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China-Maldives free trade deal rushed through parliament

The Maldives’ first bilateral free trade agreement – which commits both nations to reduce tariffs on most imported goods to zero – was rushed through hours after President Abdulla Yameen sought approval for ratification.



A landmark free trade deal between the Maldives and China was rushed through parliament Wednesday, hours after President Abdulla Yameen sought approval for ratification.

The free trade agreement – which commits both nations to reduce tariffs on most imported goods to zero – was passed with 30 votes from ruling party lawmakers in the 85-member legislature. Opposition lawmakers boycotted the vote after questioning the legitimacy of the fast-tracked process as well as the lack of public disclosure and consultation with the business community.

Amid media reports of the Majlis breaking for recess as no regular sitting was scheduled for the last working day, an emergency sitting was called for 2:30 pm to send the FTA to the national security committee.

The oversight committee completed its review in a 10-minute closed-door meeting and the agreement was promptly approved at a second impromptu sitting Wednesday night.

Opposition lawmakers complained that they were not notified of the afternoon sitting. Close to 3 pm, a dozen MPs who appeared at the criminal court for trials on obstruction charges were told the hearings were rescheduled.

Several opposition MPs were also sent text messages after the sitting began.

Formal negotiations for the FTA commenced in late 2015 and concluded last September. According to the Chinese ministry of commerce, the two countries would reduce tariffs of over 95 percent of goods to zero and commit “to opening the service market such as finance, healthcare and tourism and agreed to cooperate practically in key areas.”

Briefing the press Wednesday morning after cabinet gave the green light, Economic Development Minister Mohamed Saeed said the government decided to pursue the deal because the Maldives became ineligible for tariff reductions for fish exports to the European Union, the single largest export partner by value, after graduating from least developed country status.

The FTA would open up the “world’s largest consumer market” to Maldivian fish products, he said. China is also the largest manufacturing economy in the world and the second largest importer of goods.

Saeed said the Maldives will also seek FTAs with Japan as well the US, UK and EU. It is unclear when the China-Maldives deal will be signed.

Asked about the Maldives’ obligations under the deal, Saeed declined to offer details but insisted that the FTA would be more beneficial to the smaller partner.

The Maldivian Democratic Party, however, expressed concern over the secrecy of the deal and the growing trade deficit with China.

“We are also deeply concerned that further entrenchment of the country into a Chinese debt trap will result in additional stress on strategic national assets and increasing instability in the Indian Ocean region,” the main opposition party said.

“The MDP calls on the Government of Maldives to suspend the implementation of the FTA until a proper feasibility study is conducted to ensure the Agreement is in the best interest of the Maldives both economically and also to ensure the Agreement does not place Maldives in a geo- politically vulnerable position.”

Yameen previously said that the FTA with China should not be a “cause for concern” despite the loss of revenue from import duties. The public would benefit from the availability of cheaper goods, he said.

The decision to pursue a free trade agreement was made during Chinese President Xi Jinping’s historic state visit to the Maldives in September 2014.

The Maldives went on to become a partner in China’s maritime silk route and secure grant aid and financing for large-scale infrastructure projects such as the China-Maldives Friendship Bridge.