Free trade negotiations between China and Sri Lanka have come to a “standstill” reports a Colombo official, after Beijing refused to accept a clause that allows for the deal to be reviewed in 10 years.
In a Reuters exclusive, Sri Lanka’s chief trade negotiator K.J. Weerasinghe said even low level discussions between the two sides over a potential free trade deal have made little progress.
“The talks have come to a standstill,” Mr Weerasinghe told Reuters. “China wants to remove the review clause.”
The Sri Lankans wanted the review clause as part of the agreement so that they would be able to change terms of the deal later on. The Chinese have remained steadfast in their refusal.
Mr Weerasinghe added that the Chinese also wanted zero tariffs on 90 percent of goods the two countries sold to each other as soon as an agreement is signed. Sri Lanka wanted those terms to apply to only half of the trade between the two.
Reuters reports that Sri Lanka imported $4.2 billion worth of Chinese goods in 2016, whilst it exported just $211 million the same year.
The negotiations come as Sri Lanka’s foreign debt rose nearly 17 percent to 4.72 trillion rupees ($30 billion) last year. Moody’s Investors Service said earlier this year that Sri Lanka’s debt amounted to 80% of its national GDP, a ratio larger than instability ridden countries including Pakistan, Pakistan, Rwanda, Kenya and Ethiopia. A fifth of that figure comes solely from massive Chinese loans, an issue the United States expressed concerned stating that it was an "unsustainable debt burden".
Last month, Sri Lanka's finance minister, Mangala Samaraweera warned the country's debt crisis is only set to get worse.
