Presidential Committee of Experts silenced SLSFTA trumpet blast
Despite the trumpet blast with which the government introduced the Sri Lanka Singapore Free Trade Agreement ( SLSFTA), no tangible benefits could be reaped from the accord, the Presidential Committee of Experts (CoE) has said in concluding their report.
Sri Lanka’s balance of payments is likely to weaken as a result of the SLSFTA due to increase in imports with its flexible Rules of Origin and non- expansion of market access for Sri Lankan exports, the committee, appointed by the President to examine the agreement, warned.
The potential to develop linkages with Global Value Chains through SLSFTA is limited, as there is less possibility to attract modern hightech industries, given Sri Lanka s weak competitiveness.
Hence, any significant knowledge transfers are unlikely although the movement of professionals in the services sector is partially opened under SLSFTA, the report highlighted.
According to the conclusions of the CoE, Sri Lanka’s weak competitiveness is largely due to domestic policy drawbacks, and their correction is beyond the scope of the SLSFTA.
The committee was of the view that the capacity, therefore, of SLSFTA to improve the country’s competitiveness or to produce an upliftment of people’s living standards is likely to be limited.
Opening government procurement for market access under the agreement is bound to restrict the opportunities available to local industries. It also has implications for the government policy formulation pertaining to national development.
The SLSFTA, which is a deep agreement that goes beyond- theborder policies, poses challenges for the government’s policy autonomy with regard to economic management, the CoE said.
The committee suggested that first order priority should be given to improve the country’s competitiveness by means of unilateral domestic policy reforms based on a coherent national trade policy within a well-articulated national development framework.
The government of Sri Lanka in its policy making exercises should act with the goal of national interest in the forefront, the committee recommended.
Entering into FTAs without careful feasibility and cost-benefit exercises, primary policy documents and conducive domestic institutional and structural features is unlikely to be helpful to improve people’s living conditions, as evident from the SLSFTA, it said.
The CoE observes that the lack of a monitoring mechanism to track the progress of FTAs is a major institutional weakness in Sri Lanka.
This prevents the opportunity to learn from the pros and cons of the previous FTAs and to make use of such previous experiences in negotiating the future FTAs.
Therefore, the CoE recommends that an FTA monitoring authority be established, and reporting the progress of FTA to the Cabinet on a yearly basis be made mandatory.
According to the conclusions of the CoE, Sri Lanka’s weak competitiveness is largely due to domestic policy drawbacks, and their correction is beyond the scope of the SLSFTA.