(c) Special safeguards 
35. The Agreement has no provision on special safeguards, per se .  There is also no provision for 
structural adjustment. 
(d) Balance of payment measures 
36. When a Party has balance of payments difficu lties, it may provisionally suspend preferential 
treatment as to the quantity and value of merchandi se permitted to be importe d under the Agreement.  
The Party taking the measure shall simultaneously no tify the other Party and shall provide the other 
Party with adequate opportunities fo r consultations upon request from  the other Party (Article X). 
3. Anti-dumping and subsidies 
37. The Parties are free to apply their domestic legislation to restrict imports in cases where prices 
are influenced by unfair trade practices like subs idies or dumping.  According to the Parties the 
Agreement reaffirms and maintains the Parties' rights and obligations pursuant to the relevant 
provisions of the GATT and the WTO Agreements. 
4. Other regulations 
(a) Customs-related procedures 
38. A working group on customs related issues, in cluding harmonization of tariff headings, was 
established upon the entry into force of the Agreemen t.  The working group meets as often as required 
and reports the results of its meetings to the Jo int Committee (Article XI.3).  The Parties have 
indicated that the working group has produced  a draft agreement on cooperation and mutual 
assistance on customs matters and is nearing conclusion. 
(b) State trading enterprise 
39. While the Parties are allowed to maintain or establish a state trading enterprise in line with 
GATT Article XVII, the enterprise must meet th e obligations under the Agreement and provides 
non-discriminatory treatment to, imports from and exports to, the other Party (Article VI). 
D. SECTOR -SPECIFIC PROVISIONS OF THE AGREEMENT  
40. There are no sector-specific provisions in the Agreement. 
E. GENERAL PROVISIONS OF THE AGREEMENT  
1. Transparency 
41. There are no transparency provisions per se  in the Agreement. 
                                                      
13 'Critical circumstances' mean the emergence of an  exceptional situation where massive preferential 
imports are causing or threatening to cause 'serious in jury' which is difficult to repair and which calls for 
immediate action (A rticle II.9). WT/COMTD/RTA/2/1 
Page 14  
 
2. Exceptions 
42. Article IV of the Agreement incorporates GATT Article XX (a), (b) and (f) and Article XXI.  
In addition, Article 2 of the WTO Agreement on Sa nitary and Phytosanitary Measures (SPS) is also 
incorporated into the Agreement allowing a Part y to take action and a dopt measures it considers 
necessary to protect public morals;  human, animal or plant life or health;  articles of artistic, historic 
or archaeological value;  and national security. 
3. Accession and withdrawal 
43. There is no provision in the Agreement for the accession of third parties.  A Party may 
withdraw from the Agreement six months after a wri tten notification to the other Party (Article XIV). 
4. Institutional framework 
44. Article XI provides for the establishment of a Joint Committee responsible for reviewing the 
implementation of the Agreement and ensuring the e quitable benefits of trade expansion between the 
Parties.  The Joint Committee meets at least once a year at Ministerial level.  It can set up sub-committees and/or working groups for any sp ecific purposes as necessary.  If the Joint Committee 
approves, the Agreement can be amended.  However,  if an emergency situation arises, modifications 
may be considered, and agreed to by the Part ies without the approval of the Joint Committee 
(Article XV). 
45. One apex Chamber of trade and industry from each Party is designated by the 
Joint Committee as the nodal Chamber to represent the views of traders and industry arising from the Agreement.   
5. Dispute settlement 
46. A Party shall give sympathetic consideration to , and consult on, any representations raised by 
the other Party on issues relating to the oper ation of the Agreement (Article XII.1).
14  At the request of 
a Party, the Joint Committee can meet to consider  any matter which the Parties themselves could not 
resolve through consultation (Article XII.2).  The Committee shall adopt appropriate measures for 
settling such issues within six months from their having been filed with the other Party, to be followed 
by immediate implementation by the Parties (Article XI.4.(ii)).   
47. Any dispute between the Parties regarding the in terpretation and application of the Agreement 
or any instrument adopted under the Agreement sh all be amicably settled by negotiations.  If the 
Parties fail to settle a dispute, then either may request the Joint Committee to resolve the dispute 
(Article XIII.2). 
48. Article XIII.1 provides procedures that apply to disputes between commercial entities of the 
Parties.15  Any such  dispute  shall be referred to the nodal Chambers which shall pursue an amicable 
settlement.  If an amicable settlement is not possible,  then an Arbitration Tribunal to be constituted by 
the Joint Committee shall be establis hed to reach a binding decision. 
6. Relationship with other agreements concluded by the Parties 
49. Table II.4 lists the regional trade agreements  (RTAs), (notified and non-notified to the 
GATT/WTO and in force), as of February 2009 to  which Pakistan and Sri Lanka are parties. 
                                                      
