Features
An innocent bystander or a passive onlooker?
After nearly two decades of on-and-off negotiations that began in 2007, India and the European Union formally finally concluded a comprehensive free trade agreement on 27 January 2026. This agreement, the India–European Union Free Trade Agreement (IEUFTA), was hailed by political leaders from both sides as the “mother of all deals,” because it would create a massive economic partnership and greatly increase the current bilateral trade, which was over US$ 136 billion in 2024. The agreement still requires ratification by the European Parliament, approval by EU member states, and completion of domestic approval processes in India. Therefore, it is only likely to come into force by early 2027.
An Innocent Bystander
When negotiations for a Free Trade Agreement between India and the European Union were formally launched in June 2007, anticipating far-reaching consequences of such an agreement on other developing countries, the Commonwealth Secretariat, in London, requested the Centre for Analysis of Regional Integration at the University of Sussex to undertake a study on a possible implication of such an agreement on other low-income developing countries. Thus, a group of academics, led by Professor Alan Winters, undertook a study, and it was published by the Commonwealth Secretariat in 2009 (“Innocent Bystanders—Implications of the EU-India Free Trade Agreement for Excluded Countries”). The authors of the study had considered the impact of an EU–India Free Trade Agreement for the trade of excluded countries and had underlined, “The SAARC countries are, by a long way, the most vulnerable to negative impacts from the FTA. Their exports are more similar to India’s…. Bangladesh is most exposed in the EU market, followed by Pakistan and Sri Lanka.”
Trade Preferences and Export Growth
Normally, reduction of price through preferential market access leads to export growth and trade diversification. During the last 19-year period (2015–2024), SAARC countries enjoyed varying degrees of preferences, under the EU’s Generalised Scheme of Preferences (GSP). But, the level of preferential access extended to India, through the GSP (general) arrangement, only provided a limited amount of duty reduction as against other SAARC countries, which were eligible for duty-free access into the EU market for most of their exports, via their LDC status or GSP+ route.
However, having preferential market access to the EU is worthless if those preferences cannot be utilised. Sri Lanka’s preference utilisation rate, which specifies the ratio of eligible to preferential imports, is significantly below the average for the EU GSP receiving countries. It was only 59% in 2023 and 69% in 2024. Comparative percentages in 2024 were, for Bangladesh, 96%; Pakistan, 95%; and India, 88%.
As illustrated in the table above, between 2015 and 2024, the EU’s imports from SAARC countries had increased twofold, from US$ 63 billion in 2015 to US$ 129 billion by 2024. Most of this growth had come from India. The imports from Pakistan and Bangladesh also increased significantly. The increase of imports from Sri Lanka, when compared to other South Asian countries, was limited. Exports from other SAARC countries—Afghanistan, Bhutan, Nepal, and the Maldives—are very small and, therefore, not included in this analysis.
Why the EU – India FTA?
With the best export performance in the region, why does India need an FTA with the EU?
Because even with very impressive overall export growth, in certain areas, India has performed very poorly in the EU market due to tariff disadvantages. In addition to that, from January 2026, the EU has withdrawn GSP benefits from most of India’s industrial exports. The FTA clearly addresses these challenges, and India will improve her competitiveness significantly once the FTA becomes operational.
Then the question is, what will be its impact on those “innocent bystanders” in South Asia and, more particularly, on Sri Lanka?
To provide a reasonable answer to this question, one has to undertake an in-depth product-by-product analysis of all major exports. Due to time and resource constraints, for the purpose of this article, I took a brief look at Sri Lanka’s two largest exports to the EU, viz., the apparels and rubber-based products.
Fortunately, Sri Lanka’s exports of rubber products will be only nominally impacted by the FTA due to the low MFN duty rate. For example, solid tyres and rubber gloves are charged very low (around 3%) MFN duty and the exports of these products from Sri Lanka and India are eligible for 0% GSP duty at present. With an equal market access, Sri Lanka has done much better than India in the EU market. Sri Lanka is the largest exporter of solid tyres to the EU and during 2024 our exports were valued at US$180 million.
