Sri Lanka to Resume Trade Deal Talks with India, China and Thailand

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GG News Bureau

Colombo, 6th Jan. An official said on Thursday that Sri Lanka will resume trade talks with India, China, and Thailand after a four-year hiatus, as the crisis-hit country rushes to seal deals to help it rebuild its economy.

The 22-million-person island is in the grip of its worst financial crisis in over seven decades, brought on by a severe lack of foreign exchange, which has left the country struggling to pay for fuel, food, and medicine.

According to K.J. Weerasinghe, Sri Lanka’s Chief Negotiator of Free Trade Agreements, Thai officials are scheduled to arrive in Sri Lanka on Monday to begin the third round of talks after negotiations were suspended in 2018.

Negotiations with India and China, Sri Lanka’s two largest trading partners with roughly $5 billion in bilateral trade in 2021, are expected to begin in February and March.

“The focus is on improving economic cooperation and attracting investment, which is crucial for Sri Lanka to emerge for this economic crisis,” Weerasinghe told Reuters.

“My main goal is to have all these deals completed by the end of 2023 or early 2024.”

The talks had been postponed due to Sri Lanka’s economic crisis and the COVID-19 pandemic, according to Auramon Supthaweethum, Director General of Thailand’s Department of Trade Negotiations.

“We are heading there to continue the discussion,” Supthaweethum said.

According to Sri Lanka’s central bank data, bilateral trade between Thailand and Sri Lanka will total around $460 million in 2021.

After talks stalled in 2018, Sri Lanka hopes to expand an existing free trade agreement with its northern neighbor India into an Economic and Technology Agreement. It intends to expand the current agreement, which primarily covers trade in goods, to include services and investment.

FTA discussions with China, the island’s largest bilateral lender, also stalled in 2018 over disagreements about the pace of liberalizing of Sri Lanka’s economy, Weerasinghe said.

Both countries have responded positively to resuming talks but specific dates are yet to be finalised, Weerasinghe added.

The Sri Lankan economy is expected to contract by 8.7% in 2022, but to recover in the second half of 2023, according to the central bank.

The country signed a preliminary agreement with the International Monetary Fund last September for a $2.9 billion bailout package, but it must first get its debt under control before disbursements can begin.

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