14 The Agreement does not define  "sympathetic" consideration. 
15 According to the Parties, "commercial entities" ma y include legal and juridical persons or businesses 
engaged in or concerned with commerce. WT/COMTD/RTA/2/1 
Page 15 
 
 
Table II.4 
Pakistan and Sri Lanka:  Participation in other RTAs (n otified and non-notified in force), as of February 2009  
GATT/WTO Notification 
Partner / Agreement Date of 
entry  
into force Type of 
agreement Year WTO Provision 
PAKISTAN 
Malaysia 01.01.08 Goods & Services 2008 Enabling Clause & GATS Art. V 
China 01.07.07 Goods 2008 GATT Art. XXIV 
SAFTA 01.01.06 Goods 2008 Enabling Clause 
SAPTA 07.12.95 Goods 1997 Enabling Clause 
ECO 17.02.92 Goods 1992 Enabling Clause 
GSTP 19.04.89 Goods 1989 Enabling Clause 
PTN 11.02.73 Goods 1971 Enabling Clause 
Mauritius 30.11.07 Goods Not notified 
Iran 01.10.06 Goods Not notified 
SRI  LANKA 
SAFTA 01.01.06 Goods 2008 Enabling Clause 
India 15.12.01 Goods 2002 Enabling Clause 
SAPTA 07.12.95 Goods 1997 Enabling Clause 
GSTP 19.04.89 Goods 1989 Enabling Clause 
APTA 17.06.76 Goods 1976 Enabling Clause 
Source: WTO Secretariat.  
 
SAFTA: South Asian Free Trade Agreement.  
SAPTA: South Asian Preferential Trade Arrangement.  ECO: Economic Cooperation Organization. 
GSTP: Global System of Trade Preferences. 
PTN: Protocol relating to Trade Ne gotiations among deve loping countries. 
APTA: Asia Pacific Trade Agreement (Bangkok Agreement).  
 
 WT/COMTD/RTA/2/1 
Page 16  
 
ANNEX I 
 
Indicators of trade liberalization under the Pakistan-Sri Lanka FTA
 
 
1. A comparison between the scheduled elimination of tariffs applied to the Parties' mutual 
imports and the MFN rates applies by Pakistan and Sr i Lanka is shown in Tables AI.1 (Pakistan) and 
AI.2 (Sri Lanka) below, by total products, ag ricultural products and non-agricultural products. 
Table AI.1 – Pakistan:  Indicators of tariff rates applied to MFN and Sri Lanka 
ALL PRODUCTS Agricultural products a Non-agricultural products 
Average applied 
tariff Average applied 
tariff  Average applied 
tariff Origin 
of 
goods Year 
Overall 
(%) On 
dutiablea
(%) Share of 
duty-free 
tariff 
lines 
(%) Overall 
(%) On 
dutiable
(%) Share of 
duty-free 
tariff 
lines 
(%) Overall 
(%) On dutiable 
(%) Share of 
duty-free 
tariff lines
(%) 
MFN 2004/05 14.4 14.4 n.a 15.6 15.6 n.a. 14.2 14.2 n.a. 
 2005/06 14.0 14.0 n.a. 15.3 15.3 n.a. 13.8 13.8 n.a. 
Sri Lanka 2004/05 10.0 10.4 4.0 10.5 11.4 7.3 9.9 10.2 3.5 
 2006/07 6.1 6.4 4.0 6.4 6.9 7.3 6.1 6.3 3.5 
 2008/09 2.6 23.9 88.6 2.5 41.3 90.8 2.7 22.6 88.2 
a WTO Definition. 
n.a. Not applicable. 
Note:  Based on HS 2002 nomenclature.  The base rates for tari ff reductions in 2004/05 and 2005/06 are the MFN rates of those y ears.  
For tariff reductions in 2008/09, the base rate is the applied MF N rate in 2005/06.   For tariff lines subject to TRQs only the  
out-of-quota duty is included in the tariff-related calculations. 
Source:  WTO Secretariat estimates, based on data provided by Pakistan and WTO-IDB. 
 