On the other hand, Tariffs MFN tariffs on Apparel at 12% are relatively high and play a big role in apparel sourcing. Even a small difference in landed cost can shift entire sourcing to another supplier country. Indian apparel exports to the EU faced relatively high duties (8.5% – 12%), while competitors, such as Bangladesh, Pakistan, and Sri Lanka, are eligible for preferential access. In addition to that, Bangladesh enjoys highly favourable Rules of Origin in the EU market. The impact of these different trade rules, on the EU’s imports, is clearly visible in the trade data.
During the last 10 years (2015-2024), the EU’s apparel imports from Bangladesh nearly doubled, from US$15.1 billion, in 2015, to US$29.1 billion by 2024, and apparel imports from Pakistan more than doubled, from US$2.3 billion to US$5.5 billion. However, apparel imports from Sri Lanka increased only from US$1.3 billion in 2015 to US$2.2 billion by 2024. The impressive export growth from Pakistan and Bangladesh is mostly related to GSP preferences, while the lackluster growth of Sri Lankan exports was largely due to low preference utilisation. Nearly half of Sri Lanka’s apparel exports faced a 12% tariff due to strict Rules of Origin requirements to qualify for GSP.
During the same period, the EU’s apparel imports from India only showed very modest growth, from US$ 5.3 billion, in 2015, to US$ 6.3 billion in 2024. The main reason for this was the very significant tariff disadvantage India faced in the EU market. However, once the FTA eliminates this gap, apparel imports from India are expected to grow rapidly.
According to available information, Indian industry bodies expect US$ 5-7 billion growth of textiles and apparel exports during the first three years of the FTA. This will create a significant trade diversion, resulting in a decline in exports from China and other countries that do not enjoy preferential market access. As almost half of Sri Lanka’s apparel exports are not eligible for GSP, the impact on our exports will also be fierce. Even in the areas where Sri Lanka receives preferential duty-free access, the arrival of another large player will change the market dynamics greatly.
A Passive Onlooker?
Since the commencement of the negotiations on the EU–India FTA, Bangladesh and Pakistan have significantly enhanced the level of market access through proactive diplomatic interventions. As a result, they have substantially increased competitiveness and the market share within the EU. This would help them to minimize the adverse implications of the India–EU FTA on their exports. Sri Lanka’s exports to the EU market have not performed that well. The challenges in that market will intensify after 2027.
As we can clearly anticipate a significant adverse impact from the EU-India FTA, we should start to engage immediately with the European Commission on these issues without being passive onlookers. For example, the impact of the EU-India FTA should have been a main agenda item in the recently concluded joint commission meeting between the European Commission and Sri Lanka in Colombo.
Need of the Hour – Proactive Commercial Diplomacy
In the area of international trade, it is a time of turbulence. After the US Supreme Court judgement on President Trump’s “reciprocal tariffs,” the only prediction we can make about the market in the United States market is its continued unpredictability. India concluded an FTA with the UK last May and now the EU-India FTA. These are Sri Lanka’s largest markets. Now to navigate through these volatile, complex, and rapidly changing markets, we need to move away from reactive crisis management mode to anticipatory action. Hence, proactive commercial diplomacy is the need of the hour.
(The writer can be reached at senadhiragomi@gmail.com)
By Gomi Senadhira
Features
Trump-Xi meet more about economics rather than politics
The fact that some of the US’ topmost figures in business, such as Tesla chief Elon Musk and major US chipmaker Jensen Huang of NVIDIA fame, occupied as nearly a prominent a position as President Donald Trump at the recent ‘historic and landmark’ visit by the latter to China underscores the continuing vital importance of business in US-China ties. Business seemed to outweigh politics to a considerable degree in importance during the visit although the political dimension in US-China ties appeared to be more ‘headline grabbing’.
To be sure, the political dimension cannot be downplayed. For very good reason China could be seen as holding the power balance somewhat evenly between East and West. The international politics commentator couldn’t be seen as overstating the case if he takes the position that China could exercise substantial influence over the East currently; that is Russia and Iran, in the main. The latter powers hold the key in the Eastern hemisphere to shaping international politics in the direction of further war or of influencing it towards a measure of peace.
