Lanka Business Online
Sri Lanka to focus on putting its trade basket in order this year, before venturing into new agreements.
by Dilshani Samaraweera
3 August 2005
Sri Lanka’s Commerce Department says all recently started trade negotiations will go on hold over the rest of the year, until priority commitments are sorted out.
"We need to re-assess the situation because we have already made commitments that need to be finalised by January 2006," said K J Weerasinghe, Director General of Commerce, at the Annual General meeting of the Sri Lanka-Singapore Business Council.
Sri Lanka has nearly 30 trade agreements at bilateral and regional level that are pending conclusions, including one with Singapore.
But while two rounds of talks have already taken place with the Singaporean trade authorities, Sri Lanka says it will slow down talks to meet its immediate trade priorities.
Regional Trade Priorities
These include commitments to regional trade agreements under SAARC and BIMST-EC ( now known as ’Bay of Bengal Initiative for Multi-Sector Technical and Economic Cooperation), and ongoing talks at the World Trade Organisation (WTO).
"SAFTA (the South Asia Free Trade Agreement) will come into force from January 2006. BIMST-EC negotiations are also in advanced stages and must be concluded by January 2006," explained Weerasinghe.
The BIMST-EC agreement is of strategic importance, as a link between ASEAN and SAARC.
To access the fast growing ASEAN region, Sri Lanka is also looking at bilateral trade agreements with Thailand and China.
For the rest of the year Sri Lanka will also focus on multilateral trade talks at the WTO that are building up towards the end of this year.
"Despite regional trade agreements, Sri Lanka’s commitment to the multilateral system is 100%, because MFN reduction of tariffs is the best option for us," said Weerasinghe.
In December, 148 WTO member countries will meet in Hong Kong, to decide how to cut duties further and grow international trade.
Sri Lanka is looking to increase market access for its exports but must also protect its sensitive domestic industries and is already asking for special concessions to protect its agriculture sector.
But to ensure preferential access to its key markets Sri Lanka will focus on a few bilateral trade agreements, in parallel with regional and multilateral talks.
"The US, EU and India are our three main pillars of trade. So the US is a very important trading partner for Sri Lanka and we are holding another round of talks soon," said Weerasinghe.
Sri Lanka was the first South Asian country to start FTA talks with the US in 2002 but negotiations petered out after elections, and political and administrative changes, in both countries last year.
In the meantime Pakistan and Afghanistan also signed Trade and Investment Framework Agreements (TIFA) - as preliminaries to a final bilateral agreement with the US.
In July India and the US set up the United States-India Trade Policy Forum - a mechanism to discuss bilateral trade and related issues.
Now Sri Lanka is trying to pick up where it left off with the US, mainly to protect the island’s apparel industry.
Within the South Asian region, Sri Lanka is trying to expand trade with its largest regional trading partner India.
"Integration with the Indian economy is an essential component of the trade policy," said Weerasinghe.
Sri Lanka is now working with Indian trade authorities to expand the Indo-Lanka FTA in goods, to include investment and services by January 2006.