2. Pakistan's average applied MFN rate in the year  of the entry into force (2004/05) was 14.4%.  
None of the tariff was duty-free on an MFN basis in 2004/05 and 2005/06.  As a result of implementation of the Agreement, Sri Lankan exporters enjoyed an absolute margin of preference of 
5.1% for agricultural goods vis-à-vis  the prevailing average MFN tariff in 2004/05, and 4.3% for non-
agricultural products.  Overall, Sri Lankan exporter s enjoyed an absolute margin of preference of 
4.4% vis-à-vis  the prevailing average applied MFN tariff, as  well as an increase (to 4%) in the share 
of Pakistan's duty-free lines.  At the end of im plementation, the share of duty-free lines for all 
products is expected to increase to 88.6%, of wh ich 90.8% for agricultural products and 88.2% for 
non-agricultural products. 
Table AI.2 – Sri Lanka:  Indicators of tariff rates applied to MFN and Pakistan 
ALL PRODUCTS Agricultural products a Non-agricultural products 
Average applied 
tariff Average applied 
tariff  Average applied 
tariff Origin 
of 
goods Year 
Overall 
(%) On 
dutiablea 
(%) Share of 
duty-free 
tariff lines 
(%) Overall 
(%) On 
dutiable
(%) Share of 
duty-free 
tariff lines 
(%) Overall 
(%) On dutiable 
(%) Share of 
duty-free 
tariff lines
(%) 
MFN 05/06 11.9 13.3 9.9 24.2 25.1 3.3 10.0 11.3 11.0 
 06/07 11.8 13.3 11.5 24.1 25.2 4.2 9.9 11.3 12.7 
 07/08 11.8 13.3 11.5 24.1 25.2 4.2 9.9 11.3 12.7 
 08/09 11.8 13.3 10.8 24.2 25.1 3.6 9.9 11.3 12.0 
Pakistan 05/06 11.0 12.4 21.9 22.5 23.6 9.1 9.3 10.5 23.7 
 06/07 9.3 10.7 13.6 19.2 20.6 6.5 7.7 9.1 14.6 
 07/08 8.5 9.9 13.7 17.7 19.1 6.7 7.1 8.3 14.6 
 08/09 7.0 8.1 12.9 14.8 15.9 6.2 5.9 6.8 13.9 
 09/10 5.5 6.4 12.9 11.9 12.8 6.2 4.6 5.3 13.9 
 10/11 4.0 23.4 82.2 9.0 34.4 70.2 3.3 20.7 84.2 
a WTO Definition. 
 
Note:  Based on HS 2002 nomenclature.  The base rate is the cu rrent applied MFN rate for each year.  As the MFN tariff for 2009 /10 is 
not yet available, the calculations for this y ear are based on the applied MFN tariff for 2008/09. 
Source:  WTO Secretariat estimates, based on data provided by Sri Lanka. 
 WT/COMTD/RTA/2/1 
Page 17 
 
