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By The Ministry of Development
strategies and International Trade
The Government of Sri Lanka is deeply committed to integrate with the regional and global economies to enhance foreign direct investment, exports and to transform and rebalance the economy of Sri Lanka. India is Sri Lanka’s largest trade partner -first in terms of imports, third in terms of exports and fifth in terms of FDI. Similarly China too is an important trade partner with an overall trade volume of closer to US $ 4 billion, contributing immensely towards the economic development of the country in infrastructure development, enhancing port capacity, connectivity and mobility.
Since the Indo-Sri lanka Free Trade Agreement (ISLFTA) executed in 1998, there had been many deliberations between the two countries on a Comprehensive Economic Partnership Agreement (CEPA), which was stalled. Negotiations on a Free Trade Agreement with China also commenced in 2013 and two rounds of technical level deliberations have already taken place in April and November 2014.
Recent high level visits and engagements with India and China have improved the overall landscape for strengthening bilateral relationships and the leaders of India, China and Sri Lanka have made strong commitments towards enhancing and deepening the bilateral trade relationships. While recognizing the asymmetries of the economies of Sri Lanka, India and China, the parties acknowledge the great potential and opportunities that exist in integrating the economic activities, to boost the somewhat lagging Sri Lankan economy.Given the current global economic situation the Ministry is of the view that time is most opportune to explore aggressively& pragmatically novel ways and means of enhancing bilateral economic relations with India and China taking into account the differences of the industrial and economic structures of the countries.
In the above positive backdrop, fresh round of negotiations were initiated with Indiato transform the existing ISLFTA into a more comprehensive Economic and Technology Cooperation Agreement (ETCA). It needs to be reiterated that ETCA is novel in its content and approach and not a continuation of CEPA.
Simultaneously, it is also decided to initiate negotiations on a new comprehensive FTA with China, expanding the scope to include investment and technology cooperation. The existing FTA with Pakistan too will be invigorated exploiting more trade and investment opportunities. Going forward, the Government intends to initiate deliberations ona bilateral trade agreement with Singapore as well,and preliminary discussions in these regards are ongoing.
With preferential access to India, Pakistan, China and Singapore, and the resurrection of GSP+ concession with EU, Sri Lanka will be well placed to act as a hub and a gateway for investors seeking to access the larger, fast growing and emerging markets, on a preferential basis. In this context the Ministry of Development Strategies and International Trade which plays a lead role in all international trade and investment deliberations wishes to clarify following positions it had taken, pursuant to many consultations with relevant stakeholders.
The ultimate objective of the Ministry and the GOSL is to ensure a transparent and an inclusive process in developing international trade for the benefit of the country and its people, paving way to attract much needed foreign direct investment, access to international markets, adoption of latest technologies and know-how, capacity building and enhancing its competitiveness and trade within and outside the region, all of which will result in Sri Lanka having developed enterprises, quality goods and services and a developed job market transforming and rebalancing the economy.