Sri Lanka is taking steps to strengthen trade links with the United States and India. The country's economy has slowly been improving over the past two years as it works to end a decades long civil conflict.

During a recent visit to Colombo, the Sri Lankan capital, Deputy U.S. trade representative Josette Shiner promised to consider the island nation's request for a free trade agreement.

The United States is Sri Lanka's largest market and accounts for about 40 per cent of the country's exports - mostly textiles and garments. Trade between the two countries is $2 billion.

An agreement with the United States that gives Sri Lanka tariff concessions expires next year, which would leave the island nation vulnerable to competition from other countries, such as China, where manufacturing costs are lower. A free trade agreement would eliminate that worry.

Colombo is also stepping up trade cooperation with another major trading partner, India. Colombo's exports to India more than doubled last year, growing from $72 million in 2001 to $172 million in 2002. Economic analysts say bilateral trade will get another boost after New Delhi and Colombo sign an economic partnership pact during this week's visit to India by Sri Lanka's prime minister, Ranil Wickremesinghe. The pact would expand existing free trade agreements by including trade in services and investment.

Sri Lanka is also negotiating bilateral trade deals with Bangladesh, Pakistan, Singapore and Egypt. The country's economy is heavily dependent on exports of garments and tea.

Since the government and Tamil Tiger rebels signed a ceasefire in February 2002, Sri Lanka's economy has continued to strengthen. The peace talks stalled in April but the country, including the war-ravaged north and east, has been relatively peaceful for two years.

Dushant Vijaysingha, a senior researcher with Asian Securities in Colombo, says the stock market is booming, and direct foreign investment is on the rise.

"The economy has been recovering from the doldrums in 2001," said Mr. Vijaysingha. "The growth of economy has been in the region of 5.5 percent in the first half of the year, and that is primarily driven by a strong pickup in export trade, and also the integration of the north and eastern economies with the mainstream following the ceasefire agreement."

Meanwhile, a group of 18 countries ringing the Indian Ocean from Southern Africa through Southeast Asia has met in Colombo, pledging to build economic ties and explore the resources of the Indian Ocean such as oil.