Making FTAs as an Effective Driver of Regional Integration: Sri Lankan Experience

Abstract

Based on the past experience relating to FTAs, with a special focus on Sri Lanka, the paper emphasizes the importance of good processes, policies, strategies, and institutional mechanisms for entering into such agreements. It presents a list of important steps, negotiation methodologies, and guidelines to be followed in the FTA negotiations. It shows that (a) careful analysis of costs and benefits of proposed FTAs based on research and data, (b) a well-crafted negotiation strategy, (c) putting in place domestic policies, regulations, and legal mechanisms, and (d) building supply-side capacity are required to benefit fully from FTAs. The lack of such good practices has been identified as a major reason for the failure of Sri Lanka to gain from such agreements. (Multilateral trade negotiations is the first-best mechanism to create market opportunities as the WTO promotes non-discriminatory, fair, and equitable international trading system. Such a process would simultaneously open Sri Lanka’s and all its foreign markets, achieving the maximum benefits from trade, raising living standards and stimulating growth across the world. Though the GATT/WTO led multilateral negotiations produced remarkable results over the last six decades, they usually take a long time as the whole membership is involved in the decision-making process).