Attempts to backtrack on SLSFTA will hurt Sri Lanka

„LKI’S Wignaraja says such a move will affect SL’S future trade and other international treaties „“Even talking about it in a very official manner would be detrimental to Sri Lanka” wignaraja „President Sirisena recently appointed an expert committee to s

Aleading academic warned that attempts and the discourse to backtrack on the already enacted Sri Lanka-singapore Free Trade Agreement (SLSFTA) would hurt the country’s chances of entering into future foreign treaties.

“We see calls to re-negotiate, renege and to leave the SLSFTA in newspapers. When we observe these kind of conversation, it really

affects our economic interest, because no other country in the world would want to sign a FTA with Sri Lanka in the future, if we attempt to re-negotiate or leave that agreement,” the Chair of the Global Economy Programme at the Lakshman Kadirgamar Institute of International Relations and Strategic Studies (LKI), Dr. Ganeshan Wignaraja said.

He said this attending a panel discussion last Friday themed “Free Trade: What is in it for us?” organised by the Colombo Chapter of the Young Professionals Organisation (YPO).

Wignaraja stressed that SLSFTA is a legallybinding document between the Government of Sri Lanka and a foreign government. Hence, he cautioned that even speaking of renegotiating or abandoning the agreement would hurt Sri Lanka’s chances of entering into future foreign treaties.

“Even talking about it in a very official manner would be detrimental to Sri Lanka. Nobody would want to sign a FTA with Sri Lanka. That wouldn’t just stretch to FTAS, but it would also stretch to all other international treaties,” he said.

President Maithripala Sirisena recently appointed an expert committee to study SLSFTA and to submit a report to him within two months amid diverse views expressed to him by various parties on the agreement.

However, it was not clear as to what would be the next course of action once the report is submitted to the President.

Mangala Yapa, Managing Director of Agency for Development at the Development Strategies and International Trade Ministry pointed out that the government had held over 20 rounds of consultations with trade chambers, professionals and other stakeholders prior to signing the SLSFTA last January.

He noted that this was considerable when compared to non-existent stakeholder engagement prior to signing the India-sri Lanka Free Trade Agreement, Pakistan-sri Lanka Free Trade Agreement and other multilateral agreements.

Moderating the panel discussion, Parliamentarian Harshana Rajakaruna said that SLSFTA has become a political subject as the Opposition is increasingly engaged in making up stories for cheap political gains.

Rajakaruna stressed that education is the key to dispel the misinformation on SLSFTA and other proposed FTAS.

Commenting on the benefits from SLSFTA, Yapa highlighted that US $16 billion worth investments from Singapore, which includes a US $14.8 billion oil refinery in Hambantota is under consideration.

However, Dr. Wignaraja emphasised that SLSFTA is not merely an agreement on investments and asserted that costs and benefits should be looked at in realistic set of lenses.

He pointed out that Sri Lanka needs to double up its efforts to increase exports to Singapore in order to reduce the large trade deficit, which is in favour of Singapore, and pointed out that Foreign Direct Investment (FDI) flows from Singapore to Sri Lanka only accounted for 5.3 percent.

He was hopeful that recently launched National Export Strategy (NES) would provide the necessary push to increase exports to Singapore.

Dr. Wignaraja also said Sri Lanka could also seek technical assistance from Economic Board of Singapore to restructure Board of Investments (BOI) to increase the country’s FDI share.

He further proposed to the government to consider establishing a BOI office in Singapore to draw more Singaporean investments.

Meanwhile, Economic Advisor to the Ministry of Finance, Deshal de Mel highlighted that FTAS are crucial for Sri Lanka to plug into regional supply chains in order to increase the export of intermediate goods, which remains negligible at the moment.

He stressed that the global trade patterns have changed and the most dynamic elements of modern trade comprise of intraindustry trade through regional value chains.

He also said FTAS are a good tool to ensure policy stability in terms of investments and trade for foreign investors, in order to increase the flow of foreign investments to Sri Lanka.

De Mel further pointed out that there have been several positive spill-over effects on improving Sri Lanka’s legal framework from the SLSFTA such as the Anti-dumping and Countervailing Duties Act and immigration reforms.

Yapa also shared that SLSFTA led the government to expedite the enactment of the Anti-dumping and Countervailing Duties Act, which was drafted over a decade ago.

Immigration reforms are also soon to be presented to Parliament updating Sri Lanka’s outdated immigration laws.