The negotiating team of the Sri Lanka-Thailand Free Trade Agreement (SLTFTA) and industry experts recently discussed the FTA and its impact on Sri Lanka’s economic growth, at a knowledge session organised by the Ceylon Chamber of Commerce.
Chairman of the Ceylon Chamber, Duminda Hulangamuwa said that Sri Lanka needs to explore and leverage agreements strategically to be competitive with countries such as Vietnam, Thailand, Malaysia, China, and Singapore.
He said that sustained international trade growth can lead to an 8 to 9 percent economic growth rate, and the nation cannot rely on 2 to 3 percent growth.
Officials at the head table
Chief Negotiator, K. J. Weerasinghe, on the other hand, underscored the need to align with the Government’s vision for global market access and attracting investments. He outlined a three-pillar strategy focusing on protecting and promoting existing trade partnerships with the US and European Union, expanding market access in South Asia with countries such as Bangladesh, Pakistan, China, and India, and increasing market access in East Asia with Thailand, Malaysia, and Singapore.
He acknowledged, that Sri Lanka lost opportunities on the trade side in the last five years, and emphasised the need to act swiftly to capitalise on future opportunities.
Drawing similarities with Sri Lanka’s Free Trade Agreements with Thailand and Singapore, DG, BOI and Head of Investment Chapter, Ms. Renuka Weerakoon highlighted the comprehensiveness of these FTAs, covering areas such as trade facilitation, services, proceedings, Sanitary and PhytoSanitary (SPS), Technical Barriers to Trade (TBT), investment, trade remedies and intellectual property.
She said that FTAs are crucial for Sri Lanka, given its small domestic market, and can lead to increased market access, Foreign Direct Investment (FDI), job opportunities, foreign exchange, innovation, technology transfer, and international trade networks.
She also emphasised the expectation of increased Thai investments in manufacturing and services under the recently signed SLTFTA.
Advisor, Ministry of Finance and Head of Trade in Services Chapter, Deshal de Mel, said that the SLTFTA is part of a broader strategy to drive qualitative changes in Sri Lanka’s economic growth. He highlighted the importance of FTAs in the economic recovery strategy and the need for Sri Lanka to integrate into global and regional value chains.
He said that the non-tradable sector has dominated Sri Lanka’s economic growth, and moving forward, the country needs to move into non-debt- creating avenues and diversifying its exports beyond traditional products. FTAs provide open access to regional trade value chains and create opportunities to participate in regional trade agreements to drive sustainable economic growth, de Mel said.
He underscored that long-term economic growth is driven by productivity, which is ultimately determined by competitiveness in global markets.
Research Fellow, Institute of Policy Studies (IPS), Dr. Asanka Wijesinghe outlined the research findings from the IPS which indicate that the Sri Lanka-Thailand FTA could increase Sri Lanka’s exports by 38% through tariff elimination.
He emphasised the importance of Sri Lanka focusing on manufacturing, apparel, rubber products, and food products under FTAs, as these sectors have high tariffs in Thailand, offering significant export potential.
Wijesinghe suggested that FTAs can be a strategic tool for Sri Lanka to engage in targeted liberalisation and pursue growth through specialised trade agreements with specific countries, such as the potential agreement with the EU for electronic vehicle manufacturing components.
