Any small shock caused due to changes in US trade policies can have large repercussions on Sri Lanka because of the dependency the country has on the US economy, cautioned, Deputy Minister of Foreign Affairs Dr Harsha De Silva, addressing the Sri Lanka Apparel Exporters Association AGM held on Thursday in Colombo.
The apparel industry therefore needs to think how to prepare itself in the backdrop of Brexit and the political changes in the US, he cautioned.
The minister said he understood that exports to the UK were about US$ one billion which was 10 percent of the total exports. Quoting the saying “In the age of global supply chains you cannot take a chainsaw to a trade agreement and not expect to cut your foot off” by Prof Barry Rodrigus, the minister said how much the UK government or the US government may want to speed through it, his professional opinion was that the process is going to be rather lengthily and complicated.
“What we are going to see is a long drawn out process and during that period of time the UK will be fully engaged and all the agreements that are in place will continue to stay. So we have a certain period of time to position ourselves to deal with the fallout,” he opined.
Dr De Silva cautioned however that an all out trade protection policy will plunge the US into a trade recession and no one will be able to prevent that.
“Given that America is very important to us, 25 percent of our exports go to the US and 70 percent of that was apparels, I don’t thing in the short term there is going to be any misalignment. Any way any small shock can have a large repercussion because of the dependency we have on the US economy,” he warned.
With Brexit, without TPP what next for us, is it possible for Sri Lanka in this unsettled global trade environment create opportunities for itself? And also position itself as the hub of the Indian Ocean? Not forgetting that the country was now in a serious discussion with China for generating a significant role in building the infrastructure services for the country to be the hub in the Indian Ocean, he outlined.
Dr De Silva said by January US$ 8 billion worth projects will start in Hambantota which includes a LNG plant, a cement factory, dockyard and refinery. China trades a lot with Africa and Europe. It needs a place in the middle and the country should be ready to offer that. China will grow very fast and become very big. It would be foolish for us not to see that. Sri Lanka as a sovereign nation should take advantage of new global trends and its strategic position for the growth in the next 50 years, the minister said.
A rebalanced foreign policy with the European Union, perhaps the Common Wealth or the Colombo Plan and starting work on that and the projects with China will envisage a most exciting time for the country, he expressed hope.
The minister also expressed optimism that by mid next year Sri Lanka will receive GST + concessions from the European Union.
Add new comment