Sri Lanka should not make a kneejerk reaction to Brexit- expert

“The crisis of Brexit is a larger product of how the world is changing so that the response Sri Lanka should make is not a knee-jerk reaction. Instead we should watch the figures and numbers,” Dr. Vidanage told a forum on Brexit and its impact on Sri Lanka, jointly organized by Sri Lanka Economic Association and the Organisation of Professional Associations of Sri Lanka. Speaking on the rationale behind Britons deciding to leave the 28-member bloc he said, it demonstrated the rising tide of populism similar to populist political movements such as Trump phenomenon in the United States (US).

The presumptive Republican nominee, Donald Trump is gaining momentum against other contenders as he has become the preferred choice by the majority white US citizens as they have been left jobless in recent times allegedly due to the outsourcing of jobs to East Asian countries under successive US Presidents. Trump promises to bring those jobs back to the US but the proposal hasn’t been fared well with some of the tech giants, including Apple Inc. “Globally there is a distrust in institutions and establishments (governments) and political elites – political parties and political leaders across the globe,” Dr. Vidanage said drawing close parallels to Sri Lanka. Meanwhile Sirimal Abeyratne, Professor of Economics at University of Colombo said Brexit was a continuing phenomenon and as much as it poses challenges it also opens up opportunities for Sri Lanka. “Brexit is not the beginning, not the end. It’s continuing,” he said.

Abeyratne said Sri Lanka should bring in policy reforms post-Brexit to benefit from the shift in global investments flows and production from developed markets to developing markets in the Asian region. Citing research, he demonstrated the exponential growth in foreign direct outflows from the developed countries to developing countries starting from after 1990s. Professor Abeyratne is a strong advocate of free markets and has carried out extensive research into Asia Pacific supply chains. However Dr. Vidanage argued that open markets were not the panacea for all problems and therefore liberalisation of factor markets must be supplemented with strict regulation and absolutely high transparency.

Brexit is mainly a backlash against the unregulated influx of immigrants from Europe since the United Kingdom opened its borders to European Union in 2004. Sri Lanka’s policy makers are forcing a highly controversial trade and services pact - Economic and Technology Cooperative Agreement (ETCA) - with neighboring India. This has met with strong opposition from multiple local parties and Dr. Vidanage was of the opinion that the conversation around may have been driven by fears, which were similar Brexit’s case. Hence he cautioned the policy makers of entering into entering into any agreements without studying pros and cons thoroughly. “..it is wrong to go into somebody’s alliance without knowing where we are heading to,” he stressed.