Trade Agreements in Sri Lanka: A Comprehensive Analysis

Sri Lanka has emerged as one of the most promising economies in South Asia due to its strategic location and favorable trade policies. The country has been actively engaged in signing trade agreements with various countries to boost its trade and commerce. In this article, we will take a closer look at the trade agreements that Sri Lanka has signed, the benefits of these agreements, and the impact they have had on the Sri Lankan economy.

The Free Trade Agreement (FTA) with India

Sri Lanka signed a Free Trade Agreement (FTA) with India in 1998, which came into effect in 2000. This agreement has been instrumental in boosting trade between the two countries. The FTA allowed Sri Lanka to access the large Indian market, which has a population of over 1 billion. Sri Lanka’s main exports to India include tea, coconut products, rubber products, and garments.

The FTA has also facilitated the movement of people between the two countries for business purposes. In addition, the agreement has helped Indian businesses to set up production facilities in Sri Lanka to take advantage of the country’s low labor costs.

The Comprehensive Economic Partnership Agreement (CEPA) with India

In 2008, Sri Lanka and India commenced negotiations for a Comprehensive Economic Partnership Agreement (CEPA). The aim of this agreement was to deepen economic integration between the two countries. However, the negotiations were suspended in 2010 due to protests by Sri Lankan professionals who feared that the agreement would lead to an influx of Indian workers.

The CEPA would have provided Sri Lanka with greater access to the Indian market for its goods and services. In addition, Indian investors would have been able to invest in Sri Lanka’s infrastructure and other key sectors of the economy.

The Economic and Technology Cooperation Agreement (ETCA) with India

In 2016, Sri Lanka renewed talks with India to sign an Economic and Technology Cooperation Agreement (ETCA). The ETCA would provide a framework for the exchange of goods, services, investments, and technology between the two countries. The agreement could lead to significant investment in Sri Lanka’s infrastructure, healthcare, education, and other key sectors.

However, the negotiations have been met with opposition from some Sri Lankan professionals who fear that the agreement would lead to job losses for local workers. The Sri Lankan government has assured them that the agreement would be beneficial for the country and that safeguards would be in place to protect local jobs.

The Free Trade Agreement (FTA) with China

In 2005, Sri Lanka signed a Free Trade Agreement (FTA) with China, which came into effect in 2010. The FTA has been instrumental in boosting trade between the two countries. China has become one of Sri Lanka’s largest trading partners, with trade between the two countries valued at over USD 5 billion in 2020.

The FTA has enabled Sri Lanka to export more goods to China, including tea, spices, and rubber products. China, in turn, has invested heavily in Sri Lanka’s infrastructure, including the Port of Colombo and the Hambantota Port.

The Sri Lanka-Singapore Free Trade Agreement (SLSFTA)

In 2018, Sri Lanka signed a Free Trade Agreement (FTA) with Singapore. The agreement has been instrumental in boosting trade between the two countries. Singapore is one of Sri Lanka’s major trading partners, with trade between the two countries valued at over USD 3 billion in 2020.

The SLSFTA has enabled Sri Lanka to export more goods to Singapore, including textiles, tea, and rubber products. Singapore, in turn, has invested in Sri Lanka’s infrastructure, including the development of the Colombo International Financial City.

Conclusion

Trade agreements have played a crucial role in boosting Sri Lanka’s trade and commerce. The country has signed several FTAs with countries such as India, China, and Singapore, which have enabled Sri Lanka to access new markets for its goods and services. These agreements have also facilitated investment in Sri Lanka’s infrastructure, which has helped to drive economic growth and development.

However, trade agreements have also faced opposition from some quarters, particularly from professionals who fear that they will lead to job losses. The Sri Lankan government has assured them that trade agreements will be implemented in a manner that benefits the country and its people.

Overall, trade agreements have been instrumental in boosting Sri Lanka’s economic growth and development. They have enabled the country to access new markets for its goods and services and have facilitated investment in key sectors of the economy. As such, Sri Lanka’s continued engagement in trade agreements is crucial for the country’s future economic success.