Sri Lanka Trade Dispute Resolution Body Remains Inactive After Two Decades
By: Staff Writer
September 19, Colombo (LNW): Despite a bilateral trade agreement between Pakistan and Sri Lanka signed nearly two decades ago, the two countries have yet to operationalize a dispute resolution body, leaving trade issues unresolved. This delay has raised concerns that Pakistan’s exports to Sri Lanka may suffer due to unresolved commercial disputes, the Express Trinune reported.
Pakistan’s Ministry of Commerce recently updated the Senate Standing Committee on Commerce, stating that the Sri Lankan authorities have been uncooperative in activating the dispute resolution mechanism. The ministry emphasized that this issue may now need to be handled at the political level to make progress. Senator Anusha Rahman, chair of the meeting, led the discussion on the matter.
Initially, ministry officials implied that the dispute resolution forum was functioning effectively, but later admitted that Sri Lanka had been unresponsive. Pakistan’s Minister for Commerce, Jam Kamal, expressed a desire to resolve the trade disputes peacefully and maintain positive relations with Sri Lanka.
According to Dr. Adnan, Joint Secretary at the Ministry of Commerce, the Free Trade Agreement (FTA) between Pakistan and Sri Lanka, signed in 2005, includes provisions for resolving both government-to-government and business-to-business disputes. However, since 2013, Pakistan has raised concerns about the dispute resolution mechanisms. A joint working group was established to address these issues, but progress has been slow.
One of the key obstacles is Sri Lanka’s failure to establish a designated chamber or arbitration mechanism for dispute resolution. In 2022, Pakistan proposed an arbitration forum with nominations from both countries, but Sri Lanka claimed to have lost the meeting minutes, halting further negotiations. As a result, Pakistani exporters have been unable to claim disputed export payments.
To mitigate the situation, Pakistan’s Trade and Investment attaché suggested using letters of credit (LCs) instead of bills of engagement in trade transactions. However, the dispute remains unresolved, and the Ministry of Commerce has indicated that Pakistan’s Ministry of Foreign Affairs may need to get involved to address the issue at a higher diplomatic level.
In addition to the trade disputes, the committee also discussed issues regarding appointments to the board of the Trade Development Authority of Pakistan (TDAP). Senator Anusha Rahman expressed frustration over the Ministry of Commerce’s reluctance to include parliamentarians in the TDAP board, despite legal requirements.
Senator Faisal Saleem Rehman’s nomination to the TDAP board for the 2021-24 term was not acknowledged by the Ministry of Commerce or TDAP, prompting concerns over legal compliance. The ministry argued that the State-Owned Enterprises (SOE) Act prohibits parliamentarians from serving on the boards of such entities.
However, Senator Rahman countered that TDAP is not classified as an SOE and accused the commerce ministry of manipulating its status to avoid parliamentary oversight.
Commerce Minister Jam Kamal assured the committee that the legal issues surrounding TDAP appointments would be addressed, and the matter resolved promptly.The committee has requested a detailed report on the TDAP appointments and related legal interpretations.
