Whilst it is important to undertake unilateral trade reforms, Sri Lanka needs to improve its access to markets abroad through deeper trade agreements. Efforts to access regional and international markets will be key to boosting exports, and diversifying markets, and paving the way to achieve the government’s export target of doubling exports to US$ 20 billion over the next three years. So far, Sri Lanka has lagged behind its neighboring countries in South and Southeast Asia in pursuing preferential access for its exports in recent years. The government has expressed its interest in pursuing ad concluding new trade agreements.
As per the request of the Ministry of Development Strategies and International Trade (MODSIT), four separate reports assessing the current trade and potential trade between Sri Lanka and four South East Asian countries (Indonesia, Malaysia, Thailand, Vietnam) were undertaken. The effectiveness of proposed Free Trade Agreement with these countries was analyzed. The reports examined the significance of Indonesia, Malaysia, Thailand, Vietnam as trading partners of Sri Lanka and the main product categories that these countries trade in detail. The reports also assessed the potential for bilateral trade using commonly utilized trade indicators and a partial equilibrium model to analyze the impact of trade liberalization between Sri Lanka and the four countries separately.