By Luis C. Ramírez-Martínez
Sri Lanka, like many other countries in the world, is facing an economic crisis that has been exacerbated by the COVID-19 pandemic. It is well known that the country’s per capita income has fallen significantly, and the government is seeking ways to promote economic growth and stabilize the economy. One way to achieve this is through strategic promotion of Sri Lankan exports via expanded trade negotiations.
Sri Lanka has a diverse range of export products, including tea, textiles and apparel, rubber products, gems and jewelry. However, the country faces several challenges in promoting these products in international markets, including high transportation costs, lack of investment in infrastructure, and competition from other countries.
A Few Ideas for Commercial Strategies
To address these challenges, the government might want to consider adopting a few strategies. First, Sri Lanka can focus on promoting its high-quality tea in international markets. Sri Lanka is one of the world’s largest exporters of tea, and its tea has a strong reputation for quality. By investing in marketing and branding, Sri Lanka can increase demand for its tea in international markets, especially in countries where tea is an increasingly popular beverage. Sri Lanka can also explore the potential of organic and fair-trade tea, which could attract consumers who are willing to pay a premium for these sustainable products.
Second, Sri Lanka can promote its textile and apparel industry, which is the country’s largest export sector. Sri Lanka has a strong tradition of textile manufacturing, and its products are known for their high quality and innovative designs. By investing in better technology and more creative design, Sri Lanka can increase the competitiveness of its textile and apparel industry in international markets. Sri Lanka can also explore new markets, such as Africa, where there is a growing demand for textile and apparel products.
Third, Sri Lanka can focus on promoting its gems and jewelry industry, which has a strong reputation for quality and craftsmanship. Sri Lanka is known for producing high-quality gemstones, including sapphires, rubies, and emeralds. By investing in marketing and branding, Sri Lanka can increase demand for its gemstones and jewelry in international markets, especially in countries where luxury goods are in high demand. Sri Lanka can also explore the potential of ethical and sustainable jewelry, which could attract consumers who are concerned about the social and environmental impact of their purchases.
To achieve these objectives, the Sri Lankan government can adopt several policies and measures. These include investing in infrastructure, such as transportation and communication networks, to reduce the cost of exporting goods. The government can also provide incentives for businesses to invest in technology and innovation, such as tax breaks and subsidies. Additionally, the government can negotiate trade agreements with other countries to reduce trade barriers and increase market access for Sri Lankan products.
What about Trade Negotiations? – Strategic Partners
Sri Lanka’s approach to commercial relations with its top trade partners should focus on diversifying exports, attracting foreign investment, exploring new sectors, and negotiating trade agreements where appropriate. By doing so, Sri Lanka can deepen its commercial ties with these countries and promote economic growth and development.
United States: Sri Lanka needs to focus on diversifying its exports to the US market, beyond textiles and apparel. This could involve promoting Sri Lankan products such as tea, spices, and seafood, which have high demand in the US market. Sri Lanka could also explore opportunities in the US services sector, such as IT and outsourcing. To enhance trade relations, Sri Lanka could explore the possibility of a Free Trade Agreement (FTA) with the US, which would provide a framework for increased trade and investment.
United Kingdom: With Brexit, Sri Lanka has an opportunity to deepen its commercial ties with the UK. Sri Lanka could explore opportunities for increased exports of tea, textiles, and apparel to the UK market, as well as diversify into other sectors such as ICT, tourism, and education. The UK is also an important source of foreign direct investment (FDI) for Sri Lanka, and Sri Lanka should seek to attract more UK investment, particularly in the infrastructure sector. Additionally, Sri Lanka could explore the possibility of a FTA with the UK, which would provide a platform for increased trade and investment.
India: India is Sri Lanka’s largest trading partner, and there is significant potential for further growth in bilateral trade. Sri Lanka could focus on increasing exports of tea, rubber, gems, and jewelry to the Indian market, as well as expanding into new sectors such as ICT and tourism. Sri Lanka could also explore opportunities for joint ventures and partnerships with Indian companies, particularly in the infrastructure sector. To deepen trade relations, Sri Lanka and India could consider updating and expanding the existing FTA to include more sectors and reduce trade barriers.
China: This country has been a major trading partner and investor in Sri Lanka, particularly in the infrastructure and construction sectors. While this has brought some benefits to Sri Lanka, such as the development of ports, highways, and power plants, it has also raised concerns about debt sustainability, environmental impact, and economic dependence on China. Accordingly, Sri Lanka needs to adopt a strategic approach to its commercial engagement with China. This could involve several measures, including:
- Balancing trade relations: Sri Lanka needs to reduce its trade deficit with China by increasing exports to China. This could involve promoting Sri Lankan products in the Chinese market, particularly high-value products such as tea, textiles, and gemstones.
- Diversifying investment: Sri Lanka needs to attract more investment from other countries to reduce its dependence on Chinese investment. This could involve improving the business environment, providing incentives for investment, and promoting Sri Lanka as an attractive destination for foreign investment.
- Ensuring sustainability: Sri Lanka needs to ensure that Chinese-funded projects are environmentally and socially sustainable. This could involve conducting environmental and social impact assessments, involving local communities in the decision-making process, and monitoring the implementation of projects.
- Negotiating fair agreements: Sri Lanka needs to negotiate fair agreements with China to ensure that the country’s interests are protected. This could involve negotiating favorable terms for loans and investments, ensuring that projects are implemented transparently, and addressing concerns about debt sustainability.
- All in all, Sri Lanka needs to adopt a strategic approach to its commercial engagement with China, which involves balancing trade relations, diversifying investment, ensuring sustainability, and negotiating fair agreements. By doing so, Sri Lanka can maximize the benefits of its engagement with China while minimizing the risks and challenges.
Sri Lanka’s economic crisis presents an opportunity for the country to adopt a strategic approach to promoting its exports. By focusing on high-quality products, investing in marketing and branding, and adopting policies to reduce the cost of exporting goods, Sri Lanka can increase its competitiveness in international markets and promote economic growth. The government can play a critical role in facilitating this process by investing in infrastructure, providing incentives for businesses, and negotiating trade agreements.
Luis Ramírez-Martínez is a Lecturer and Practitioner of International Economic Law. He is a Lawyer, with an LLB (Hons.) from the Pontificia Universidad Javeriana – Colombia, and holds an LL.M in International Business Law from Sergio Arboleda University – Colombia, and an LL.M in International Law, from The Fletcher School of Law and Diplomacy, Tufts University – USA. Luis is the Managing Partner of CID-Pro Consulting, SAS, in Bogotá, Colombia, and was the former Advisor to the International Legal Affairs Bureau of the Minister’s Office at the Colombian Ministry of Trade and former Director of the practice on Trade Remedies at Araújo Ibarra S.A. He has also taught trade-related courses at several universities in Colombia.