The National Chamber of Commerce of Sri Lanka (NCCSL) recens signed cooperation agreement with four provinces in China. The agreements were signed with the regional offices of the China Council for Promotion of International Trade (CCPIT) in the provinces of Jiangsu, Fujian, Hunan and Anhui in Eastern China, the Foreign Ministry said in a statement. The chamber was successful in negotiating with officials from Fujian to train Sri Lankan experts in producing green tea. A Chinese trade delegation from these provinces is expected to visit Sri Lanka later this year. According to the Foreign Ministry, trade between Sri Lanka and the Jiangsu province amounted to US$ 200 million in 2007 and US$ 47 million for the first quarter of this year. Textiles, chemicals, paper and vegetables are the provinces main exports to the island while Sri Lanka’s exports to the province are mainly fibre, rubber and transformers. The Fujian province has 34 counties that make up special economic development zones. The population of the four provinces combined is about 238 million, a huge market for Sri Lankan exporters to exploit. An official of the Export Development told the Island Financial Review that total exports to China in 2007 amounted to US$ 36 million (0.5 percent of total exports to all countries) and imports amounted to US$ 921 million (8 percent of total imports from all countries). About 23 percent of exports are in Tea. China is expected to consider granting more concessions to Sri Lanka under the Asia Pacific Trade Agreement. During the recently concluded First South Asia Economic Summit, the question was raised as to whether the region was ready to face China after quotas restricting its exports are lifted next year. While the South Asian Free Trade Agreement is virtually non-existent, the Summit realized that integration is the only way the region could survive the swarm of Chinese goods which will hit US and EU markets at cheaper prices. Trade statistics showed that India demonstrated a keenness to establish links with the ASEAN trade-block, which enjoyed closer links with China. The summit discussed that despite the fact that integration could give the region better bargaining powers, the seeming preference of India to grow ties with ASEAN rather than with SAARC, could, however, present an opportunity for other South Asian countries to provide supply chain services to India. In 2006, India’s trade with SAARC amounted to 2.8 percent while trade with East Asia amounted to 24.9 percent. Sri Lanka’s trade with SAARC amounted to 19 percent while trade with East Asia amounted to 22.1 percent in 2006. High tariffs, non-tariff barriers and high transportation costs resulting from political wrangling in the region has prevented the effectiveness of SAFTA and with exception of Nepal (no statistics were presented for Afghanistan and Bhutan) the rest of South Asia had more trade with ASEAN than with SAARC. Nepal, a landlocked country, along with Bhutan and Afghanistan (along with the lagging impoverished provinces of India, Pakistan and Bangladesh), depend on the rest of the region to open up borders through transportation and trade linkages so that their people too could benefit from the East Asian connections (if SAFTA fails). |
