WT/TPR/S/6
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II. TRADE POLICY REGIME: FRAMEWORK AND OBJECTIVES
(1) General Institutional Framework
1. SriLanka, aCommonwealth member, achieved independence on4February 1948. Thecurrent
Constitution oftheDemocratic Socialist Republic ofSriLanka, promulgated in1978, provides for
astrong executive President andademocratically elected Parliament. ThePresident 'spowers include
therightto:(i)holdanyportfolio inCabinet; (ii)appoint ordismiss thePrime Minister oranyother
minister;(iii)presideatceremonialsittingsofParliament;(iv)summon,prorogueordismissParliament
under certain conditions laiddown intheConstitution; and(v)submit toanational referendum any
Billormatter ofnational importance which hasbeenrejected byParliament. ThePresident iselected
foraperiod ofsixyears byuniversal adult suffrage andiseligible forre-election; thelastelections
were heldinNovember 1994.
2. TheCabinet ischaired bythePresident; Ministers areresponsible tobothParliament andthe
President. Thecurrent President holds theportfolios offinance, planning, ethnic affairs andnational
integration; defence; andBuddhist affairs. Draft legislation isnormally worked outwithin the
administration, co-ordinated between theMinistries involved, approved byCabinet andsubmitted to
Parliament forassent. Members ofParliament mayalsoinitiate newlegislation.
3. SriLanka 'scurrent Parliament has225members whoareelected forsixyears under asystem
ofmodified proportional representation.1Following thelastelection inAugust 1994, thePeople 's
Alliance formed aminority Government onthebasis of105seatsinParliament, supported byethnic
minority parties.
4. Thejudicial system consists oftheSupreme Court, theCourt ofAppeal and,operating asCourts
ofFirstInstance, theHighCourt, District Courts, Magistrates 'Courts andPrimary Courts.2TheChief
Justice andallother Judges oftheSupreme Court andCourt ofAppeal areappointed bythePresident.
AllJudges oftheCourts ofFirstInstance areappointed andcontrolled byaJudicial Service Commission,
comprising theChief Justice andtwojudges oftheSupreme Court, nominated bythePresident.
5. Aconstitutional amendment in1987 provided forthedevolution ofcertain executive powers
toprovincial councils, most ofwhich were elected inMay1993.3However, thecouncils haveno
authority inpolicy areas related toexternal trade.
6. TheConstitution alsoprovides foraParliamentary Commissioner forAdministration (the
Ombudsman). Hemayuseinformal dispute resolution asanalternative topossibly costly and
time-consuming judicial procedures. In1994, theGovernment introduced legislation thatwould
strengthen theOmbudsman 'sposition andfacilitate access ofaggrieved parties.
1Thenumber ofmembers isdetermined byaDelimitation Commission appointed byParliament prior toan
election.
2TheHigh Court deals withallcriminal cases andtheDistrict Courts withcivilcases.
3Forsecurity reasons, noelections were heldinthenorthern andnorth-eastern parts ofthecountry.SriLanka WT/TPR/S/6
Page 15
7. AConstitutional Council, whose composition reflects thebalance ofpower inParliament, is
currently preparing amajor amendment tothecurrent Constitution. Proposals under discussion would
abolish thecurrent system ofexecutive Presidency andstrengthen therôleofParliament anditscontrol
ofGovernment. Anyamendments would needtobeapproved byatwo-thirds majority inParliament.
(2) Structure ofTrade Policy Formulation andImplementation
(i) Government institutions andstatutory bodies
8. Within Cabinet, responsibility formaintrade-related policies lieswiththeMinister ofFinance
andtheMinister ofExternal Trade, Commerce andFood. TheMinister ofFinance isincharge of
revenue-related aspects suchastariffs, tariff concessions (waivers andexemptions) andsurcharges.
While allchanges intheseareasareultimately subject toParliament 'sassent, surcharges andconcessions
maybeimplemented byMinisterial Order and,thus, assented toonlyafter enactment. Further
responsibilities oftheMinister arelisted inTable II.1.
