Russia and Sri Lanka begin efforts to end Ceylon Tea impasse

• Second round of trade talks conclude in Colombo
• 3-day marathon talks successfully clear many outstanding issues
•  Russia vows consultations with Eurasian Union on Ceylon Tea tariff
•  Tea made up 78% of Lankan exports to Russia last year

Following a marathon three-day bilateral trade session in Colombo, both Russia and Sri Lanka achieved a greater understanding on breaking the Ceylon Tea impasse dogging the trade, the Industry and Commerce Ministry said in a statement. 

Industry and Commerce Ministry Secretary D. N. R. Asoka, addressing the final session of the Russia-Sri Lanka Inter-Governmental Commission on Trade, Economic, Scientific and Technical Cooperation, said he was confident both sides could work to strengthen trading ties between the two countries. 

“While highlighting the long-established friendship and cooperation between the two nations, I am confident that this Commission’s functioning would inject a strong impetus in further strengthening the mutually beneficial trade and economic ties between Sri Lanka and the Russian Federation,” he said.

The Russian side was led by the Deputy Minister of Agriculture I. V. Shestakov.

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Also joining the session were Commerce Department Director General Sonali Wijeratne, Russian Ambassador designate to Sri Lanka Materiy Yuriy Borisovich and Sri Lanka’s Ambassador of Sri Lanka Dr. Saman Weerasinghe.

Total trade between the two countries in 2016 was $363 million, a decline of 17% over 2015. During the first eight months of 2017, however, trade returned to the growth trend, increasing by 5.6% to $247.2 million in comparison with $234 million in the same period of 2016.

Russian Minister Shestakov thanked the Sri Lankan Co-Chair for the hospitality extended to them. “This is an important event in Russia-Sri Lanka bilateral trade cooperation,” he said, adding “We are willing to implement the decisions adopted by this Commission in a consistent manner.”

The Sri Lankan side continuously pressed for the reduction of import duty by Moscow on its Ceylon Tea exports. Sri Lanka’s complaint was that the duties were based on gross weight of value added teas, which includes packaging material such as ceramic and wooden tea containers, rather than only the weight of net teas. 

The Russian side stated that currently, in accordance with the Customs Code of the Customs Union, the basis for calculation of Customs Duties (subject to type of goods and applicable duties) is customs value of goods and/or its physical characteristics in physical terms (quantity, mass with original packaging which is inseparable from the goods and in which the goods are due for retail, volume of goods or other characteristics). 

More importantly, the Russian side stressed that “it would take part in this regard within the limits of its competence in working out this issue with all the member states of Eurasian Economic Union.”

 At present, Ceylon Tea is the leading Lankan export to Russia, and last year tea claimed 78% ($143 million) of Sri Lanka’s total exports ($ 182 million) to Russia. Other key Lankan exports to Russia last year were apparel, textile fibres, apparel accessories, and activated carbon. 

Both sides also noted that the value of their bilateral trade had not reached the desired level over the recent years and called for ways to enhance efforts to improve trade through efficient exploitation of the hitherto untapped potentials.

 The first ever Russia-Sri Lanka Inter-Governmental Commission on Trade, Economic, Scientific and Technical Cooperation Session concluded successfully on 12 February 2016 in Moscow.