Pakistan and Sri Lanka are two neighboring countries in South Asia. Both countries have had close economic ties with each other for many decades. In order to strengthen their economic partnership, Pakistan and Sri Lanka have signed a free trade agreement (FTA) in 2005. The FTA aims to promote bilateral trade by removing or reducing barriers to trade between the two countries. While the FTA has brought some advantages to both Pakistan and Sri Lanka, there are also some disadvantages that should be considered.
Advantages of the Pakistan Sri Lanka Free Trade Agreement:
1. Increased Trade: One of the main advantages of the FTA is that it has increased trade between the two countries. The FTA has eliminated or reduced tariffs on many goods, which has made it easier and less expensive for businesses to trade with each other. The FTA has also created new opportunities for businesses to invest in each other`s countries.
2. Boost to Economic Growth: The FTA has helped to boost economic growth in both Pakistan and Sri Lanka. Increased trade has led to greater economic activity and job creation in both countries. This has helped to improve the living standards of people in both countries.
3. Better Access to Markets: The FTA has given businesses in both countries better access to each other`s markets. This has enabled them to expand their customer base and tap into new markets. This has also helped to reduce their dependence on traditional markets.
4. Strengthened Diplomatic Relations: The FTA has also helped to strengthen diplomatic relations between Pakistan and Sri Lanka. The two countries have been able to work together on economic issues, which has created a stronger bond between them.
Disadvantages of the Pakistan Sri Lanka Free Trade Agreement:
1. Unequal Benefits: While the FTA has brought benefits to both Pakistan and Sri Lanka, the benefits have not been equal. Sri Lanka has benefited more from the FTA than Pakistan. This is because Sri Lanka has a more diversified economy, which has made it easier for them to take advantage of the opportunities presented by the FTA.
2. Threat to Local Industries: The FTA has also posed a threat to local industries in both countries. Some domestic industries have found it difficult to compete with cheaper imports from the other country. This has led to job losses and a decline in some industries.
3. Political Instability in Sri Lanka: Sri Lanka has a history of political instability, which has affected the implementation of the FTA. The frequent changes in government have led to delays in the implementation of the FTA, which has affected its effectiveness.
4. Lack of Infrastructure: Both Pakistan and Sri Lanka have faced challenges in terms of infrastructure development. This has made it difficult for businesses to take advantage of the opportunities presented by the FTA. Lack of infrastructure has also affected the movement of goods between the two countries.
In conclusion, the Pakistan Sri Lanka Free Trade Agreement has brought both advantages and disadvantages to both countries. While increased trade and economic growth have been some of the positive outcomes of the FTA, unequal benefits, threats to local industries, political instability in Sri Lanka, and lack of infrastructure are some of the challenges that need to be addressed. Both countries need to work together to overcome these challenges and ensure that the FTA benefits all stakeholders.