and their benefits to Sri Lanka
Deputy Director, Department of Commerce
"Regaining Sri Lanka" policy document of the UNF government
has emphasized the importance of pursuing bilateral and regional
Free Trade Agreements (FTAs) with identified countries and regions.
Ministry of Commerce & Consumer Affairs, being the ministry
responsible for the conduct of Sri Lanka's foreign trade relations
handles the entirety of the process right from the stage of conceptualization,
selection and up to the phase of concrete negotiations, conclusion
and implementation and monitoring and evaluation of Free Trade Agreements.
order to realize the policy goals of increased employment, enhanced
income levels, higher productivity, increased investment aimed at
realizing a 10 percent annual growth rate, will only be possible,
if we aggressively seek markets and investment possibilities for
our goods and services around the world. The government is prepared
to pursue any and all opportunities with any country to expand access
into new and existing markets for Sri Lankan goods and services.
It will be clearly observed that our rationale and justification
for entering into FTAs with a number of countries around the world,
is already built into the above objective of the policy document
on Regaining Sri Lanka. Therefore, it is the well-considered view
that Sri Lanka should vigorously pursue FTAs with a specific set
of identified countries, from which Sri Lanka is going to benefit.
In terms of our basic rationale for entering into Free Trade Agreements,
it has to be mentioned that countries in South East Asia have been
quite active in this area and are in the process of entering into
a series of bilateral FTAs with countries outside their region.
If Sri Lanka did not initiate timely high-level action, Sri Lanka
would have lost out to our competitors on valuable market access
opportunities for both for goods and services. In our own region,
India too is pursuing market opportunities in South East Asia and
the Far East through an accelerated programme of Free Trade Agreements.
basic or the primary stage of regional cooperation is the preferential
trading arrangements under which countries consider preferential
tariff concessions to the member states of the Agreements mostly
on reciprocal basis.
Lanka is a member of two important preferential regional trade agreements
namely, the Bangkok Agreement (1975) and the SAARC Preferential
Trade Agreement (1993). During the past two years, Sri Lanka has
been able to successfully participate at the third round of negotiations
under the Bangkok Agreement whose member countries are Bangladesh,
India, China, South Korea, Laos and Sri Lanka. The Ministerial meeting
of the Bangkok Agreement will be held on April 25 in China. Commerce
Ministers of the Bangkok Agreement countries will sign the APTA
Agreement. The Bangkok Areement is the only regional trading arrangements
where both India and China are members covering a market size of
over two billion people.
APTA when it comes into operation will provide tremendous potential
for increased regional cooperation. Under the Third Round of negotiations
of the Bangkok Agreement, the Ministry of Commerce and Consumer
Affairs has been able to arrange significant tariff concessions
on products of export interest to Sri Lanka in the vast Chinese
market in additional to markets in other member countries. These
products includes black tea, coir fibre, desiccated coconut, cashew
nuts, betel nuts, lemon and lime, water melon, flavoured tea, pepper,
spice mixtures, copra, coconut oil, rubies, sapphires, precious
and semi precious stones, jewellery, etc.
SAARC Preferential Trade Agreement has completed four rounds of
negotiations to date. The Ministry of Commerce and Consumer Affairs
participated at each round of negotiations on a regular basis with
a view to arranging maximum benefits to the Sri Lankan exporters.
Framework Agreement of the BIMST-EC FTA which brings together Sri
Lanka, Bhutan, India, Myanmar, Nepal and Thailand is a comprehensive
agreement, which covers trade in goods, services investments and
other areas of cooperation.
regard to FTA negotiations, the Ministry of Commerce & Consumer
Affairs has always ensured that Sri Lanka will not consider any
tariff concessions on the import of rice, potatoes, onions, chillies
and poultry products for national food security considerations.
In short the agricultural sector will not get adversely affected
due to the implementation of the tariff reduction commitments under
the FTAs that Sri Lanka is negotiating with other countries.
of the main objectives of entering into FTAs with Pakistan and Egypt
is to recapture the market for Sri Lankan tea which Sri Lanka lost
to Kenya. Significant tariff concessions that Sri Lanka will get
for our tea under these free trade arrangements will be a boost
to tea prices at the Colombo auctions. At the same time, in view
of the highly volatile situation in the Middle Eastern region, it
is highly desirable that Sri Lanka finds additional markets for
our tea exports.
proposed bilateral FTA with Singapore, where two rounds of negotiations
have already been completed, is expected to generate increased investments
from Singapore to Sri Lanka mainly in the services sector. Sri Lanka
signed the Trade & Investment Framework Agreement (TIFA) with
the USA in July 2002. Both sides have so far conducted three rounds
of fruitful negotiations under the TIFA, which is considered a forerunner
to an FTA between the two countries.
bilateral FTA with USA which is likely to be concluded soon will
be a very significant breakthrough in arranging tariff concessions
for export of readymade garments from Sri Lanka to the USA.
mention has to be made with regard to the Indo-Sri Lanka Free Trade
Agreement (ISFTA), which came into force in March 2000. This agreement
marks an important milestone in Indo-Lanka Trade/Economic and Political
relations. Both countries have demonstrated the highest level of
political will and commitment in promoting bilateral trade and economic
cooperation. Most of the operational problems that affected the
performance of two-way trade under the Agreement were sorted out
during the Commerce Ministers meeting held in New Delhi in 2002.
the ISFTA not only did the total trade turnover between the two
countries reach unprecedented levels (well over Sri Lanka rupees
1 billion in 2003) but also the import coverage ratio and import/export
ratio too have recorded a significant increase since 2002. In addition,
the ISFTA has been responsible in attracting Indian investment to
Sri Lanka in a big way and it is hoped that this trend will continue
June 2002, a Joint Study Group (JSG) was set up to make recommendations
on how to take the two economies beyond trade in goods towards greater
integration through the conclusion of a Comprehensive Economic Partnership
JSG which comprised experts from both countries completed its report
and presented it to both governments in October 2003.