Columns

The only certainty in the current global economy is its uncertainty. Our exports could be seriously eroded by the high US tariffs imposed on our exports, as the US accounts for as much as one half of our merchandise exports.

Furthermore, the likely global recession could impact adversely on our exports to the rest of the world. Our tourist earnings and remittances too could be affected adversely owing to depressed in-comes and higher travel costs. Recessionary conditions and lower employment in West Asian and oil-producing countries could reduce remittances.

Challenge

We must find ways and means of coping with the severe economic storms and uncertainties in this bleak international economy by diversifying our exports and export markets, as the prospect of nego-tiating for lower import tariffs in the US is highly uncertain.

Way forward

We must enhance our competitiveness, diversify our exports, widen our export markets and increase our exportable surpluses in agricultural commodities in which we have a competitive edge. Developing new products, increasing our efficiency and increasing our competitiveness, finding new markets and removing obstacles to our export trade are the ways forward to an improvement in our exports.

US tariffs

The high tariffs President Trump has imposed on imports to the US have suddenly disrupted global trade, and a global recession is expected this year. How we cope with the emerging global conditions will determine our economic stability and growth.

Exports

Our exports are expected to be severely reduced if the US tariffs for our exports remain high, as the US is our main export market for our manufactured exports. We have to find ways and means of en-hancing our merchandise exports. The manner in which we minimise and cope with the emerging global conditions will determine our economic stability and growth.

The high US tariffs are expected to reduce our exports, strain our balance of trade, increase unem-ployment and reduce incomes. Furthermore, the recessionary conditions may reduce earnings from tourism and inward remittances. How do we cope with these serious economic setbacks?

Negotiations

Whether the government’s trade negotiations would bear fruit remains to be seen. The expectation is that there would be a lowering of tariffs owing to the adverse impacts of the tariffs on the US economy. What those changes would be and how beneficial they would be for our exports remain highly uncertain.

Countervailing action

The countervailing actions we could take to meet the impacts of the US trade policies are the protection of our other markets, diversification of our markets and export products, and improving our competitiveness by increasing our exportable quantities in our high-quality agricultural exports such as tea, pepper, cashew and spices. These are vitally important in the long-term growth of our exports.

European Union

In the current context of uncertainty in the US market, it is vital to protect and expand our exports to other regions and countries. The European Union countries are a huge market for our exports and are so due to the favoured treatment we have with the GSP+ status. There are, however, conditions that the government must comply with for the continuation of these concessions.

GSP Plus

The outcome of our discussions with the EU mission on our GSP+ status is of vital significance for our exports, as the European Union is our second-largest export market. We are in danger of losing our GSP+ status as we have dragged our feet in meeting the EU’s condition of repealing the Prevention of Terrorism Act and the Online Safety Act, which bolster the repressive potential of the government.

Fulfilling the promise

The JVP/NPP had promised to repeal this legislation for the continuation of the EU’s trade concessions so vital for our economy. The delay in implementing this promise could endanger the continuity of the concessions at a time when exports to the US are threatened. The government must make a firm and credible commitment to repeal these undemocratic laws.

Explanation

The government has explained that the delay was due to the lack of an alternate law to prevent terrorism and has given an assurance that it will not use the PTA for political reasons. Hopefully this assur-ance will be acceptable to the EU, as the withdrawal of the GSP+ concessions would undermine Sri Lanka’s trade balance and economic recovery.

Solution

One way of assuring the EU of the government’s intent would be to give a timeline to repeal the PTA. There is no reason why the government, with its two-thirds majority, cannot pass the new legislation that safeguards human rights.

Negotiations

Sri Lanka has received a breathing space of three months to negotiate with the US regarding tariffs to be imposed on Sri Lankan exports to the US. Although a reduction of US tariffs is likely, their extent and conditions are highly uncertain. It is, therefore, imperative for us to diversify our exports, export markets and our competitiveness.

Diversification

The only certainty in the global economy is its uncertainty. The high tariffs President Trump has imposed on imports to the US have suddenly disrupted global trade, and a global recession is expected this year. Sri Lanka’s exports are expected to be severely reduced as the US is our main export market.

Conclusion

We have to find ways and means of enhancing our competitiveness, diversifying our exports, widen-ing our export markets and increasing our exportable surpluses.

Developing new products, increasing our efficiency and increasing our competitiveness, finding new markets and removing obstacles to our export trade are the ways forward to an improvement in our exports. We must find ways and means of coping with the severe economic storms and uncertainties by diversifying our exports and export markets.