In-house seminar on the Effect of Trade Policy on Global Value Chain Participation of South Asian Countries by Chathurrdhika Yogarajah

24 March 2022

‘Effect of Trade Policy on Global Value Chain Participation of South Asian Countries: Implications for Bangladesh-Sri Lanka Trade Negotiations’ was the subject of IPS’ in-house seminar this month presented by Research Assistant, Chathurrdhika Yogarajah. The presentation was based on a recent IPS publication co-authored with Dr Asanka Wijesinghe. In her presentation, Chathurrdhika highlighted the plausibility, along with the pros and cons of negotiating a Preferential Trade Agreement (PTA) between Bangladesh and Sri Lanka.

The research showed that although the South Asian region embarked on trade liberalisation in 1995, an in-depth analysis shows that intra-regional trade has not reached its full potential due to similar product structures, sensitive lists, and complex rules of origin (ROO) between the countries. In the case of the PTA between Bangladesh and Sri Lanka, modest gains are reported in absolute terms for Sri Lanka, whereas gains are insignificant for Bangladesh. However, in relative terms, gains are substantial.

Chathurrdhika pointed out that for these benefits to be realised, removing tariffs in the sensitive lists of goods are necessary. However, this can be an issue as directly observed revenue loss may discourage full tariff elimination for Sri Lanka, and Bangladesh may request for special and differential (S&D) treatment. She concluded that negotiating a PTA between the two countries will generate modest gains that can be justified from a value chain participation perspective. Moreover, Bangladesh and Sri Lanka can opt for selective negotiations for removing tariffs on intermediate goods.

Download presentation HERE.

Download publication HERE.