Maldives inks free trade pact with China

Maldives on Thursday signed a historic free trade agreement with China ignoring concerns from the opposition.

The contentious agreement was signed after the official talks between Maldives president Abdulla Yaameen Abdul Gayoom and his Chinese counterpart Xi Jinping. President Yameen is currently on his first state visit to the global super power.

The agreement was signed on behalf of the Maldives by economic minister while Chinese commerce minister Zhong Shan signed the pact on behalf of the Chinese government.

The Maldives' fast-tracking of the FTA with China was understandably widely reported in the Indian media saying that Sino-Maldivian trade balance remains considerably in favour of China, and there are concerns that the FTA will further increase the deficit and push Maldives towards a debt trap like Sri Lanka -- an issue that has alarmed Delhi amid apprehensions of neighbourhood plunging into economic crisis in future.

The FTA for the Maldives, under which China will exempt its Maldivian imports, mostly fisheries products, from tax. In turn, the Maldives would waive tariffs on its Chinese imports, the Hong-Kong based South China Morning Post reported.

China has defended its much-criticized free trade agreement with Maldives, saying it serves the interests of the two countries and the entire region.

“We hope through this visit to enhance political mutual trust and deepen cooperation and move forward sound and steady development of bilateral relations and thus bring benefit to the two peoples,” Chinese Foreign Ministry spokesman Geng Shaung was quoted by some media sources.

China’s forays into Maldives, located in India’s backyard in the Indian Ocean has sparked concerns in New Delhi.

President Yameen also pledged support for China’s 21st century Maritime Silk Road (MSR) over which India has expressed concerns, especially its implications in the Indian Ocean.

Asked about the criticism of the Maldivian Opposition parties of the government’s signing of Free Trade Agreement (FTA), Geng said “the negotiations on FTA is important consensus between the leaders of two countries and correspond with the trend of the times”.

He said for a long time the two sides followed the principle of equality and mutual benefit to conduct many rounds of negotiations and at last “we have reached the FTA”. “It not only serves the interest of the two countries but also facilitate the trade in the region,” he said.