International Trade Agreements In Sri Lanka

Despite its proximity to India, Pakistan, Bangladesh and Nepal, intra-regional trade accounts for less than 5% of total trade in South Asia. This is partly due to limited logistics, major regulatory barriers and protectionist policies, as well as disproportionate trade costs in the region. According to the World Bank, South Asian trade costs 20% more than in the Association of Southeast Asian Nations. Although the South Asian Free Trade Agreement (SAFTA) has been in place since 2006, para-tariffs have discouraged activities. In 2018, the EDB has launched its five-year national export strategy (NES), which focuses on four pillars: export diversification; Harness geostrategic advantages to become an efficient shopping and logistics centre; Strengthening entry and compliance practices for aussrimic exporters; Establish a transparent, predictable and operational policy and regulatory framework. At the same time, SAFTA is undergoing a transformation. The 2004 agreement brings together Sri Lanka, Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal and Pakistan to remove tariff and non-tariff barriers. However, according to CBSL Governor Indrajit Coomaraswamy, more than a third of intra-regional trade under SAFTA is on the sensitive list, while border restrictions between Pakistan and India hinder merchandise trade and prevent regional integration. The Ministry of Development Strategies and International Trade (MODSIT) and the Ministry of Industry and Trade (MIC) are the main public bodies responsible for trade and investment growth.

They cooperate to implement support programmes, develop strategies for foreign direct and private sector investment, and work to expand international market opportunities for Sri Lankan products. The Board of Investment (BOI), the Export Development Board (EDB) and the Department of Commerce (DoC) operate as part of MODSIT. However, the sector is not without its problems. The outlook for emerging markets has darkened and U.S. interest rate hikes have affected global trade balances. In Sri Lanka, export growth in recent years has lagged behind GDP growth, and industry experts and government officials are working to address it. A new export strategy has been developed, as well as a major explosion of economic diplomacy, to draw more global attention to trade and investment. As a developing economy without commercial oil and gas resources, increased fuel imports have pushed Sri Lanka`s trade deficit to new heights. While Brent crude oil prices fell to about $51 per barrel at the end of the year, the price of oil peaked at more than $85 in October, leading to a 28.9% increase in fuel imports. In the meantime, exports are mainly intermediate and industrial goods, as well as raw materials such as tea, rubber, minerals and metals. The main local products are textiles and clothing. Sri Lanka`s exports have traditionally been less competitive than those of other countries in the region, such as Bangladesh and Vietnam, due to higher minimum wages.

Nevertheless, after a rapid fall in the value of Sri Lankan rupees and an increase in the minimum wage for workers in the garment industry in Bangladesh, the minimum wage in Sri Lanka is equivalent to that of Bangladesh and lower than that of Vietnam. In 2018, imports of goods increased by 7% to $22.2 million, while exports amounted to $11.9 million (up 5% y-o-y); WTO data), so the trade balance is $10.3 billion. The country is a net exporter of commercial services and exported $8.3 billion in 2018, compared with $6.7 billion in imports.

This entry was posted on Saturday, April 10th, 2021 and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.

Comments are closed.