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Exporters hail China-SL FTA

Sri Lankan exporters have hailed the proposed China-Sri Lanka Free Trade Agreement (FTA) and expect big opportunities to expand and diversify their export markets. Selected Sri Lankan items could be exported to China at zero duty with the implementation of the FTA in November.

JAAF, Secretary General, Tuli Cooray said that the FTA is the second historic landmark in China-Sri Lanka relations. The Rubber-Rice Pact signed in 1952 between China and Sri Lanka was the first significant trade agreement between the two countries.There was no proper policy direction and this agreement was concluded during President Mahinda Rajapaksa's recent visit to China. “We are happy because apparel has been included at the top of the items covered by this FTA and rubber, value-added tea and gems and jewellery are among the other items,” he said.“China is one of the major apparel exporters but it also imports around US$ 4 billion worth of apparel annually especially of the high-end variety.

We are looking at the opportunities in this high-end market and if we can capture 10 percent of this market it is a significant gain,” Cooray said.Chairman of the HVA Lanka Exporters, Rohan Fernando, a leading tea exporter, said that this FTA will be a big opportunity in export promotion and attracting FDI. China has much to offer to Sri Lanka.

The FTA opens a gateway for China to enter the large SAARC market and therefore an opportunity to start joint ventures, Fernando said.

At present trade between the two countries is asymmetric and it is in favour of China.

According to 2012 export statistics of the Central Bank, exports to China account for only $ 113 million or 1.2 percent of our total exports. In imports, China is Sri Lanka's second largest source of imports and it import $3.64 billion worth of goods from China, and it is 19 percent of our total imports.

Analysts said that FTA will only be a gain if it helps to change this asymmetry and create a win-win situation. Diversification of Sri Lanka's export markets and reducing dependency on US and EU markets was long-felt need especially as the global financial crisis and slow down in US and EU economies, Sri Lanka felt the need to enter new markets.

Emerging economies were the main focus and this FTA is the first significant step in this direction.

China with a population of 1.3 billion and over US$ 7 trillion GDP is the second largest economy in the world and is increasingly playing an important and influential role in the global economy.

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