New Zealand, Sri Lanka eye free trade pact

New Zealand and Sri Lanka are boosting bilateral engagement with the planned exchange of diplomats as part of a push towards a free trade agreement, New Zealand's trade minister Todd McClay said today.

The decision was taken after McClay's meeting with Sri Lankan Prime Minister Ranil Wickremesinghe on the sidelines of the World Economic Forum in Davos, Switzerland.

He said the governments of the two countries have instructed officials concerned to prepare a framework to boost economic ties, which could result in a free trade deal.

Sri Lanka is a big market for New Zealand's dairy products, the island country's main exports.

"Sri Lanka and New Zealand are complementary economies. There is potential for greater trade both ways,'' said McClay, and added that any deal could include "other like-minded nations."

New Zealand, which is heavily dependent on international trade, is looking for alternatives as a protectionist United States under incoming President Donald Trump threatens to abandon the Trans-Pacific Partnership (TPP) signed by 12 nations last year.

Wellington is focusing on getting a number of new trade deals and existing pact upgrades off the ground, including one with the European Union.

McClay has also said it would be "interesting" to see whether momentum builds around the Regional Comprehensive Economic Partnership, an Asian trade pact that includes China and India, if the United States pulls out of the TPP.

Trade with Sri Lanka is currently modest, at NZ$307 million in the year to October 2016. Sri Lanka is a major buyer of New Zealand's main goods export, dairy products, with exports last year worth NZ$240 million.