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Business / Economy

China-Sri Lanka FTA feasibility to be finalized in March

(Xinhua) Updated: 2014-01-24 10:19

COLOMBO - The feasibility study on the highly-anticipated Sri Lanka-China Free Trade Agreement (FTA) is underway and due to be completed by March with eventual signing of the deal slated for before end 2014, an official said on Thursday.

The progress towards what would be a landmark agreement was revealed by Wang Yingqi, commercial counsellor of the Chinese embassy in Sri Lanka, at a forum promoting ceramics from China.

Wang expressed confidence in the signing of the Sri Lanka-China FTA (SLCFTA), which he said would boost bilateral trade.

He also said that the SLCFTA would help bring bilateral trade with Sri Lanka to similar levels the island nation has with the Association of Southeast Asian Nations (ASEAN) member states.

Noting that ASEAN enjoys zero duty while China pays 6 percent, Wang said, "Once the China-SL FTA is signed, the trade between the two countries will reach the same levels of trade similar to what Sri Lanka has with ASEAN member states. The capacity to export to China will be significantly enhanced."

The proposed SLCFTA is billed as the biggest development since the famous Sino-Lanka Rubber-Rice Pact in 1952.

Discussions on having an FTA with China started when President Mahinda Rajapaksa paid a State visit to Beijing in May 2013, during which the two countries expressed interest in upgrading the economic and political relationship to a strategic partnership.

Wang stated that Sri Lanka has a special advantage in attracting Chinese investments since the post-war era has a "very good" economic environment which would be further improved with the effective measures taken by the Sri Lankan government.

However, he noted that despite Chinese investments having good potential, it was yet to identify prospective markets in Sri Lanka.

"By signing the FTA, Sri Lanka will have a bigger market share in China, and China in Sri Lanka. That will help not only in bridging the trade gap but also in the overall development of the Sri Lankan economy," said Wang.

According to the Department of Commerce, trade between Sri Lanka and China stood at $2.67 billion in 2012, which is a 306 percent increase from $658.94 million in 2005.

Sri Lanka's exports to China, according to the Central Bank 2012 Annual Report, amounted to $113 million, accounting for 1.2 percent of the total exports. In terms of imports, the figure stood at $3.64 billion and accounted for about 19 percent of total imports.

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