 
3. Sri Lanka's average applied MFN rate in the year of the entry into force (2005/06) was 11.9%;  
the average applied tariff on agricultural products wa s about two times higher than that applied to 
non-agricultural products.  Duty-free tariff lines acc ount for 9.9% of all tariff lines.  Pakistani 
exporters enjoyed an absolute margin of preference of 1.7% for agricultural goods vis-à-vis  the 
prevailing average MFN tariff in 2005/06, and 0.7% fo r non-agricultural products.  Overall, Pakistani 
exporters enjoyed an absolute margin of preference of 0.9% vis-à-vis  the prevailing average applied 
MFN tariff, as well as an increase (to 21.9%) in the share of Sri Lanka's duty-free lines.  At the end of implementation, the share of duty-free lines for all products is expected to increase to 82.2% of which 
70.2% for agricultural products and 84.2% for non-agricultural products.   
Table AI.3 – Pakistan: Market a ccess opportunities under the Agreem ent for Sri Lanka's top 25 exports 
Access Conditions to Pakistan's import markets  
MFNa Preferential Sri Lanka's top export products in 2002-2004  
Duty-free in  
HS number and description of the product  Share in 
global 
exports 
(%) Average 
MFN 
applied 
rate 
(%) Number 
of  
dutiable 
tariff lines  
04/ 05 
08/ 09 
Remain 
Dutiable  
090240b Other black tea (fermented) and other partly 
fermented tea 8.2 10.0 2   2 
090230b Black tea (fermented) and partly fermented tea, in 
immediate packing of a content not exceeding 3 kg 5.3 10.0 1   1 
621210b Brassières 2.7 25.0 1   1 
620342 Of cotton 2.6 25.0 1   1 
620462 Of cotton 2.3 25.0 1   1 
620520 Of cotton 2.2 25.0 1   1 
620469 Of other textile materials 2.2 25.0 1   1 
710239 Other 2.2 5.0 1  1  
610910b Of cotton 2.0 25.0 1   1 
880330 Other parts of airplanes or helicopters 1.9 5.0 1  1  
620333 Of synthetic fibres 1.6 25.0 1   1 
401290 Other 1.5 25.0 1  1  
710391 Rubies, sapphires and emeralds 1.5 5.0 1 1   
610510 Of cotton 1.5 25.0 1   1 
620630 Of cotton 1.3 25.0 1   1 
611020 Of cotton 1.2 25.0 1   1 
620690 Of other textile materials 1.1 25.0 1   1 
620640 Of man-made fibres 1.1 25.0 1   1 
620433 Of synthetic fibres 1.0 25.0 1   1 
611610 Impregnated, coated or covered with plastics or 
rubber 1.0 25.0 1  1  
620343 Of synthetic fibres 1.0 25.0 1   1 
401519 Other 1.0 20.0 1  1  
740319 Other 1.0 5.0 1  1  
610990b Of other textile materials 1.0 25.0 1   1 
620463 Of synthetic fibres 0.9 25.0 1   1 
Total of above 49.6  26 1 6 19 
a  The applied MFN rates in 2004/05 and 2005/06 are the same. 
b For tariff lines subject to TRQs only the out-of-quot a duty is included in the tariff-related calculations. 
Note:  Based on HS 2002 nomenclature.   
 
Source:  WTO estimates based on data provided by  Pakistan and UNSD, Comtrade data.  
 
4. Table AI.3 shows the market access conditions in  Pakistan for Sri Lanka's top 25 exports, 
which in 2002-2004 accounted for 49.6% of its global exports.  No tariff lines were duty-free on an MFN basis in 2004/05 and 2005/06.  Of the 26 tariff lines that were dutiable on an MFN basis, seven 
lines are to become duty free at the end of implemen tation:  one line became duty-free in 2004/05 and 
six lines are to be made duty-free in 2008/09.  Th e remaining 19 lines to remain dutiable after the 
Agreement is fully implemented are related to tea and textiles and textiles articles. 
 
  WT/COMTD/RTA/2/1 
Page 18  
 
Table AI.4 – Sri Lanka: Market access opportunities  under the Agreement for Pakistan's top 25 exports 
Access Conditions to Sri Lanka's import markets  
MFNa Prefer-
ential Pakistan's top export products in 2002-2004  
Number of tariff 
lines  
HS number and description of the product  Share in 
global 
exports (%)  Average 
MFN 
applied 
rate 
(%) 
Duty-
free 
Dutiable Duty-free 
in 
2010/11  
Remain Dutiable  
630231 Of cotton 5.7 15.0  1 1  
100630b Semi-milled or wholly milled rice, 
whether or not polished or glazed 4.0 Rs 0.9/kg  1  1 
520512 Measuring less than 714.29 decitex but not 
less than 232.56 decitex (exceeding 14 metric number but not exceeding 43 metric 
number) 3.0 0.0 1    
610510 Of cotton 2.8 15.0  1 1  
630260 Toilet linen and kitchen linen, of terry 
towelling or similar terr y fabrics, of cotton 2.6 15.0  1 1  
520819 Other fabrics 2.5 0.0 1    
620342 Of cotton 2.0 15.0  1 1  
420310 Articles of apparel 1.6 28.0  1 1  
271019 Other 1.6 9.1 4 4  4 
521051 Plain weave 1.4 0.0 1    
570110 Of wool or fine animal hair 1.4 15.0  1 1  
520522 Measuring less than 714.29 decitex but not 
less than 232.56 decitex (exceeding 14 metric number but not exceeding 43 metric 
number) 1.3 0.0 1    
521213 Dyed 1.2 0.0 1    
540774 Printed 1.2 0.0 1    
630710 Floor-cloths, dish-cloths, dusters and 
similar cleaning cloths 1.0 15.0  1 1  
950662 Inflatable 0.9 2.5  1 1  
901890 Other instruments and appliances 0.8 2.5  1 1  
630210 Bed linen, knitted or cr ocheted 0.8 15.0  1 1  
610910 Of cotton 0.7 15.0  1 1  
890510 Dredgers 0.7 2.5  1 1  
521021 Plain weave 0.6 0.0 1    
611490 Of other textile materials 0.6 15.0  1 1  
611420 Of cotton 0.6 15.0  1 1  
630232 Of man-made fibres 0.6 15.0  1 1  
950699 Other 0.6 2.5  1 1  
Total of above 40.2  11 21 16 5 
a Sri Lanka's applied MFN rates for Pakistan's top 25 exports are the same over the period 2005/06-2008/09.  
b For tariff line 100630 which is subject to TRQ only the out-o f-quota duty is included in the tariff-related calculation. 
Note: Based on HS 2002 nomenclature. 
 
