The proposed Free Trade Agreement (FTA) between Sri Lanka and China is to be signed in June 2015, says the Deputy Secretary to the Treasury S. R. Attygalle.
The FTA, which was initially expected to be signed by the end of 2014, is expected to boost Sri Lanka’s future development and further promote trade between the two countries, which have developed increasingly closer economic and trade relations in recent years.
On the planned FTA dialogue, President Rajapaksa had said, “Our cooperation covers many sectors including industry, energy, technology, infrastructure and tourism.”
He said the FTA will boost the trade and investment ties as well as Sri Lanka’s export to China, creating new momentum for the island nation’s development.
Chinese President Xi Jinping’s visit to the island in September, a first by a Chinese head of state in 28 years, helped expand cooperation and cement the ties in trade and economy between the two countries and launched negotiations on the FTA.
During President Rajapaksa’s state visit to China in May 2013 both leaders agreed to elevate the bilateral relations to a ‘Strategic Cooperation Partnership’, by substantially expanding the mandate for engagement.
The two countries signed a Memorandum of Understanding and agreed to establish a Joint Working Group on Trade to study the feasibility of a China -Sri Lanka free trade agreement (FTA) and measures to enhance Sri Lankan exports to China.
A joint feasibility study on the proposed FTA completed in March 2014 concluded that the building of an FTA will bring benefits to both countries.
Although Sri Lanka’s exports to China have increased from US$ 28.39 million in 2005 to US$ 121.63 million in 2013, the exports have not increased up to its potential with the bilateral trade reaching US$ 3.62 billion in 2013.
Sri Lanka hopes the FTA will help the country to gain easier access to the Chinese market and gradually reduce its trade deficit towards the world’s second largest economy.
Some of Sri Lanka’s main export items to China include coir fiber, garments, tea, rubber and precious stones, among others.
Trade between Sri Lanka and China has increased in recent years, reaching USD 3.6 billion in 2013 from USD 1.1 billion in 2006. China has also become a major development partner of Sri Lanka especially in the field of infrastructure projects.
In this background the proposed FTA between Sri Lanka and China offers an ideal platform for Sri Lankan business; especially export oriented enterprises to exploit the Chinese market for optimum benefit.