In 2019, only 6% of tea imported by Thailand was from Sri Lanka. This low percentage can be attributed to the difference in preferences and Thailand’s high tariffs of 90% on imported tea, which act as barriers to Sri Lanka’s tea exports. Additionally, Thailand imposes up to 30% tariffs on nearly 120 product lines of wearing apparel. These high tariffs for products with a comparative advantage are not exclusive to Sri Lanka. Thailand also faces higher tariffs for vehicles, rubber, and light-electronics exports which Thailand exports competitively. This tariff structure hampers the bilateral trade of products with a higher comparative advantage for both countries. Despite these challenges, Sri Lanka and Thailand have expedited the process of signing a free trade agreement (FTA) to boost bilateral trade by threefold to USD 1.5 billion. This article discusses the trade effect of an FTA and a way forward to maximise the gains from an FTA.
Sri Lanka is hosting the fifth Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) summit from 28-30 March 2022. Established in 1997, BIMSTEC is a seven-member regional organisation comprising Bangladesh, Bhutan, India, Nepal, Myanmar, Sri Lanka, and Thailand. BIMSTEC pays significant attention to agriculture and food security, with agriculture included as a stand-alone sector in 2005 in recognition of its importance. Sri Lanka, the lead country for the coordination of activities in the Science, Technology and Innovation Sector, is in the midst of a food crisis even as it plays host. Against this backdrop, this blog discusses food security challenges in the BIMSTEC region, Sri Lanka’s experiences in smart farming, and its expectations from the summit.
The ongoing Bangladesh-Sri Lanka discussions on a preferential trade agreement (PTA) will benefit from knowing the potential gains from reducing bilateral trade costs. Ex-ante estimates predict modest gains for Sri Lanka and Bangladesh in absolute terms, even after completely removing the sensitive list. Given that the estimated modest economic gains of a Bangladesh-Sri Lanka PTA do not justify a trade deal that requires substantial resources for negotiations, the PTA should have fewer regulatory measures and tariff concessions for the products on the offensive lists to maximise the economic benefits of a PTA.
The Institute of Policy Studies of Sri Lanka (IPS) together with the Sri Lanka Medical Association (SLMA) and the Center for Policy Impact in Global Health (CPIGH) of the Duke University, USA organised a virtual policy dialogue on ‘Planning for Universal Health Coverage amidst the 4Ds of Health Transitions’ on 25 August 2021. The dialogue was structured around a recent IPS study aimed at understanding how government, donors and key country stakeholders in the health sector perceive these transition challenges and their impact on the progress towards UHC, where they see the biggest gaps emerging, and what actions can help to address these challenges and gaps. Health sector experts who spoke at the Dialogue flagged the need for multi-sectoral collaboration to achieve universal health coverage (UHC) in Sri Lanka.
Unprecedented declines in merchandise trade, foreign direct investment (FDI) flows, tourism and cross-border migration have all been hallmarks of the economic fallout of COVID-19. As a result, growth expectations for countries worldwide dimmed. Nonetheless, thanks in part to substantial expansionary monetary and fiscal policies being rolled out to achieve pre-COVID economic recovery levels and the development of vaccines, the contraction in global trade and economic output are less than what was anticipated. The Sri Lankan economy too has been impacted by these external developments, witnessing fluctuating fortunes in its external sector performance. This blog discusses the impacts of global economic developments on Sri Lanka’s external sector and suggests ways to cushion them.