Sri Lanka “has taken steps” to renegotiate free trade agreements with “key bilateral partners”, the country’s State Minister of Finance, Shehan Semasinghe has said. 

To begin with, Sri Lanka will focus on discussions with India, China and Thailand, to conclude the ongoing negotiations, “following which Sri Lanka intends to join the Regional Comprehensive Economic Partnership (RCEP),” a regional trade and economic co-operation agreement of 16 Asian countries. 

Speaking at an Investor Forum, a Sri Lankan road-show organised by the Confederation of Indian Industry (CII) on Wednesday, Semasinghe stressed that the economic troubles the country faced in 2022 were practically over and said that the government would position Sri Lanka so that it grows through “non-debt creating inflows” — such as through exports of goods and services, foreign direct investment and tourism. “This will provide a healthier external balance and enable Sri Lanka to service its external liabilities,” the minister said. 

market access

He said that the renegotiations of the FTAs would create “significant market access” for foreign direct investment into Sri Lanka to happen. This, in turn, would boost local manufacturing and be a “key catalyst” for export growth and attract investments into the country. 

“While addressing market access through trade agreements, Sri Lanka is also addressing, supply-side bottlenecks to boost productivity. A recently drafted labour bill, will address numerous inefficiencies in the labour market. The government is opening up government-owned land, for productive commercial activity. Capital market restrictions are gradually being eased, as the external imbalances get resolved,” Semasinghe said. 

Commenting on Sri Lanka’s desire to renegotiate, Dr Ajay Sahai, CEO, Federation of Indian Export Organizations (FIEO), told businessline that the Sri Lanka–India FTA was heavily in favour of Sri Lanka. “I don’t think they have any problem with the FTA,” he said, adding that Sri Lanka could be wanting to expand the scope of the FTA so as to make it an Economic and Technology Co-operation Agreement (ECTA).  Asked if it would be in India’s favour, Dr Sahai said he didn’t think it would be an issue for India, adding that in any negotiations there are “give and take”.