According to a report issued by the Sri Lankan finance ministry, Sri Lanka has exported five times more than its imports under the India-Sri Lanka Free Trade Agreement in the first nine months of this year, 2022.

 

Details

  • Sri Lanka’s exports added up to over 140 billion Lankan rupees under the agreement.
  • Imports into Sri Lanka from India stood at 28 billion rupees.
  • Trade with India contributed to almost 65 percent of the total trade of Sri Lanka under four existing free trade agreements.
  • The Free Trade Agreement (FTA) between India and Sri Lanka was the first-ever bilateral trade agreement for both countries, signed in 1998 and enforced in 2000.
  • The pact is aimed at further boosting the economic ties between the two countries by liberalising trade norms.

 

What is a ‘Free Trade Agreement’?

  • FTA is an agreement between the countries or regional blocks to reduce or eliminate trade barriers, though mutual negotiations with a view to enhancing trade.
  • It can however be comprehensive to include goods, services, investment, intellectual property, competition, government procurement and other areas.
    • On goods, the key areas covered are customs duties or tariffs, rules of origins, non-tariff measures such as technical barriers to trade (TBT), sanitary phytosanitary (SPS) measures, trade remedies etc.
    • On services, the negotiations are on barriers to various modes of supply including domestic regulations.

 

Trade agreements

  • Bilateral trade agreements occur when two countries agree to unshackle trade restrictions to expand business opportunities.
  • Plurilateral agreements occur between a large number of countries, either in the regional context or otherwise.
  • Multilateral trade agreements is generally referred to for WTO negotiations since it covers a large number of countries and sets global trade rules.