ECONOMYNEXT – Sensitive domestic industries like footwear and confectionery remain protected in Sri Lanka’s free trade agreement with Singapore, although that might not be to the benefit of consumers, a government statement said.
The Ministry of Development Strategies and International Trade, which has responsibility for trade deals, said the government gives due consideration to protecting local industry in free trade deals it signs with other countries.
The trade deals also have safeguard measures to protect domestic industry against import surges.
In almost all FTAs signed by Singapore with its other trading partners the level of liberalization is kept close to 90% or more of the tariff lines.
“Sri Lanka, in comparison, has been able to negotiate to limit it to 80%, thereby keeping 20% of tariff lines i.e. 1487 items in the Negative List to protect domestic Industries and revenue concerns,” the ministry said in a statement issued to explain how the FTA works and how domestic industry is protected.
“Items like footwear, confectionery and many other sensitive items which has a high MFN (most favoured nation) tariff have been kept in the negative list due to domestic sensitivities though one can argue that keeping them in the negative list does not benefit the larger segment of consumers.”
Furthermore, the bilateral safeguard section under the trade remedies chapter of the agreement has provision to increase tariff to the MFN level, the ministry said.
That can happen if import surges take place on a particular product due to implementation of the trade liberalization programme and if they cause injury or threaten to cause injury to domestic industry.
“Therefore, there are provisions in the agreement to protect the domestic industries.”
In addition, the ministry said, the mere reduction of tariff will not enable products to be imported, since the products to be imported from Singapore, should meet the rules of origin criteria.
“Products imported will also be subject to import license requirement, if applicable, and also to regulations for protection of human, animal and plant life.”
(COLOMBO, 24 August, 2018)