Sri Lanka’s FTA with China is clearly political: Ganeshan Wignaraja

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Nov 01, 2017 (LBO) – Sri Lanka’s proposed free trade agreement with China is not an economic agreement but an agreement with a very clear political nature, a top policy adviser said.

Speaking at an event hosted by the Lakshman Kadirgamar Institute of International Relations and Strategic Studies, Dr. Ganeshan Wignaraja said China would also want a rules based order for the future investments in Sri Lanka.

“Free trade agreement with China is a political agreement; it’s not an economic agreement and you don’t negotiate with China if you’re a small country the way we are and China being the large market,” Wignaraja said.

“It would be an ‘Everything But Arms’ agreement and we should ideally get access for ten years before China comes and gets access to our market.”

Everything but Arms (EBA) is an initiative of the EU under which all imports from the least developed countries are duty-free and quota-free, with the exception of armaments.

“If we get an agreement with China I think we will get an agreement with India rather quickly for obvious reasons,” he emphasized.

“China would want a rules-based order because they’re major investors in the future of Sri Lanka.”

Wignaraja said Sri Lanka should attempt first to get these two trade agreements done and in terms of sequencing the one with China is the priority.

Speaking at the event, Deputy Minister of National Policies, Harsha de Silva said they are attempting to have some consensus by the end of next year of broad framework on a rules-based order.

“We are attempting to have a conference by the end of next year; we are in the process of bringing interested parties together; there is a tremendous interest from countries both near and far,” de Silva said.

“We have put together a small group; Ganeshan is a key member of that and we will be able to have some consensus at least on some sort of broad framework on a rules-based order.”

42 percent of Sri Lanka’s total imports in 2016 came from China at a value of 4.2 billion dollars, with bilateral trade with China at 4.4 billion dollars.

Sri Lanka’s exports to China last year were in Ceylon Tea, coconut, footwear parts, apparel, and rubber tyres, with growth shown in tea over the last five years.

Though Sri Lankan exports to China declined in 2016 to 199 million dollars from 293 million dollars in 2015, exports have been on an upward trend increasing from 35 million dollars in 2007.

Top imports from China last year were mobile phones, boats & vessels, handmade fabrics, and petroleum.