Sri Lanka is set to strengthen its trade relations with Russia after the country's cabinet approved an agreement that will facilitate legally valid trade activities. This agreement aims to promote transparent and predictable customs procedures between the two nations, which will help streamline trade processes.
The approval, initially granted back in November 2021, followed a series of bilateral discussions between Sri Lanka and Russia. However, it had not yet been formally signed.
Recently, the Sri Lankan cabinet, led by President Anura Kumara Dissanayake, who also holds the portfolios of finance, economic development, policy formulation, and planning, gave the green light to finalise the agreement.
This step is expected to reinforce the trade ties between the two countries, which have been growing steadily since the collapse of the Soviet Union in 1991.
Over the years, the trade dynamics between Sri Lanka and Russia have experienced various shifts. From 2007 to 2014, Sri Lanka enjoyed a favourable trade balance, primarily due to significant tea exports.
However, the situation began to change in recent years, particularly after 2015, when Sri Lanka’s tea exports to Russia started to decline. This drop led to a more fluctuating trade balance between the two countries.
The newly approved agreement is seen as an important measure to stabilise trade relations and offer a more structured framework for future exchanges. Both nations are expected to benefit from smoother customs procedures and a more predictable trade environment.
While Sri Lanka has faced challenges in maintaining a favourable trade balance with Russia due to increasing imports and fluctuating tea exports, this agreement aims to create a more balanced and sustainable trade relationship. With customs procedures becoming more transparent and predictable, both countries hope to see growth in mutual trade activities.
In particular, Russia has been a significant market for Sri Lanka’s tea, but the decrease in exports in recent years has caused some concern. With the new agreement in place, there is optimism that Sri Lanka can not only revive its tea exports but also diversify its trade with Russia.
The Sri Lankan government believes that this agreement will open up new opportunities for trade across various sectors, and both countries are keen to explore these possibilities.
Additionally, with more structured and reliable customs procedures, businesses from both countries are likely to find it easier to conduct cross-border transactions.
This initiative marks another chapter in the longstanding trade relationship between Sri Lanka and Russia. As both nations look toward the future, there is hope that this agreement will pave the way for stronger economic ties, benefiting businesses and consumers alike.
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