Singapore Agreement: Myths & Reality
Whether it is necessary to enter into FTAs?
The world around us is increasingly moving forward with regional and bilateral free trade agreements (FTAs) as the multilateral trade liberalization process led by the WTO has come to a standstill. There are now 419 regional trade agreements in the World.
If we look at South Asian countries in SAARC, Sri Lanka is far behind others in working out duty free or preferential market access with other countries. In SAARC, five countries, viz. Bangladesh, Nepal, Bhutan, Maldives, and Afghanistan, by virtue of them being LDCs qualify for duty free access to the EU and Indian markets. In fact, nearly 84% of SAARC LDC exports have duty free access to the world at large. India has preferential market access to ASEAN, Japan, South Korea, by various FTAs and CEPAs it has signed during the last decade. Pakistan has FTAs with China, Malaysia and Sri Lanka and benefit from GSP‐plus in the EU market. In contrast, Sri Lanka has preferential market access only to India and Pakistan (and some preferential access to APTA members China and Korea to which Bangladesh and India also qualify). Clearly, Sri Lanka lags behind even with its South Asian neighbors in having preferential market access to its trading partners.
What Sri Lanka need to do is to ensure growth and sustaining the traditional two major markets, namely the U.S. and the E.U. and negotiate Free Trade Agreements with emerging South Asia and Far East Asian countries, with the most dynamic potential trading partners in the South East Asian region, thus linking to the global production and value chains. Accordingly, Sri Lanka has embarked upon negotiations on FTAs with India, China, Singapore and Thailand.
Whether the government has national policy on trade?
Yes.
Whether the New Trade Policy is a fake document?
The Ministry observed that the trade related policy decisions are taken at different institutions under jurisdictions and following different directions. They were mostly ad-hoc and fragmented. Those decisions did not follow a clear direction. Absence of a national trade policy led to chaotic decision making and non-effective directions resulting poor performance in terms of trade. Recognizing this, the government decided to adopt a national trade policy which can bring together various policy directions demonstrated by different agencies into one platform where there is a clear vision.
The trade policy was formulated through an inclusive process and it took almost one year from May 2016 to May 2017 for the preparation. As it gives a fresh outlook and a broader governing framework for the country’s trade regime and brings the unclear trade policies prevailed so far into one platform for the first time in Sri Lanka’s history, the document was named as New Trade Policy. The New Trade policy took into account development objectives of the government, Sri Lanka’s comparative advantage in trade, past trade performance, recent global trade developments and trade policy formulation experiences of other countries.
The policy was prepared by two committees, a representative committee with the participation of several representatives of government agencies and later brought it to a focused paper by a group of experts headed by Dr. Sarath Rajapathirana, Economic Advisor to the H.E. the president and made it publicly available for comments.