Source:  WTO estimates based on data provided by  Sri Lanka and UNSD, Comtrade data. 
 
5. Table AI.4 shows the market access conditions in  Sri Lanka for Pakistan's top 25 exports, 
which in 2002-2004 accounted for 40.2% of its global exports.  Eleven tariff lines were duty-free on 
an MFN basis.  Out of 21 tariff lines that are du tiable, 16 lines will become duty-free only at the end 
of implementation (2010/11).  The remaining five lin es to remain dutiable after the Agreement is fully 
implemented are related to mineral products and rice. 
  
  WT/COMTD/RTA/2/1 
Page 19 
 
 
ANNEX II 
 
Tariff-Rate Quotas under the Agreement  
 
 
1. Tariff-rate quotas exist on trade in some agricultura l and textiles products be tween the Parties,  
the details of which are shown below.  
Table AII.1 
Pakistan: Tariff-rate quotas for agricultural and textiles products originating in Sri Lanka  
HS Code (description)  TRQ from the date of entry into force  
(12 June 2005)  Liberalization scheme  
 Quantity  Duty  Quantity Duty 
  In-quota Out of quota   
Tea 
0902;  0902.10;  0902.20;  
0902.30;  0902.40 10,000 metric 
tonnes (MT)  0 
Articles of apparel;  knitted or 
crocheted 
61.07.11;  61.07.12;  61.07.19;  61.08.21;  61.08.22;  61.08.29;  
61.08.31;  61.08.32;  61.08.39;  
61.09.10;  61.09.90;  61.12.31;  and 61.12.39 
Articles of apparel;  not knitted or crocheted 
62.07.11;  62.07.19;  62.08.21;  62.08.22;  62.08.29;  62.11.11;  
62.12.10;  and 62.16.00 1,200 MT 35% margin of 
preference on 
applied MFN rate 
(16.3% in 
2006/07) MFN duty  According to the Parties, further 
liberalization can be negotiated if the 
Parties consider it essential. 
Betel leaves 
1404 90.20 
 
  
 
 1,200 MT 35% margin of 
preference on 
applied MFN rate 
(Rs 97.5/kg  
in 2004/05) MFN duty The TRQs on betel leaves originally 
agreed under the Agreement have been 
removed on 16 March 2007.
 
 
Note: The operation of the TRQs is based on Pakistan's financial year (July-June). 
Source: Attachment III, Annex A of the Agreement and Government  of Pakistan, Ministry of  Finance, Economic Affairs 
 and Revenue (Revenue Division) Notificat ion (Customs) S.R.O.818(I)/2007, 11 August 2007. 
Table AII.2 
Sri Lanka: Tariff-rate quotas for agricult ural products originating in Pakistan  
HS Code (description)  TRQ from the date of entry into force  
(12 June 2005)  Liberalization scheme  
 Quantity  Duty  Quantity Duty 
  In-quota Out of quota   
Long grain basmati rice   
1006.30 6,000 MT  
per calendar 
year  
Potatoes 
0710 1,000 MT per 
calendar year 
(two-thirds  
during June-
July and one-
third during 
October-
November) 0 
 current applied 
MFN duty 
 According to the Parties, further 
liberalization can be negotiated if they 
consider it essential. 
 
Source: Attachment III, Annex B of the Agreement. 
 
__________