For example, time and again China has prevented the West from ‘having its own way’, so to speak, in the UN Security Council, for instance, in respect of the ongoing conflicts involving Russia and Iran, by way of abstaining from voting or by vetoing declarations that it sees as deleterious. That is, China has been what could be seen as a ‘moderating influence’ in international politics thus far. It has helped to keep the power balance somewhat intact between East and West.
At present a meet is ongoing between Chinese President Xi Jinping and Russian President Vladimir Putin in Beijing. This happened almost immediately after the Trump visit. Apparently, Beijing is in an effort to project itself as treating the US and Russia even-handedly while underscoring that it is no ‘special friend’ of the US or the West.
This effort at adopting a non-partisan stance on contentious questions in international politics is also seen in Beijing’s policy position on the Hormuz tangle and issues growing out of it. The Chinese authorities are quoted as saying in this regard, for instance, that China is for ‘a comprehensive and lasting ceasefire in the Middle East’.
Such a position has the effect of enhancing the perception that China is even-handed in its handling of divisive foreign policy posers. It is not openly anti-West nor is it weighing in with Iran and other Eastern actors that are opposed to the West in the West Asian theatre. A ‘comprehensive and lasting ceasefire’ implies that a solution needs to be arrived at that would be seen as fair by all quarters concerned.
On the highly sensitive Taiwan issue, President Xi was comparatively forthright during the Trump visit, but here too it was plain to see that Beijing was not intent on introducing a jarring, discordant note into the ongoing, largely cordial discussions with Washington. On the Taiwan question President Xi was quoted saying: ‘If mishandled, the two nations could collide even come into conflict.’ In other words, the US was cautioned that China’s interests need to be always borne in mind in its handling of the Taiwan issue.
The cautioning had the desired result because Trump in turn had reportedly conveyed to Taiwan that the latter’s concerns on the matter of independence had to be handled discreetly. He had told Taiwan plainly not to declare ‘independence.’
Accordingly, neither the US nor China had said or done anything that would have made either party lose face during their interaction. Apparently, both sides were sensitive to each others’ larger or national interests. And the economic interests of both powers were foremost among the latter considerations.
There is no glossing over or ignoring economic interests in the furtherance of ties between states. They are primal shaping forces of foreign policies and the fact that ‘economics drives politics’ is most apparent in US-China ties. That is, economic survival is fundamental.
Among the more memorable quotes from President Xi during the interaction, which also included US business leaders, was the following: ‘China’s doors will be open wider’ and US firms would have ‘broader prospects in the Chinese market.’
Xi went on to say that the sides had agreed to a ‘new positioning for ties’ based on ‘constructive strategic stability’. The implication here is that both sides would do well not to undermine existing, mutually beneficial economic relations in view of the wider national interests of both powers that are served by a continuation of these economic ties. That is, the way forward, in the words of the Chinese authorities, is ‘win-win cooperation.’
It is the above pronouncements by the Chinese authorities that probably led President Trump to gush that the talks were ‘very successful’ and of ‘historic and landmark’ importance. Such sentiments should only be expected of a billionaire US President, bent on economic empire-building.
One of the most important deals that were put through reportedly during the interaction was a Chinese agreement to buy some 200 Boeing jets and a ‘potential commitment to buy an additional 750 planes.’ However, details were not forthcoming on other business deals that may have been hatched.
Accordingly, from the viewpoint of the protagonists the talks went off well and the chances are that the sides would stand to gain substantially from unruffled future economic ties. However, there was no mention of whether the health of the world economy or the ongoing conflicts in West Asia were taken up for discussion.
Such neglect is regretful. Although the veritable economic power houses of the world, the US and China, are likely to thrive in the short and medium terms and their ruling strata could be expected to benefit enormously from these ongoing economic interactions the same could not be said of most of the rest of the world and its populations.
Needless to say, the ongoing oil and gas crisis, for instance, resulting from the conflict situation in West Asia, is taking a heavy toll on the majority of the world’s economies and the relevant publics. While no urgent intervention to ease the lot of the latter could be expected from the Trump administration there is much that China could do on this score.
China could use its good offices with the US to address the negative fallout on the poorer sections of the world from the present global economic crunch and urge the West to help in introducing systemic changes that could facilitate these positive outcomes. After all, China remains a socialist power.
