Sri Lanka is likely to sign the proposed bilateral Free Trade Agreement (FTA) with Singapore within the next two months, while the Economic and Technology Cooperation Agreement (ETCA) with India and the proposed FTA with China are expected to be sealed in the middle of next year, the Sunday Observer reliably learns.
“The FTA with Singapore is the one that has made a greater progress and it is likely to be signed first. As for the ETCA, we concluded the seventh round of negotiations on Thursday while the next round of talks with China will be scheduled for January or February 2018,” Secretary to the Ministry of Development Strategies & International Trade, Chandanie Wijayawardhana said.
The launch of negotiations between the governments of Singapore and Sri Lanka commenced in July last year during the visit of Prime Minister Ranil Wickremesinghe to Singapore. Once finalized, it is expected that the Singaporean Prime Minister Lee Hsien Loong will visit Sri Lanka to sign the FTA.
“Apart from the three countries, Thailand, Malaysia, Indonesia and Bangladesh have also expressed their willingness to come into FTAs with Sri Lanka. We are hopeful of commencing discussions with Thailand soon,” the Secretary to the Ministry said. Meanwhile, governor of the Central Bank, Dr. Indrajit Coomaraswamy advocated that people should not fear when a small country such as Sri Lanka negotiates deals with giants like India and China as there are well tried and tested ways through which a small country can protect itself.
“For instance, the positive list which stipulates products or services they agree to lower tariffs on or decrease non-tariff barriers and liberalise trade, a larger country will have a comparatively longer list. These agreements are based on the policy of non-reciprocity and ensures a smaller country receives preferential treatment,” the governor explained.
On the other hand, Dr. Coomaraswamy speaking at a recent lecture outlined that the existing FTA with India has not been a failure as presumed by a section of the business community based on the overall trade deficit going up in India’s favor.
“If you really unpack the figures, what becomes apparent is that if you look at trade taking place under the FTA on a preferential basis only, then the trade deficit is much less. Although 80% of Sri Lankan goods go to the Indian market on a preferential basis, only about 20-25% of their goods come into our market on a preferential basis,” the governor said, delivering a lecture organized by the British Scholars’ Association of Sri Lanka.
Speaking on the topic of ‘Advancing Vision 2025’, Dr. Coomaraswamy highlighted that during the 17 years the Sri Lanka-India FTA has been in place, Sri Lanka has had a surplus in six years in terms of preferential trade.
“The overall deficit is large because India is cheaper on a number of areas like motor cars, motorcycles etc. So if we didn’t import these from India, although the bilateral trade deficit will be smaller, the overall deficit will be bigger because we will be importing from more expensive sources,” the governor emphasised.