The US has stressed that there will be no major change in its trade policy towards Sri Lanka in the aftermath of its new administration and hinted on stronger economic relations in the future, based on the bedrock US-Sri Lanka Trade and Investment Framework Agreement (TIFA) inked in Washington in 2002, to which Colombo consented readily yesterday.
“It is tough to predict the future,” stressed the Washington DC-based visiting new Assistant US Trade Representative South and Central Asian Affairs Office of the US Trade Representative Mark Linscott yesterday in Colombo.
Linscott was meeting Sri Lankan Industry and Commerce Ministry team led by Industry and Commerce Ministry Secretary Chinthaka Lokuhetti representing Industry and Commerce Minister Rishad Bathiudeen, joined by Commerce Department Director General Sonali Wijeratne and other Commerce Department officials and Bathiudeen’s Senior Advisor Himali Jinadasa.
Linscott was joined by Economic and Commercial Officer of US Embassy in Colombo William Humnicky.
“The new US administration has a significant shift in change towards several of its trade agreements-mainly the Trans-Pacific Partnership trade deal and there is a big focus on renegotiating the North American Free Trade Agreement (NAFTA) as well as correcting our current trade deficits too,” Linscott.
He added, “Despite this, I am not expecting any significant changes in the US’ bilateral trade with Sri Lanka or our TIFA with Sri Lanka. Being a hub in the region, this is a remarkably exciting time for Sri Lanka and we share the interest in working with Sri Lanka and exploiting its natural advantages for better trade.
The World Trade Organisation (WTO) Information Technology Agreement (ITA) and WTO Trade Facilitation Agreement (TFA) would bring immediate international attention if Sri Lanka moves ahead while I agree that these are challenging initiatives for the country. Also we are pleased of the government’s public-private partnership vision, which the TIFA too stresses about. The US is the largest export market for Sri Lanka but our exports to Sri Lanka have not increased in parallel and are down the list, something we need to work on.”
When it comes to Sri Lanka’s trade with the world in 2016, 27.5 percent of total Lankan annual exports headed to US, while 2.77 percent of total imports from the world to Sri Lanka were from the US. According to the Commerce Department of Sri Lanka, of last year’s Sri Lanka-US total bilateral trade, only 16 percent were imports to Sri Lanka (US $ 540 million) while 84 percent were exports from Sri Lanka to the US (at US $ 2.8 billion).
In the five period of 2012-’16, Sri Lanka’s exports to the US surged by 33 percent from US $ 2.11 billion (in 2012) to US $ 2.8 billion (in 2016). In the same period, imports from the US to Sri Lanka surged by 130 percent to US $ 540 million.
Sri Lanka’s leading exports to the US in 2016 were apparels and clothing accessories and made up textile articles (all three totalling to 11.5 percent of overall exports), solid, new and used tyres (6 percent) followed by fish, activated carbon and mineral and cinnamon. Among leading imports from the US in 2016 were oil cakes (13 percent), optical and photographic (10 percent), plastics (5 percent), medicaments (3 percent), and wheat and meslin (3 percent), etc.
Sri Lankan officials apprised Linscott on the country’s many new trade initiatives based on the vision of the unity government of Sri Lanka and thanked for recent US-GSP support.
“We welcome the recent US support by expanding US GSP’s scope, which enhances our exports of travel goods to the US,” said Lokuhetti.
He added, “Sri Lanka has one of the highest US GSP utilisation rates among other US GSP beneficiaries – we use 85 percent. Therefore, it is time we see more new initiatives via the TIFA and are keen to strengthen the TIFA path. Having successfully concluded the inter-sessional meeting in September 2016 on 12th Joint Council Meeting (JCM) to adopt a five-year action plan, it is time to meet again.”
Linscott responded, “We are looking to move on from the past and create a special (trade) plan for Sri Lanka on the TIFA. A real example is using trade to increase economic growth. We too definitely want to see the TIFA’s follow up on the progress achieved in Washington. I appreciate this frank exchange of ideas with the Industry and Commerce Ministry in my first visit to Sri Lanka.”
The TIFA was signed in July 2002 in Washington D.C., to further enhance trade and economic relations between the two countries.
According to the Commerce Department of Sri Lanka, in the five period of 2012-’16, Sri Lanka’s bilateral trade with the US surged by 43 percent from US $ 2.34 billion to US $ 3.34 billion. Even last year, Sri Lanka’s YoY bilateral trade with the US surged by 2.14 percent to US $ 3.34 billion from 2015’s US $ 3.27 billion.