Sri Lanka should start diverting more of its exports to China, which values the economic independence of a country, Chinese Ambassador Yi Xianliang said. “Economic independence is a requirement of a nation. Why suffer punishment from political tools of other markets?” he said.
The European Union had revoked preferential trade access given to Sri Lanka, while the United Nations had applied immense pressure through the United Nations Human Rights Council due to alleged war crimes committed during the waning stages of the civil war. Further, the EU had also enacted a fisheries ban on Sri Lanka for unregulated bottom trawling, which was recently removed.
“We believe the Sri Lankan people and government know who your friend really is,” Xianliang said.
China has averaged over US$ 400 million in foreign direct investments to Sri Lanka over the past several years, while the United States, which is Sri Lanka’s largest trading partner—absorbing 26.7 percent of Sri Lankan exports—has invested an average of just US$ 60 million annually over the past 3 years.
Xianliang said that Sri Lanka could put all of its major export products in the free trade agreement (FTA) under negotiation.
The India-Sri Lanka FTA had placed barriers to Sri Lanka’s main export products.
“You should go for FTA access to as many areas as possible. The FTA could include tea, gems, fruits and fisheries, and hopefully it will come into effect by the end of this year,” Xianliang said.
He noted that the Chinese have a high regard for Sri Lankan tea, gems and fruits, and buy a lot of these during visits to Sri Lanka.
Xianliang added that the Chinese have a fish market with prices equivalent to or higher than the West.
Sri Lanka exported US$ 308 million worth of products to China in 2015, just 2.9 percent of the export share, but imported goods worth US$ 3.7 billion in return, which was 19.6 percent of Sri Lanka’s imports.
While Sri Lanka’s FTA with China will address tariffs of the central government, given the weaknesses of Sri Lanka’s past FTAs, the private sector is afraid that China’s different standards, as well as paratariffs and non-tariff barriers will hamper exports.