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China Sri Lanka Free Trade Agreement Pdf

We can get a deeper perspective of the import-to-GDP ratio, which is seen as a better indicator of a country`s trade dynamics. Since 2000, Sri Lanka`s import rate relative to GDP has declined, as has the export rate of GDP. This reflects a sharp contraction in trade and at the same time a step towards protectionism, which is one of the main causes of the economic problems facing Sri Lanka today. The interesting fact is that Chinese imports to Sri Lanka have increased despite the overall contraction of international trade and the proliferation of protectionist measures. Although Sri Lanka currently does not have a free trade agreement with China, discussions have taken place on the signing of such a bilateral agreement. Beginning in 2014, Sri Lanka and China concluded six rounds of negotiations on the proposed free trade agreement. Discussions ended in 2017 due to differences over the extent of trade liberalization under the proposed free trade agreement. China wanted 90% of goods to be tariff-free, a scenario sri Lanka is not comfortable with. In June, however, Sri Lankas International Eskerei said that during Chinese Vice Trade Minister Wang Shouwen`s visit to Sri Lanka, the two sides were in talks to resume their free trade negotiations. In 2005, Sri Lanka`s import rate to GDP was 36%; In the same year, China`s import/GDP rate was only 2.6%.

In 2017, the import/GDP rate had fallen to 23.8%, while China`s import/GDP rate had risen to 4.8%. This significant increase in Chinese imports occurred even in the absence of a Free Trade Agreement (FTA) from China with Sri Lanka. This means that Chinese imports are subject to normal tariffs that could be abolished under a free trade agreement. In contrast, India has a free trade agreement with Sri Lanka, the Do-Sri Lanka Free Trade Agreement (ISFTA), which comes into force in 2000. Even with this free trade agreement, Sri Lanka`s Indian import rate has fluctuated by about 5% and has not seen a significant sustainable increase since 2005. In 2016, China became Sri Lanka`s main source of imports and overtook India. However, in subsequent years, the value of Indian imports slightly exceeded Chinese imports. Although China has not been able to remain Sri Lanka`s main import partner, even its unique claim in this regard has highlighted the marked growth in China`s imports and trade relations with Sri Lanka. In addition to the significant increase in Chinese investment in Sri Lanka, this scenario does not seem to appeal to India, especially if China is able to export more to Sri Lanka than India. However, for India, this dynamic indicates that it has failed to strengthen trade relations within the South Asian region, a situation that India does not enjoy. In 2015, China became Bangladesh`s largest trading partner, which is expected to be the case for Sri Lanka in the near future.

It is precisely this idea that could prompt India to accelerate the proposed ETCA signing process with Sri Lanka and remove barriers to bilateral trade. That is why discussions have taken place on the extension of the existing free trade agreement and on the signing of an agreement known as economic and technological cooperation (CETA), which would improve the current free trade agreement and include some liberalisation of certain services. Eleven rounds of negotiations have been concluded on an India-Sri Lanka ETCA. However, negotiations were suspended due to the political and constitutional crisis in Colombo in October 2018. Since then, no progress has been made in the ETCA negotiations. India-led South Asia has seen a terrible development in regional trade integration, with intra-regional trade accounting for only 5% of total trade flows. Perhaps the growing power of China`s trade relations in South Asia can help to change this dismal situation. Although Chinese imports have increased significantly, exports