Sri Lanka should first worry about the barriers to trade inside the country before entering into far reaching trade pacts with other countries as bureaucracy and administrative and information inefficiencies among other things have put a cap on the progress of the country’s exports, opines a top economist. 
In a clear reference to the proposed free trade agreements (FTAs) by the coalition regime as a remedy to ailing exports, Nishan de Mel, the Executive Director of Verité Research questioned if the country’s political masters have in fact diagnosed the problems the exporters are facing and if right medicine is being prescribed.
Development Strategies and International Trade Minister Malik Samarawickrama this week told reporters in Davos that Sri Lanka would finalise trade pacts with China, Singapore and India before June this year.
“We used to think that all our problems or many of our problems have to do with how our exports are treated when they arrive at foreign destination.
So, wouldn’t it be good to get back to GSP Plus? Would that help our exporters? If only we could sign a trade deal with India - ETCA - wouldn’t that help us? What about another trade agreement with China, Korea, Singapore?
We have multiplied our ambitions in terms of reducing the constraints and problems our exporters face on the other side of the border when our goods arrive in other countries, when in reality most of the issues lying for decades inside the country,” de Mel told the 22nd Annual General Meeting of National Chamber of Exporters this week.
According to research carried out by Verité, exporters face four types of barriers. They are barriers faced inside the foreign country, barriers at the border of the foreign country, barriers at the domestic border and the barriers within the home country even before the exports reach the border. “I want to argue today that we must re-think seriously that barriers we face inside our own border before we worry about FTAs and the speck of dust that is in the foreign border,” de Mel added, making a strong case for domestic reforms.
It was only last week Dr. Ganeshan Wignaraja, Advisor to the Economic Research and Regional Cooperation Department of the Asian Development Bank prescribed the political masters to follow the right sequence in getting in to FTAs by prioritising domestic structural reforms.
Meanwhile, Sri Lankan exporters are facing excessive amount of non-tariff barriers (NTBs) both at the border and inside the border, when exporting to India in spite of having a two-decade old FTA with India.
But the coalition government seems determined to push for much deeper trade with India, disregarding the existing NTBs amid mounting public opposition.
Outlining the internal export barriers, de Mel said Sri Lanka has been reeling with an acute problem of efficiency because of the delay in bureaucracy at all levels of the state sector.
For instance Sri Lanka has been trying to process documents electronically and accept e-signatures since the mid 1990s, but failed to get the project off the ground for over two decades.
According to de Mel, this is not due to the absence of the required law to that effect, but due to non-implementation of the law by the bureaucrats.
Processing electronic documents and accepting e-signatures makes an exporter’s life much easier and also significantly results in lower costs.
“Even a tiny little African country like Senegal accepts electronic signatures”.
“Sri Lanka has been systematically falling behind. And these are administrative and informational problems that we are facing inside our own country that prevent us from making progress,” de Mel remarked.
Sri Lanka passed a law on electronic document processing and acceptance of e-signatures back in 2006 but the bureaucracy who are tasked with implementing the law has resisted it for over 10 years.
According to statistics presented by de Mel, Malaysia has seen the document processing time being reduced from 12 hours to 15 minutes after migrating into electronic processing. Besides, the cargo turnaround time has also come down from 4 days to 2 days.
Highlighting another shortcoming, de Mel said Sri Lanka does not have a national trade portal, which is a basic necessity for the exporters to access the important changes in policies and procedures.
He pointed out that such portals are available in less developed countries like Bangladesh, Philippines, Myanmar and Cambodia.
Sri Lanka’s export earnings have been in a downward spiral from around 33 percent of gross domestic product (GDP) in 2000 to 12.7 percent of GDP in 2015.
However, the country’s policy makers have come up with lofty targets to triple the exports earnings from the current US $ 10 billion to US $ 30 billion in just less than 4 years.
Making another shocking revelation, de Mel said Sri Lanka’s post harvest loss in agriculture trade is anywhere between 20 percent to 40 percent, which must be addressed on a priority basis as such could not be solved with any number of FTAs that the government is mulling to enter into with.
