A fillip for trade | Daily News

A fillip for trade

We often hear the term Global Village, which essentially means that the entire world has become one village. We can instantly communicate with another person on the other side of the world and watch events happening in that part of the world “live” on television. Ceylon Tea is consumed by people all over the world while we Sri Lankans also consume many foreign products. We can travel from anywhere in the world to any other place in less than 24 hours. Communications, travel and trade have transformed our lives and brought the world closer together.

In this context, no country can survive without trade. In other words, no country, rich or poor, can live in isolation. Those who think so have no grasp on the global reality. Most countries opt for bilateral trade agreements with other countries to seek mutual advantages in two-way trade, although they still work within multilateral trade arrangements.

Sri Lanka is no stranger to these Free Trade Agreements (FTAs). Sri Lanka and India pioneered the FTAs in the South Asia more than 20 years ago, which has proved to be mutually beneficial. Sri Lanka has since then signed many FTAs with other countries in the region and beyond. Deeper trade integration and investment cooperation, access to markets and economical inputs and improved competitiveness are among some of the potential benefits that FTAs offer partner countries.

The latest news in this regard is that the FTA between Sri Lanka and China is expected to be signed this year, according to a report in the China Daily. The report had quoted the Sri Lankan Embassy in China. According to the embassy, the sixth round of negotiations to formulate the FTA had been concluded some time back. There is a need to fast track the negotiations and sign the FTA without any undue delay.

Sri Lankan Ambassador to China Karunasena Kodituwakku said that Sri Lanka is interested in forging more ties with China in the fields of economy and trade. This is a step in the right direction as the two countries are very strong trade partners. In fact, China is Sri Lanka's second largest trading partner and it is also Sri Lanka's second most important source of imports. Now the trade balance is heavily in favour of China, but the FTA should be able to rectify this situation.

One should recall that China was one of the first countries to sign a trade agreement with Sri Lanka, only a few years after the latter received independence. The Rubber-Rice Pact was a landmark development in the ties between the two countries, which date back centuries. Since then, China has been one of the biggest donors of Overseas Development Assistance to Sri Lanka and has also invested in a range of mega projects ranging from the Hambantota Port to the Colombo Port City. Sri Lanka has been identified as a key element in China’s Belt and Road Initiative (BRI).

Unfortunately, there seems to be an innate (and mainly unfounded) fear of FTAs among certain sectors. This is a manifestation of the “island mentality” that some Sri Lankans (and many other islanders in the other parts of the world) seem to have, who think that we can get along fine without the rest of the world. However, we can become stronger only if we open up to the world.

The signing of an FTA with Singapore caused a huge controversy, with many arguing that it would not be advantageous to Sri Lanka. The fundamental nature of an FTA is that there are positives and negatives for both countries involved – a little bit of give and take is essential in today’s world. Ironically, some of the bodies which are vehemently opposed to this FTA such as the Government Medical Officers' Association (GMOA) are not strictly qualified in economic matters to comment on an FTA.

However, President Maithripala Sirisena had reportedly raised certain concerns regarding the FTA with Singaporean leaders during his recent official visit. Following this development, the Government has announced the appointment of a committee to identify the areas that may be amended.

Development Strategies and International Trade Minister Malik Samarawickrama plans to submit a Cabinet paper seeking approval to appoint a committee to study any clauses and areas that should be revised. The findings will be referred to the Joint Committee between the two countries to proceed with further action. In any case, there are built-in provisions in the FTA for the revision of its contents with mutual agreement.

This is a welcome move that will help allay the fears of those who had expressed negative opinions about the FTA. The Committee, which is likely to comprise economic and trade experts, should conduct an impartial assessment of the benefits and disadvantages of the FTA and suggest any improvements which may then be incorporated in the agreement. There should also be a debate in the media and the society about the two FTAs to give an opportunity for interested parties to express their opinions. Fine- tuning the FTAs will no doubt gain more advantages to Sri Lanka.


 

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