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How the Sri Lanka-Thailand FTA paves the way for enhanced bilateral trade

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Unlocking trade potential:

By Dr Asanka Wijesinghe

Dr Asanka Wijesinghe is a Research Fellow at IPS
with research interests in macroeconomic policy, international trade, labour and health economics. He holds a BSc in Agricultural Technology and Management from the University of Peradeniya, an MS in Agribusiness and Applied Economics from North Dakota State University, and an MS and PhD in Agricultural, Environmental and Development Economics from The Ohio State University.
(Talk with Asanka – asanka@ips.lk)

The Sri Lanka-Thailand Free Trade Agreement (SLTFTA) paves the way for lower tariffs on 85% of products between Sri Lanka and Thailand.

Strategic use of uncommitted lists to restrict imports from the partner country may weaken the effectiveness of SLTFTA.

The agreement opens avenues for trading new products, enhancing bilateral trade potential.

Thailand became the second Regional Comprehensive Economic Partnership (RCEP) economy to sign a free trade agreement (FTA) with Sri Lanka, following the FTA signed earlier with Singapore. A major goal of an FTA is to lower trade costs by reducing border tariffs and eliminating behind-the-border barriers for competitively traded products. This article assesses the coverage and potential of the Sri Lanka-Thailand FTA (SLTFTA) tariff liberalisation in increasing bilateral trade.

Coverage of the SLTFTA

Salient features of the SLTFTA tariff schedules include immediate concessions for a limited number of products, a 15-year phased tariff reduction plan for most of the products, and uncommitted products which are excluded from any commitment for tariff reduction or elimination. Notably, the tariff liberalisation programme is not limited to custom duties, but also expands to para-tariffs.

Given that 25.6% of products are already under zero tariffs in the case of Thailand, the SLTFTA commits to reduce or eliminate tariffs on 59.4% of products for Sri Lanka. Thailand provides immediate concessions for Sri Lanka over 2,188 products, while tariffs on 4,597 products will be subject to phased reduction within 15 years. Thailand’s uncommitted list includes 1,708 (or 15% of products).

By contrast, only 17.4% of products are under zero tariff currently in the case of Sri Lanka, implying that Sri Lanka will reduce or eliminate tariffs on 67.6% of products through the SLTFTA. Under the agreement, Sri Lanka commits to immediate concessions for 2,722 products (or 33.4%), reducing or eliminating tariffs on 2,796 products within 15 years, and maintaining 1,224 products on the uncommitted list (15%). By the end of the tariff phase-out, both countries will have 85% of products under zero tariffs, or tariffs liberalised under the SLTFTA.

Although both countries will maintain about 15% of products in their uncommitted tariff schedules, the corresponding import values are largely uneven. Based on 2022 values, Sri Lanka’s uncommitted list covers 39% of imports from Thailand while only 4% of imports from Sri Lanka are covered by Thailand’s uncommitted list. Sri Lanka excludes major Thai imports like sugar, cement clinkers, many rubber products in HS chapter 40, food imports like seafood, manioc, red onions, lubricants, and cotton in the uncommitted list. The import-competing industries and revenue considerations incentivise Sri Lanka to retain policy flexibility in setting tariffs for these products. Sri Lanka exports 74% of products by value under zero tariff in pre-SLTFTA.

The Offensive Lists: A Closer Look

The effectiveness of an FTA hinges on offensive lists – products with a comparative advantage and potential for expanded trade. A recent IPS study identified 147 six-digit HS codes as Thailand’s offensive list and 154 six-digit HS codes as Sri Lanka’s offensive list.

Under the SLTFTA, of the 147 six-digit codes in Thailand’s offensive list, Sri Lanka’s tariff schedule contains 413 products at the more disaggregated eight-digit HS codes. As such, Thailand will receive tariff concessions for 71.7% of these offensive list products. However, some of the offensive list products are in Sri Lanka’s uncommitted products list – although just 117 in number, they account for USD 57.8 Mn or 19.8% of Sri Lanka’s imports from Thailand in 2022.

