PM says Sri Lanka trade deal on cards
Prime Minister Prayut Chan-o-cha is optimistic about signing a free trade agreement with Sri Lanka after the two countries level up their economic ties, but said full bilateral trade will “need time”.
Talks with Sri Lankan Prime Minister Ranil Wickremesinghe turned out satisfactorily as Gen Prayut marked the end to his two-day visit to the island nation yesterday by signing joint initiatives ranging from business and infrastructure development to tourism and judicial affairs.
Colombo views economic cooperation with Thailand as one of the keys to fueling its development while Bangkok sees a chance to open a new market and distribute Thai goods and services in Sri Lanka, Gen Prayut said yesterday morning.
One of the goals is an FTA the two countries have been planning since 2016 when Deputy Prime Minister Somkid Jatusripitak met high-ranking officials in Sri Lanka.
After talks with Sri Lankan President Maithripala Sirisena on Thursday, Gen Prayut said he believes the memorandum of understanding on a strategic economic partnership will go hand in hand with stronger economic cooperation, including attempts to forge the FTA.
The two leaders witnessed the MoU signing ceremony during this official visit.
“We’ll speed up FTA talks,” Gen Prayut said, adding that progress would benefit both sides as they aim to increase bilateral trade to US$1.5 billion (49.2 billion baht) by 2020.
Sri Lanka ranks as Thailand’s fourthlargest trading partner in South Asia.
From 2013-17, bilateral trade averaged $491 million a year.
It jumped 8.7% to $513 million last year, with Thai exports accounting for $442.3 million and imports making up the rest.
The strategic partnership will cover 10 sectors: investment, infrastructure, development of the agro-industry, fisheries, gems and jewellery, tourism, SMEs, financial cooperation, packaging industries and IT sector development.
The MoU also covers other sectors of mutual economic interest.
Gen Prayut said the two sides will further develop t heir connectivity between cities.
“Colombo and Ranong will be [more economically] connected as another effort to help drive economic cooperation,” Gen Prayut said, seeing an opportunity to boost the local economy of this southern Thai province on the Andaman coast.
Sri Lanka, which lies about 30km off the southeast coast of India, is strategically significant to China’s One Belt One Road Initiative, according to Thai Ministry of Foreign Affairs.
China’s signature economic initiative, announced by President Xi Jinping in 2003, is a US$1.5 trillion infrastructure project spanning 80 countries.
It will link China with international communities through a complex network of ports, roads, railways and industrial parks.
Gen Prayut said “investment can’t be made without considering the environment and people of Sri Lanka. We also need to think about human rights when doing businesses”.
Other agreements signed during the prime minister’s visit include a Treaty on the Transfer of Offenders and a pact dubbed Cooperation in the Enforcement of Penal Sentences.
Thailand is proposing use of the early harvest scheme (EHS) during the first round of free trade agreement (FTA) talks with Sri Lanka to accelerate implementation, as talks began yesterday.
Deputy Commerce Minister Chutima Bunyapraphasara said the EHS will help the FTA conclude negotiations faster.
Normally FTA talks take 2-3 years at the soonest before a pact is settled.
The EHS is an agreement between two states (or regional trading blocs) that liberalises tariffs on certain goods preceding the conclusion of an FTA. India is particularly fond of such EHS arrangements and has used them in the past as a trust-building measure while an FTA is being negotiated.
India used an EHS in 2003 with Thailand, which paved the way to negotiate an FTA through the elimination of tariffs on 83 goods.
Ms Chutima said the government assigned Auramon Supthaweethum, director-general of the Trade Negotiations Department, as the negotiator for the scheme.
Prime Minister Prayut Chan-o-cha and Maithripala Sirisena, president of Sri Lanka, jointly announced the first round of FTA talks on Thursday after meeting in Colombo.
Ms Chutima also signed a memorandum of understanding (MoU) on a strategic partnership with Malik Samarawickrama, Sri Lanka’s development strategies and international trade minister. The strategic partnership covers 10 sectors: investment, infrastructure, development of the agro-industry, fisheries, gems and jewellery, tourism, SMEs, financial cooperation, packaging industries and IT sector development.
Sri Lanka is the fourth-largest trading partner of Thailand in South Asia. During 2013-17, bilateral trade between Thailand and Sri Lanka averaged US$491 million (16.4 billion baht) per year. Last year, bilateral trade totalled $513 million, up 8.7% from 2016. Thai exports accounted for $442 million and imports were worth $70.5 million.
Ms Chutima said Sri Lanka wants Thailand to open imports for Sri Lankan products, particularly for agricultural products such as tea, fruit, textile, jewellery, while Colombo is calling for more investment from Thai investors.
Thai companies are set to invest in Sri Lanka in the sugar and sugar cane, furniture, cement and agricultural industries, she said.
Mrs Auramon said the first round of FTA negotiations will cover the FTA framework on general issues, including tax reduction format, sensitive lists and trade rules such as sanitary and phytosanitary measures, services, investment, and intellectual property.
The aim is to conclude the FTA talks in 2020, and there will be two rounds of talks this year, she said, adding the second round will be held in Thailand in September.