Sri Lanka looking at finalizing Free Trade Agreement with China within 12–18 months
Chairman of Sri Lanka’s Export Development Board (EDB) Prabhash Subasinghe has reportedly expressed his intention of signing the long-delayed Free Trade Agreement (FTA) with China within the next 12–18 months.
“Free trade agreements are very important in identifying new markets. We have an ongoing discussion on the Chinese FTA; hopefully in the next 12-18 months it should be concluded. I believe it is an important one,” Subasinghe has been quoted as saying in The Sunday Morning.
The EDB Chairman has made this observation while addressing a press conference recently at the EDB premises.
China is the world’s second-largest economy and an FTA with it has been coveted by Sri Lanka for many years and negotiations on this FTA had finally commenced in 2016, but had come to a virtual standstill by 2018. The main reason for this was reported to be Sri Lanka’s insistence on reviewing the agreement every 10 years, to which China was strongly opposed.
The massive difference in bargaining power between the two nations has also meant that China insisted on a zero tariff regime, which would have overwhelmingly benefitted it due to the bilateral trade relationship being dominated by China’s exports to Sri Lanka, the local media report has stated.
China is Sri Lanka’s second-largest source of imports after India. Sri Lanka’s pushback on these proposals is also believed to have contributed to the breakdown in talks in 2017.
The EDB is also planning to formulate a China Market Entry Strategy to boost exports to China and carve a niche in the country for Sri Lankan goods and services and for this purpose, the EDB hopes to obtain the services of an international consultancy firm/consultant, it said in a presentation at the press briefing.
Sri Lanka enjoys trade agreements as well as trade concessions with many foreign countries. This has given a boost to Sri Lanka’s trade/investment/tourism sectors. It is in this backdrop that Sri Lanka is looking at entering in to a free trade agreement with China. This will result in the further strengthening of trade ties between Sri Lanka and China. It would also create more business opportunities for Sri Lanka in China and vice versa. Also, foreign businesses/investors interested in doing business with China could look at setting up base in Sri Lanka in order to engage with China.
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