Similarly, of the 154 six-digit HS codes identified as Sri Lanka’s offensive list, Thailand’s tariff schedule contains 457 such products at eight-digit HS codes. Unlike Sri Lanka though, only 25 such products are on Thailand’s uncommitted list, accounting for 3.6% of Thailand’s imports from Sri Lanka in 2022. Additionally, although Thailand puts 12 ready-made garment products (USD 3.6 Mn or 4.2% of imports) from Sri Lanka’s offensive list in its uncommitted list, 130 offensive list products (USD 3.6 Mn or 4.2% of imports) from HS chapters 61 and 62 will see tariffs phased-out. Out of these 130, Thailand did not import 68 products in 2022 from Sri Lanka.

For Sri Lanka, the immediate concessions given for offensive list products include tariff rate quotas for desiccated coconut, green tea, and black tea. Provided that Sri Lanka has a high comparative advantage in tea and desiccated coconut, and the existing high tariffs on these by Thailand, the quota under SLTFTA is a relatively positive outcome for Sri Lanka. However, the quantity under the tariff rate quota can be quite low and efficient distribution of quotas might be administratively challenging.

Dissecting the SLTFTA: Potential for Increased Bilateral Trade

The substantial coverage of the SLTFTA, binding commitments for phase-out tariff reduction, applying tariff reduction to para-tariffs, and a tariff rate quota for Sri Lanka’s tea are positive features. Both countries receive tariff reductions or elimination for the majority of each country’s offensive products. However, the strategic use of uncommitted lists to restrict imports from the partner country may weaken the effectiveness of the FTA. Sri Lanka’s uncommitted list notably includes rubber products, ceramic tiles, sinks, washbasins, ceramic tableware, soaps, detergents, beverages, and sugar and confectionery items, reflecting existing trade distortions and suggesting limited potential for FTAs to address incentive distortions. Yet, given the political challenges of a comprehensive tariff overhaul, limited liberalisation through FTAs emerges as a viable second-best option for policymakers.

Similarly, Thailand excludes vital ready-made garment products and agricultural products like tuna and black pepper from the SLTFTA tariff liberalisation. However, the exclusion is limited to 25 offensive list products of Sri Lanka.

Overall, the potential for a swift increase in bilateral trade in already traded products is low given that immediate concessions cover a lower percentage of products, and the major currently traded products are already under zero tariffs. However, the SLTFTA removes bilateral tariffs on competitively exported products by both countries, opening a window for increased trade over time. Currently, many products in the offensive lists which get tariff concessions under SLTFTA, are not traded bilaterally.

The trade effect of SLTFTA may come from trading new products that were not traded bilaterally before the FTA due to bilateral trade frictions. Accordingly, products in the offensive lists that receive immediate concessions are better candidates for increased bilateral trade (see Infographic). Dissemination of accurate information on tariff concessions, and eligibility criteria including rules of origin, linking exporters to potential buyers through market facilitation, and investment promotion may increase bilateral trade in these products.

Infographic: Sri Lanka – Thailand FTA: Selected Offensive List Products Receiving Immediate Concessions

Link to original blog: https://www.ips.lk/talkingeconomics/2024/02/28/unlocking-trade-potential-how-the-sri-lanka-thailand-fta-paves-the-way-for-enhanced-bilateral-trade/

 



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Remotely conducted Business Forum in Paris attracts reputed French companies

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The “Sri Lanka Business Forum 2026” was organized by MEDEF International, the French Business Confederation of leading French companies, in partnership with the Embassy of Sri Lanka in France, on 30 January 2026 at the MEDEF Office in Paris. The event, which was held in hybrid format, had a solid line up of reputed French companies participating.

Delivering the keynote address, the Deputy Minister of Industry and Entrepreneurship Development of Sri Lanka Chathuranga Abeysinghe presented the Government’s policy framework and the reform agenda aimed at strengthening investor confidence, improving ease of doing business, and accelerating export-led growth. The Deputy Minister elaborated on upcoming legislative reforms, including amendments to the Minerals Act, the Colombo Port City legislative framework, implementation of the Investment Single Window, and the Government’s broader digitization drive which would contribute towards enhancing transparency and business confidence.

Highlighting Sri Lanka’s comparative advantage in the South and Southeast Asian region, the Deputy Minister emphasized France’s role as a strategic investment partner, while inviting French companies to engage with Sri Lanka. The Deputy Minister’s address was followed by a vibrant Q&A where he responded to several questions posed.

