Consistent trade policies


There was an interesting news article thaat appeared on 7th March 2018 in the Lankadeepa, that no foreign investments will be allowed by the government to suppress the local industry in order to protect the local industrialists. It is strange to note that when the government is in a hurry to sign international agreements such as ECTA etc, can the government on the other hand have closed door policies?

Once you sign an international agreement, there are certain terms that you have to abide by in general. In a nutshell, there is something called MFN, most favoured nation status and also equal status for foreigners, similar to the locals under the principle of National Treatment. What National Treatment means is that you cannot treat foreigners and locals differently once you enter into an International Agreement in Trade and Services with another country.

In order to protect international treaties, we have enacted Right to Information Act No. 12 of 2016 where there are so many exemptions that we have to follow under Section 5(c) of the Act. Section 5(c)(v) states that – ‘the disclosure of such information would cause serious prejudice to the economy of Sri Lanka by disclosing prematurely decisions to change or continue government economic or financial policies relating to – ‘the entering into of overseas trade agreements’.Therefore it appears that this Act has a restriction to the provisions already enacted in Article 14(a) of the Constitution.

The arguments that were put forward by the lobby group favouring international agreements are that our producers and industrialists will have a bigger market to sell their goods, for e.g. India’s population is more than 1 billion, whereas Sri Lankan population is around 22 million and therefore as long as you could produce anything can be sold. The important thing that we have to remember is that except very few industrialists, most of the products are sold in the local market and the products that are sold to the international market have already been established, even before signing these agreements.

The bad part of this agreement is that rather than opening a world wide market to our producers and industrialists, now they have to compete with the rest of the world in order to sell their products locally. In order to compete with the rest of the world, they may not have sufficient finances, technical know-how, marketing techniques etc. While the Prime Minister is all out to sign international agreements to liberalise trade policies, some others in the government are pledging to protect the local industrialists, contravening the trade policies of Sri Lanka! Therefore, we should have a comprehensive and cohesive trade policy and mere utterances at local level meetings without knowing what is happening in the country will not be beneficial to local industrialists.

Dr. Ananda Ranasinghe

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