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| Saturday, 11 October 2003 |
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20% import surcharge out by year end by Asanga Warnakulasuriya The Government will eliminate the 20 per cent tariff surcharge on imports by end 2003, a senior Central Bank official said yesterday. This has obvious benefits to consumers, bringing down the cost of imported products such as food items including, dried fish, sprats, canned fish as well bicycles, radios and TV's, the Convenor of the Steering Committee on Macro and Trade Policy Framework under "Regaining Sri Lanka" and Director of Economic Research of Central Bank, Dr. A.G.Karunasena said. Karunasena said the government was aiming at a consistent and transparent tariff policy regime under the "Regaining Sri Lanka" programme. Speaking at the first committee meeting, the Convenor further said that investors will also benefited by this decision with a lower investment required for importing goods. Exporters too will benefit from lesser prices for their imported raw materials. As the first step of moving towards a more uniform tariff policy the Tariff Advisory Council was established which reduced the then (2001) 40 per cent import surcharge to 20 per cent in 2002. The 40 per cent import surcharge imposed in 2001 raised the domestic prices substantially, making it a thorny issue among the importing and industrial community, he said. "The existing multiple and complex tariffs systems had proved unnecessary and inefficient with complex procedures at Customs hurting exporters, importers, and ultimately the consumer. For example, it was cheaper to import car parts and assemble cars in Sri Lanka rather than import a vehicle in its genuine condition." Another inefficiency in the current tariffs system is that the different rates of duty imposed on different commodities has led to instances where the products liable for higher rates of duty are being imported under classification of a lesser duty rate. Under the prevailing duty structure the import of seed potato is duty free, whereas the other potato imports are liable for a duty rate of Rs. 20 per kilo, encouraging the importers to classify the other potato imports under seed potato. At the same time, producers and exporters will also gain from a uniform tariff policy that will allow greater transparency and consistency as they plan for the future. A simple tariff system will also be more effective in raising the expected government revenue, enabling essential public services to be financed. The Convenor stressed that the trade reforms suggested by the committee which includes strengthening market competition, simplification of tariff policy, trade and economic partnership agreements and new legislation to safeguard the consumer will not be effective on their own since they should go hand in hand with other economic reforms. Elaborating on trade and economic partnership agreements, he said that the Government is finalising the Economic Partnership Agreement (EPA) with India. The EPA will pave the way for greater bilateral integration, at a faster rate where the existing Free Trade Agreement (FTA) with India is a limited engagement focusing only on trade in goods. The EPA is expected to embrace many sectors including goods and services, investment and cooperation. The Government is negotiating with Egypt, Singapore and specially with the United States for bilateral free trade agreements. With the current quota system ending in 2005, the Government is negotiating with the biggest apparel importer on the possibilities of an FTA. All outstanding issues with the US have been resolved and the US decision is expected by the end of this year. Improvement of customers administration is another area to be considered to increase efficiency in external trade operations. Plans are under way to introduce an electronic Data Interchange (EDI) system, streamline cargo inspection procedures and include a risk based inspection system for the Customs in 2003. |
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