Sri Lanka-China FTA: Challenges and Opportunities

Sri Lanka and China decided to enter into a Free Trade Agreement (FTA) in August 2013 to further expand trade between the two countries. Technical negotiations, which officially commenced in September 2014, are still underway with five rounds of negotiations having been concluded.

China is the world’s second largest economy, its largest exporter and its second largest importer. For a small market economy like Sri Lanka, an agreement with a country such as China presents exciting opportunities as well as daunting challenges.

This briefing note provides an assessment of the challenges and opportunities that Sri Lanka is likely to face in operating under an FTA with China. Potential challenges and opportunities have been identified by analysing the key features of China’s existing FTAs with other countries.