Maldives-China FTA to become effective in Jan 2025, 91 percent tariff cut

The Minister of Economic Development and Trade Mohamed Saeed on Tuesday said the new Maldives-China Free Trade Agreement (FTA) will become effective on January 1, 2025.

At a press briefing at the President’s Office, Saeed highlighted that FTA allows the two countries use their respective currencies for trade. The FTA also enhances local businesses to export their products without export duties and overcome other non-tariff barriers. Local importers can import their products at zero-tariff rates on major categories of import commodities.

“So, the duty we currently expend will drop to zero. These arrangements will allow us to use our currencies for trade and receive zero-tariff rates on 91 percent of the import commodities from China, meaning the retail price of these products will become cheaper,” Saeed said.

Saeed further said that the FTA allows Maldives to export a total of 296 items, inclusive of all fish products at zero-tariffs to China.

“When we negotiated, there is a mechanism set up by the WTO to label imported seafood products after value-add and retail pricing as Maldivian products,” the minister added.

“Upon compliance to this policy, these products are identified as Maldives’ packed or processed products. If these items make it to China via Maldives, they are exported at zero-tariff.”

The FTA further allows Maldivian travel operations to launch inbound and outbound travel agencies in the free trade zones of Beijing, Shanghai, and Tianjin.

Besides China, Saeed said Maldives conducted discussions on free trade with other global allies, and added that the ‘preferential trade agreement’ discussions with Turkey concluded with real progress. The minister projected Maldives-Turkey PTA will be implemented by next January.

After a two-year discussion, Maldives signed its FTA with China during former president Abdulla Yameen Abdul Gayoom’s administration in December 2014, which however was approved in November 2017 following parliament approval.

Despite implementation in 2017, former president Ibrahim Mohamed Solih’s administration – that succeeded Yameen’s presidency – did not put the agreement to effect.

While Solih’s administration maintained closer ties with India, relations between Male’ and Beijing remained static, which received resuscitation following President Dr. Mohamed Muizzu’s assumption of office on November 17, 2023.

Maldives already engages in USD 700 million worth trade with China, implementation of the FTA will boost this figure to USD 1 billion, government projected.