The growing trade deficit shows no signs of slowing and rose from $2.88 billion in the first half of 2016 to $4.75 billion $US end of June 2017 and $5.7 billion $US in the first half of 2018. Provisional data from the Central Bank of Sri Lanka (CBSL) for the month of November 2018 showed that the trade deficit increased from $999 million in November 2017 to $785 million $US in October 2018. Meanwhile, the DoC formulates foreign trade policy and promotes bilateral, regional, and multilateral trade relations in four departments: multilateral trade affairs, bilateral trade relations, regional cooperation, and trade promotion. The department thus plays a key role in international trade negotiations with bodies such as the World Trade Organization and the EU. The DoC is also responsible for the ongoing monitoring and evaluation of free trade agreements (FTAs), preferential trade agreements, and comprehensive economic partnership agreements. Trade and investment activities in Sri Lanka benefit from the country`s location along the bustling Indian Ocean trade routes, abundant agricultural and industrial exports, and young skilled workers. Only 19 km separate the southernmost port from a global seaway that transports two-thirds of the world`s oil and half of container transport. This makes local ports a natural stopover for cargo destined for India and Pakistan, with currently around 30% of container traffic transiting through Sri Lanka. While future trade and foreign direct investment are likely to be influenced by factors such as China`s economic slowdown and the U.S.-China trade war, changes in Sri Lanka`s domestic and economic landscape also play an important role in shaping the outlook for 2019-20.
Elections are at the forefront, with the macroeconomic environment likely to have some fiscal easing. Nevertheless, the government is committed to advancing its strategy of opening the economy to international trade and trade flows, while the NES brings together industry players to address a number of outstanding issues. Steps are under way to reduce protectionism and develop the regulatory framework needed to boost trade, with Sri Lanka likely to move closer to its goal of becoming a regional trade and investment centre in the coming years. In 2018, EDB launched its five-year National Export Strategy (NES), focusing on four pillars: export diversification; harnessing geostrategic advantages to become an efficient shopping and logistics hub; strengthen the entry and compliance practices of Sri Lankan exporters; and to put in place a policy and regulatory framework that is transparent, predictable and capable of doing business. The country has also made progress in creating international actors for the development of trade, transport and logistics infrastructure, so that it has become an important target for foreign direct investment (FDI). Higher inflows benefited the economy as a whole, with 2018 being the highest year since foreign direct investment and $2.3 billion in investment records began. Pl. Visit India`s website for ISFTA tariff concessions and other Customs Information from India: www.indiantradeportal.in/index.jsp However, not all outstanding free trade agreements are proceeding as planned. The free trade agreement between China and Sri Lanka has experienced several rounds of negotiations since the two countries began cooperation in 2014. Discussions broke down in June 2018 following differences of opinion over a Sri Lankan demand to review the agreement after 10 years, as well as a Chinese demand for full liberalisation of customs lines instead of Sri Lanka`s phased approach. No date had been set until January 2019 for the resumption of talks, but Sri Lanka was in the process of appointing a new negotiating team.