Sri Lanka expects to complete India trade deal this year, China longer
May 08, 2018 07:41 AM GMT+0530 | 0 Comment(s)
ECONOMYNEXT - Sri Lanka is expecting to wrap up an expanded trade deal with India, this year, but a free trade deal with China will take longer, officials said.
International Trade Minister Malik Samarawickreme said talks with India was also aimed at reducing non-tariff barriers.
There is already an Indo-Lanka Free Trade Agreement where India has freed about 80 percent of good for her people, making it impossible for politically connected businesses to exploit the poorest section the people on the tariff lines.
Analysts say import duties allow businessmen to charge high prices from consumers and gauge them at rates higher than the rest of the world, which anyway have to come to a country after paying freight and port charges.
Sri Lanka on the other had only freed about 70 percent of the tariff lines under the Indo Lanka Agreement, having about 30 percent of the goods in a 'negative list', where businesses are given a chance to continuously exploit the people.
Official say India had recognized the asymmetry in liberalization by allowing Sri Lanka to keep more goods on the negative list.
Talks will focus on how the negative list can be reduced and the time frame to do it.
South Asian economies lagged behind the rest of Asia after independence from British rule as money printing central banks created forex shortages making it easier for businesses to make a case for domestic production or 'import substitution' and protection.
East Asia on the other hand forged ahead with free trade and strong exchange rates and became export powerhouses.
Protectionism was a philosophy made popular by nationalist 'German Historical Economics' as Germany became nationalist.
Some communist states in East Asia such as Vietnam also embraced free trade easily, with Marxist philosophy also stating that free trade and good manufactured with new technology and methods, benefitted the workers of the world.
"The system of protection was an artificial means of manufacturing manufacturers, of expropriating independent labourers, of capitalizing the national means of production and subsistence, of forcibly abbreviating the transition from the mediaeval to the modern mode of production," Karl Marx one wrote.
Marx was particularly supportive of free trade in food.
"To burden foreign corn with protective duties is infamous, it is to speculate on the hunger of the people," Marx said in 1848 in Brussels after the repeal of Corn Law brought food prices down in Britain propelling the country further on the path of an industrial powerhouse.
"In a word, the free trade system hastens the Social Revolution. In this revolutionary sense alone, gentlemen, I am in favour of free trade.
K J Weerasinghe Advisor to Sri Lanka's Ministry of International Trade and Chief Negotiator said China had wanted to start with 90 percent of tariff lines freed and the finalization may take time.
The reduction of tariffs can take place over several years, with times as long as 20 years being mentioned he said.
With the US government coming under the control of nationalists under Donald Trump, protectionism has come back to the fore though competitive businesses in the country who have global production chains are trying to resist. (Colombo/May08/2018)