New Trade Policy presented to Cabinet Sub Committee on Economic Management

The Minister of Development Strategies & International Trade yesterday presented the New Trade Policy (NTP) drafted by a committee comprising of trade sector experts in consultation with a wide range of stakeholders to the CCEM, making a remarkable milestone in the history trade policy making in Sri Lanka.

Formulation of a NTP was a long awaited task which was demanded by various parties including both public and private stakeholders especially professional associations, chambers, academia, international trading partners etc. Lack of a clear vision and coherent trade policy that provides benchmarks to govern and guide the administration and conduct of international trade has resulted in the development of ad-hoc and often conflicting rules, regulations and certain practices  adversely affecting the expansion of trade over the last decade. 

The government recognized the poor performance of trade over the past several years was a result of inward-orientation, separation from the rest of the world, lack of integration and highly distorted trade regime. Sri Lanka has the slowest export growth since 1990s compared to peer countries. Share of trade to GDP in Sri Lanka has fallen from 80% in 2000 to 49% in 2015 whereas most of the countries have made significant increases. For more than a decade the share of FDI in GDP has been remained around 1%. Exports as share of GDP also declined to below 20%. 

In the backdrop of trade and investment being given the highest priority of the development agenda of the government, the NTP will set a framework to guide trade and FDI-led development in the country, with a clear vision for: introducing domestic trade reforms and legal and regulatory structure required enhancing competitiveness leading to higher productivity; formulating the broad based fiscal policies which has cascading effects across many sectors and players in the economy; negotiating the international trade agreements; mapping out the product space and prioritizing and boosting investments and exports and  drawing up a facilitation mechanism to create a level playing field and adjustments .

Therefore, government has identified the need to bring different elements of trade policy into one platform essentially with a series of reforms to increase competitiveness, expand market access & trade facilitation, create macroeconomic balance, bring policy and institutional coherence and adjustment of firms and people. The NTP proposes various actions including new export strategy, reforms in decade-old legal framework, standards & regulations, national single window and trade  cost adjustment program to help firms and people affected by policy reforms.

The draft NTP was prepared through an inclusive process taking into account development objectives of the government, Sri Lanka’s comparative advantage in trade, past trade performance, recent global trade developments and trade policy formulation experiences of other developing countries.

It was drafted by a committee comprising of a team of experts. The Draft NTP was published in the Ministry website and widely circulated to various stakeholders including political leaders, professionals, trade chambers, industry associations and relevant Ministries for their comments, suggestions and observations for further improvement. After incorporating the comments received from those stakeholders, the draft NTP was finally wetted by the Committee established as the focal point in policy formulation and execution in relation to International Trade at the Ministry of Development Strategies & International Trade. The NTP placed before the CCEM is the final outcome of extensive public consultations and discussions held over the last 12 months, from May, 2016 to 15 May 2017.