The significance of FTAs
With reference to the article to the business feature column of your
newspaper by Rohantha Athukorale former Chairman SLEDB has requested
good counsel on the significance of FTAs between Sri Lanka and other
With the accelerating threat on the withdrawal of G.S.P. facility,
may it be known that it is the FTSs that we have entered with our
neighbours, that help to maintain the balance to keep home fires
The former EDB Chief quotes that the strategic products of Sri Lanka
namely tea and garments are below 6 per cent on quota utilisation after
the operation of FTA. TRQ delays and custom clearance at Indian points
and Port Crgo Clarence have contributed a loss of faith in the FTA by
our exporters which was intended to promote trade competition and
These are matters for the top agenda for the SAARC meeting in August,
the former Chief of EDB suggests. He has shown statistics to establish
products list that have been affected by the operation of the FTA.
Products range from Vanaspathy, bakery shortening, desiccated
coconut, tea, pepper and garments coming under TRQ that make the balance
of payment favourable to Indian trade after the FTA.
There are 1,180 products in the negative list over to India against
our 429 entitled for duty free concessions. Athukorale making his case
for our exporters here argue the rational of including the consumable
items in the list under FTA.
Being a market specialist on FTAs, the writer is aware on the
practices in free trade and the consequences of making the
liberalisation of trade. The simultaneous cry by the Vanaspathy Traders
is justifiable in the free trade context where both partners produce the
We have to examine this claim in the background of exporting apparel
that brought this country US$ 2,900 million last year. Unlike Vanaspathy
we are the only producer in the region where we qualify for the
concessions for apparel from EU.
Our apparel exports have to be compared with the earnings from tea,
rubber products, gem and jewellery and the earnings from the remittances
from abroad. The foreign employment earnings stood at US $ 2,700 million
last year according to the Ministry of Export Development.
According to Ministry sources there are almost 7,000 items without
tariff duty given on our exports to the United Estate. The garment
industry is heavily depending on this concession. Kingsley Bernard of
Daya Group on behalf of garment exporters emphasised in a article to the
press that the G.S.P. concession is a great patronage to local industry.
The G.S.P. has to be reviewed this year.
This concession was granted to the garment industry because of the
high quality of the finished product, worker facilities and the on-going
training programmes available in Sri Lanka.
We alone enjoy this concessions in the region and therefore it is our
craftsmanship to review it back. Apart from Vanaspathy our women (Vanithavo)
folk who are the candles burning from both ends depend heavily on the
apparel sector to run the families.
Therefor the G.S.P. stigma remains a crucial stepping stone for their
The Export Development Minister has justified once that the main
features of the apparel industry are that those who are engaged in
employment are rural girls who are sole breadwinners of the family
The other aspect is that these factories have been located in the
rural hub and have become centres of income generation for the rural
folk. It has reduced the income disparity between the town and the
village base. These are merits that are universally accepted in terms of
trading conditions and buyers in UK are so familiar with household names
such as Marks and Spencer, Tesco Produced in Sri Lanka.
Apparel exports brought the country US$ 2,900 million last year. The
criteria that the GSP review depends on a political nature. It is a
technical evaluation on our obligation to conventions etc.
The outcome of democracy in the trouble torn area in the East under
this administration is a positive assessment to review GSP. EU has a
political approach to a value system of representative democracy on this
question of reviving the G.S.P. This is also depending the policy on
dissemination of poverty and social discontent in this part of the
world, according to Export Ministry, sources.
The Minister of Export Development has briefed the Royal Commonwealth
Society, London recently that there is an phenomenal leap towards
economic progress in this part of Asia in 2007.
This could be due to commitments by the regional governments to be
sensitive to resolve issues through the ballot.
He quoted Pakistan as an example.
The per capita income in the region is US$ 1,650 per year. The trade
balance of Sri Lanka in international trade in 2007 stood at US$ 3,727.4
m. against India US$ 2,229.2m which make 60 per cent ratio of trade.
Lanka depends on buses for her roads pharmaceuticals for her hospitals
and books for students from India. India is the third trading supplier
for Sri Lanka.
The question on pepper cited by the former EDB chief could be defined
due to price slash in the world market.
Politically we have been stable as an independent state because our
national movements and specially the mobilisation of peasantry forces
that led the engine of growth got the inspiration from the neighbours
specially in the 20th century.
Hence our commitments to FTAs with our neighbours would strengthen
when the blows of the W.T.O. dash our country as it seems to have
happened with the G.S.P. crisis. The working woman in Sri Lanka is a
burning candle from both ends and heavily depend on the outcome of the
G.S.P. in our industrial policy.