Sri Lanka International Trade Agreements
On 08, Oct 2021 | In Uncategorized | By Bill
The country has also made progress in creating international actors for the development of trade, transport and logistics infrastructure, so that it has become an important target for foreign direct investment (FDI). Higher inflows benefited the economy as a whole, with 2018 being the highest year since foreign direct investment and $2.3 billion in investment records began. Traders stressed the need to facilitate visa procedures between two countries if one aims to improve trade relations between them. Sri Lankan exporters to India, for example, said it is extremely difficult to obtain business visas in India and stressed the need to encourage businessmen visiting India and obtain multiple entry visas. It makes little sense to get concessions under a trade deal if the country is not able to supply the requested goods – this may be a restriction in the case of a small country like Sri Lanka. This is evident from Sri Lanka`s strawberry exports to India[vii]. This list includes sensitive products that are exempt from tariff concessions under the Agreement. The negative list should be established in consultation with local stakeholders, balancing revenue considerations with the impact on local industry and livelihoods that may be affected by trade liberalization. However, it is important to keep negative lists to a minimum in order to ensure that a significant proportion of tariff headings and products fall within the scope of the Agreement. If negotiations reduce tariffs, non-tariff measures (NTMs) or “behind borders” can reduce the use of agreements if they are not dealt with effectively. NTDs should be identified at the outset and addressed together with tariff reductions/eliminations. In this regard, there should be binding commitments. Many Sri Lankan exporters have faced difficulties in entering the Indian market due to the prevalence of, such as state taxes, standards and administrative procedures[v], which are not covered by tariff reductions under ILFTA.
Despite its proximity to India, Pakistan, Bangladesh and Nepal, intraregional trade accounts for less than 5% of total trade in South Asia. This is partly due to limited logistics, significant regulatory hurdles and protectionist measures, as well as disproportionate trade costs in the region. According to the World Bank, South Asian trade costs 20% more than within the Association of Southeast Asian Nations. Although the South Asian Free Trade Agreement (SAFTA) has been in existence since 2006, para-tariffs have prevented activity. As a developing economy without clean oil and gas resources for commercial purposes, the increase in fuel imports has pushed Sri Lanka`s trade deficit to new heights. While Brent crude prices fell to around US$51 a barrel at the end of the year, oil prices peaked at more than US$85 in October, leading to a 28.9% increase in fuel imports. Domestic exports mainly include intermediate and industrial goods, as well as raw materials such as tea, rubber, minerals and metals. The most important locally manufactured products are textiles and clothing. While Sri Lanka has actively participated in all multilateral trade negotiations and implemented trade reforms in accordance with WTO GATT principles, Sri Lanka has also participated in a number of initiatives aimed at liberalizing regional trade.
Sri Lanka participates in two regional agreements, namely the South Asia Free Trade Agreement (SAFTA) and the Asia-Pacific Trade Agreement (APTA), as well as two bilateral agreements, the Sri Lanka Indo Free Trade Agreement (ISFTA) and the Pakistan-Sri Lanka Free Trade Agreement (PSFTA). This article highlights some of the key lessons learned from sri Lanka`s experience with these existing free trade agreements, which need to be taken into consideration when negotiating a trade agreement with China.. . . .