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Sri Lanka`s economic reforms were launched in response to widespread public dissatisfaction with poor industrial performance and the widespread search for rents under a distorted incentive system. While there have been some slippages over time, strong growth in recent years has contributed to increased domestic political support for change. Outside, WTO agreements have established and expanded the institutional framework for international market integration. The signs are therefore positive for new initiatives to compete with long-standing protected service sectors, to further reduce and harmonize customs protection, to streamline rebate and duty exemption regimes, and to develop alternative sources of less distorted government revenue. Given Sri Lanka`s current export basket, it is essential that these efforts be supported by liberal and predictable conditions of access to major export markets outside the region. Sri Lanka has continued to promote international trade and economic cooperation by actively participating in several international and regional organizations. In order to achieve the benefits of global trade expansion facilitated by the removal of tariff and non-tariff barriers and the strengthening of rules and disciplines in international trade, Sri Lanka signed the Uruguay Round (UR) Final Act on 15 April 1994. The application of the EC rules is essential for the Sri Lankan economy, as it includes not only tariff reduction measures and non-tariff measures, but also a wide range of issues, including the integration of textiles and clothing into the GATT, trade in agriculture and services, trade-related investment measures and intellectual property rights. Sri Lanka`s main export products are expected to benefit significantly from the implementation of the U.S.

Act. However, the integration of agriculture into the EC would have negative short- and medium-term effects on food imports into Sri Lanka, as commodity prices, including prices for wheat flour, dairy products, sugar and rice, are expected to rise. Public servants are committed to improving existing trade agreements. ISLFTA was a great advantage for the country – in 2017, about 64% of Sri Lanka`s exports to India were covered by the agreement, while only 6% of Indian exports to Sri Lanka were – with discussions underway to expand India`s membership. Negotiations on the draft Economic and Technology Cooperation Agreement between Colombo and Delhi are part of this process, with a review of non-tariff measures under ISLFTA. Eleven roundtables were held in January 2019. In the meantime, the DoC formulates foreign trade policy and promotes bilateral, regional and multilateral trade relations under four subdivisions: multilateral trade issues, bilateral trade relations, regional cooperation and trade promotion. This gives the division a key role in international trade negotiations with bodies such as the World Trade Organization and the EU.

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