Sri Lanka, racked by civil unrest and economic disruptions for much of the year, is now ready to resume free-trade agreement talks with India, China and Taiwan amid new social stability within the island nation, a top official heading negotiations is revealed.
The crisis-hit country races to seal deals to help it rebuild its economy battered by the worst financial crisis in over seven decades, triggered by a severe shortage of foreign exchange that has left the country struggling to pay for fuel, food and medicine.
Officials from Thailand are scheduled to arrive in Sri Lanka on Monday to start the third round of talks after negotiations were suspended in 2018, said K.J. Weerasinghe, Sri Lanka’s Chief Negotiator of Free Trade Agreements (FTAs).
Negotiations with India and China, Sri Lanka’s biggest trading partners accounting for about US $5 billion each in bilateral trade in 2021, are expected to begin in February and March.
“The focus is on improving economic cooperation and attracting investment, which is crucial for Sri Lanka to emerge for this economic crisis,” Weerasinghe said, adding that “his main goal is to have all these deals completed by the end of 2023 or early 2024.”
Auramon Supthaweethum, Director General of Thailand’s Department of Trade Negotiations, said talks had been delayed because of Sri Lanka’s economic crisis and the COVID-19 pandemic.”We are heading there to continue the discussion,” Supthaweethum said.
Bilateral trade between Thailand and Sri Lanka totaled around $460 million in 2021, according to Sri Lanka’s central bank data.
Sri Lanka is aiming to deepen an existing FTA with its northern neighbor India into an Economic and Technology Agreement after talks stalled in 2018. It is looking to add services and investment to the current agreement that primarily covers trade in goods.
Sri Lanka has exported five times more than its imports under the India-Sri Lanka Free Trade Agreement in the first nine months of 2022.
A report issued by the Sri Lankan finance ministry stated that the island nation’s exports added up to over Rs. 140 billion under the agreement. Imports into Sri Lanka from India stood at Rs.28 billion rupees.
Sri Lanka has shown interests in exploring a bilateral trade agreement with China. Both countries now have agreed that they would embark on a free trade agreement, which is hoped to open up the vast Chinese market to Sri Lanka’s producers, manufacturers and exporters.
This would not only boost bilateral trade but help reduce Sri Lanka’s heavy reliance on traditional markets in Europe and USA.
In this regard, it is imperative that the agreement covers a substantial number of tariff lines and trade as well as address non-tariff barriers that may hinder export expansion.
