Mr. Xi Jinping with Mr. Rajapaksa/c: MED (SL)
A memorandum of understanding (MoU) on launching negotiations for free trade agreement (FTA) was among the 27 bilateral agreements and MoUs signed between Sri Lanka and China during the two-day official visit of Chinese President Xi Jinping to Sri Lanka this week.
The MoU on launching the negotiations for a China-Sri Lanka FTA was signed by Basil Rajapaksa, Sri Lanka’s Minister of Economic Development, and China’s Minister of Commerce Gao Hucheng.
Incidentally, President Xi’s visit was the first visit by a Head of State of China to Sri Lanka in 28 years.
Sri Lanka’s economy is growing at 7.8 percent this year and the China-Sri Lanka FTA, once finalized, is expected to provide a more balanced and sustainable development in bilateral trade and economic cooperation between the two nations.
While China is the world’s largest exporter of textiles and apparel, Sri Lanka is a manufacturing hub for lingerie, T-shirts and blouses. At present, Sri Lankan exports of textiles and apparel attract duty ranging from 14 percent to 25 percent in China, and if the free-trade deal fructifies, all textile and clothing items from Sri Lanka would be able to enter the Chinese market duty-free. This would also help some of the global apparel brands that have their manufacturing facilities in Sri Lanka, according to industry analysts.
PVH Corp (Phillips-Van Heusen), one of the top American apparel companies with 2013 revenue of US $8 billion, is already excited about the upcoming FTA. “We are very excited about the forthcoming Lanka-China FTA—having duty free market access to China is very important for us as an apparel sourcing firm and the benefits are great. … Having a production centre in Sri Lanka with duty free access to China market is very exciting for us. This is really exciting!,” Mr. Mark Green, the executive vice president of global supply chain of the New York-based company, told Rishad Bathiudeen, Sri Lanka’s Minister of Industry and Commerce, in Colombo, last month.
Textiles and garment exports, which account for 45.3 percent of the total Sri Lankan exports, grew by 25 percent year-on-year to US$ 446 million in June 2014, contributing more than 50 percent to the overall growth in exports in June 2014, according to the data from the Economics Research Department of the Central Bank of Sri Lanka.
In January-June 2014, Sri Lanka’s textiles and garments exports surged 20.6 percent to $2.412 billion, as against exports of $2 billion made during the corresponding period of last year.
In 2013, Sri Lanka’s earnings from textile and garment exports grew by 13 percent year-on-year to $4.508 billion, while its value of imports declined by 9.7 percent year-on-year to $2.045 billion. (RKS)
Fibre2fashion News Desk - India