Exploiting Sri Lanka's Free Trade Agreements with India and Pakistan

Abstract

The article looks at the impact of preference, given under the bilateral free trade agreements Sri Lanka has signed with India and Pakistan. The focus here is on the export side and away from the import angle. This article identifies where the greatest preferences are offered to Sri Lanka-based exporters and analyzes the relationship between preferences and the export outturn. Preferences are calculated incorporating the current levels of protection in India and Pakistan. The article argues that successful Sri Lankan exporters’ penetration of the large Indian market, as reflected by the doubling of total exports over 2003–05, actually reflects a very concentrated increase in exports of a few products. Controlling for industry effects, preferences do not have a statistically significant impact on exporting to India.

Keywords

JEL: F15 JEL: F14 Bilateral free trade agreements integration Sri Lanka India Pakistan

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References

Central Bank of Sri Lanka (2006), Annual Report 2005.

Duty Concession List of Pakistan, Free Trade Agreement (FTA) between the Islamic Republic of Pakistan and the Democratic Socialist Republic of Sri Lanka. Board of Investment (BOI) of Sri Lanka website http://www.boi.lk (accessed in February 2006)

Duty Concession List of India, Free Trade Agreement (FTA) between the Republic of India and the Democratic Socialist Republic of Sri Lanka. Board of Investment (BOI) of Sri Lanka website http://www.boi.lk (accessed in February 2006).

Exchange Rates Data (2005), Central Bank of Sri Lanka, Annual Report 2005, Colombo .

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India Tariff Schedule (2005), Central Board of Excise and Customs, Government of India http://www.cbec.gov.in (accessed February 2006).

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