Sri Lanka and China have 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, the government Information Department announced.
According to the government, a joint feasibility study on the proposed FTA was completed in March 2014 and 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, trade balance remains significantly in favor of China. Bilateral trade reached US$ 3.62 billion in 2013.
Some of Sri Lanka's main export items to China include coir fiber, garments, tea, rubber and precious stones.
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.