SL advised to further strategise trade policy to boost exports

By Nishel Fernando
Sri Lanka must further strategise its trade policy pursuing trade openness, as the country’s trade reaches uncharted territory amid the scheduled expiration of the GSP Plus concession in 2023, Brexit and intensifying competition from other trading nations, which could hinder the access to key export markets, the country’s largest trading partner, the European Union (EU), advised. 

Sri Lanka is set to lose the EU’s GSP Plus concession in 2023, with the country being classified as a middle-income country by the World Bank, last year.

“Sri Lanka became another middle-income country, according to the World Bank (WB), in 2019. That means, it triggered a three-year transition period starting from January 1, 2020 and GSP Plus will expire in 2023.

For the next three years, if the labour and human rights conditions are met, Sri Lanka can enjoy the GSP Plus concession,” Ambassador of Delegation of EU to Sri Lanka Denis Chaibi said.

He was delivering the keynote speech at the 25th Annual General Meeting (AGM) of the National Chamber of Exporters (NCE), in Colombo, on Tuesday.

He noted that Sri Lanka trade is at crossroads due to the expiration of GSP Plus, Brexit and increasing competition from natural competitors such as Bangladesh and Vietnam.

Chaibi highlighted that it would be crucial for Sri Lanka to retain access to the EU market under good conditions, with the EU enacting a number of bilateral trade agreements with countries such as Indonesia and Canada as well as a historical agreement with Japan, recently while finalising the bilateral trade agreements with Mexico, Australia, Chile and New Zealand.

“This means the EU will have the biggest network of preferential trade agreements in global value chains. Hence, It’s very important for Sri Lankan to retain access to the EU market under good conditions,” he said.

Chaibi also advised the government to negotiate a trade deal with the United Kingdom (UK) before the two-year Brexit transition period ends.

Speaking on Sri Lanka’s lacklustre export performance in recent past, he said Sri Lanka’s protectionist trade measures should be blamed for that.

He pointed out how Sri Lanka’s natural competitors such as Bangladesh and Vietnam were able to increase their exports pursuing increasingly a liberalised trade regime.

During 2013-2018, Bangladesh and Vietnam were able to increase their exports to the EU by 70 percent and 80 percent, respectively, while Sri Lanka’s exports only rose by 20 percent during the period, mostly thanks to the GSP Plus facility.

“In late 1970s and 1980s, there was a great movement in reducing trade barriers in Sri Lanka. Then, there was a boomerang effect with the increase focus on non-tariff barriers. By 2010, the level of protection was back to the level of pre-1980. At the same time, the countries which are natural competitors of Sri Lanka, such as Bangladesh and Vietnam, continued to decrease their traffic,” he explained.

Commenting on Sri Lanka’s hub aspirations, Chaibi stressed that trade openness is a pre-condition for the country to position itself as a hub while noting that its strategic location alone wouldn’t automatically transform Sri Lanka to a hub.

With the EU adopting the ‘Green New Deal’ with an aim to become climate neutral by 2050, the ambassador also urged the exporters to get themselves familiar with the new environmental standards of the EU.

Otherwise, he warned that the exports, which will not meet the EU standards, would be imposed with tariffs.

Chaibi noted that the usage of renewable energy and recycling in production would be crucial for the exporters to access the EU markets in the future.

According to media reports, the European Commission is planning a carbon border tax to meet the ambitious climate targets.

“The potential for Sri Lanka to export much more to the EU is there when you look at Sri Lanka’s natural competitors,” he said.

Sri Lanka merchandise trade with the EU hit 4.4 billion euros in 2018 with a 1.3 billion euro trade surplus in favour of Sri Lanka.

Textiles and textile articles accounted for over 58 percent of Sri Lanka’s export to the EU in the year.

Exporters alarmed over NES implementation delays

Sri Lanka’s National Chamber of Exporters (NCE) expresses grave concerns over the slowdown of implementation of the National Export Strategy (NES) and the delay in preparation work for Sri Lanka’s participation in the six-month-long Expo 2020 Dubai.

“In respect to Expo 2020 Dubai, currently the progress has slowed down and it has raised concerns among the exporter community on the timelines of implementation. Similarly, the implementation of activities related to the NES has also slowed down,” NCE President Ramya Weerakoon revealed.

The exporters have expressed concerns over the slowdown of the implementation of the NES, at the recent NCE council meeting.

Weerakoon spoke of these concerns at the 25th Annual General Meeting (AGM) of the NCE, in Colombo, on Tuesday.

The NES, which was launched in 2018, focuses on the short and medium-term approaches aimed at elevating Sri Lanka’s export sector to US $ 28 billion by 2022, through a well-coordinated process, involving all relevant private and public sector stakeholders and the optimal use of the country’s resources and capabilities.

The NES was designed and driven by the inputs of Sri Lanka’s export fraternity representing various sectors.

Eight advisory committees were appointed for strategic planning of the NES, representing both the state and private sectors and 50 government agencies are responsible for the implementation of the NES. “After the presidential elections, we have seen a slowdown in the progress of the NES. The new administrators have to be educated on the NES and some of the key state officials, including the director general of Sri Lanka Customs, are yet to be appointed on a permanent basis,” an advisory committee member told Mirror Business.

Further, he noted that there are certain policy decisions to be made by the Cabinet of Ministers to move forward with the implementation of the NES.

“We are waiting for decisions and guidelines from the new government to move forward,” he said.

As per the NES, Sri Lanka was to achieve US $ 17.4 billion in merchandise exports this year.

However, the government revised down the target to US $ 13.5 billion as the export earnings entered into a declining trend in the aftermath of the Easter Sunday attacks. 

Meanwhile, the new government is yet to approve the activity plan submitted by the Steering Committee, which is responsible for Sri Lanka’s participation in Expo 2020 Dubai.

A Steering Committee member said that the activity plan was submitted prior to the presidential election and a presentation was also made to the new administration at the Industrial Export and Investment Promotion Ministry.

“We have listed out activities to be carried out and submitted that to the ministry. We need the green light from the government for the activities and then funding,” the official said.

Sri Lanka was to have its own dedicated pavilion spanning over 212 square metres at the six-month-long mega exposition under the sub-theme ‘Opportunity’ and the pavilion was to be branded under the title ‘Island of Ingenuity’.

Although the previous government had committed Rs.580 million to promote Sri Lanka’s exports, tourism and investment opportunities at Expo 2020 Dubai, the UAE government has supported Sri Lanka by granting concessions worth of Rs.1.3 billion for the pavilion space.

The NCE has also proposed to conduct a mini-expo event to showcase the products and services of its members. (NF)