The Ministry of Development Strategies & International Trade said yesterday it would formulate the National Trade Policy by the end of next month by incorporating inputs from all stakeholders through a broad-based consultative process.
“During the recent deliberations between Development Strategies & International Trade Minister Malik Samarawickrema and his Indian counterpart, an agreement was reached to begin technical-level discussions on the Economic and Technology Cooperation Agreement (ETCA) in the 3rd week of this month,” the ministry said in a statement.
Following is the full statement:
The Sri Lankan Government is deeply committed to integrate with the regional and global economies to enhance foreign direct investment, exports and to transform and re-balance the economy of Sri Lanka. India is Sri Lanka’s largest trade partner -- first in terms of imports, third in terms of exports and fifth in terms of FDI. Similarly China too is an important trade partner with an overall trade volume of closer to US $ 4 billion, contributing immensely towards the economic development of the country in infrastructure development, enhancing port capacity, connectivity and mobility.
Since the Indo-Sri lanka Free Trade Agreement (ISLFTA) executed in 1998, there had been many deliberations between the two countries on a Comprehensive Economic Partnership Agreement (CEPA), which was stalled. Negotiations on a Free Trade Agreement with China also commenced in 2013 and two rounds of technical level deliberations have already taken place in April and November 2014.
Recent high level visits and engagements with India and China have improved the overall landscape for strengthening bilateral relationships and the leaders of India, China and Sri Lanka have made strong commitments towards enhancing and deepening the bilateral trade relationships. While recognizing the asymmetries of the economies of Sri Lanka, India and China, the parties acknowledge the great potential and opportunities that exist in integrating the economic activities, to boost the somewhat lagging Sri Lankan economy. Given the current global economic situation the Ministry is of the view that time is most opportune to explore aggressively & pragmatically novel ways and means of enhancing bilateral economic relations with India and China taking into account the differences of the industrial and economic structures of the countries.
In the above positive backdrop, fresh round of negotiations were initiated with India to transform the existing ISLFTA into a more comprehensive Economic and Technology Cooperation Agreement (ETCA). It needs to be reiterated that ETCA is novel in its content and approach and not a continuation of CEPA.
Simultaneously, it is also decided to initiate negotiations on a new comprehensive FTA with China, expanding the scope to include investment and technology cooperation. The existing FTA with Pakistan too will be invigorated exploiting more trade and investment opportunities. Going forward, the Government intends to initiate deliberations on a bilateral trade agreement with Singapore as well, and preliminary discussions in these regards are ongoing.
With preferential access to India, Pakistan, China and Singapore, and the resurrection of GSP+ concession with EU, Sri Lanka will be well placed to act as a hub and a gateway for investors seeking to access the larger, fast growing and emerging markets, on a preferential basis.
In this context the Ministry of Development Strategies and International Trade which plays a lead role in all international trade and investment deliberations wishes to clarify following positions it had taken, pursuant to many consultations with relevant stakeholders.
1. Drafting of the new agreement with India is in progress and a transparent and proactive consultative process too has been initiated with all relevant stakeholders, including the business and industry chambers, the United Professionals’ Movement (UPM), professional bodies and other public and private sector stakeholders. The new agreement – Economic and Technology Cooperation Agreement (ETCA), encompasses deepening of the goods sector, and will include services and investments, bringing in investment, technological know-how, training, and capacity building in Sri Lanka. It is envisaged that deliberations between the parties would lead to resolution of the critical constraints in the ISLFTA, as an early harvest, and eventually ETCA will replace the existing ISLFTA.
2. During the recent deliberations between the Hon. Minister of Development Strategies & International Trade and his Indian counterpart, an agreement was reached to commence technical-level discussions on ETCA in 3rd week of July 2016.
3. Similarly, China too has expressed its interest to re-launch the dialogue on the China Sri Lanka Free Trade Agreement, and a Chinese delegation is expected to visit Sri Lanka in early August for next round of deliberations.
4. Given due cognizance to the concerns raised by UPM, the Ministry while reiterating its commitment to engage in transparent and ongoing consultations with all stakeholders have decided to establish a Joint Working Group (JWG) encompassing all pertinent stakeholders before end of July 2016, with the approval of the Cabinet Sub Committee on Economic Management/Cabinet of Ministers. The Ministry will coordinate and extend their best support to facilitate such consultations in an ongoing basis and to make them transparent, productive, focused and result oriented. It is the intension of the Ministry to complete all deliberations and execute ETCA by the end of this year. Similarly the FTA with China is expected to be finalised by early next year.
5. The need for, and absence of a comprehensive National Trade Policy to guide the futuristic trade deliberations of the country were highlighted by many, and emerged as a recommendation in the ongoing consultative process with the UPM. Ministry wishes to express that it has already embarked upon formulating a National Trade Policy in consultation with Chambers, UPM and other professional bodies, which will focus on the linkages and inter-connectivity between trade and other economic policies, trade and investment nexus or export-seeking FDI, reducing the anti-export bias in our policies while reviewing the para tariffs and introducing reforms towards improving trade facilitation, enabling Sri Lanka to capitalize on its strategic geographical location. The objective of the Ministry is to formulate the National Trade Policy by the end of August 2016, incorporating inputs from all stakeholders through a broad-based consultative process.
6. The UPM as well as Chambers have also urged the GOSL to update and improve the existing legal framework to be in par with such regimes adopted by our trading partners, avoiding any possible negative and detrimental implications. The Ministry has agreed to facilitate and enable expeditious review of legal regimes related to professional services to ensure service quality, visa and tax laws, accreditation process for foreign professionals and enact relevant amendments prior to liberalizing any services in bilateral trade agreements stated above.
7. Further, the Ministry demonstrating its true commitment towards transparent engagement with the relevant stakeholders will allocate a seat for a common representative from Chambers and Professionals in the respective bilateral negotiating teams.
The ultimate objective of the Ministry and the GOSL is to ensure a transparent and an inclusive process in developing international trade for the benefit of the country and its people, paving way to attract much needed foreign direct investment, access to international markets, adoption of latest technologies and know-how, capacity building and enhancing its competitiveness and trade within and outside the region, all of which will result in Sri Lanka having developed enterprises, quality goods and services and a developed job market transforming and rebalancing the economy.