9. Competence forawiderange ofnon-revenue related measures, suchasquantitative restrictions,
lieswiththeMinister ofInternal andExternal Trade, Commerce andFood. Hisresponsibilities include
company registration, trade representation overseas, intellectual property rights, competition policy,
foodsupplies anddistribution, andexport development. Within hisportfolio, theDepartment of
Commerce hasseven divisions: (i)Multilateral Trade Division, dealing withGATT/WTO issues;
(ii)UNCTAD Division; (iii)Commodities Division; (iv)Trade Promotion; (v)Research and
Development Division; (vi)Bilateral Trade Division; and(vii)SriLanka Overseas Trade
Representatives. TheDepartment hasposted 20trade representatives overseas at18locations
(twoofficials arebased inGeneva andLondon, respectively).
10. TheExport Development Board ofSriLanka (EDB), astatutory authority, wasestablished
inAugust 1979 topromote anddevelop exports ofgoods andservices.4TheEDB isresponsible for
thepreparation oftheNational Export Development Planand,inthiscontext, provides awiderange
ofexport incentives: equity andloanparticipation forthedevelopment ofexport-oriented companies;
direct financial support fortheexport ofselected products; marketing information andassistance; and
human-resource development. Onrequest byprivate exporters, theEDB calculates duty-drawback
rates, tobeapproved byacommittee chaired bytheDeputy Secretary oftheMinistry ofFinance
(Chapter (IV)(3)(xi)). Thegoverning bodyoftheEDBconsists of12directors, sixofwhom arefrom
theprivate sector. In1993, 53percentoftheBoard 'sfunds werecontributed bythenational budget,
45byalevy(cess) onimports and2percentbyother sources.5
4TheSriLanka Export Development Act,No.40of1979.
5International Trade Centre UNCTAD/GATT (1994).WT/TPR/S/6
Page 16Trade Policy Review
Table II.1
Main departments andstatutory organizations involved intrade policy formulation andimplementation, mid-1995
Department/organization Trade-related functions
Minister ofFinance, Planning, Ethnic Affairs andNational Integration
-General Treasury -Tariff policies (including tariff concessions, surcharges andrefunds)
-Department ofcustoms -Collection ofimport/export duties
-Department ofExcise -Collection ofexcise revenue
-Central Bank ofSriLanka -Monetary andexchange ratepolicy (including exchange controls)
-Board ofInvestment ofSriLanka -Investment policies
-Department ofExternal Resources -Foreign aidandtechnical assistance
-National Development Bank -Assistance forsmall andmedium industries
-Development Finance Corporation ofSriLanka --ditto-
-Securities andExchange Commission -Regulation ofstock brokering
-State Gems andJewellery Authority -Supervision ofgemsector
-Institute ofPolicy Studies -Formulation andappraisal ofeconomic policies andstrategies
Ministry ofInternal andExternal Trade, Commerce andFood
-Department ofCommerce -Trade representation abroad, trade information andexport promotion
-Department ofImport/Export Control -Quantitative trade restrictions
-Registrar ofPatents andTrade Marks -Trade-related intellectual property rights
-FairTrading Commission -Competition policy
-Export Development Board -Export promotion
-Co-operative Wholesale Establishment -Import andexport trade
-SriLanka Export Credit Insurance Corporation -Export credit andinsurance
-Registrar ofCompanies -Registration ofcompanies
Minister ofAgriculture, Land andForestry
-Department ofAgriculture -Agricultural policies
-Administration ofthePlant Protection Ordinance
-Department ofExport Agriculture -Promotion ofminor export crops
-Paddy Marketing Board -Marketing ofpaddy
-State Timber Corporation -Protection oftimber resources
-National Fertilizer Secretariat -Monitoring offertilizer supply
-Agricultural Insurance Board -Implementation ofagricultural insurance
Minister ofFisheries andAquatic Resources Development
