Govt. steps up efforts to enhance trade pacts with regional countries

• Plans to enter into FTA with Maldives
• Wants to wrap-up FTAs with China; renegotiate deal with Singapore
• Trade Minister Bandula Gunawardena believes finalisation of trade deals will expand market access for Sri Lanka and enhance investments

By Charumini de Silva

The Government is stepping up efforts to enhance trade pacts with regional countries in an economic revival strategy that seeks to push for higher exports and investments that can boost GDP growth in the country.

“Strategic and economic ties bolster each other. We cannot ignore the advantages of the trade agreements. The Government is keen to wrap-up the deals that are under the vetting process,” Trade Minister Bandula Gunawardena told the Daily FT.

He said the Government has planned to enter into a Free Trade Agreement (FTA) with the Maldives, whilst measures have been taken to resume talks on an FTA with China and re-negotiate the one signed with Singapore by the previous regime.

“Last week we had discussions with the Maldivian Ambassador to ink an FTA between the two countries to enhance our bilateral trade. This will not only help our merchandise exports, but also the service sectors such as education, healthcare and tourism,” he added.

Sri Lanka and Maldives are negotiating tariff cuts and market access for several products. Items under discussion include fruits, vegetables, seafood, poultry, processed food, textile, leather, footwear, chemicals, electronic and electrical products. In turn, Sri Lanka may grant access to higher education, healthcare, tourism industry services. 

“Already a lot of Maldivian students visit Sri Lanka to pursue higher education which helps to generate foreign exchange, and the number has grown significantly over the years. The Maldivian people also come for healthcare purposes at private hospitals,” he said.

Noting that 2022 will be an important year for Sri Lanka-China bilateral relations, as it will mark the 65th anniversary of diplomatic relations and also celebrate the 70th anniversary of the signing of the Rubber-Rice Pact, Gunawardena said it would be a great opportunity if they could finalise the proposed FTA.

“We hope to fast-track the negotiations with China on the proposed FTA,” he said.

The Trade Minister also pointed out that the Government on a previous occasion had proposed a preferential trade agreement with a selected number of products, which included around 100 items, but the Chinese Government was not keen to proceed with it stating that it is not a win-win proposal.

Gunawardena also said that steps would be taken soon to address the concerns of the proposed FTA with Singapore to implement it.

With the resumption of global travel post-pandemic, the Minister hopes one-to-one meetings with heads of state will help fast-track the completion of these impending trade pacts and new ones.

“These agreements will help to boost trade and investment activities, particularly foreign direct investment (FDIs) to create jobs, increase income for our people and stimulate economic growth,” he stressed.

The Minister also emphasised that Sri Lanka had earned more trust from its trade partners during the pandemic by ensuring timely delivery of quality goods and services, despite supply chain disruptions.

“As many countries and companies are looking for alternative trustworthy trading partners post-pandemic, Sri Lanka is in a sweet spot right now. If we can get one of these trade ties inked by next year, it would significantly improve Sri Lanka’s credibility,” Gunawardena said.

The Government has strengthened its overseas missions to boost exports as global supply chains have begun to realign post-pandemic.

The Gotabaya Rajapaksa Government has pushed for more self-reliance and reduced dependence on imports. However, this has resulted in criticism from Sri Lanka’s leading trade partners. The European Union (EU) and Germany called on the Government to comply with international conventions, where social standards are respected, to make economies more competitive, adding that Sri Lanka was in a good position compared to other countries in the region. 

As per the latest data of the Sri Lanka Export Development Board (EDB) the country’s total exports were $ 11.1 billion in the first nine months, reflecting an achievement of 70.63% of the $ 15.72 billion target for the entirety of 2021. 

In mid-2021, the EDB upwardly revised the original export target of $ 15.68 billion to $ 15.72 billion, as post-COVID reopening of the country augured well for a better export performance in 2021.

During the first nine months of the year, merchandise exports were up by 19.3% to $ 8.88 billion from the corresponding period of last year. Merchandise exports recorded during the Q3 increased by 5% to $ 3,182.8 million compared to the same period a year earlier, as well as in 2019 where it increased by 6.7%.