Sri Lanka looking at reviving stalled negotiations on trade agreements.
The Morning:The Ministry of Trade, Commerce, and Food Security is currently focusing on the revival of all discussions related to Free Trade Agreements (FTAs) with the respective countries.
Speaking to The Sunday Morning Business, Ministry of Trade, Commerce, and Food Security Secretary S.T. Kodikara revealed that the Ministry was keen to revive all discussions related to FTAs with the respective countries as soon as possible and that they were motivated to arrange the activation of the proposed FTAs. Elaborating further, he stated: “We are currently studying where discussions with each country last stopped. After that we can consider starting new rounds of discussion. Furthermore, many foreign ambassadors have reached out to us, encouraging us to restart all of these stalled discussions.” One of the major FTAs Sri Lanka is currently pursuing is with China. The proposed FTA with China has been under discussion since 2015. Discussion stalled in 2018 after six rounds due to a deadlock over a 10-year review clause. However, in early 2022 China started publicly encouraging Sri Lanka to recommence discussions related to the stalled FTA and the same had been encouraged by Chinese Ambassador to Sri Lanka Qi Zhenhong in March 2022 in his discussions with Minister of Foreign Affairs G.L. Peiris.
According to a statement published by the Ministry of Foreign Affairs dated 20 March 2022, “Minister Peiris highlighted that the seventh round of FTA negotiations will soon commence with the support of the respective line agencies in Sri Lanka”. Speculations prevailed that obtaining any bridge financing from China to address Sri Lanka’s current economic crisis would be contingent on the financing of this proposed FTA with China. However, these assertions were emphatically denied by the Ministry of Finance. Furthermore, speaking to The Sunday Morning Business, Ministry of Trade, Commerce, and Food Security External Trade Division Director Asha Hapuarachchi revealed that the primary reason for the delay in restarting discussions with China regarding the proposed FTA had been the political turmoil in the country and the constant shuffling of ministers. In 2015, the Institute of Policy Studies (IPS) in a report pointed out that Sri Lanka had a comparative global trade advantage in 566 products, of which 243 items were or could be exported to China. There were an additional 299 products with trading potential with China, especially in vegetable products, rubber, and plastics.
Sri Lanka currently enjoys the benefits of many trade agreements as well as trade concessions that have helped boost the country’s trade, especially in the exports sector. The government of Sri Lanka is focused on further expanding Sri Lanka’s export portfolio while also increasing the country’s attraction as an emerging trade hub in the region. It is in this backdrop that Sri Lanka is looking at further enhancing the already active trade agreements while also looking at moving forward with stalled trade pacts. Sri Lanka’s geographical positioning in the Indian Ocean and the growing trade relations would further boost the country’s image as an emerging business destination in the South Asian region. Foreign businesses/investors could therefore confidently explore the growing opportunities in Sri Lanka.
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