Promoting trade between US and Sri Lanka:

Many challenges remain - AMCHAM

by Lalin Fernandopulle

While expressing positive sentiment of better trade and investment between Sri Lanka and the United States, a top official of the American Chamber of Commerce (AMCHAM) underscored the importance of addressing the tariff barriers that stifles the growth of trade and investment between the two countries, at the US Trade Show 2015 in Colombo.

Sri Lanka and the United States are keen to boost trade and investment with renewed interest. Relations between the two countries took a new turn following the change of government in January this year.

However, many challenges remain in promoting trade and investment between the two countries.

Trade has been in favour of the US with a deficit of US$ 1,888 million up to September this year. Exports amounted to US$ 292 million and imports US$ 2,181 million.There is a considerable deficit in US trade with Sri Lanka due to many challenges faced by US companies and investors.

The complexity of the multitude of tariffs and taxes imposed on the business community is one of the main barriers in addition to corruption and lack of transparency of the regulatory system, which keeps investors away from large projects and government procurement contracts, the Chamber official said.Exports to the United States, Sri Lanka’s most important single-country market, were estimated at $2.4 billion last year.

The United States is Sri Lanka’s biggest single-country market for garments, accounting for around 40 percent of total garment exports. US exports to Sri Lanka were estimated at $244 million last year, consisting primarily of industrial machinery, medical instruments, aircraft parts, lentils, paper, specialized fabrics and textiles for use in the garment industry, fruits, and pharmaceuticals.

Stringent labour laws and policies in favour of the employee also dampen business activities since its difficult to fire or lay off workers for reasons other than well-established disciplinary issues. To ease the business registration process many look forward to an online facility. Prohibitions imposed on the purchase of land by foreign nationals, foreign companies and companies incorporated in Sri Lanka in addition to retrospective applicability of a number of other laws are viewed as major barriers to trade in Sri Lanka by the US, an AMCHAM spokesman said.

US Ambassador to Sri Lanka, Atul Keshap said there is a new and tremendous opportunity for the United States and Sri Lanka to enhance economic ties and expand bilateral trade.

“US companies are some of the most dependable business partners, producing quality products and services in the world,” Keshap said.

Deputy Foreign Minister Harsha de Silva said a free trade agreement between Sri Lanka and the US is in the pipeline and added that discussions between the two governments are continuing.

Sri Lanka should focus on preferential trade agreements and the Transpacific Partnership Agreement (TPP) to expand trade.

Transportation, information technology, food preparation, agriculture, cosmetics, logistics, machine tools, education and energy are some of the major sectors represented at the show.