Maldives can make wise choice when it comes to bilateral trade pact with China

By Hu Weijia Source:Global Times Published: 2018/11/21 22:43:40

Maldives has drawn widespread attention as ex-president Mohamed Nasheed said the country's new government is considering pulling out of a free trade agreement (FTA) with China because it was a mistake for the tiny country to strike such a deal with the world's second-largest economy.

But if we follow that logic, serious mistakes have been made by many "tiny countries" like Singapore, Bahrain and EI Salvador, which have signed FTAs with the US, the world's largest economy. Many small countries are very enthusiastic about reaching FTAs with big powers because small nations can hardly build a complete industrial chain and integrate into the global value chain.

It is not a good idea to steer the Maldives away from an open economy. Tourism is the largest economic industry in the country, whose small land area means it can hardly be self-sufficient in agriculture and manufacturing. Many countries refuse to cut tariffs because they may worry that imports deal a blow to homegrown industries and cut local jobs.

However, this is a less important source of anxiety for the Maldives. The FTA between China and the Maldives will cut tariffs on 95 percent of goods involved in bilateral trade to zero and thus reduce the price of many consumer goods in the island country.

Why does the country's new government seek to prevent local companies from importing Chinese goods at a lower price?

With the new FTA, the two countries have committed to opening the services market in such areas as finance, healthcare and tourism. China is currently the largest source of tourist arrivals in the Maldives. Such tourism cooperation enhanced by the FTA is very important for the Maldives' economy. The Maldives will suffer greater losses than China if it pulls out of the FTA and uses it as a gesture toward India. Such politicization of an economic issue is likely to deal a severe blow to the Maldives' economy. Beijing doesn't want the island country to choose between China and India. We think the Maldives has the wisdom and ability to make the best choice for itself.

The author is a reporter with the Global Times.


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