Sri Lanka to remove para-tariffs in five-year phased out plan

Sri Lanka will continue with the plan to remove para-tariffs over a fiveyear period, while safeguarding local industries with anti-dumping legislation and the creation of a trade adjustment programme to support them to meet international trade challenges.

“This process will continue in 2019, where all HS codes with an import cess will be subject to a phasing out. In order to allow more time for industry adjustments, it is proposed that the Para-tariff phaseout takes place over a 5-year period,” Finance Minister Mangala Samaraweera said. However, considering the impact of cess on certain imported materials used by export industries such as tourism, manufacturing and construction, the government will phase-out cess on certain imported materials during a three-year accelerated period.

The government commenced the phasing-out of para-tariffs last year with the removal 1,200 para-tariffs in November, 2017.

However, Samaraweera noted that the 10 percent of all imported materials, which are considered to be sensitive, will not be subject to a complete para-tariff phasing-out.

In support of domestic industries exposed for foreign competition as a result of para-tariff removal, the government is expected to establish a Trade and Productivity Commission over next two years.

Samaraweera noted that the Commission was a recommendation to implement the much awaited trade adjustment programme.

The Budget 2019 proposed to allocate Rs.500 million to set-up the Trade and Productivity Commission at the Development Strategies and International Trade Ministry over the next two years.

Samaraweera went on to say that the government will continue to push forward with its liberal and open economic policies, despite the objections of certain individuals in the business community, who are averse to competition and fair markets. “This is a small but powerful and influential segment of the private sector. This is not the private sector that we want to see as the engine of economic growth, but is a vestige of a bygone era.

They benefited from inflated government contracts, the costs of which are still being paid-off today. Some of these oligarchs yearn for the return of a dictatorship, which funnelled so much wealth into their companies and private accounts,” he said.