International Trade: Is Sri Lanka sleeping at the switch

Once India signs the agreement, India’s apparel exports to Europe will be subject to zero duty. Bangladesh enjoys this status now. It is concerned that leveling the playing field for India will result in a reduction of its exports.

Perhaps Sri Lanka should be concerned as well. Sri Lanka did not enjoy preferential status in Europe, but a huge economy like India qualifying for zero duty could dramatically change the playing field for our exporters.

Now that the Doha Round of multilateral talks to liberalize international trade is dead, all the action has shifted to bilateral and plurilateral (more than two but less than WTO membership) trade negotiations. One of the problems with bilateral agreements is that they can shift advantages, as in the above example.

Given Sri Lanka is a country that is heavily dependent of international trade, should we not be monitoring developments such as the India-EU negotiation. Bangladesh’s response is not the right one; but at least they are on the ball.

There are developments to the East that we should be paying attention to as well. On May 13th, China, Japan and South Korea initiated discussions on a trilateral free trade area.

This is seen as a first step toward something really huge that would include ASEAN, something that was written about in this column (http://www.lbo.lk/fullstory.php?nid=1164622060).

India is signing economic partnership, cooperation and free-trade agreements at a pace. Perhaps this is in response to being left out of the ASEAN-plus discussions.

Do the authorities understand that these actions in far-away capitals could have serious repercussions on Sri Lanka’s exporters and through them for all of us? Isn’t it time that the government starts paying attention to international economic policy, other than in terms of placating narrow interest groups within Sri Lanka.

The action is not all in Geneva. Even Bangladesh knows that Brussels is important. But we pull our representative from Brussels without even talking about who will replace him.

Rohan Samarajiva heads LirneAsia, a regional think tank. He was also a former telecoms regulator in Sri Lanka. To read previous columns go to LBOs main navigation panel and click on the 'Choices' category.

READER COMMENT(S)

10. Rohan Samarajiva Jun 19

Worth a read: Former DG of Commerce on sad state of trade policy: http://www.sundaytimes.lk/120617/BusinessTimes/bt22.html

9. importer Jun 16

Products made in Sri Lanka are low in quality and high price, so not competitive in any part of the world, including tea.

8. Rohan Samarajiva Jun 15

CEPA would of course be a good thing. But what I am arguing here is that we really need to keep an eye on the changing trade environment and go in for other bilateral agreement that will hopefully not draw the ire of the protectionist minority.

7. dina Jun 14

Who cares ? We can send more maids to middle east

6. I Bunkum Jun 14

So long as "Sapaththu & Viskoththu" lobby is active there is no cchance for CEPA

5. Monika Jun 13

India has its own internal issues: The widening gap between the rich and the masses in poverty. Political and bureacratic crisis and the worlds second largest Islamic population,India is perhaps a time bomb waiting to explode.

Some even say that India may no longer be the I in BRICS and could be replaced by Indonesia.

Albeit India's large domestic market will be attractive to some sectors

4. Thanushka Jun 12

Duty stands as a barrier to economic efficiency and allows inefficient industries to hide behind them. If india has struck a deal for Zero duty to Indian exports, we should take action to safe guard our competitive advantage. B'cos sooner or later this day will come.

Only thing that will safeguard your Industry in the long run is your competitive advantage against another. I.e - Quality, Technical Know how or Environmentally friendly production etc.. The fact that our leaders doesn't even know these are serious issues, Since in order to develop sustainable competitive advantage , you need to know the changes first !!

3. Lazarus Jun 11

Loku Raja and the 40 thieves dont seem to mind, maybe give more permits so that the poor women can slave more to send foreign currency.

2. Navidi SL May 31

Your concerns are worth millions. Despite sarcasm the west expressed until a decade ago, India has now become an adoring mammoth and crawl on their knees to be friends. India in turn welcome them so as to expand its sphere of influence. Neither Bangladesh nor Sri Lanka has the muscle to do what India does. Sri Lanka either have to ride with the Indian mammoth or breed stallions.

1. Nimal May 30

Export Development Body is inactive with no experts, with its non visionary tops groping in the dark not knowing what to do. No proper activities to up exports and ....perish.