China-Sri Lanka Free Trade Agreement: Priorities for Negotiations

Abstract

China and Sri Lanka have commenced negotiations on a Free Trade Agreement (FTA), which hopes to open up the vast Chinese market to Sri Lankan products. The Agreement is expected not only to boost bilateral trade but also help reduce Sri Lanka's dependence on traditional markets in Europe and USA. With the commence¬ment of initial round of negotiations, it is necessary to consider how best the Agreement could be drawn to ensure Sri Lanka maximizes benefits whilst minimizes associated costs from a FTA. This Policy Insights highlight the main findings from the IPS study on 'China-Sri Lanka Free Trade Agreement’. The objectives of the study were: 1) to draw lessons from Sri Lanka's existing FTAs to identify key stumbling blocks to trade liberalization; 2) to describe key features of China's FTAs; and 3) to identify products with export potential to China, which should be included in the negotiations with China.