-Department ofFisheries andAquatic Resources -Fishery andaquatic resources policies
-Ceylon Fisheries Corporation
-Ceylon Fishery Harbours Corporation
Minister ofIndustrial Development
-Industrial Development Board -Promotion ofindustries
-Department ofTextile Industries -Regulation oftextile industry
-Textile Quota Board -Administration andmanagement oftextile quotas
Minister ofHealth, Highways andSocial Services
-Directorate ofHealth -Policies intheareaofhealth, international quarantine andsanitary
regulations
-State Pharmaceutical Corporation -Pharmaceutical pricing policies
Minister ofIrrigation, Power andEnergy
-Department ofIrrigation -Management ofmajor irrigation projects
-Ceylon Electricity Board -Generation, distribution andmarketing ofelectricity
Minister ofMedia, Tourism andAviation
-Civil Aviation Department -Civil aviation policies
-Ceylon Tourist Board -Development ofthetourist industry
Minister ofPostandTelecommunications
-Department ofPosts -Postservices
-SriLanka Telecom -Telecommunication services
-Office oftheDirector-General ofTelecommunications -Regulation oftelecommunication services
Minister ofTransport, Environment andWomen 'sAffairs
-Department ofMotor Traffic -Regulation ofuseofmotor vehicles
-SriLanka Central Transport Board -Provision ofpublic transport
-Central Environmental Authority -Environmental policies
Source: WTO Secretariat based onTheGazette oftheDemocratic Socialist Republic ofSriLanka, 7August 1995.SriLanka WT/TPR/S/6
Page 17
(ii) Advisory andreview activities
11. ATariff Review Committee wasestablished in1978 toprocess complaints generated bythe
switch from licence controls toamainly duty-based import régime. Following recommendations of
theCommittee, afirstPresidential Tariff Commission (PTC) wasappointed inOctober 1980toconduct
ageneral review oftradepolicies andpropose amethod toevaluate theireconomic impact. Twofurther
Commissions havebeenappointed since, withsimilar mandates, toprovide policy guidance.6Their
reports werepublished infull.Themainelements arepresented inTable II.2,andhavemostly been
implemented (Chapter V).TheThird Presidential Tariff Commission recommended thatanysuccessor
commission should work closely with, orbeintegrated in,theIndustrialization Commission (currently
under thepurview oftheMinistry ofIndustry). TheIndustrialization Commission, chaired bythe
Secretary oftheMinistry ofFinance, ismandated toadvise theGovernment onpolicy measures, plans
andprogrammes fortheencouragement andpromotion ofindustry.7
Table II.2
Main recommendations ofthePresidential Tariff Commissions
FirstPresidential Tariff Commission
(October 1980 -March 1985)-Tariff changes onalarge number ofitems.
-Removal oflicence control ontextile imports.
-Maximum nominal rateofprotection of60percent, except motor cars, alcoholic
beverages andtobacco.
Second Presidential Tariff Commission
(December 1985 -November 1991)-Introduction oftheHarmonised Commodity Description andCoding System.
-Liberalization ofmain rawmaterials toproduce plastic products.
-Introduction ofafour-pronged tariff structure withratesof5,15,35and50per
cent, or-withtheinclusion ofsurcharges inthetariff system -of10,20,35and
50percent.
-Liberalization ofexports onintroduction ofthenewtariff structure.
Third Presidential Tariff Commission
(May 1992 -December 1994)-Continuation oftheprevailing tariff structure (10,20,35and50percent) forat
leastanother year.
-Introduction ofapre-shipment inspection scheme provided itiscosteffective.
-Rationalisation ofalldutyexemptions andwaivers.
-Removal ofallimport andexport licensing requirements except those maintained
onhealth, environmental, national security andmoral grounds.
-Reduction ofanadditional import tax(Cess) tofinance theExport Development
Board from 10to5percent, abolition induecourse (Chapter (IV)(2)(i)).
Source: WTO Secretariat based onPresidential Commission onTariffs andTrade (1994).
