Sri Lanka and Singapore signs free trade deal; investment protection
ECONOMYNEXT – Sri Lanka and Singapore has signed a free trade agreement during a visit of Prime Minister Lee Hsien Loong to Colombo, which the island hopes sees as broader ‘look east’ strategy and getting in to regional supply chains.
The Sri Lanka-Singapore FTA goes beyond goods also into some services, investment, economic and technological cooperation, government procurement, e – commerce and intellectual property rights, the government said.
The agreement will also cover sanitary and phyto-sanitary (SPS) measures, technical barriers to trade (TBT), trade remedies and dispute settlement, customs co-operation and trade facilitation,
It is not clear whether the poor in Sri Lanka would gain much immediate benefits from an FTA with Singapore, as the city state does not usually negotiate hard to lower import duties of a partner country, so that domestic businesses find it harder to exploit consumers with import duties.
Singapore is a ‘unilateralist’ which has already lowered import duty to zero on 99 percent of traded goods, giving full trade freedoms to the citizens of the country, and businesses in the city state can no longer exploit citizens and have to be efficient and globally competitive.
Most countries use domestic citizens exploited by import duties with high prices as ‘bargaining chips’ to gain ‘market access’ to another country and grant trade freedoms to citizens of the third country and raise the living standards of consumers in third countries.
Channel News Asia, Singapore’s state broadcaster said Sri Lankans would be able to import about 80 percnet of traded goods duty free from
Singapore had signed 21 free trade deals already.
Sri Lanka has also been unilaterally cutting para tariff in a number of goods, after realizing that tariffs prevented the country from joining global production network like East Asia.
However any improvements demanded by Singapore to improve the investment climate or property rights can benefit Sri Lankan citizens and their investments, analysts say.
Trade deals with the US for example result in improvements in domestic investment and other laws, generating floods of foreign direct investment.
Sri Lanka said it expects that protection given by the FTA to investors and their investments will generate substantial increase in FDI from Singapore.
Channel News Asia said investment guarantees will be given for Singapore firms that invest in state enterprises in Sri Lanka.
Singapore has invested 658 million dollars in Sri Lanka from 2005 to the third quarter of 2017 in 119 companies.
Sri Lankan companies have invested more than 120 million dollars in Singapore.
Singapore is Sri Lanka’s 20th export destination and 08th trading partner. Bilateral trade volume of 1.15 billion US dollars in 2016. (Colombo/Jan23/2018)