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China FTA slow and steady to prevent another Singapore

17 Oct 2020

[caption id="attachment_101348" align="alignleft" width="233"]Tharaka Balasuriya State Minister of Regional Co-operation Tharaka Balasuriya[/caption] By Madhusha Thavapalakumar Sri Lankan authorities are reviewing the provisions of the proposed Free Trade Agreement (FTA) with China to ensure it would not turn out to be “another Singapore FTA”, State Minister of Regional Co-operation Tharaka Balasuriya told The Sunday Morning Business. “The proposed China FTA is a huge document and there is a lot of negativity towards Sri Lanka. We are reviewing the contents and assessing Harmonised System (HS) codes because we do not need a repeat of what happened with the Singapore FTA,” the State Minister stated. Despite strong opposition from professional associations and other bodies, Sri Lanka entered into an FTA with Singapore, called the “Sri Lanka-Singapore Free Trade Agreement” (SLSFTA), in January 2018, following 18 months of negotiations. The opposition was mainly on two grounds. One, that the agreement endangered Sri Lankan jobs by allowing the entrance of Singaporean skilled labour and professionals. Two, that it would open the floodgates for the importation of clinical and nuclear waste, making Sri Lanka a dumping ground for Singapore. In the face of unrelenting opposition and lobbying, both in the political and professional spheres, former President Maithripala Sirisena appointed an independent committee a few months later, comprising five experts to study the SLSFTA and to submit a report. During an official visit to Singapore in January 2019, President Sirisena, referring to the FTA, said that certain weaknesses of the Sri Lankan side were evident in the drafting of the agreement and therefore he expects to make amendments to rectify this. In May 2019, Sri Lanka proposed setting up a joint committee with Singapore to amend the SLSFTA, and Balasuriya told us that its provisions are still being reviewed. Meanwhile, China is the world’s second largest economy and an FTA with it has been coveted by Sri Lanka for many years. Negotiations on this FTA finally commenced in 2016, but came to a virtual standstill by 2018. This was due to Sri Lanka’s insistence on reviewing the agreement every 10 years, to which China was strongly opposed due to its willingness to have longer term stability, according to Sri Lanka’s then Chief Trade Negotiator K.J. Weerasinghe, as reported by Reuters in May 2018. Nevertheless, during a meeting with Sri Lanka President Gotabaya Rajapaksa and Prime Minister Mahinda Rajapaksa on 9 October in Colombo and a high-level Chinese delegation, Sri Lanka and China agreed on the need to resume negotiations on the stalled talks on the Sri Lanka-China FTA. According to Balasuriya, Sri Lanka is reviewing the agreement before getting back to China on resuming the negotiations. The massive difference in bargaining power between the two nations also meant that China insisted on a zero-tariff regime which would have overwhelmingly benefited them due to the bilateral trade relationship being dominated by China’s exports to Sri Lanka.  

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