12. Research activities oftheInstitute ofPolicy Studies (IPS) cover virtually thefullrange of
economic policy making. TheIPSisastatutory organization under theauspices oftheMinister of
Finance; itsfunding relies mainly onoverseas development assistance. Research topics arechosen
bytheInstitute 'sresearch staff(13economists). In1994, theInstitute published policy papers onissues
suchaseconomic liberalization andstabilization, privatization anddistributional equity, andtrends
inforeign aid.
13. Theprivate sector 'sinputintheprocess ofpolicy formulation andimplementation ischannelled
mainly through theCeylon Chamber ofCommerce andtheNational Chambers ofCommerce and
6TheThird Commission hadeight members, chosen from senior civilservants andbusiness representatives,
andappointed bythePresident.
7ActNo.45of1990.WT/TPR/S/6
Page 18Trade Policy Review
Industry.8TheChambers comment ongovernment policies ontheirowninitiative andoninvitation
bytheGovernment, inparticular during thepreparation ofthebudget. Following thelatest change
ofGovernment, theCeylon Chamber ofCommerce suggested regular meetings between theprivate
andpublic sector; these havenowbeenformalized onamonthly basis. Themeetings arechaired
bytheSecretary oftheMinistry ofFinance andattended bytheDirector-General oftheBoard of
Investment (Chapter III);theDirector-General oftheInland Revenue Department oftheMinistry of
Finance; theController oftheDepartment ofExchange Control oftheCentral Bank; theDirector
oftheDepartmentofCommerce;theChairmanoftheExportDevelopmentBoard;theDirector-General
ofCustoms; andtheSecretary oftheMinistry ofIndustrial Development. Theprivate sector isgenerally
represented bytheCeylon Chamber ofCommerce, theNational Chambers ofCommerce andIndustry,
andvarious trade associations. Anyother Government organization maybeinvited depending onthe
issues under discussion.
(3) Trade Policy Objectives
14. Thecreation ofemployment opportunities, improvements inliving conditions andacceleration
ofincome growth areamong theprime economic policy objectives ofthecurrent Government of
SriLanka.9GDPgrowth isexpected toaverage 8percentovertheperiod 1995to2000, while private
investment should exceed 30percentofGDP, upfrom some 20percentatpresent. These targets
havebeeninspiredbytheperformanceofdynamiceastandsouth-eastAsianeconomies;theypresuppose
theearly restoration ofpeace throughout thecountry.
15. Theprivate sector (both domestic andforeign owned) isregarded astheprincipal engine of
growth. TheStateistoprovide areliable andpredictable institutional framework, including transparent
rules, impartial legislation andswiftenforcement. Asmall range ofbasicinfrastructural services, where
natural monopolies aredeemed toexist(e.g.railtransport, electricity andwater), aretoremain within
thepublic domain. TheGovernment iscommitted toensuring thecontinued provision ofbasic health,
environmental andeducational services andsupporting socially disadvantaged groups. Bycontrast,
public activities suchastelecommunications areearmarked forgradual privatization andderegulation.
Major public investments areexpected tobefinanced byBuild-Own-Operate (BOO) and
Build-Operate-Transfer (BOT) arrangements.10
16. Trade policy isdesigned topromote theemergence ofinternationally competitive activities
andfacilitate outward-oriented structural adjustment throughout theeconomy. TheGovernment is
supportive of,andseeks toensure SriLanka 'sintegration into,them.f.n.-based multilateral trading
system; recent preferential trading arrangements areconsidered ascomplementary. Theauthorities
areconfident ofthepositive impact oftheWTO Agreements onmarket access abroad aswellas
economic expansion andconsumer welfare athome. Inkeeping withthese general objectives, further
strides towards tariff reduction andharmonization areenvisaged (Chapter (IV)(2)(ii)).
8TheCeylon Chamber ofCommerce, established in1839, hasaround 500corporate members andcovers
anadditional 2,000 firms through associated institutions. TheNational Chambers ofCommerce andIndustry,
set-upin1948,representsgenerallysmall-andmedium-sizedfirms.BothChambersarememb ersoftheFederation
ofChambers ofCommerce; joint membership ofbothorganizations ispossible.
9Government ofSriLanka (1995).
