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The Lanka Sama Samja Party in a press release says that the recent admonition of the Prime Minister to Sri Lanka's industrial and manufacturing businessmen that they must quit their field of activity if they cannot face free market competition from the outside world, is indeed unfortunate. The LSSP sees it as a lack of understanding of the problems of the Sri Lankan farmers and industrialists, especially of our small and medium manufacturing sector, the party stated in a media release.

The UNF Government seems to be following the lead of the USA in forging bilateral trade agreements. The USA chose bilateral trade agreements with countries of the Third World as a means of pressurising the European community to end their protectionist defense against the USA's huge farm subsidies and tariff walls against European steel. Sri Lanka as an economically underdeveloped country cannot pressurize any other country.

It is in this parlous situation that the local manufacturing community has expressed its reservations on the bilateral trade agreements that we have entered into with both India and China. These are industrial and manufacturing giants as compared to ourselves. The free or low tariff inflow of their goods to our market can well be regarded as 'dumping' in the sense in which the term is used in WTO literature. The WTO rules allow protection of incipient industry within a given time period. The UNF government's throwing of this right to the winds in forging these bilateral agreements calls for serious protest.

In the Regaining Sri Lanka document one of the main problems highlighted is that of the large national debt and the foreign exchange crisis. The increase of the import bill (which requires more dollars etc. to be sent abroad) while the Government's income from tariffs is lowered will tend to aggravate these problems. In fact with the upturn in the global economy since 2001, Sri Lanka's export income has increased, but as our import bill has shown a comparatively higher rise, the balance of trade has deteriorated, deepening the foreign exchange crisis. It is the responsibility of the Government to ensure that the infrastructural weaknesses are rectified and the necessary supporting services (funds - not only at low interest but also as venture capital; science and technology capability, efficient technology transfer and marketing mechanisms etc.) are provided.

Till then adequate subsidies must be provided as compensation. The BOI concessions should be extended to local producers in selected areas. Like in all countries that have developed in the past, and to varying extents in developed and developing countries today, there must be a reasonable period of tariff protection against imports to enable the enterprises to stabilise and to catch up with those abroad (e.g: 3 years). These measures are best done in the sectors in which we have a natural advantage and can be competitive e.g. tropical agriculture, including spices and herbal medicines, and post-harvest technology; fisheries; rubber goods technology; ceramics and the like.

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