Sri Lanka to lose US$ 39.8 mn from TPP exclusion
MAY 11 2016
The level of trade diversion or market loss for Sri Lanka due to Sri Lanka being excluded in the Trans-Pacific Partnership (TPP) is expected to be around US$ 39.8 million, Preliminary estimates by the Institute of Policy Studies of Sri Lanka (IPS) shows.
The TPP was signed last February bringing together 12 countries, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, US, and Vietnam. These countries accounts for more than one-third of world’s GDP, and one quarter of world trade.
TPP will now undergo a two year ratification process in all the 12 countries.
A country-wise analysis shows that the biggest loss in exports for Sri Lanka would be in the USA (81%). To a much lesser extent, export loss will also take place in Mexico (8.8 per cent), Canada (5.7 %) and Japan (1.7%).
“When reviewing the garment sector, Sri Lanka need to carefully address the TPP under which tax free garment export opportunities have been given to countries such as Vietnam. This has enabled them to engage in competitive markets and supply the American and Japanese markets at low rates. This may also affect exports from Sri Lanka in the future. TPP must therefore be reviewed further,” the study said.
Duty free market access provided under the Agreement for member countries would result in cheaper prices for goods traded among TPP countries. This can in turn would be diverted towards TPP countries where buyers can benefit from purchasing cheaper goods.
The size and scope of this trade deal makes it a pertinent trade policy issue for both members and non-members like Sri Lanka.
Countries such as Korea, Taiwan, the Philippines, Colombia, Thailand, Indonesia, have expressed an interest in joining the mega regional grouping. Therefore, the risks of trade loss or diversion are likely to increase with time given that Sri Lanka is also not part of the other mega-regional trade agreements under negotiations.
Sri Lanka too has cast its eyes on TPP and is currently conducting a feasibility study to determine the pros and cons of the Agreement.
Sri Lanka should strive to improve the competitiveness of its own exports by creating competitive infrastructure services, promoting export oriented foreign investment, facilitating goods across borders effectively, addressing export market issues through trade agreements, and improving
access to inputs of materials, capital, and technology for the export sector.
In November 2015, Prime Minister, Ranil Wickremesinghe stressed the need for an urgent review of the TPP in his Economic Policy Statement.The IPS study was conducted by Research Fellow Dr. Janaka Wijayasiri and Research Officer Nipuni Perera.
MAY 11 2016
The level of trade diversion or market loss for Sri Lanka due to Sri Lanka being excluded in the Trans-Pacific Partnership (TPP) is expected to be around US$ 39.8 million, Preliminary estimates by the Institute of Policy Studies of Sri Lanka (IPS) shows.
The TPP was signed last February bringing together 12 countries, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, US, and Vietnam. These countries accounts for more than one-third of world’s GDP, and one quarter of world trade.
TPP will now undergo a two year ratification process in all the 12 countries.
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| Trans-Pacific Partnership (TPP) |
A country-wise analysis shows that the biggest loss in exports for Sri Lanka would be in the USA (81%). To a much lesser extent, export loss will also take place in Mexico (8.8 per cent), Canada (5.7 %) and Japan (1.7%).
“When reviewing the garment sector, Sri Lanka need to carefully address the TPP under which tax free garment export opportunities have been given to countries such as Vietnam. This has enabled them to engage in competitive markets and supply the American and Japanese markets at low rates. This may also affect exports from Sri Lanka in the future. TPP must therefore be reviewed further,” the study said.
Duty free market access provided under the Agreement for member countries would result in cheaper prices for goods traded among TPP countries. This can in turn would be diverted towards TPP countries where buyers can benefit from purchasing cheaper goods.
The size and scope of this trade deal makes it a pertinent trade policy issue for both members and non-members like Sri Lanka.
Countries such as Korea, Taiwan, the Philippines, Colombia, Thailand, Indonesia, have expressed an interest in joining the mega regional grouping. Therefore, the risks of trade loss or diversion are likely to increase with time given that Sri Lanka is also not part of the other mega-regional trade agreements under negotiations.
Sri Lanka too has cast its eyes on TPP and is currently conducting a feasibility study to determine the pros and cons of the Agreement.
Sri Lanka should strive to improve the competitiveness of its own exports by creating competitive infrastructure services, promoting export oriented foreign investment, facilitating goods across borders effectively, addressing export market issues through trade agreements, and improving
access to inputs of materials, capital, and technology for the export sector.
In November 2015, Prime Minister, Ranil Wickremesinghe stressed the need for an urgent review of the TPP in his Economic Policy Statement.The IPS study was conducted by Research Fellow Dr. Janaka Wijayasiri and Research Officer Nipuni Perera.
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