With no progress in sight for a free-trade agreement with the US, Sri Lanka is now trying to negotiate a bilateral agreement with Canada.

"We are trying to get a duty-free deal with Canada, which we feel is easier and faster than tackling the US," said Ashroff Omar, chairman of the Joint Apparel Association Forum (JAAF), addressing an industry gathering.

The only preference window for Canada open to Sri Lanka at the moment is the Canadian GSP scheme but the scheme excludes garments. 

However, Canada provides duty-free access for clothing from Least Developed Countries and Sri Lanka is asking the Canadian government for the same treatment, on grounds of being a vulnerable economy.

Sri Lanka's garment exports are concentrated in the US and EU with the US buying over half of total export production. But market share in the US is threatened by China and the island is looking to diversify.

Canada is currently a very small market for Sri Lankan clothing exports. Garment export earnings to Canada in 2005 came to around US$40m compared to over $1.64bn income from the US and over $990 m from the EU.

However, the garment export industry says the Canadian market has great potential if duty free access is available.

By Dilshani Samaraweera.