Sri Lanka – China FTA discussions stalled

Sri Lanka – China FTA discussions stalled

Talks between China and Sri Lanka for a free trade agreement have hit major hurdles, according to a report filed by Reuters.

Quoting Sri Lanka’s top negotiator it said the talks are limping mainly because Beijing will not agree to Colombo’s demand for a review of the deal after 10 years.

China’s exports to Sri Lanka dwarf the trade that goes in the other direction, leaving Colombo with a big deficit with Beijing.

Sri Lanka’s chief trade negotiator K.J. Weerasinghe has said that Colombo was insisting on a right to review the free trade pact after 10 years, but China was not ready to agree that.

Ministerial-level discussions about an agreement have not been held since March last year.

Lower-level discussions between officials have made little progress, according to Weerasinghe.

“The talks have come to a standstill. China wants to remove the review clause,” Weerasinghe told Reuters. Beijing was opposed to such an option because it wanted longer-term stability, he said.

The review clause that Sri Lanka wants would allow it to change some of the deal terms if they were hurting the island nation’s businesses.

China’s commerce ministry did not respond to Reuters requests for comment.

Chinese Foreign Ministry spokeswoman Hua Chunying told reporters in Beijing that China attached a great deal of importance to its relationship with Sri Lanka, and that they are willing to continue with cooperation in all areas including trade and business.

“We are also willing to play a constructive role in Sri Lanka’s sustainable development and economic diversification,” Hua said.

Weerasinghe said another point of contention was that China wanted zero tariffs on 90 percent of goods the two countries sold to each other as soon as an agreement is signed while Colombo would rather it started with zero tariffs on only half of the products concerned and expanded gradually over 20 years.

Sri Lanka imported $ 4.2 billion worth of Chinese goods in 2016, mostly raw materials for garments, machines and electronics, metals, transport equipment and chemicals.

Its exports to the world’s second-largest economy were just $211 million the same year, which included textiles, tea, and vegetables, footwear and rubber.

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