10Ministry ofIndustrial Development (1995).SriLanka WT/TPR/S/6
Page 19
17. TheGovernment 'scommitment tocontinued tradeliberalization isnotunqualified. Time-bound
surcharges maybeusedtoprotect emerging newindustries frominternational price fluctuations and
dampen over-reactions inindividual markets. Import protection forsubsistence farming willremain
themaininstrument toprotect theruralpoor; effective protection inthisareacurrently peaks ataround
180percent(Chapter V).11
(4) Trade Laws andRegulations
18. SriLanka 'slegislation intrade-related areas maydatebackasfarasthe1950s and1960s.
However, liberalization andderegulation policies overthepastdecade haveledtoimportant amendments
inareas suchasimport, export andexchange controls andinvestment promotion. Table II.3gives
anoverview; details arepresented inChapter IV.
19. TheWTO Secretariat understands thatinternational treaties andlawsaresubject toratification
byGovernment. Theresulting international legalobligations cannot beciteddirectly inSriLankan
courts; tobeapplicable, theywould needtobeincorporated bydomestic legislation. Forexample,
draftlawsareinpreparation toincorporate theprovisions oftheWTO Agreements onSafeguards,
onImplementation ofArticle VIoftheGeneral Agreement (Anti-dumping), andonSubsidies and
Countervailing Measures.
Table II.3
Overview oftrade-related legislation
Area Legislation/regulation Ministry/Institution
Companies
registrationCompanies Registration Act,No.17of1982 Department ofCompanies
Registration (Ministry ofTrade,
Commerce andFood)
Customs procedures Customs Ordinance Customs Department (Ministry of
Finance) andBoard ofInvestment
forBOI-approved firms
Customs tariffs Aspublished intheGazette from timetotime Customs Department (Ministry
ofFinance)
Tariff waivers and
exemptionsEnacted under Sections 10and19AoftheCustoms Ordinance Customs Department (Ministry
ofFinance)
Anti-dumping and
safeguard measuresAmendment totheCustoms Ordinance 1988 Customs Department (Ministry of
Finance)
Export andimport
cessBudget Speeches Customs Department (Ministry of
Finance)
Defence levy Defence Levy ActNo.52of1991 Customs Department (Ministry of
Finance)
Turnover tax Budget Speeches Inland Revenue Department
(Ministry ofFinance)
Excise tax Excise ActNo.13of1989 asamended in1993 and1995 Customs Department (Ministry of
Finance)
Other levies and
chargesOrdinances issued bytheMinister ofFinance tobeapproved by
Parliament inretrospectMinistry ofFinance
Import andexport
controlImports andExports (Control) Act,No.1of1969 asamended in
1985 and1987Department ofCommerce,
(Ministry ofTrade, Commerce
andFood)
Table II.3(cont'd)
11Presidential Commission onTariffs andTrade (1994).WT/TPR/S/6
Page 20Trade Policy Review
Area Legislation/regulation Ministry/Institution
Exchange control ActNo.24of15August 1953 Department ofExchange Control
oftheCentral Bank
Standardization SLSI ActNo.6of1984 SriLanka Standards Institution
Government
procurementPublic Finance Circular No.332 Public Finance Department
(Ministry ofFinance)
Phytosanitary
regulationPlant Protection Ordinance of1956 asrevised in1960 Ministry ofAgriculture
Export promotion SriLanka Export Development Act,No.40of1979 Department ofCommerce
(Ministry ofTrade, Commerce
andFood) andExport
Development Board
Export insurance and
guaranteesActNo.15of1978 SriLanka Export Credit
Insurance Corporation (SLECIC)
Competition policy FairTrading Commission Act,No.1of1987 andsubsequent
amendments (Industrial Promotion ActNo.46of1990 andFair
Trading Commission (Amendment) ActNo.57of1993)FairTrading Commission
Intellectual property Code ofIntellectual Property ActNo.52of1979 asamended by
