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China, Sri Lanka FTA To Be Signed in June 2015

by Mary Swire, Tax-News.com, Hong Kong

31 October 2014


Sri Lanka's Deputy Secretary to the Treasury S. R. Attygalle has now said that the proposed free trade agreement (FTA) between Sri Lanka and China will be signed in June 2015, delayed from an expected completion date at the end of this year.

Thoughts of an FTA began only recently, during Sri Lankan President Mahinda Rajapaksa's state visit to China in May 2013, and a feasibility study on the proposed agreement was completed in March this year. When in effect, it is expected to boost trade between the two countries, which have looked to develop closer economic cooperation recently.

Total trade between Sri Lanka and China in 2013 is said to have reached almost USD3.6bn, some five times the USD700m of goods traded in 2005. However, Sri Lankan exports to China still remain minimal, at only just above USD120m.

Although there is, as yet, no indication of the terms of any agreement, and in particular the preferential tariff reductions that will form part of the deal, it is expected that the substantial Sri Lankan garment industry will be a main beneficiary of the FTA, through which it would expect to gain access to the Chinese market.

However, it has also been indicated that Sri Lanka's industrial sector, as a whole, will probably also be concerned that any tariff reductions will be limited for imports from China of the manufactured goods that local firms are themselves beginning to produce, and that they will thereby remain protected from unfettered Chinese competition.

TAGS: tax | free trade agreement (FTA) | Sri Lanka | tariffs | China | agreements | manufacturing | trade

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