Features
The Quiet Shift: China as America’s “+1” in a Changing World Order
“Everything ever said to me by any Chinese of any station during any visit was part of an intricate design”
— Henry Kissinger
That design may already be complete before this week’s , a meeting that could shape the future balance of global power.
The wind arrives quietly. By the time it is heard, history has already begun to turn. Across Asia, that wind is no longer distant. It carries with it the exhaustion of an old order and the uncertain birth of another. The question now is not whether the world will change. It is whether those who hold power possess the wisdom to guide that change toward something less violent than the century behind us.
Since 1945, the United States has carried the burden of a global order built with its Western allies. To its credit, the world avoided another direct world war between great powers. The conflicts remained contained in distant lands—proxy wars fought in the shadows of ideology, oil, and influence. From Latin America to Asia, the American century expanded not only through prosperity, but through intervention. Yet empires, even democratic ones, grow tired. Fatigue settles slowly into institutions, alliances, and public memory. The role of global policeman no longer inspires certainty in Washington as it once did.
The “rules-based order” now confronts its own contradiction: it was built to be universal, yet it often appeared selective. During my recent visit to , a young researcher asked me quietly, “Does the West itself still believe in the rules-based order?” The question lingered long after the conversation ended. The rising century demands a more inclusive architecture—one that recognises the reality of Asian power, especially China.
My three years of field research across South and Southeast Asia, documented in , revealed a transformation too significant to dismiss as temporary. China has moved beyond being merely a competitor to the United States. In trade, infrastructure, technology, cultural diplomacy, and economic influence, Beijing has established itself as what may be called the world’s “US +1.”
Great powers often search for such a partner. History shows this tendency clearly. When an empire becomes overextended—burdened by wars, alliances, sanctions, tariffs, and crises—it seeks another center of gravity to stabilize the system it can no longer manage alone. The United States today faces disorder stretching from Venezuela to Iran, from Ukraine to the unsettled Middle East. In this landscape, China emerges not simply as a rival, but as a state powerful enough to broker peace where Washington alone no longer can.
Drawing from the lessons of the Nixon–Mao era, warned that “” The United States and China are now engaged in a long-term economic, technological, political, and strategic competition. Managing that competition wisely may become the defining challenge of this century. In such a deeply polarized and unstable world, recognising China as a “US +1” partner is not surrender, but strategic realism.
Donald Trump understood this reality before boarding his flight to meet Xi Jinping. Their meeting inside Zhongnanhai—the guarded compound where China’s leadership governs—was never merely ceremonial. It symbolized a deeper recognition already acknowledged quietly within the itself: China is the nearest peer competitor the United States has ever confronted. Before departing Washington, Trump seemed to reassess not only China’s strength, but its unavoidable position as a “” shaping the future global balance.
Yet the significance of a Trump–Xi meeting extends beyond trade wars, tariffs, or diplomatic spectacle. It presents an opportunity to confront two crises shaping the century ahead: global energy insecurity and regional instability. Washington increasingly understands the limits of direct engagement with Tehran. Decades of pressure, sanctions, and confrontation have produced exhaustion rather than resolution. In that vacuum, Beijing now possesses leverage that Washington does not.
For China, this is an opportunity to evolve from a development partner into a security actor. Xi Jinping’s (GSI) was never designed merely as rhetoric. It was intended as the next phase of Chinese influence—transforming economic dependence into strategic trust. The geopolitical spillover from the Iranian conflict now offers Beijing a historic opening to project itself as a stabilising force in the region, not against the United States, but alongside it as a “US +1” partner.
If China succeeds in helping stabilise the Gulf and secure energy corridors vital to Asia, it will reshape perceptions of Chinese power globally. Beijing would no longer be seen only as the builder of ports, railways, and industrial zones, but as a guarantor of regional balance. This transition—from infrastructure diplomacy to security diplomacy—may become one of the defining geopolitical shifts of the coming decade.
Xi Jinping does not seek open confrontation. His strategy is older, more patient, and perhaps more formidable because of its restraint. Beijing speaks not of domination, but of a “,” advanced through three instruments of influence: the Global Development Initiative (GDI), the Global Security Initiative (GSI), and the Global Civilization Initiative (GCI). These are not slogans alone. Across Asia, many governments increasingly trust China as a development partner more than any other power.
