A DEFINING MOMENT FOR SL TO IMPROVE BUSINESS CLIMATE

After U.S. President Donald Trump announced reciprocal tariffs on imports from different countries, including Sri Lanka, policymakers across the world contemplated ways and means to diversify their export markets and products.

- By Kelum Bandara

For Sri Lanka, such an approach is all the more realistic because it depends on the U.S and the European Union for a bulk of its exports. The U.S. alone accounts for 23 per cent of Sri Lanka’s total exports.

Currently, there is a pause in the implementation of reciprocal tariffs, and the countries, including Sri Lanka, are in touch with the U.S. government authorities to seek redress. Sri Lanka is also ready to make some compromises to narrow the trade gap with the United States. The reduction of para tariffs and the increase in imports from the United States are among them. The government will make every possible effort to retain the market access for its products, mainly apparel, in the U.S.

For years, if not decades, the need for a broader export base has been discussed, but tangible actions have not yet been taken on the ground. Even minimal steps taken in this direction have yet to yield sufficiently. Action is needed to help cushion the impact of exogenous shocks without any further delay. In case of global recessions or disruptions, diversified economies are resilient. Diversification ensures that if demand falls in one region or for one product category, other areas may still provide stable revenue. Recently, India struck a trade deal with the UK, which sees it as a major achievement to stave off the impact from Brexit.

Sri Lanka has signed Free Trade Agreements (FTAs) with countries such as India, Pakistan, Singapore and Thailand. It mulls agreements with other countries at the moment.