ActsNo.30of1989, No.2of1983, andNo.17of1990Registrar ofPatents andTrade
Marks
Research and
developmentParliamentary ActNo.15of1955 (established CISIR asan
autonomous institution)Ceylon Institute ofScientific and
Industrial Research (CISIR)
Environmental
protectionNational Environmental (Amendment) Act,No.56of1988 National Environmental Authority
Foreign investment Greater Colombo Economic Commission Law, No.4of1978 as
amended byActsNo.43.of1980, No.21of1993 andNo.49of
1992.Board ofInvestment
Consumer policies ActNo.1of1979 asamended byActNo.37of1980 and
ActNo.34of1992Consumer Protection Unit
(Ministry ofTrade, Commerce
andFood)
Textiles andclothing ... Textile Quota Board
Banking Banking ActNo.30of1988 Banking Supervision Department
(Central Bank)
Insurance Insurance Corporation Actof1961 andControl ofInsurance Act
of1962Controller ofInsurance (Ministry
ofFinance)
Telecommunications SriLanka Telecommunication Act,No.25of1991 (gives the
Director-General thepower toregulate)Director-General of
Telecommunications (Ministry of
PostandTelecommunications)
Aviation AirNavigation ActNo.15of1950 amended byActNo.20of
1952Civil Aviation Department
(Ministry ofMedia, Tourism and
Aviation)
Tourism Tourist Board ActNo.10of1966; Tourist Development Act
No.14of1968.Ceylon Tourism Board
Source: WTO Secretariat based oninformation provided bytheGovernment ofSriLanka.SriLanka WT/TPR/S/6
Page 21
(5) Trade Agreements andArrangements
(i) World Trade Organization
20. SriLanka ratified theMarrakesh Agreement establishing theWorld tradeOrganization (WTO)
on1June1994tobecomeafoundingMemberoftheWTOon1January1995.12SriLankathusassumed
thecommitments oftheMultilateral Agreements onTrade inGoods, theGeneral Agreement onTrade
inServices (GATS) andtheAgreement onTrade-Related Aspects ofIntellectual Property Rights.
SriLanka hasbound alltariffs onagricultural items, likeallother Members, butretains arelatively
lowlevel ofbindings intheindustrial area(Chapter IV(2)(ii)(d)). Ithasnotsigned thePlurilateral
Trade Agreements13,anddoesnotparticipate intheGATS negotiations onBasic Telecommunications
andonMaritime Transport. Asadeveloping country, SriLanka maypostpone theimplementation
ofcertain WTO Agreements, suchastheAgreement onTrade-Related Intellectual Property Rights
andtheAgreement onSanitary andPhytosanitary Measures. Table II.4listsinitiatives taken by
SriLanka under thevarious WTO Agreements untilJuly1995.
21. SriLanka hasjustified theuseofimport restrictions onbalance-of-payments grounds during
consultations withtheCommittee onBalance-of-Payments Restrictions. Thelastfullconsultation with
thisCommittee washeldon22June1971. Consultations under simplified procedures wereheldevery
second yearfrom1973to1989aswellasin1992and1994. Following the1994consultation, SriLanka
informedtheCommitteewhichproductsarelicensedforbalance-of-paymentsreasons(ChapterIV(2)(ix)).
Table II.4
Actions taken inthecontext ofWTO Agreements, July1995
Agreement Action
General Agreement on
Tariffs andTrade 1994- Schedule ofConcessions onmarket access submitted on14October 1994 (GATT
document G/SP/9, 9November 1994).
General Agreement on
Trade inServices- Schedule ofSpecific Commitments submitted inApril 1994 (GATT
document GATS/SC/79, 15April 1994).
Agreement onTrade
Related Intellectual
Property Rights (TRIPS)- Nonotification made.
Agreement onAgriculture - SriLanka hasinformed theWTO Secretariat thatit"implemented 99%ofits
agricultural tariff bindings on1stJanuary 1995" (GATT document G/AG/W/2,
17March 1995).
- SriLanka hasbound itsagricultural tariffs at50percent.
Agreement onSanitary and
Phytosanitary Measures- Nonotification made.