India, despite its ambitions, has not matched this scale of regional penetration. In both ASEAN and South Asia, China’s economic gravity is felt more deeply. Ports, railways, technology networks, and financial dependency have altered the geopolitical map quietly, without the spectacle of war.
In , I compared three inward-looking national strategies shaping Asia today: Trump’s MAGA, Modi’s emerging economic nationalism , and Xi’s strategy. Among them, China has demonstrated the greatest structural resilience. Faced with American tariffs and decoupling pressures, Beijing diversified its supply chains across Central Asia, Europe, and Southeast Asia. Rail corridors now connect Chinese industry to European markets through Eurasia. ASEAN has surpassed the United States as China’s largest trading partner, while the European Union follows closely behind. Exports to America have declined sharply, yet China continues to expand. Trump, once defined by confrontation, now arrives seeking a new “” with China—an acknowledgment that economic rivalry alone can no longer define the relationship between the world’s two largest powers.
Unlike Washington, which increasingly retreats from multilateral institutions, Beijing presents itself as the defender of multilateralism. Whether genuine or strategic matters less than perception. In geopolitics, perception often becomes reality.
What emerges, then, is not surrender between rivals, but interdependence between powers too large to isolate one another. The future may not belong to a bipolar Cold War, but to a reluctant coexistence. The United States now recognises that China possesses diversified markets and partnerships capable of reducing dependence on America. China, in turn, understands that its long march toward global primacy still requires strategic engagement with the United States.
This is where the true geopolitical shift begins.
Many analysts continue to frame China solely as a threat. Yet history rarely moves through absolutes. The next world order may not be built through confrontation alone, but through uneasy partnership. Artificial intelligence, technological supremacy, economic stability, and global governance now demand cooperation between Washington and Beijing, whether either side admits it publicly or not.
Trump will likely celebrate his personal relationship with Xi, presenting himself as the American leader capable of negotiating a “better deal” with China than his predecessors. But beneath the rhetoric lies something larger: the gradual acceptance of China’s indispensable role in shaping the future international order.
Even the question of war increasingly returns to Beijing. If Washington seeks an understanding with Tehran, China’s influence becomes unavoidable. Iran listens to Beijing in ways it no longer listens to the West. This alone signals how profoundly the balance of power has shifted. And Xi, careful as always, refuses to openly inherit the mantle of global leadership. He delays, softens, and obscures intention. It is part of a longer strategy: to rise without provoking the final resistance of a declining hegemon too early.
History rarely announces its turning point. Empires fade slowly, while new powers rise quietly beneath the noise of the old order. Washington still holds immense power, but Beijing increasingly holds the patience, reach, and strategic depth to shape what comes after.
The century ahead may not belong to one power alone, but to the uneasy balance between Washington and Beijing. And in that silence, a new world order is already taking shape.
By Asanga Abeyagoonasekera
Features
Egypt … here I come
Chit-Chat Nethali Withanage
Three months ago, 19-year-old Nethali Withanage, with Brian Kerkoven as her mentor, walked the ramp at Colombo Fashion Week. On 06 June, she’ll walk for Sri Lanka in Hurghada, Egypt, as the country’s delegate to Top Model of the World 2026._
I caught up with Nethali as she prepares to fly out, this weekend, and here’s how our chit-chat went:
1. Tell me something about yourself?
I’m someone who blends creativity with ambition. I’ve always loved expressing myself, whether it’s through fashion, styling, or the way I present myself to the world. At the same time, I’m very driven and disciplined, especially when I was working, as a student counsellor, at Campus One, at a young age, where I’ve learned how to connect with people, understand them, and communicate with confidence. I believe I’m still evolving, and that’s what excites me the most … becoming better every single day.
2. What made you decide to be a model?
Modelling felt natural to me because it combines everything I love – fashion, confidence, and storytelling without words. I realised that modelling isn’t just about appearance, it’s about presence and how you carry your energy. I wanted to be part of an industry where I could express different sides of myself, while inspiring others to feel confident in their own skin.
