Sri Lanka is accelerating its push for free trade agreements (FTAs) with key regional and global partners, aiming to finalize deals with India, Indonesia, Malaysia, Vietnam, and China by the end of 2024. This ambitious plan, announced by Foreign Affairs Minister Ali Sabry, seeks to boost the nation’s economic growth and competitiveness by opening up new markets and diversifying trade partnerships.
“These agreements will be game-changers for Sri Lankan businesses,” Minister Sabry emphasized at a press conference. “They will unlock access to vast markets, attracting investments and creating new export opportunities, ultimately contributing directly to our economic recovery and long-term prosperity.”
Sri Lanka’s current export performance lags behind regional players like Vietnam and Bangladesh, prompting this proactive approach. With exports hovering around $12-14 billion compared to Vietnam’s $370 billion and Bangladesh’s $60 billion, Sabry attributed this gap to limited market access. “While our neighbours actively pursued FTAs, Sri Lanka focused primarily on the domestic market,” he explained. “This strategic move by our competitors fueled their export-driven growth, leaving us behind.”
Recent successes like the FTA signed with Thailand, granting access to a $2.2 billion market, serve as a model for future agreements. Sri Lanka is also engaging with Bangladesh and other ASEAN member states, with an eye on joining the broader RCEP once debt restructuring is finalized.
Meanwhile, talks with China have resumed virtually after a five-year hiatus. Chief Negotiator K G Weerasinghe indicated China’s newfound flexibility on key sticking points like the tariff list, level of liberalization, and review process. “This positive development paves the way for progress,” he stated.
Sri Lanka’s pursuit of FTAs comes amidst a complex geopolitical landscape. Balancing close ties with China and India while navigating a potential “proxy cold war” is crucial. However, the recent economic crisis and sovereign debt default have underscored the need for diversified partnerships and increased foreign inflows.
By proactively seeking FTAs, Sri Lanka aims to unlock its full economic potential, creating a more robust and sustainable future for its citizens. Whether this ambitious plan can be achieved within the set timeframe remains to be seen, but the renewed push for trade agreements signifies a crucial step towards economic recovery and regional integration.
