Through the proposed free trade agreement with China, Sri Lanka is to request the Chinese government to provide full tax concessions on the island’s exports of apparels, coconut, rubber and tea based products, gems and precious stones and jewellery to China, says a senior official of the Treasury.

Deputy Secretary to the Treasury S.R. Attygala told AdaderanaBiz that the feasibility report compiled jointly by both countries has already been forwarded to China for its approval.

He added that discussions between the two countries would begin as soon as the feasibility report is approved and that the agreement if planned to be signed before the end of this year.

“Under this agreement, we expect to request a 100 percent tax holiday on rubber, tea, coconut, apparels, gems, precious stones and jewellery exports to China. Our aim is to export USD 500 million worth tax free apparels to China under this agreement.

“We have clearly stated that professional services in the island would not be opened up for China. Instead, Sri Lanka plans to provide concessions to China on imports of constructions related heavy equipment and machinery not produced in Sri Lanka,” Mr. Attygala said further.

While there is a huge deficit against Sri Lanka in China-Sri Lanka trade relations, China’s ambassador in Sri Lanka had recently stated at a Colombo meeting that China is looking forward to provide some relief to friendly Sri Lanka through this free trade agreement.

Meanwhile, there is another school of thought that Sri Lanka’s trade deficit would widen further while being unable to compete with China which is soon to become the world’s economic giant.