THE BIG PICTURE
TARIFF MERRY-GO-ROUND If you are one among many of us who believes that political circuses only run here in Sri Lanka, think again. Thanks to POTUS, Uncle Sam is giving us – and most of the world – a run for our money!
As if to personify this, President Donald Trump has singlehandedly turned world trade upside down and into a state of flux with no plausible end in sight at the time of going to press.
Whether Sri Lanka has done well to reduce the 44 percent tariff down to 20 percent is apparently a matter of conjecture – supporters of the ruling types and others who would rather not be in their bad books have hailed the outcome while other commentators fear that the resulting hike (from the existing 10% levy) threatens the livelihoods of thousands of working people, especially in our apparel factories and the plantations.
Some have even expressed concern about the impact that the higher tariff may have on Sri Lanka’s ability to repay its restructured debts come 2028, on top of which questions have been raised in parliament and beyond about what concessions have been offered by the government to secure the 24 percent reduction from Trump’s original tariff on exports from Sri Lanka’s shores.
‘Toggle navigation’ is how one social media platform described the goings on.
Meanwhile, according to mainstream social media reports, President Anura Kumara Dissanayake has said that no agreement has been finalised or signed to reduce the reciprocal tariff imposed by the US on Sri Lankan exports to 20 percent – so yes, confusion reigns supreme!
Speaking in parliament on 7 August, he revealed that discussions had recommenced with the United States to try to reduce the tariff further.
Krishan Balendra, the Chairperson of the Ceylon Chamber of Commerce – who features on the cover of this edition of LMD – is perhaps taking a pragmatic view of the outcome of negotiations so far: “It is now important to use this window of opportunity to work towards a long-term arrangement that ensures more stable and competitive market access for our exports.”
When asked for his take on the latest developments, LMD columnist and the chamber’s Chief Economic Policy Advisor Shiran Fernando asserted that they “offer an opportunity to rebuild momentum in our trade relationship with the United States, and positions Sri Lanka as a reliable and competitive partner in global value chains…”
“At the same time, we must address remaining non-tariff barriers, diversify our export base and deepen integration through strategic trade agreements to fully unlock Sri Lanka’s potential in world markets,” he adds.
So what’s the bottom line?
First, the gap between rhetoric and reality needs to be narrowed… before it’s too late. Second, be it in political circles or the influential private sector, the need for a united front is a sine qua non. And third, as both Balendra and Fernando say, there’s a need to also focus on the future of Sri Lanka’s export strategy.
A game plan is in order.
