The Pathfinder Foundation in cooperation with the Embassy of the Republic of Korea (ROK) has commissioned a study on the feasibility of entering into a free trade agreement (FTA) between ROK and Sri Lanka. 

The objective of this study is to analyse the past performance and current scenario in trade, investment and services-related development to ascertain the feasibility of establishing a trade and investment promotion agreement. 

The major focus areas of the study will be on: trade agreements and trade policies of ROK and Sri Lanka, economic relations between ROK and Sri Lanka, sectoral impacts of trade agreement, potential economic effects of ROK Sri Lanka trade agreement. 

The proposed study consists of analysis from perspectives of both ROK and Sri Lanka. The Sri Lankan segment of the study is carried out by Pathfinder Foundation Fellow Dr. O.G. Dayaratne-Banda of the Department of Economics, University of Peradeniya who during his post-doctoral research in Canada looked at regional economic cooperation and trade arrangements in Asia. The Korean segment will be commissioned to Prof. Yoocheul Song of Dongduk Women’s University and Senior Research Fellow of Centre for International Economic Studies. 

ROK – Sri Lanka relations goes back to post 1977 economic liberalization era. During the 1980s and 1990s ROK was a leading investor in Sri Lanka both inside and outside the Export Processing Zones in Katunayake and Biyagama. In addition to its contribution in investment, the ROK participation in construction activities resulted in improving the local know-how and quality management in housing and other construction industries. With the heightening of the armed conflict in Sri Lanka, the interest of Korean investors declined to some extent although ROK has been helping Sri Lanka in vocational training and providing employment in Korea for skilled, semi-skilled and unskilled workers. 

The rationale of the Pathfinder Foundation for undertaking such research is to complement the government-to-government efforts being undertaken by Sri Lanka and ROK for promoting bilateral trade and investment. Upon completion of the study, plans are ahead for conducting a seminar, tentatively scheduled for the third week of December, with the participation of a select group of policymakers, professionals, business community and other stakeholders for a dialogue to assist in finalizing the feasibility report, taking into consideration views of the local audience. This seminar is being organised by the Pathfinder Foundation with the support of the Korean Embassy. 

Sri Lanka has active FTAs with both India and Pakistan while one with China is currently under negotiation. The Pathfinder Foundation believes that entering into similar arrangements with developed economies such as ROK would result in opening Sri Lankan producers to larger and sophisticated markets, while promoting inward investment and tourism.