by Our Diplomatic Affairs Editor
“Is Sri Lanka trying to join a trade agreement, or a new economic system?” and “In a world of fragmented supply chains and regional blocs, what does competitiveness actually mean?” These are the underlying questions that framed the discussion in Colombo this morning.
The Ambassadors’ Roundtable on “Sri Lanka’s Pathway to RCEP and the Emerging Global Trading Order,” held this morning in Colombo, was part of the Pathfinder Foundation’s regular flagship programme series. The Ambassadors’ Roundtable is one of Pathfinder’s established policy platforms, known in Colombo for bringing together diplomats, policymakers, and economic stakeholders into a single room where trade policy is discussed without insulation from political reality. In this month’s edition, the focus was placed on the Regional Comprehensive Economic Partnership, particularly Sri Lanka’s prospective engagement with the bloc and the structural reforms and economic adjustments that such alignment would require.
The discussion took place at a moment when, as stated, the global trading system is “undergoing a significant transformation, driven by geopolitical tensions, economic fragmentation, and the reconfiguration of global supply chains.” That framing was not challenged by any speaker; it functioned as the baseline assumption for every intervention that followed.
The Regional Comprehensive Economic Partnership was repeatedly treated not as a conventional trade deal but as a scale-driven economic system. It was described as accounting for “approximately 30% of global GDP” and “around 28% of global trade,” with Ambassador Dewi Gustina Tobing, Ambassador of Indonesia to Sri Lanka, further grounding it in material magnitude by stating it represents “about 29 trillion US dollar” and “2.2 billion population.” Her characterisation was unambiguous: this is “a very big market” and “a very dynamic and important market.”
Tobing located RCEP firmly within ASEAN institutional history and identity. She stressed that it is “coming from ASEAN,” with “ASEAN centrality” as its defining principle. She traced its evolution from the 19th ASEAN Summit in Bali in 2011, where leaders agreed to pursue a “regional wide economic partnership framework,” followed by the formal launch in Phnom Penh in 2012. Indonesia’s role, she noted, included “helping build the potential momentum” as ASEAN chair. The negotiations, she emphasised, took “eight years,” concluding in 2019, signed in 2020, and entering into force in 2022.
Her argument consistently returned to governance design. ASEAN, she said, functions as “convener, coordinator and consensus builders among participant economies,” ensuring the agreement remains “anchored in ASEAN-led principles and regional cooperation” and “not driven by the interests of any single economy.” That formulation was doing political work: it positioned RCEP as decentralised rather than dominated.
Her economic framing was equally direct. Competitiveness, she stated, is now defined “not only by tariff reduction” but by “participation in regional supply chains, investment networks, logistic connectivity, digital trade ecosystems and production resilience.” She presented these as interconnected systems rather than separate policy domains. She also emphasised simplification of “rules of origin” and improved trade facilitation as the mechanisms through which firms integrate into cross-border production networks.
On Sri Lanka, Tobing’s tone was cautiously supportive but conditional. She noted that Sri Lanka “has an interest to join the RCEP,” while also arguing that “RCEP also… will be benefited by having Sri Lanka to join this organisation.” She grounded this in geography, describing Sri Lanka as having a “strategic location in the Indian Ocean and strong maritime connectivity potential” and capacity as a “regional logistic and service hub.” Yet she did not soften the requirements, pointing to the need for “transparency, structural and policy adjustment,” and describing accession as “a process,” not a one-time political step.
Matthew Duckworth, Australian High Commissioner to Sri Lanka, immediately reframed the entire discussion. He stated: “we’re not talking about a free trade agreement here. We’re talking about an agreement that is intended to form a genuine economic architecture for our region.” That distinction shaped his entire intervention.
He anchored his remarks in institutional memory, recalling the 2012 Chiang Rai meeting where delegations released lanterns, noting: “it was only when we stepped back… that the way we’d released it with all of the delegations together was what created the effect.” The metaphor was used to emphasise collective economic structure rather than bilateral gains.
Duckworth described RCEP as creating “a united economic space” across economies “at different stages of development.” Its core value, he argued, lies in “access to scale” and “a consistent set of economic rules and economic principles.” He underscored asymmetry with a stark comparison: Australia’s exports to RCEP economies are around “$420 billion,” while its trade with Sri Lanka is “$2.9 billion.”
