Sri Lanka- China FTA negotiations hit a snag
The proposed Sri Lanka- China Free Trade Agreement (FTA) has hit a snag following the difference of opinion on right to review this pact after 10 years, official sources said.
The Chinese side has insisted to remove the review clause at the official and ministerial level talks, but those talks ended in a deadlock, a senior government official told the Business Times on condition of anonymity.
The Chinese government’s argument was that it needs a long period for the stability of the agreement between the two countries.
The Sri Lanka government needs some flexibility in making changes, or reviewing the agreement if any clause in the pact affects local businesses, he disclosed.
China was lobbying for zero tariffs on 90 per cent of goods being traded between the two countries soon after signing the agreement, he said, adding that the Sri Lanka side wanted to start with zero tariffs on only half of the products being sold to each other initially and gradually increase it in over 20 years.
However a top official of the Ministry of Development Strategies and Internal Trade said that contentious issues in the proposed FTA between the two countries could be settled despite a delay in the negotiations.
The difference of opinion in the 10-year review clause could be settled through consultation and compromise, he said adding that the Chinese side has also made some proposals and it will be sorted out shortly.
According to Finance Ministry data, Sri Lanka recorded a trade deficit of US$ 795.11 million in June 2018. Balance of trade in Sri Lanka averaged -$513.31 million from 2003 until 2018.