Sri Lanka Asks Russia for Phased Import Duty Reduction

Sri Lanka has asked Russia to cut import duty on tea in a phased manner following its admission to the World Trade Organisation (WTO) after 18 years of negotiations, officials said.

Russia's accession into the WTO has to be first ratified by its Duma or parliament which will be in March 2012 after which it has three months for implementation, Hasitha De Alwis, director promotion of the Sri Lanka Tea Board, told LBO.

Russia is the biggest market for Ceylon tea, the island's main agricultural export, despite import duty as high as 20 percent on value-added teas.

During the talks between the two countries, Sri Lanka has asked Russia to bring down import duty by at least two percentage points a year to 12.5 percent, said De Alwis.

This means it can take about four years for the full import duty reduction to come into effect.

Sri Lanka's tea industry has been lobbying Russia to reduce import duty to enable exporters better access for value-added shipments that would earn more foreign exchange.

Russia increased import duty on value-added teas to promote its own packaging industry and provide employment.

Russia's $1.9 trillion economy was the largest outside the WTO and it was the biggest market for Sri Lanka despite tariff barriers for value added teas.

About 17 percent of Sri Lankan tea exports go to Russia and Ceylon teas account for about 30 percent of the entire Russian tea market.