The Forum was moderated by Chairman of the France–Sri Lanka Business Council at MEDEF International and Advisor to the Chairman of the Michelin Group, Eric Le Corre.

Delivering welcome remarks, the Ambassador of Sri Lanka to France and Permanent Delegate to UNESCO Manisha Gunasekera applauded the convening of the Forum a first step in broadening and deepening the investment partnership. She appreciated the role of MEDEF in connecting reputed French companies with potential investors and partners in Sri Lanka.

The Executive Director of the Board of Investment (BOI) of Sri Lanka Priyanka Samaraweera, in her presentation detailed, inter alia, investor facilitation measures, fiscal incentives including tax holidays, tariff benefits under preferential trade agreements, and upcoming industrial zones. The BOI also invited potential French investors to participate in the upcoming Investors’ Forum scheduled to be held in Colombo on 30 March 2026.

The presentation of the CEO of Orange Marine, Didier Dillard on the company’s successful collaboration with Colombo Dockyard PLC in building their cable vessel “Sophie Germain” in 2023; and two additional vessels scheduled for delivery in 2028 and 2029, helped position Sri Lanka as an attractive and competitive investment destination.

The Embassy highlighted “Sri Lanka Expo 2026” which will be held in Colombo from 18-21 June 2026, as a key global platform for buyers and investors; and encouraged French companies to participate.

Reputed French companies, SNCF, Bureau Veritas, Carrefour, Deviseo Fret, Emovis SAS, Union de Banques Arabes et Françaises (UBAF), Michelin, and Top Tech College, participated in the Forum, thus demonstrating the interest among French cooperates in doing business with Sri Lanka. The participating companies reaffirmed that the engagement marked a first step in expanding dialogue and collaboration between France and Sri Lanka.

Senior officials of the Ministry of Industry and Entrepreneurship Development, and the Export Development Board of Sri Lanka (EDB) also participated in the forum. The Forum was organised by the Commercial Section of the Embassy led by First Secretary (Commerce) Prasadi Boomawalage, in consultation with relevant stakeholders. The success of the Forum reflects the strong commitment of the parties concerned to organise a broader, outcome-oriented engagement with the French private sector in the future.

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LANKATILES Celebrates the Grand Opening of Its 58th Showroom in Historic Galle

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From left: Priyantha Talwatte, Managing Director of LT PLC, LWT PLC and LC PLC, and K. K. Samanthilaka, Engineer and Deputy Chief Secretary (Engineering Services), Southern Province, ceremonially cutting the ribbon to declare open the new LANKATILES branch in Galle.

Sri Lanka’s leading tile manufacturer, LANKATILES, proudly announces the grand opening of its 58th showroom and second in the Galle located at No. 145, Matara Road, Pettigala Watta, Galle. This latest addition marks a significant milestone in LANKATILES’ continued journey of design excellence, innovation, and trusted service built over more than five decades.

Inspired by the heritage charm and timeless architecture of Galle, a UNESCO-valued destination renowned for its cultural tapestry and historic streets, the new showroom blends local architectural heritage with contemporary living needs, truly Creating Spaces That You’d Love to Live In.

“Galle’s unique character shaped by centuries of history, art and human ingenuity resonates deeply with LANKATILES’ ethos of design integrity and aesthetic depth,” said Priyantha Talwatte, Managing Director of LANKATILES. “We’re delighted to bring our design leadership and trusted product portfolio closer to the Southern market, supporting both residential aspirations and the burgeoning tourism-led growth across the region.”

Built on more than five decades of trust and excellence, LANKATILES continues to set the benchmark in tile design superiority while delivering solutions that uplift spaces with beauty and performance. The new showroom features standout products including the Majestica large-format tile collections and Mosaics, ideal for modern living spaces, luxury tourism projects, boutique hotels, and heritage restorations that demand both quality and visual impact.

As Sri Lanka’s tourism sector continues to grow, strategic destinations such as Galle play a vital role in LANKATILES’ long-term expansion strategy. The company aims to strengthen its presence in the Southern market through enhanced accessibility, tailored solutions, and meaningful collaboration with industry stakeholders.

