Archives

By Kingsley Wickramaratne

The PA Government since its victory in 1994 launched a programme to implement the External Trade Policy of the country, based on a long term vision to support rapid economic growth through the expansion of exports. The management of the Foreign Trade Sector in economic development which is based on, interalia, strengthening traditional ties, identifying and developing new and emerging markets, strengthening small and medium enterprises for participation in International Trading Centre programmes were successfully carried out by our government. In this process, the private sector has been given due recognition and consulted extensively.

Servicing the bilateral, regional and multi-lateral trade agreements/arrangements, signed by Sri Lanka forms an important part of the implementation of Sri Lanka's external trade policy. The progress in the implementation of such agreements/arrangements during the period under review are detailed below under the respective sections. Sri Lanka's growing dynamics of trade and economic co-operation with the rest of the world witnessed a tremendous improvement during the period under review.

The highest level of political impetus coupled with proper planning and preparation by the agencies concerned have paid dividends in the sphere of Sri Lanka's bilateral trade and economic co-operation efforts. Many innovative ides have been conceptualized and implemented with a view to creating a balanced playing field for the conduct of bilateral trade relations. Joint Commissions under the bilateral trade and economic co-operation agreements have been successfully used as an effective tool to promote bilateral trade and economic co-operation by Sri Lanka.

The joint commissions provide opportunities for high level inter-governmental consultations between Sri Lanka and respective countries in order to work out mutually beneficial projects. The objectives of those projects can be sub-divided into broad categories such as market development, investment promotion, technical co-operation and economic assistance.

The scope of these Joint Commissions is wide-ranging, from trade exchanges, banking and shipping to co-operation in education, science and employment. These Joint Commissions are expected to identify and pursue activities for the expansion of bilateral trade and economic co-operation. Activities, undertaken in this context, apart from contributing to the promotion of Sri Lanka's trade, fostered mutual understanding and co-operation among participating countries and their respective public and private sector agencies. Economic co-operation with countries was vigorously pursued with particular emphasis on the promotion of Joint Ventures for the mutual benefit of Sri Lanka and participating countries.

EU partnership

After 1994, eleven bilateral trade and economic co-operation agreements between Sri Lanka and countries such as Egypt, Libya, Maldives, Pakistan, China, Iran, Iraq, India, Bangladesh, Romania and Yugoslavia were signed, in addition to the co-operation agreement with the European Commission consisting of 15 member countries.

The new co-operation agreement with the European Union, which is the largest trading partner of Sri Lanka, was signed in December 1994, soon after the formation of the Peoples Alliance Government. The Government of Sri Lanka has successfully negotiated with the EU for total removal of quotas in respect of textiles and garments exported from Sri Lanka with effect from 2001. It was estimated that this measure would result in additional exports of textile and garments worth US$ 200 million per year, and it did.

Having realized the importance of bilateral trade and economic co-operation agreements as useful and effective instruments of generating and enhancing trade relations, the PA Government decided to conclude such agreements with several other important trading partners of Sri Lanka. During the last seven year period, Sri Lanka entered into such agreements with Cyprus, Kuwait, Thailand and Indonesia while arrangements have been made to sign such agreements with Russia, the CIS countries and Turkey.

An Agreement on Trade, Economic and Technical Co-operation entered into with Ukraine in August 1999 has enabled Sri Lanka's tea exports to Ukraine to be accorded a 50% reduction on import duty. In the case of countries such as Uzbekistan, Czech Republic, Slovak Republic, Hungary and Italy, the process of negotiating the conclusion of similar agreements is under way. During the period under review, arrangements were made to hold twenty sessions of the Joint Commissions established under the bilateral trade and economic co-operation agreements with the countries concerned.

A noteworthy factor in the expansion of Sri Lanka's bilateral trade relation was the initiative taken by the Minister of Trade and Commerce in personally visiting some of our trading partners with a view to accelerating the expansion of our trade relations with those countries. His visits, accompanied by delegations of businessmen to countries such as Egypt, China, South Africa, UK, Russia and Iran in 1996 and to Iraq in 1998 and in 2000 to Libya provided required stimulation for the expansion of the bilateral trade relations between Sri Lanka and those countries concerned.

The delegation's visit to China in March 1996 was followed by a state visit by H.E. the President in April 1996. During her visit, China granted Sri Lanka an interest subsidised preferential credit line for RMB Y 150 million, for setting up of Joint Ventures agreed upon by the two countries.

In November 1998, a trade delegation led by the Ministry of Internal & International Commerce and Food visited Iraq & Jordan with a view to developing Sri Lanka's tea exports in the region. A direct consequence of this visit was that under the 5th phase of the Oil for Food Programme, Iraq has resumed the import of tea from Sri Lanka with an enhanced allocation.

Moreover, potential markets for a well-defined, broad range of products were specifically targeted. The first such high impact exhibition was held in June 1996 in Moscow. As a direct outcome of this exhibition, firm orders for Sri Lankan exports exceeding Sri Lanka Rs. 400 million were obtained by our participants. The second single country exhibition held in Belgrade in February, 1997 also resulted in concrete trade transactions valued at more than Sri Lanka Rs. 300 million for a broad range of traditional and non-traditional export products.

The single country exhibition staged in Santiago, Chile, in August 1999, the first ever export promotion project undertaken by Sri Lanka in Latin America, brought in export orders of more than Sri Lanka Rs. 245 million.

As a long term strategy to derive the maximum benefit from the Indo-Sri Lanka FTA, the first ever Sri Lanka single country exhibition held in Mumbai in September 2000, resulted in concrete trade transactions valued at more than Sri Lanka Rs. 85 million. As a result of these successful series of single country exhibitions, the small and medium enterprises in Sri Lanka benefited substantially by gaining market access for their range of products, thereby assisting income generation and employment by these industrial units.

Indo-Sri Lanka Free Trade Agreement

The signing of the IFSTA can be considered as the culmination of Indo-Sri Lanka Trade Relations. This was a landmark agreement signed by Her Excellency Chandirka Bandaranaike Kumaratunga and the Prime Minister H.E. Atal Bihari Vajpayee in 1998.

Although the Agreement was signed in December 1998, the actual implementation of tariff concessions took place in February/March 2000, due to the extensive consultation process that the PA Government had with parties concerned in order to obtained views/comments of such parties.

Sri Lanka has been able to export a number of new items to India including processed food products, marble, rubber slippers, furniture, rubber mattresses, ice-cream machines and computer chips, container trailers, alfa safes, ceramic and porcelain products etc. mainly due to tariff concessions extended under the FTA.

From March to December of the year 2000, Sri Lanka shipped 1019 consignments under the ISFTA concession to the tune of Rs. 655.11 million whereas during 2001 (January-September) 1167 consignments to the tune of Rs. 911.57 million were sent.

News | Business | Features | Editorial | Security
Politics | World | Letters | Sports | Obituaries |

Produced by Lake House
Copyright 2001 The Associated Newspapers of Ceylon Ltd.
Comments and suggestions to :Web Manager