SL-China trade pact under negotiations
Sri Lanka and China would soon commence negotiations on the proposed joint Free Trade Agreement (FTA) between the two countries but no date for the signing of the pact has been scheduled, an official said.
The two countries would be conducting negotiations that was expected to commence at the earliest having concluded the joint feasibility study, Commerce Department Director General R.D.S. Kumararatne told the Business Times.
However, authorities were unable to confirm exact dates for the signing of the agreement though Investment Promotion Minister Lakshman Yapa Abeywardena said this week that the two countries were likely to sign the trade pact during the Chinese President Xi Jinping’s scheduled visit to Colombo next month.
Mr. Kumararatne noted that the target was to complete negotiations and discussions as soon as possible and in this respect was likely to sign the FTA by the end of this year or even early 2015.
He noted that during the conduct of the feasibility study the two sides had identified in Sri Lanka apparel, rubber, coconut, tea, ceramic and porcelain as priority sectors. Mr. Kumararatne explained that they were yet to work out a definite area in terms of the services sector and during the study they had looked at the prospects for trade.
A number of product areas were covered during discussions and the Commerce Department has had consultations with local exporters on who would want to target the Chinese market, he said. During the course of the study the two sides had discussed about the potential of this agreement, he said adding that they would also look at what product packages would bring in 90 per cent of exports to the country.
Commenting on the investments expected from China, Mr. Kumararatne observed that this was one of the key areas that had been worked on. And in this respect, authorities believe that some of the Fortune 500 companies in China would be part of the investment plan and would be interested in coming to Colombo. The Director General pointed out that it was premature to declare what this agreement would entail as negotiations were about to commence.
However, he noted, “We always expect more market access” and would need to take into account the overall economic conditions of the country. At present authorities believe Sri Lanka could cater to the middle income sectors based on how the products were accepted in the Chinese market.
In this respect, they have been able to ascertain from recent participation at trade fairs in China that there was a good perception in the Chinese market for tea, gems and jewellery and even handicrafts.
Chinese authorities had reportedly stated that this trade pact could improve trade relations between the two countries as it currently favours China.
During President Mahinda Rajapaksa’s state visit to China last year the two countries signed a Memorandum of Understanding (MOU) to establish a Joint Working Group on Trade to study the feasibility of the Sri Lanka – China FTA. Work on the study commenced in August, 2013 and was completed and it was agreed that this trade pact “would bring substantial economic and trade benefits to the two countries.”