“We recognize the indispensable role of architects, designers, contractors, and tilers in shaping inspiring spaces,” added Talwatte. “We look forward to deepening partnerships across the region celebrating creativity that transforms environments and enriches everyday living.”

The new showroom is operated by Franchise Owner Yasith Ranu Karunasekara, a Southern Province-based entrepreneur with a keen appreciation for design-driven business and customer-centric service. His local expertise and commitment to quality align strongly with the LANKATILES brand promise.

“This showroom is more than a retail space, it’s a destination where imagination meets craftsmanship,” said Karunasekara. “We’re excited to support local homeowners, hospitality developers, and professionals in redefining spaces across the Southern region.”

The LANKATILES Galle showroom officially opened on January 28, 2026, welcoming customers and industry professionals to experience the brand’s curated collections, design expertise, and innovative tile solutions.

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Four runs, a thousand dreams: How a small-town school bowled its way into the record books

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The Under-13 Cricket Team of Kalawana National School, which set up the new school cricket record

By the time the last wicket fell at Gangakanda Vidyalaya in Pelmadulla, silence briefly hung over the ground. The scoreboard told an almost unbelievable story: the Under-13 team of Kalawana National School had dismissed their opponents, Mihindu Vidyalaya, Ratnapura, for just four runs. In six overs and five balls, a group of boys from a remote corner of Sabaragamuwa had etched their names into Sri Lanka’s schools cricket record books.

The achievement soon found its way onto the official Sri Lanka Cricket Facebook page. But behind that viral moment lies a quieter, more powerful story of children who train without a proper ground, a coach who works without pay, and parents who refuse to let poverty dictate their children’s dreams.

For the boys of Kalawana National School, cricket is not played on manicured turf. There is no proper pitch. Practice nets are borrowed and returned. The few bats and pads available are worn and broken. During the rainy season, there is often nowhere to practise at all.

Yet, every evening, they turn up.

“Our children play under conditions where even the most basic facilities are lacking,” said N. V. Pushpakumara, a parent. “There is no proper playground, no pitch. Still, they keep winning. We hope the authorities will see what these children are capable of and give them the support they deserve.”

At the centre of this effort is their coach, Chanuka Pradeep Madhushan, who joined the school in late 2021. He trains the children voluntarily, without a salary, accepting only small contributions from parents who themselves struggle to make ends meet.

“I didn’t come here expecting facilities,” he said. “I came because I saw potential. One of our boys played for the district squad in 2025. This year, our Under-13 team is doing very well. We even have a left-arm bowler who has taken 21 wickets in four matches. When you see their commitment, you want to give your best, even without pay.”

The school’s principal, Ashoka Nandasiri, speaks of cricket at Kalawana National School as a journey marked by quiet persistence. The school began leather-ball cricket in 2011. In 2016, their Under-16 team broke into the top 16 at national level. In 2025, a student was selected to the Sabaragamuwa Under-15 provincial team. And in January this year came the moment that stunned school cricket circles across the country.

“These achievements did not come easily,” the principal said. “They came through the dedication of our coach and the sacrifices made by parents. Despite many difficulties, they have kept this programme alive.”

For the boys themselves, the record is not just about four runs. It is about being seen.

“We practise with many difficulties,” said team captain P. A. Pamod Lakshan. “We don’t have proper equipment or a proper ground. When it rains, we have nowhere to go. Once, a kind uncle from Kalawana helped build us a small indoor place to practise. We are very grateful. We want to go a long way in cricket.”

In a country where cricketing dreams often begin in elite school grounds with lush pitches and modern facilities, the story of Kalawana National School stands as a reminder of how talent can grow in the most unlikely soil. These children do not ask for luxury—only for a fair chance.

Their record-breaking performance is now part of Sri Lanka’s cricketing statistics. But the deeper question remains: will their struggle also be noticed? Parents hope that this extraordinary moment will prompt sports authorities and policymakers to look beyond the usual centres of privilege and invest in rural schools where potential waits quietly, often unseen.

For the boys from Kalawana, the scoreboard has already given its verdict. Now they wait for the country to do the same.

By Upendra Priyankara Jathungama

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