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Formal China-Lanka trade pact needed

Bilateral ties between China and Sri Lanka have grown over the years but a formal trade agreement between the two countries may be crucial to deepen economic ties and minimise trade disputes, discussions between businessmen and Chinese Embassy officials highlighted.

Over the past 50 years, bilateral economic co-operation and trade have developed gradually between the two Asian economies but during the last few year relations have been boosted on to a whole new level, Third Secretary of the Chinese Embassy Ms. Ding Nana, told members of the National Chamber of Commerce of Sri Lanka at a recent forum.

"China is one of the major investors in Sri Lanka; aid and technical co-operation from China continues to flow in, the Norochcholi Power Plant, Hambantota Port Development Project, Renovation and upgrading of the BMICH, National Performance Arts Theater, Airport Express Way, are all under construction with Chinese funding and expertise. These projects are essential to boost economic development in Sri Lanka," She said.

Ms. Nana said Sri Lanka has become one of the main tourist destinations of the Chinese people while bilateral trade has developed in a stable manner over the years.

In 2009, according to statistics, the bilateral trade value reached US$ 1.64 billion, decreasing slightly by 2.6 percent. Chinese Exports to Sri Lanka reached US$ 1.569 billion, dropping by 3.3 percent, while Chinese imports from Sri Lanka amounted US$ 70 million, an increase of 18 percent. The trade deficit of China to Sri Lanka is US$ 1.499 billion.

The Asia Pacific Free Trade Area was created in September 2006 and there are more than 1,700 items enjoying concessions on tariff, border charges and fees, and other non-tariff concessions.

Nagging problems...

China and Sri Lanka dropped plans to formulate a trade agreement between the two countries in 1998, and it seems a formal engagement would be necessary.

"We have to admit that there are still some problems when it comes to trading and this is preventing the healthy development of bilateral trade and economic cooperation to much higher levels. First, the trade balance is widening; second, Chinese investment in Sri Lanka, especially private investments, are still not active enough," Ms. Nana said.

Sri Lankan businessmen told Ms. Nana that some Chinese products that are imported are failing to meet quality standards.

Sri Lankan businesses are also facing major losses due to the violation of trade agreements by their counterparts in China.

They said relevant authorities of both countries have not paid enough attention to these issues.

Ms. Nana said the best solution was to involve chambers of commerce of both countries.

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