3. What sets you apart from other models?
I would say my ability to connect. Whether it’s with the camera, a brand, or an audience, I bring authenticity. I also have a strong background in communication and sales, which gives me an edge in understanding how to represent a brand, not just wear it. I don’t want to just model clothes, I want to bring them to life.
4. What clothing do you prefer to model?
I enjoy modelling versatile styles, but I’m especially drawn to elegant and expressive fashion pieces that tells a story. I love looks that allow me to embody confidence and femininity, whether it’s a structured outfit or something soft and flowing.
5. What is the most important aspect of modelling?
Confidence combined with professionalism. Confidence allows you to own the moment, but professionalism ensures that you respect the work, the team, and the brand you represent. Both are equally important.
6. If you could change one thing about yourself, what would it be?
I would say I’m learning to trust myself more and not overthink. I’ve realised that growth comes from embracing who you are, not constantly trying to change it. So instead of changing something, I’m focused on becoming more confident in my own voice.
7. School?
I did my O/Ls at Seventh Day Adventist High School Kandana, and, while at school, I was actively involved in creative activities. I enjoyed participating in English Day events that allowed me to express myself and interact with others. Those experiences helped me build confidence, teamwork, and communication skills, which continue to shape who I am today.
8. Happiest moment?
One of my happiest moments is realising how far I’ve come from being unsure of myself to stepping into opportunities, like modelling, and representing myself with confidence. That feeling of growth is something I truly value, and also a dream come true!
9. Your idea of perfect happiness?
Perfect happiness for me is peace of mind, being surrounded by people I love, doing what I’m passionate about, and feeling proud of who I am becoming.
10. Your ideal guy?
My ideal partner is someone who is respectful, supportive, and confident in himself. Someone who values growth, understands my ambitions, and encourages me to be the best version of myself.
11. Which living person do you most admire?
I admire strong, self-made individuals who have built their identity through hard work and resilience. People who stay true to themselves, despite challenges, inspire me, because they show that success is not just about talent, but also about strength and consistency.
12. Your most treasured possession?
My most treasured possession is my confidence. It’s something I’ve built over time, and it allows me to face challenges, take opportunities, and believe in myself, even when things are uncertain.
13. If you were marooned on a desert island, who would you like as your companion?
I would choose someone who is calm, positive, and resourceful, someone who can turn a difficult situation into an adventure. The right mindset matters more than anything.
14. Your most embarrassing moment?
I’m 19 and still haven’t faced any most embarrassing moment. But I would say I’ve had small moments where things didn’t go as planned, but I’ve learned to laugh at myself. Those moments remind me that perfection isn’t necessary; confidence is about how you recover, not how you avoid mistakes.
15. Done anything daring?
Pursuing modelling and stepping into competitions is something I consider daring. It pushed me out of my comfort zone and challenged me to grow, both personally and professionally.
16. Your ideal vacation?
My ideal vacation would be somewhere peaceful, yet beautiful, like a beach destination where I can relax, reflect, and reconnect with myself, while enjoying nature.
17. What kind of music are you into?
I choose music that matches my mood at that time, whether it’s calm and relaxing or energetic and uplifting. Music is something that helps me express emotions and stay inspired.
18. Favourite radio station?
Usually I don’t listen to radio stations but whenever I get into a car I would search for Yes FM because it has a refined balance of contemporary hits and timeless music. I appreciate how it maintains a vibrant yet sophisticated energy, keeping listeners engaged while creating a consistently uplifting atmosphere. It’s something I enjoy because it adds a sense of positivity and elegance to my day.
19. Favourite TV station?
At the moment, I don’t have a television at home, but growing up, my favourite TV station was ‘Nickelodeon’. I genuinely loved the shows and series it aired; they were fun, creative, and full of personality. It was something I always looked forward to, and those memories still bring a sense of joy and nostalgia, whenever I think about it.
20. Any major plans for the future?
My future plans are to grow in the modelling industry, work with international brands, build a strong personal brand and finish completing a Bachelor’s Degree in Business Studies. At the same time, I want to explore my creative side further, especially in fashion and business, so I can create something of my own one day.
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