The Free Trade Agreement: A new journey with Sri Lanka
The last four years has seen a dramatic change in economic ties between Bangladesh and Sri Lanka. The Sri Lankan president visit is another beginning of a new journey in the bilateral relation of the two countries. Bangladesh and Sri Lanka agreed to enter into a free trade regime by this year. The two countries reached the decision during official talks between Sri Lankan President Maithripala Sirisena and Bangladesh Prime Minister Sheikh Hasina in Dhaka.
President Sirisena and Prime Minister Sheikh Hasina unanimously came to the decision to sign the Free Trade Agreement (FTA) by 2017. The foreign secretary said both countries decided to complete all negotiations and studies in this regard as soon as possible to make way for the FTA, which will be the first such agreement of Bangladesh with any country.
The decision on FTA is a big political push towards trade and investment collaboration between the two countries. 14 instruments signed between the two countries seven are on trade and investment and agriculture.
A joint statement of the two countries has given a framework to the relation of the two countries. It has also reflected the vision of the two countries to strengthen trade relation as well as political relation. The two countries have found a strong possibility of collaboration in higher education as a large number of Sri Lankan students are studying in Bangladesh particularly in the area of medicine. The agreement of visa waiver for the diplomatic and official passport holders is a big achievement of the high level visit.
Bangladesh and Sri Lanka are trade competitors with ready-made garments exports being the major export of both countries and that there are limited trading opportunities according to the comparative advantage of both countries. Recent trading trends however, show that with production networks, supply chains, and changing production patterns in the world, that this need not be the case. Although in terms of numbers trade between the two countries appear to be still small, the increasing trade does indicate that smaller South Asian countries are now prepared to engage in more trade and investment among themselves irrespective of regional politics.
However, both countries are rich in entrepreneurial spirit and there is no reason why they, with their innovative private sectors and democratic governments, cannot cooperate with each other to enter the rank of middle-income countries in the near future.