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Sri Lanka is committed to an outward-oriented trade regime following WTO principles, with a view to enhancing overseas market access for its products and achieving greater integration in the world economy. Towards achieving the desired objectives, Sri Lanka continues to simplify her tariff structure and encourage foreign direct investment (FDI) into the country in technology-intensive, value-added sectors and for infrastructure development, to expand output while generating employment opportunities.
At the regional level, Sri Lanka is a member of the South Asian Free Trade Area (SAFTA) and the Asia-Pacific Trade Agreement (APTA). At the bilateral level, Sri Lanka has FTAs with India (Indo-Sri Lanka Free Trade Agreement - ISFTA) Pakistan (Pakistan-Sri Lanka Free Trade Agreement - PSFTA) and Singapore (Singapore – Sri Lanka Free Trade Agreement (SSLFTA). Sri Lanka and India is in discussion to elevate the ISFTA to an Economic and Technological Cooperation Agreement (ETCA) in the foreseeable future.
Sri Lanka is continuing negotiations on FTAs with China. In addition, Sri Lanka enjoys Tariff Concessions under the EU-GSP Plus Scheme and other GSP Schemes such as USA, CIS, Japan and Canada.
Sri Lanka has expressed interest in discussion on an FTA with the Republic of Korea. In addition, given the potential for the expansion of trade and investment, a Joint Commission on Economic Cooperation (JC) between the two countries has been established in 2018 and the first meeting of the JC was held in Colombo in June 2018.
Sri Lanka’s composition of International Trade from 2014 to 2020 is given in the following Table.
It is observed that the volume of bilateral trade between Sri Lanka and the Republic of Korea stood at US$ 265 Mn. in 2020, consisting of Sri Lanka’s import of US$ 194 Mn. and exports of US$ 71 Mn., with a favorable Balance of Trade of US$ 123 Mn for the Republic of Korea. Although the trade volume is modest, there is much potential for increase in bilateral trade between the two countries.
Sri Lanka’s main export items include, Apparel, Apparel accessories, Ceylon Tea, Rubber & Rubber-based Products, Spices & Allied Products, Coconut & Coconut-based Products and food items.