COLOMBO: Talks between China and Sri Lanka for a free trade agreement have hit major hurdles, mainly because Beijing will not agree to Colombo’s demand for a review of the deal after 10 years, Sri Lanka’s top negotiator said.

China has invested billions of dollars building ports and roads and power stations in the Indian Ocean island nation just off the southern toe of India as part of its Belt and Road Initiative to increase its trade and other connections across Asia and beyond.

But concerns have grown in recent months that such investments can drive the country of 21 million people deeper into debt and undermine its sovereignty, prompting greater scrutiny of deals with China. China’s exports to Sri Lanka dwarf the trade that goes in the other direction, leaving Colombo with a big deficit with Beijing.

Sri Lanka’s chief trade negotiator K.J. Weerasinghe said this week that Colombo was insisting on a right to review the free trade pact after ten years, but China was not ready to agree that. Ministerial level discussions about an agreement have not been held since March last year. Lower-level discussions between officials have made little progress, according to Weerasinghe.

“The talks have come to a standstill. China wants to remove the review clause,” Weerasinghe told Reuters. Beijing was opposed to such an option because it wanted longer-term stability, he said. China’s commerce ministry did not respond to Reuters requests for comment.

The review clause that Sri Lanka wants would allow it to change some of the deal terms if they were hurting the island nation’s local businesses. Weerasinghe said another point of contention was that China wanted zero tariffs on 90 per cent of goods the two countries sold to each other as soon as an agreement is signed while Colombo would rather it started with zero tariffs on only half of the products concerned and expanded gradually over 20 years.

Published in Dawn, June 1st, 2018