FTA with China: 70% of imports duty-free, boosts trade

Next Wednesday marks the official implementation of the landmark Free Trade Agreement (FTA) between the Maldives and China, a development expected to reshape the trade landscape for both nations. According to economic minister Mohamed Saeed, the FTA will significantly boost trade relations by exempting 70% of Chinese imports from duties and waiving tariffs on 90% of goods over the next five years.

The agreement, which was signed on December 7, 2017 but remained idle for seven years, is set to bring unprecedented opportunities to the Maldives. In addition to the reduction of import duties, the FTA will also provide a major advantage to Maldivian exports. Saeed highlighted that 95% of Maldives’ goods exported to China will now be able to enter the Chinese market duty-free.

The FTA marks a significant milestone in the history of Maldives' trade, Saeed emphasised during a ceremony marking the agreement’s implementation. He noted that this agreement would open up unparalleled trade opportunities for the island nation, particularly with China, the world’s largest market. Saeed pointed out that, 15-20 years ago, the United Nations World Tourism Organisation (UNWTO) predicted China would become the world's largest outbound and inbound contributor to tourism by 2050—a forecast that has now become a reality.

The FTA, Saeed explained, would not only benefit traditional industries like tourism but also other sectors by allowing Maldivian businesses to engage with China's expansive market under the same rights and privileges as Chinese companies. This includes access to China's free trade areas, offering significant advantages for local firms. The agreement also ensures that Chinese businesses will not be granted any privileges that are not available to other global companies.

One of the most significant aspects of the FTA for the Maldives is its impact on the fisheries sector. China has agreed to import Maldivian seafood without imposing tariffs, which is expected to provide a major boost for the country’s fishing industry. Saeed highlighted that out of the approximately 3,000 tariff items in China, 269 seafood varieties from the Maldives will be exempt from duties. This includes a wide range of fish and seafood products, offering Maldivian exporters access to the world’s largest market.

However, Saeed was careful to emphasise that certain sensitive species, such as tortoises, turtles, and sharks, would remain subject to restrictions. Nevertheless, the agreement will allow the Maldives to compete in China’s massive seafood market on equal footing with other global exporters, a rare opportunity afforded by the FTA.