01/29/2022, 16.13
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Dispute over contaminated fertiliser cast a cloud over Sino-Sri Lankan relations

by Arundathie Abeysinghe

The Sri Lankan government banned a shipment from China. Driven by the need for Chinese help to cope with its economic crisis, Sri Lankan authorities had agreed to pay for the supply, but the Chinese company claims Sri Lanka violated the terms of the agreement.

Colombo (AsiaNews) – The row between a Chinese fertiliser company and Sri Lanka has taken a turn for the worse. The bone of contention is a shipment of fertiliser Sri Lankan authorities deem contaminated.

Qingdao Seawin Biotech Group has filed an official complaint with the Food and Agriculture Organisation (FAO).

The Chinese company believes that the UN body could settle any misunderstanding through technical consultations, thus avoiding losses for both parties.

The disagreement between Sri Lanka and Qingdao Seawin Biotech has led to a rare diplomatic spat between the island nation and China.

The request for FAO intervention was made before Sri Lankan authorities and the Chinese company could reach an agreement on the payment of the disputed fertilizer.

In September, the administration of President Gotabaya Rajapaksa stopped a shipment of 20,000 tonnes of fertiliser worth US$ 6.9 million from the Chinese company, claiming that the cargo contained harmful pathogens.

Sri Lanka needs foreign support to overcome its currency crisis. India and China have pledged help with currency swaps and lines of credit.

According to several observers, the need for Chinese aid to cope with the country’s serious crisis prompted Sri Lankan authorities to settle with Qingdao Seawin.

However, the Chinese company claims that Sri Lanka violated the terms of the agreement, and so it turned to the FAO.

Analysts note that Sri Lanka has a lot to learn when it comes to international agreements.

The disaster of the X-Press Pearl, the "toxic ship" that caught fire off the Sri Lankan coast in May 2021, causing an environmental catastrophe, highlighted Sri Lanka’s inability to deal with legal experts representing multinational corporate interests.

The country is still struggling to get adequate compensation for the damage caused to its environment and to the local fishing industry.

Due to its shortage of foreign exchange and a declining credit rating, foreign companies are reluctant to do business with Sri Lanka.

In addition to the dispute with Qindao Seawin Biotech, Sri Lanka is involved in an arbitration case with KLS Energy Lanka, the local subsidiary of a Malaysian renewable energy company.

Such problems will have a major negative impact on Sri Lanka's ability to trade internationally.

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