Sri Lanka-Thailand Free Trade Agreement to Tackle Economic Challenges

Sri Lanka-Thailand Free Trade Agreement

In a bid to overcome its severe financial crisis, Sri Lanka has signed a significant free trade agreement (FTA) with Thailand. The “Sri Lanka-Thailand Free Trade Agreement” was officially signed by Sri Lankan President Ranil Wickremesinghe and Thai Prime Minister Srettha Thavisin in Colombo on Saturday, February 3.

The comprehensive agreement covers various aspects such as trade in goods, investment, customs procedures, and intellectual property rights. Sri Lanka’s primary exports, including gemstones, clothing, tea, and spices, will now find new avenues in Thailand, which exports smoked rubber sheets, natural rubber, plastics, and cement. The Sri Lankan government anticipates that this FTA will elevate the two-way trade volume from the 2022 figure of approximately US$352 million to a promising US$1.5 billion.

Thai Prime Minister Thavisin highlighted the commitment to promote investments in sectors like fisheries, food processing, tourism, and green energy. He announced that Thai Airways would resume daily flights from Bangkok to Sri Lanka in the coming month, further supporting the growth of tourism between the two nations.

This bilateral trade agreement comes at a crucial time for Sri Lanka, which declared bankruptcy in April 2022, facing a debt exceeding US$83 billion, with more than half owed to foreign creditors. The economic crisis led to protests and the removal of then-President Gotabaya Rajapaksa. Although Sri Lanka’s economy contracted by 3.8% in the previous year, under President Wickremesinghe, efforts have been made to address shortages in food, fuel, and medicine.

President Wickremesinghe described the agreement as an “important milestone in the economic partnership” between the two countries, emphasizing the progress made in economic stability since the crisis. Seeking Thailand’s support, he referred to the FTA as a crucial step for Sri Lanka in its journey of economic transformation and integration with Asia. Notably, this marks the second FTA between Sri Lanka and ASEAN countries after Singapore, with ongoing negotiations for trade agreements with neighboring India and China.

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