Call to support WTO negotiation

Even though WTO negotiation is a slow process, it is a system that needs to be protected and supported by developing countries such as Sri Lanka, said Executive Director Institute of Policy Studies of Sri Lanka Dr. Saman Kelegama.

Speaking on the theme, "Doha to Hong Kong WTO and Sri Lanka" at the annual sessions of the Sri Lanka Economic Association, he said that Sri Lanka needs to effectively participate in multilateral negotiations in the WTO through building coalitions to ensure not to undermine the development dimensions of liberal trade. There is policy space and fair trade.

The trade policy in Sri Lanka took different paths. Initially it was a unilateral trade policy and it intensified after 1977 liberalisation and is ongoing. The regional track was initiated with the Bangkok Agreement in 1974 and four rounds of SAPTA in the late 1990s are significant. In bilateral track FTAs with India (2000) and Pakistan (2005) are significant.

In the multilateral track liberalisation was influenced by the unilateral liberalisation agendas and various structural adjustment programs of the government. From 1999-2001 ML on particular issues was influenced by the SAARC agenda but on some other issues it was influenced by unilateral and bilateral liberalisation pursued by the government.

During 2002-2003 ML was influenced by the need to work out a Bilateral Free Trade Agreement(BFTA) with USA to support the RMG industry in the post MFA era. This required pursuing a WTO plus path on issues such as TRIPS, competition policy and FDI liberalisation.

BFTA with USA could not be worked out as these conditions were fulfilled half heartedly and retracting domestic policy space being an impediment to pursue domestic requirements. Unilateral liberalisation also slowed down due to the need for policy space to promote domestic agriculture and SMIs as per government policy.

This slow down influenced the position on the July 2004 package.

Sri Lanka believes that there are too many bottlenecks in the agriculture supply side for the sector to effectively responed to trade liberalisation. Therefore until institutions and infrastructure are in place trade liberalisation should be slow, Dr. Kelegama said.

The most important element in the tariff reduction formula agreed at the Hong Kong ministerial for Sri Lanka is threshold for the lowest band at 50% with a low reduction at 15%.

The agriculture support needs to be increased rather than decreased since 32% of the labour market, 70% of the livelihoods and 18% contribution to the GDP is from agriculture.

Agriculture tariffs bound at 50% is now felt a mistake. Dr. Kelegama said that we have been more Catholic than the Pope. The agriculture sector is more liberalised than is required under AOA commitments. He said that a new formula based tariff reduction is now being discussed and debated at the WTO.