He was unusually explicit about domestic politics in trade reform. Trade agreements, he said, provide “a really important fillip… to domestic reform measures,” and also “social license from the community… to make reforms that may be difficult and may often leave certain losers.” That statement directly acknowledged distributional conflict in economic reform.
His technical expectations were extensive. Accession requires alignment with “trade in goods, tariffs, quotas, services liberalisation, investment protections, e-commerce rules.” He called for a “whole-of-government ASEC readiness audit,” including customs modernisation, institutional capacity building, and regulatory alignment. Sri Lanka’s tariff regime, he stated, is “complex and, relative to other ASEC members, still protective,” requiring a “simplified tariff structure” and “time-bound liberalisation plan.”
He was equally firm on investment. Investors require “predictability and transparency,” supported by commitments against “unreasonable discrimination” and “unfair expropriation.” He also stressed that digital trade is now structural, referencing requirements for “digital trade documentation” and “electronic authentication of payments,” noting these reforms are partially underway in Sri Lanka but need acceleration.
David Pine, High Commissioner of New Zealand to Sri Lanka, entered the discussion with a deliberately understated framing. Describing himself as “a batter coming in at the start of the 19th over a T20,” he acknowledged that most of the argument had already been made, but used his intervention to shift perspective rather than repeat content.
He supported the terminology correction that RCEP is not merely a trade agreement but a “partnership,” recalling criticism of earlier regional frameworks as “four adjectives in search of a noun,” while arguing that RCEP now clearly has a governing concept.
Pine’s analysis of Sri Lanka’s structural position was more geopolitical than technical. He described a dual orientation in which western partners supply “energy needs” and absorb labour migration, while eastern partners provide export markets. He characterised this as functional but fragile, exposed to “energy shocks” and remittance volatility.
His remarks on remittances were particularly direct. He stated that “high remittance economies tend to have lower domestic productivity and narrower economic bases,” and that remittances “support consumption over investment and… raise the currency, thereby reducing the profitability of exports.” While acknowledging their short-term importance, he insisted that long-term development requires reducing dependency.
A central part of his intervention was a forward projection of Sri Lanka in 2040, where he asked: “If Sri Lanka has succeeded economically in 20 years’ time, what will its economy actually look like?” He then identified two structural markers of success. First, that “a more successful Sri Lanka in 20 years’ time will be one that has greater energy independence than it enjoys at present,” with a clear direction towards cleaner energy systems. Second, that it would be “less dependent on remittances than it currently is.” He emphasised that “we can be sure about the direction of travel,” even if specific pathways remain uncertain.
He explicitly rejected economic prediction, stating “we have no idea what new economic activities will emerge,” but still suggested possible areas such as improved value addition in minerals, including “a better, more sustainable way of extracting graphite or some new use for zircon.” He concluded that uncertainty itself is structural, saying “no one knows, that’s what makes the future exciting.”
His accession framing was procedural and demanding. Applicants must demonstrate capacity to implement the “full ASEC rulebook,” including “tariffs, quotas, services liberalisation, investment protections, e-commerce rules,” alongside institutional readiness in customs and standards systems. He called for a “whole-of-government ASEC readiness audit” and stressed that Sri Lanka must demonstrate “commercially meaningful market access.”
He reiterated that RCEP aims to eliminate “90% of tariffs among its members,” requiring Sri Lanka to adopt a “simplified tariff structure” and “phased reductions across most goods,” while managing “sensitive sectors.” He also stressed reciprocity, noting that trade is “a two-way street,” and that members want “more goods and services from Sri Lanka in our market.”
Pine’s final set of remarks moved into structured conditional forecasting. He outlined customs digitisation, alignment with e-commerce frameworks, port modernisation, and potential integration into “FinTech IT services and e-learning within RCEP.” He even referenced future possibilities of “blockchain-enabled trade facilitation” and “regional mobility packages,” presented not as predictions but as logical extensions of reform alignment.
Throughout the discussion, the positions were distinct but not contradictory. Tobing emphasised ASEAN-origin institutional discipline and supply chain logic. Duckworth emphasised systemic economic architecture and reform pressure. Pine emphasised structural vulnerability and long-term transformation. The discussion did not converge on optimism or caution. It converged on a more basic point: RCEP is not a symbolic accession exercise but a framework that demands internal economic restructuring before external benefits become meaningful.
