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The current uncertainties in global trade and tariffs are an opportunity to make much-needed structural changes to strengthen our weak export capacity and unstable export structure.

Persistent deficits

Trade deficits have been persistent features of our external finances since independence. There have been only three or four years of a trade surplus since 1950, and these small surpluses have been achieved with stringent import controls. The structural weaknesses in our export structure must be altered expeditiously.

Multi-pronged strategy

The current threats and uncertainty in global trade are an opportunity to make the much-needed structural changes in our export structure by diversifying export products, increasing export volumes and diversifying export markets. This is especially so in respect of our manufactured exports, such as garments, rubber products, ceramics, and electric goods. We have to increase our exportable products by broadening our export commodities and finding new export markets.

Export markets

The recent visits of trade delegations from several countries, including China, Vietnam, India and Germany, are favourable developments. However, unless we have exportable commodities in large quantities, free trade agreements could expand our bilateral trade deficits. China would be a good market for our solid tyres, rubber manufacturers and even clothing.

Opportunity

The current challenge to our exports is an opportunity to diversify our export commodities, as well as seek new markets. Never has the admonition ‘Export or Perish’ been more relevant to Sri Lanka as it is now.

In the midst of a global trade and tariff war when our exports to our main markets are facing a severe threat and imminent recessionary conditions are threatening our exports, expeditious actions must be taken to minimise the setbacks to our exports.

Challenge

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

European Union

In the current uncertain and unpredictable 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 of the GSP plus 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 on our GSP Plus status is of vital significance for our exports, as the European Union is our second-largest export market. We may lose our GSP Plus status if we drag our feet in meeting the EU’s condition of repealing the Prevention of Terrorism (Temporary Provisions) Act and other undemocratic legislation, such as the Online Safety Act, which bolster the repressive potential of the government.

Fulfilling the promise

The JVP/NPP had promised to repeal these laws for the continuation of the EU’s trade concessions so vital for our economy. The delay in fulfilling 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.

Formidable challenges

The government faces formidable challenges of unifying the country and eradicating corruption amidst an inhospitable international environment that is threatening to destabilise the country’s external finances, increase unemployment and decrease incomes.

Summing up

The crisis we are facing today on exports is an opportunity to correct fundamental flaws in our economy. Our dependence on a few exports and a few markets, the narrow number of exports and low volumes makes us vulnerable to the vagaries of international trade.

The solution to the fundamental weaknesses is to expand and diversify our export markets, diversify our export products, increase our export volumes in the products we have a decisive comparative advantage in and remove the obstacles for our exports, such as complying with the conditions for the continuation of the GSP Plus concession.

The export strategy has to be implemented by a strong participation of the private sector. The government has to play the important role of facilitating exports by improving the infrastructure, reducing the costs of production and encouraging foreign investment in export industries.

Conclusion

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.