APTA strengthens trade with China

by Gamini WARUSHAMANA

Most of the Sri Lankan exporters are not aware about the Asia Pacific Trade Arrangement (APTA) which China is a member and offering Margin of Preference (MOP) over the general tariff, said the Executive Director of IPS Dr. Saman Kelegama.

Dr. Saman Kelegama.

He was addressing the Sri Lanka - China business Forum organised by the Sri Lanka-China Solidarity Movement and the Chamber of Commerce.

This is a potential avenue by which trade between the two countries can be significantly expanded, but has thus far been under-utilised, he said.

Under the APTA China already provides concessions for over 1700 products imports from Sri Lanka at MOP of 27% which covers around 50% of our total exports to China. These concessions will be increased to cover over 2000 export items within the next 1 1/2 years.

However the usage of tariff concessions by Sri Lankan exporters is very low and only less than 5% of preferential tariff lines granted by China has been used.

Out of APTA eligible exports 15% is completely untouched by Sri Lankan exporters. Major exports such as tea and coconut products receive MOPs of 50% and 20%. But the reduction in duty for the latter is from 4%-5% which is marginal, he said.

APTA provides ample opportunities for business expansion, sourcing and attracting FDI to Sri Lanka. The trade authorities should make the exporters aware of APTA. The fourth round of the APTA negotiations to be completed in October which aims to widen the coverage of preference to at least 50% of the number of tariff lines and provide tariff concession of at least 50%.

Dr.Kelegama pointed out the increasing bilateral trade between the two countries. The total trade has doubled from 2005 to 2008. Sri Lankan exports to China has increased from US$29.4 in 2005 to US$ 46.8 million in 2008 while imports from China has increased from US$ 630.6 million in 2005 to US$ 1091.5 in 2008.

The trade deficit in 2008 is US$ 1044.7 million and he said that this reflects the trade relation between the globalised economy. We have trade surplus with EU and USA and a deficit with China and India.

The trade between China + Hong Kong is far greater and our exports to China + HK was US$93.6 million in 2005 and it has increased to US$ 151.2 in 2008.

Sri Lankan exporters have vast opportunities in the Chinese market.

There is a growing middle class which is expected to pass 400 million by 2010. We also have a niche market in Tea and apparel products. There is a huge potential in the tourism sector which is now facilitated by three daily direct flights between Sri Lanka and China, he said.