Sri Lanka is closing in on a Free Trade Agreement (FTA) with China after ending a third round of negotiations with senior officials hopeful that the deal could be concluded next year.  The FTA is now being finalised to open up the huge Chinese market to Sri Lanka’s producers, manufacturers and exporters, Commerce Department officials [...]

The Sunday Times Sri Lanka

Sri Lanka –China FTA concludes third round negotiations

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Sri Lanka is closing in on a Free Trade Agreement (FTA) with China after ending a third round of negotiations with senior officials hopeful that the deal could be concluded next year.  The FTA is now being finalised to open up the huge Chinese market to Sri Lanka’s producers, manufacturers and exporters, Commerce Department officials revealed in Colombo recently.  The third round negotiation of China-Sri Lanka Free Trade Zone was held in Colombo earlier last month with the participation of a top level official delegation of China.  But it was not given much publicity and prominence by the government except an announcement made by Minister of Development Strategies and International Trade Malik Samarawickrama that Sri Lanka and China hope to conclude discussions on the FTA by early 2017.

The Minister said that the proposed FTA mainly looks at the apparel sector, tea, gem and jewelry, rubber, coconut and spices  China and Sri Lanka exchanged views on cargo trade, service trade, investment, cooperation on economic technology, rules on the origin of product, convenience on custom order and trade, technological fortress on trade and hygiene and planting measures, moreover, relieve of trade, laws, etc.
Director Commerce Ananda Dharmapriya disclosed that China Sri Lanka FTA negotiations will conclude by February next year and Sri Lankan companies should make their representations in writing to the Department of Commerce as soon as possible. He revealed at a meeting convened by Ceylon Chamber of Commerce in Colombo that only 41 companies responded to the department’s request to submit the lists of products that should be considered for tariff concessions under the FTA.

Initially 3380 items have been proposed for the inclusion in the negative list of China aimed at protecting its domestic industries.  Several vegetable products, animal and vegetable fats and oils, prepared food, chemicals, wood products; pulp and paper, and textile categories are protected by China. In almost all of the agreements, China has placed pulp and paper in its negative list. Sri Lanka has a comparative advantage in 566 products, out of which China does not import 24 products from the other countries in the world, Deputy Director of Commerce Shirani Ariyaratne said.  Of the 542 potential exports to China, Sri Lanka already exports 243 products.

The other 299 products with trade potential to China are currently not exported by Sri Lanka to China but are imported by China from rest of the world, presenting new market opportunities for Sri Lankan producers, manufacturers and exporters, he disclosed.  Bilateral consultations are now underway on the proposed product specific rules under the proposed FTA which are used to determine the country of origin of a product and it includes Local Value Addition (40 per cent of total content) and Regional Value Content (60 per cent of the value of the product).  She pointed out that the two sides have focused attention to relax and simplify the rules of origin so that they are easy for traders to understand and to comply with, while ensuring the necessary controls are in place to prevent fraud.

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