Trade experts said addressing internal trade barriers with the same attention and intensity paid to external trade barriers is vital to enhance export competitiveness and boost external trade.
Trade research reveals that subsequent governments have paid more attention to external trade barriers paying less attention to domestic bottlenecks which have stifled the pace of external trade over the years.
A report on ‘Sri Lanka’s Domestic Trade Barriers’ by Verite Research reveals that the government’s recent focus has been on reducing external trade barriers and improving market access through Free Trade Agreements (FTAs). In comparison, little attention has been paid to domestic trade barriers that affect export competitiveness. As a result agriculture is one of the most affected sectors impeding its export competitiveness and revenue to the country.
The study reveals that the domestic trade barriers are a significant impediment to the growth and diversification of the agricultural exports. The negative effects of these barriers are especially pronounced in the case of perishable agricultural products. Removing these barriers can go a long way in boosting exports.
Agricultural exports, valued at USD 2.5 billion in 2015, accounted for 25% of total exports. Tea accounted for 50% of total agricultural exports; coconut and spices accounted for another 33%; and fruit and vegetables, cut flowers and foliage, minor crops, and fisheries products constituted the remaining 17%.
According to the report, interviews with exporters revealed that improving the efficiency of border procedures could cut cost of products by as much as 25 to 30 percent. The study identifies trade barriers the exporters face when importing inputs such as seed and fertilizer.
Institute of Post Harvest Technology Past Chairman and National Chamber of Exporters former President Sarath de Silva said “Enhancing quality, production and export volumes depend on less trade restrictions and barriers that would increase competitiveness and boost trade,” de Silva said.
The Vertie Research report states that the export sector performance has been poor since the turn of the century. Exports to GDP ratio has declined from 33.3% of GDP in 2000 to 12.8% of GDP by 2015. Additionally, from 2011 onwards, exports have declined in terms of absolute value.
In response, the Government has made it a priority to revive the ailing export sector.
Trade experts said the government must make use of its friendly ties with all SAARC countries especially India and Pakistan to renegotiate trade agreements. Categorising it as regulatory , procedural and informational barriers the Verite Research report calls for speedy action to address the challenges.