ANI | 12 April 2023
China pushes Sri Lanka to sign FTA in guise of debt restructuring
Negotiations for a possible FTA between China and Sri Lanka
were launched in 2014 in the presence of Chinese President Xi
Jinping and former Sri Lanka President Mahinda Rajapaksa
when both sides continued to have several rounds of talks, Daily Mirror
reported.
China had "awarded" Sri Lanka
with a delayed response to its request for debt
restructuring and now appears to pressure Sri Lanka
into signing a Free Trade Agreement (FTA ) under the guise of helping to
restructure debt repayments.
The 5th round of China - Sri Lanka
FTA negotiation was held in Colombo
on Tuesday where the two sides exchanged views on
issues concerning trade in goods, trade in service, investment,
economic and technical cooperation, rule of origin, customs
procedures and trade facilitation, technical barriers to trade (TBT),
sanitary and phytosanitary measures (SPS) and trade remedy.
According to experts, the disadvantage for Sri Lanka
is that China ’s FTA s restrict
the use of para-tariffs, such as the import levy used by
Sri Lanka , Daily Mirror reported.
For a country like Sri Lanka , whose
exports are limited to a few products, an agreement that reduces
barriers to trade on thousands of other products but excludes these
key exportable products from the world and from China
will fail to facilitate Sri Lanka ’s export
growth.
Since the end of the Sri Lanka n civil
war in 2009, China has extended numerous loans to
Sri Lanka for various infrastructure
projects, including a port, an airport, highways, and other significant
projects.
However, concerns have been raised about the nature of China’s financial assistance and the motivations behind its
debt restructuring efforts. Critics argue that China ’s
financial assistance is part of a broader strategy to extend its
economic and political influence in the region, with
Sri Lanka serving as a key location for China
’s ambitious Belt and Road Initiative (BRI), Daily Mirror
reported.
Critics argue that the deal would be heavily skewed in favour of China
, leading to a flood of cheap Chinese goods into
Sri Lanka and undermining the
country’s domestic industries.
Sri Lanka occupies a strategic
location in the Indian Ocean, making it an essential part of China
’s ambitious Belt and Road Initiative, which seeks to
expand China ’s economic and political influence in the
region. The Chinese push for the FTA has faced opposition
from critics suggesting that the deal would not be in the country’s
best interests, Daily Mirror reported.
Furthermore, Sri Lanka is facing
growing concerns about its growing economic dependence on China
. Experts suggest that the country risks falling into a debt
trap that could threaten its economic sovereignty.
To address these concerns, Sri Lanka
plans to diversify its economic ties, exploring new opportunities for
economic partnerships with other countries in the region.
The Sri Lanka n government is also
seeking renegotiation of its debt agreements with China
, with some suggesting that the country wants to reduce
its dependence on Chinese loans.
One of the potential disadvantages of signing the FTA with
China is the risk of job losses. Sri Lanka
’s labour-intensive industries, such as textiles and
apparel, could face increased competition from cheaper Chinese
imports, leading to potential job losses in these sectors.
This could be especially problematic for Sri Lanka
, which is already facing high unemployment rates
and a struggling economy, Daily Mirror reported.
Another potential disadvantage of signing an FTA with
China is the risk of regulatory standards. As part of the
FTA negotiations, Sri Lanka would require harmonizing its regulatory regime with China
, potentially leading to a "race to the bottom" in terms of
labour standards, environmental protection, and intellectual property
rights.
Finally, signing an FTA with China could lead
to a loss of policy autonomy for Sri Lanka. Sri Lanka might require
abiding by certain rules and regulations set forth in the FTA
, potentially limiting its ability to pursue certain policies in
areas such as trade, labour standards, and the environment.
However, China ’s efforts to push for the FTA
continue and experts suggest that the country might be using its
financial leverage to coerce Sri Lanka
into signing the deal.
The situation in Sri Lanka highlights
the risks associated with excessive reliance on foreign loans and the
importance of balancing economic development with strategic
interests. China ’s debt restructuring efforts in Sri Lanka and its push for the FTA
have raised concerns about the country’s growing economic and
political influence in the region.
While Sri Lanka is seeking to reduce
its dependence on China and diversify its economic ties,
it remains to be seen whether the country will be successful in
achieving these goals. The situation in Sri Lanka
underscores the importance of balancing economic
development with strategic interests and the risks associated with
excessive dependence on foreign loans, Daily Mirror reported.