The FTA, signed in Colombo in early February by Sri Lankan President Ranil Wickremesinghe and Thai Prime Minister Suretta Thavisinh and now in force, provides both immediate tariff concessions and phased tariff concessions over 15 years. .
Under the agreement, Thailand will offer concessions on a wide range of Sri Lankan exports including clothing, tea, cinnamon and coconut products, with immediate concessions on desiccated coconut, green tea and black tea. By the end of the 15-year period, both countries will have 85% of their products tariff-free.
![Sri Lankan President Ranil Wickremesinghe (right) with Thailand’s Prime Minister Srettha Thavisin in Colombo, Sri Lanka, on February 3. Photo: EPA-EFE/Sri Lanka President’s Media Division](https://cdn.i-scmp.com/sites/default/files/d8/images/canvas/2024/03/03/39a4dd2e-8faf-4389-a57c-f470f817a498_44b7324d.jpg)
In 2022, total exports from Sri Lanka to Thailand were USD 57.76 million, and Colombo imported goods worth USD 302.64 million from Thailand.
Rohan Masakorala, an export and logistics expert from Sri Lanka, said it was important for the country’s existing businesses to become part of the global supply chain.
“these [bilateral agreements] It’s like a component of a larger trade. [They] “We will look at broadening our horizons in multilateral frameworks and help provide a more open and facilitative environment for such trade to take place,” he said.
According to Asanka Wijesinghe, a researcher at the Sri Lanka Institute for Policy Studies, the FTA may not lead to an increase in trade volumes immediately, but over time it will increase by eliminating tariffs on competitive export products from both countries. It is said to provide room for trade to increase. .
The FTA with Thailand and the trade agreement with Singapore signed in 2018 are catalysts for Sri Lanka’s long-term goal of joining the Regional Comprehensive Economic Partnership (RCEP), a multilateral free trade agreement between Asia-Pacific countries. Wijesinghe added.
![Hand-cart pullers work at a wholesale market in the commercial hub of Colombo, Sri Lanka, in August 2023. Photo: EPA-EFE](https://cdn.i-scmp.com/sites/default/files/d8/images/canvas/2024/03/03/f3222744-b2c9-430d-834f-6a5c9171c3af_798e21ed.jpg)
“Strictly speaking, Sri Lanka should negotiate with the 15 RCEP countries. The conclusion of the Thailand FTA is an important milestone for Sri Lanka’s ambitions to join RCEP,” Wijesinghe said.
Wijesinghe said integration into the Association of Southeast Asian Nations will benefit the Sri Lankan economy as many production value chains are rooted in these growing economies, thereby allowing Sri Lanka to diversify its export destinations and join global value chains. He added that it provides an opportunity.
Mascorala believes that entering into such bilateral agreements with ASEAN member states will help RCEP accession negotiations in the long run, as RCEP is one of the world’s largest trading blocs that offers greater market access. He said there was.
As Sri Lanka seeks to recover from the deep economic crisis that led to its historic debt default in 2022, the country’s bilateral trade ambitions are renewed, with FTA negotiations underway with China and Malaysia and There is also growing interest in concluding a trade agreement with Indonesia. . By 2023, Sri Lanka’s cumulative trade deficit reached US$4.9 billion.
According to Rajini Gamage, a political scientist at the National University of Singapore Research Institute, the economic crisis has made it imperative for Sri Lanka to diversify its external relations, and Sri Lanka is pursuing this strategy primarily through economic instruments such as trade agreements. It seems that there is. South Asian Studies.
The Sri Lanka-Thailand FTA could be a signal to other ASEAN countries that South Asian countries, excluding India and Bangladesh, are ready for further connectivity, investment and economic engagement, Gamage said.
“This makes the South Asian region more conducive to regional economic cooperation at a time when the global political climate and national-level politics in many South Asian countries are pushing for a more inward-looking and semi-isolationist approach to development. It will be advantageous,” she said. I got it.
Sri Lanka walks a ‘tightrope’ between IMF demands and social reconstruction
Sri Lanka walks a ‘tightrope’ between IMF demands and social reconstruction
Ganeshan Wignaraja, a researcher at UK-based think tank ODI, said the Sri Lanka-Thailand FTA would allow for cheaper Thai food imports for Sri Lankan consumers struggling in the face of rising domestic food prices. It has the potential to promote trade and investment between the two countries.
It also has the potential to attract foreign investment and increase Sri Lanka’s foreign exchange earnings, helping it repay its crippling external debt, he added.
However, Wignaraja pointed out that the FTA with Singapore has stalled.
He said, “I hope that future Sri Lankan governments will respect this honor.” [the Thailand] Do not repeat the mistake of concluding an FTA and delaying its implementation as in the case of the Sri Lanka-Singapore FTA, damaging Sri Lanka’s international reputation. ”
![A Sri Lankan man sets up his roadside food stall to start his business for the day in Colombo, Sri Lanka, on February 20. Photo: AP](https://cdn.i-scmp.com/sites/default/files/d8/images/canvas/2024/03/03/0e4285f9-1bba-46d5-85e5-c9099d556b4c_1cfbf6ff.jpg)
While the agreement with Thailand may be important, WA Wijawardena, a former deputy governor of the Central Bank of Sri Lanka, argued that the country needs a better trade deal than an FTA to help it emerge from the crisis.
“Sri Lanka needs a comprehensive economic partnership agreement.” [CEPA] “It’s not an FTA, it’s about capturing some of the Thai investment that goes to countries like Myanmar, Laos, Cambodia and Vietnam,” Wijewardena said, adding that CEPA has room for cooperation in more areas.
Wignaraja said a CEPA with Thailand could help Sri Lanka “benefit from Thailand’s high-tech manufacturing and pragmatic research and innovation, which are essential for long-term economic growth.”
He added that Colombo should seek to conclude CEPAs with other ASEAN member states, South Korea and Japan.