Despite Chinese pressure, Sri Lanka wary of entering into free trade agreement
ANI | 28 September 2022
Despite Chinese pressure, Sri Lanka wary of entering into free trade agreement
Colombo [Sri Lanka], September 28 (ANI) : The ongoing economic
crisis and challenges of penetrating the Chinese market are
making Sri Lanka cautious about concluding a Free Trade
Agreement (FTA) with China,
despite pressure.
Recently, Sri Lankan Foreign Minister Ali Sabry and his Chinese counterpart, Wang Yi
held a meeting on the sidelines of the UN General Assembly
session in New York. The Chinese Embassy said that the two sides
had "agreed to speed up the negotiation process and strive for an
early conclusion of a Free Trade Agreement (FTA), thereby boosting the confidence in and
stabilizing the expectations for their economic and trade
cooperation," Daily Mirror reported.
However, the Sri Lankan minister tweeted about their meeting
but there was no trace of the discussion on FTA.
While Sri Lanka has been prevaricating and dragging its feet on
the FTA since talks on it began way back in 2015, China has been
very keen on it, frequently reiterating it, and even making it a
condition for continued financial investments in Sri Lanka.
Even, Qi Zhenhong, the Chinese Ambassador to Sri Lanka, had
also discussed the FTA with the then Lankan Foreign Minister GL
Peiris. In the press release. Sri Lanka said that China had signed
over 26 FTAs, an FTA with Colombo. However, the economic crisis
which intensified put paid to that.
Daily Mirror citing EconomyNext, reported that the real
opposition to FTA was from the entrenched Lankan monopolists.
China also wanted zero tariffs on 90 per cent of the goods sold to
each other as soon as the FTA was signed, while Sri Lanka wanted
it to start with zero tariffs on only half of the products concerned
and expand gradually over 20 years. Sri Lanka’s demands were
reasonable from the point of view of a smaller and less-developed
economy.
However, if the Lankan government abandons or toes down its
protectionist policy, and if the business community and the
entrepreneurial class also stop clamouring for protection, an FTA
with China could work to Sri Lanka’s advantage as indeed FTAs
with other countries would also do.
Earlier, Chinese Premier Li Keqiang told his Sri Lankan
counterpart Mahinda Rajapaksa that China was keen on helping
Colombo, however, Beijing, later on, responded differently from their previous statements. This has forced Sri Lanka to change its
course to India and IMF.
To China’s dismay, India quickly came up with a USD 4 billion aid
package and strengthened its relations with Sri Lanka. China did
announce a loan and buyer’s credit totalling USD 2.5 billion, but
that was not implemented.
The publication suggests that to make FTA work on the ground,
Sri Lankan businessmen should be given practical and up-to-date
information on trade opportunities in China by a government
institution.
Cultural differences and institutional practices often lead to
misunderstandings and miscalculations, the IPS study points out,
reported Daily Mirror.
Currently, Sri Lanka is involved in managing the ongoing
economic crisis and is unlikely to have the time or inclination to
start discussing a complex and controversial issue like an FTA
with China. And the same was indicated when Sri Lanka turned
silent on the discussion in New York between Ali Sabry and Wang
Yi.
