WEEKLY INSIGHTS: TUESDAY, 3 APRIL 2018

April 3, 2018        Reading Time: 3 minutes

Your weekly digest of foreign policy commentary*

Reading Time: 3 min read

Anthony Milner argues that Australia faces challenges in strengthening ties to ASEAN. Image credit – ncousla / depositphotos

SRI LANKA COMMENTARY

 

FTA with Malaysia: Will it Lead to an Expansion in Flow of Trade and Investment with Sri Lanka?, Lanka Business Online, by Janaka Wijayasiri, Institute of Policy Studies of Sri Lanka

“To truly maximize the benefits of the bilateral trade relationship, Sri Lanka needs to significantly increase the quantity and the value of exports to Malaysia.”

• Janaka Wijayasiri argues that a Sri Lanka-Malaysia free trade agreement (FTA) could increase Sri Lanka’s exports to Malaysia and increase investment from Malaysia.
• As both countries have a service sector that accounts for more than 50% of their economies, liberalising trade in services may have significant economic benefits.
• Sri Lankan producers should, however, prepare for intra-regional competition. China, Vietnam and Cambodia offer Malaysia products similar to what Sri Lanka could offer, but at a lower price.

LKI Take: Closer trade ties with Malaysia may provide Sri Lanka with an opportunity to learn from the success of booming Malaysian service sectors, like e-commerce and budget airlines.

ASIA COMMENTARY

 

Four Challenges for Australia–ASEAN Relations, East Asia Forum, by Anthony Milner, Asialink

“As Australia works at being ASEAN’s ‘leading partner,’ government officials and public intellectuals may well have to engage in more serious dialogue about values and ideology.”

• Anthony Milner commends Australia’s aim to become a key partner of the Association of Southeast Asian Nations (ASEAN), but also identifies several challenges in this goal.
• For example, Australia needs to navigate differences between ASEAN’s objectives and its own; including between ASEAN’s desired neutrality in great power relations and Australia’s support of an emerging quadrilateral security arrangement (which includes the US, Japan, and India).
• Canberra may also need to explain its focus on the Pacific and “Indo-Pacific,” a concept that some regard as contrary to ASEAN’s focus on East Asia and as “anti-China.”

LKI Take: Given its location and strategic neutrality, Sri Lanka is a natural and potential key partner of ASEAN. Its recent FTA with Singapore and now potential FTAs with Malaysia, Thailand, and Indonesia are positive steps towards such a partnership.

GLOBAL COMMENTARY

 

Africa’s Free-Trade Future, Project Syndicate, by Francis Mangeni, Common Market for Eastern and Southern Africa (COMESA)

“[The CFTA] could double intra-African trade and bring enormous benefits to the continent. But much will depend on the arrangement’s final shape.”

• Francis Mangeni highlights economic factors that African states need to manage to benefit from the Continental Free Trade Area (CFTA), recently signed by 44 states.
• Intra-African trade currently covers only a few products lines. States should therefore not exclude the most-traded products from the CFTA, which may make the CFTA largely redundant.
• It takes time to develop trade rules. To expedite the CFTA, African countries may therefore need to set general rules rather than product-specific rules.

LKI Take: Africa’s CFTA is a notable exception to current trends against multilateralism and free trade. It is an encouraging development as Sri Lanka prepares to chair the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC), which has an FTA under negotiation.

*Written by Barana Waidyatilake, with research assistance from Nimaya Harris, and edited by Anishka De Zylva. The opinions expressed in this Weekly Brief are the authors’ own and not the institutional views of LKI, and do not necessarily reflect the position of any other institution or individual with which the authors are affiliated.

Please note that there will be no Weekly Insights next week due to the Sinhala and Tamil New Year. We will back on 17 April with the best commentary from the world of foreign policy and international relations.