Move aimed at boosting trade between two countries which is at present only $ 200 m
The Cabinet of Ministers this week approved the decision to commence discussions towards finalising a Preferential Trade Agreement (PTA) with Bangladesh.
The Government is confident a PTA will boost trade between Sri Lanka and Bangladesh, which is relatively small at $ 200 million.
The Cabinet decision follows Sri Lanka and Bangladesh in March agreeing to strengthen economic relationship via a free trade pact during Prime Minister Mahinda Rajapaksa’s State visit to Dhaka.
The proposed PTA will contain a short list of goods as the initial step, according to the proposal made by Trade Minister Bandula Gunawardena. Both Sri Lanka and Bangladesh act as stakeholder member countries of the SAARC Preferential Trading Arrangement (SAPTA), South Asian Free Trade Area (SAFTA), Global System of trade Preference (GSTP), Asia-Pacific Trade Agreement (APTA) and Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC).
However, the Government said trade between Sri Lanka and Bangladesh was low despite of special provisions under these accords and the PTA would be a catalyst to enhance volume.
Sri Lanka’s imports from Bangladesh account for 0.3% of the total. Last year value was $ 48 million up from $ 41 million in 2019 but lower in comparison to $ 44 million in 2017. Sri Lanka’s exports to Bangladesh account for only 1.5% of the total. Last year the value was $153 million, down from $ 162 million in 2019.
Once finalised, Bangladesh will be the third South Asian country with which Sri Lanka has a free or preferential trade arrangement after India and Pakistan. Both FTAs have helped to enhance bilateral trade.
According to the Central Bank, Sri Lanka’s exports through FTAs with India and Pakistan remained high in 2020 as a share of total exports to these countries at 59% and 71%, respectively. Exports under India-SL FTA were $ 358 million in 2020 down 27% from 2019. Exports under Pakistan-SL FTA were $ 53 million, lower by 13% from 2019 and accounted for just 1.2%.
Imports under the India-Sri Lanka FTA and the Pakistan Sri Lanka FTA continued to be low in 2020 with shares of only 5.2% ($ 159 million) and 3.3% ($11 million) of total imports from India and Pakistan, respectively.
(FT)