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Island’s 2nd Biggest Trade Agreement Stalled

Dec 25, 2010 2:21:14 PM - thesundayleader.lk
  • Indo-China Dispute

A dispute between India and China on trade tariffs is precluding Sri Lanka from enjoying exporting its products to those countries on a near zero duty basis, an official said.
Gomi Senadhira, Director General Commerce, speaking at a recent seminar had said that under the now stalled 4th round of the Asia Pacific Trade Agreement  (APTA) talks, the tariff cuts proposed for Sri Lanka was 90% as opposed to the present 20%. (See The Sunday Leader of October 24, 2010).
He told this newspaper on Saturday (December 18) that what caused the impasse in the 4th round of APTA talks was China wanting India to make a 40% duty cut on imports from China, but India being willing to give only a 33% cut instead, hence causing this deadlock.
Senadhira at that seminar said that APTA is the biggest trade agreement after the Indo-Lanka Free Trade Agreement (ILFTA) for the island.
Non reciprocal trade agreements like the recently lost GSP+ duty free concession in exports to the EU, or exports under the GSP concessional umbrella to both the EU and USA, were not dealt with or considered at that lecture because Sri Lanka, in turn, not having had to make any reciprocal trade concessions to enjoy the benefits offered, in its exports to those markets, under those relevant agreements.
He had further said that if the fourth round of APTA talks were successful by finding a solution to the Indo-China deadlock, Sri Lanka would have had enjoyed a near zero concessionary duty entry in to the markets of China, India and Korea (three “huge” markets), by virtue of the fact that it would have had enjoyed being classified as a least developed country under the agreement, thus being privy to such benefits.
However India has asked the rest of APTA members to carry on without it and to go ahead with the 4th round of APTA talks, but China is unwilling to reach a consensus without India’s participation, Senadhira told this reporter. That has caused a hiatus in taking APTA forward.
China has a trade surplus over India, he said.
The difference of 7%, ie China’s insistence of a 40% duty cut, as opposed to India agreeing to give only a 33% cut, means a lot to India, said Senadhira. The amounts involved are huge, he said.
Sri Lanka exported about US$ 50 million worth of goods to APTA member countries last year, with China topping the list (US$ 29 million), followed by India (US$ 13 million) and Korea (US$ six million).
Coir products were Sri Lanka’s biggest export (US$ 24.5 million), followed by natural rubber (US$ 14.5 million). Other exports under APTA included rubber products, fish “products,” floor tiles and tea.
APTA’s objective is to cover at least 40% of tariff lines, but studies have shown that Sri Lanka has under-utilised APTA concessions by 50%, Senadhira had said.
Hope the current rapprochement between the two Asian giants will lead to a compromise agreement on APTA for Sri Lanka’s benefit!
Senadhira told this reporter that talks with the stakeholders, both from the Indian side as well as from the local side, so as to broaden the scope of the ILFTA to a Comprehensive Economic Partnership Agreement (CEPA) were continuing.
Senadhira was in India last month in this connection.
CEPA aims at encompassing not only the trade in goods between the two countries at concessionary or no duty level (already being dealt with by the ILFTA), but extending such concessions to encompass trade in services and investments as well.
He said that the only subject in regard to the movement of natural persons that CEPA was talking of, were the movement of IT persons and shipbuilders.
Senadhira said that in this connection he is talking to his Indian counterparts as well as the concerned local parties. There have been fears expressed by certain local business/professional quarters that CEPA would result in locals losing their jobs to Indians.