An official with Australia's Department of Foreign Affairs and Trade, Elizabeth Ward this week warned Sri Lanka against overturning the Free Trade Agreement signed with Singapore.
Speaking at an event in Colombo, Ward warned of the risk of outward flight of investments and reputational damage.
"Can you roll back an FTA? The damage to Sri Lanka’s reputation would be so bad in international arena," she was quoted by Economy Next as saying.
"You wouldn’t be able to do an FTA for a long time," she added.
"There would be capital flight from the country and ramifications on the services coming to this country."
Last month the Sri Lankan president appointed an expert committee to re-examine the Singapore FTA which was signed in January, after the Joint Opposition reiterated its threat of legal action to overturn it.