(Table II.4cont'd)
12Cabinet Paper No.94/280/003 (2),3May 1994.
13Agreement onTrade inCivil Aircraft, Agreement onGovernment Procurement, International Dairy
Agreement, andInternational Bovine Meat Agreement.
Asamemb erofGATT1947,SriLankahadobserverstatusundertheTokyoRoundAgreemen tsonTechnical
Barriers toTrade, Subsidies andCountervailing Duties, Customs Valuation, Import Licensing, Civil Aircraft
andAnti-Dumping. Itdidnotparticipate intheAgreements onGovernment Procurement, onBovine Meat and
onDairy Products.WT/TPR/S/6
Page 22Trade Policy Review
Agreement Action
Agreement onTextiles and
Clothing- SriLanka informed theWTO Secretariat on28February 1995 thatitdidnotmaintain
restrictions ontextiles andclothing within themeaning ofArticle 3.1(GATT
document G/TMB/N/75, 28April 1995).
Agreement onTechnical
Barriers toTrade- Nonotification made.
Agreement on
Trade-Related Investment
Measures- Nonotification made.
Agreement onAnti-
Dumping Practices- SriLanka informed theWTO Secretariat on11April 1995 thatithadnolawsor
regulations within themeaning ofthisAgreement (GATT documents G/ADP/N/1 and
G/SCM/N/1/LKA/1, both26April 1995).
Agreement onCustoms
Valuation- SriLanka notified theWTO Secretariat on6July1994, specifying thedelay of
implementation ofselected measures ofthisAgreement (GATT
document WT/Let/Rev.1, 2March 1995).
Agreement onPreshipment
Inspection- Nonotification made.
Agreement onRules of
Origin- Nonotification made.
Agreement onImport
Licensing Procedures- Nonotification made.
Agreement onSubsidies
andCountervailing
Measures- SriLanka informed theWTO Secretariat on11April 1995 oftheabsence oflawsor
regulations within themeaning oftheAgreement (GATT documents G/ADP/N/1 and
G/SCM/N/1/LKA/1, both26April 1995).
Agreement onSafeguard
Measures- SriLanka notified theWTO Secretariat on11April 1995 thatithadnolawswithin the
meaning ofArticle 12.6(GATT document G/SG/N/1/LKA/1, 27April 1995).
Plurilateral Trade
Agreements- SriLanka hasnotsigned anyofthePlurilateral Trade Agreements .
Waivers granted under
Article IX.3oftheWTO
Agreement- SriLanka notified theWTO Secretariat on31May1995 thatitwasintheprocess of
Article XXVIII negotiations withAustralia, NewZealand andEuropean Union.
Negotiations withtheUnited States willbeheldshortly. On3July1995 theGeneral
Council granted awaiver until31December 1995 (GATT document G/C/W/11/Rev.1,
11July1995).
Source: WTO Secretariat.
(ii) Preferential trade agreements
22. SriLanka participates inthree preferential trade agreements: theGlobal System ofTrade
Preferences (GSTP), theBangkok Agreement, andtheSouth Asian Preferential Trading Arrangement
(SAPTA).
23. TheGSTP andtheBangkok Agreement areintended topromote economic development through
trade expansion among members oftheGroup of77andtheEconomic andSocial Commission for
AsiaandthePacific. Thirty-seven developing countries participate intheGSTP; sixcountries makeSriLanka WT/TPR/S/6
Page 23
uptheBangkok Group, joined bysixobserver countries.14TheBangkok group isserviced byaStanding
Committee oftheparticipating members.
24. SriLanka isafounding member oftheSouth Asian Association forRegional Co-operation
(SAARC), established in1985andinspired byregional integration initiatives inotherpartsoftheworld.
Theother current SAARC members areBangladesh, Bhutan, India, Maldives, Nepal andPakistan.
TheHeads ofStateofthemember States meetonceayear, while meetings oftheCouncil ofMinisters
maybeconvened bytheSAARC Secretariat onanadhocbasis. TheSecretariat islocated inKatmandu,
Nepal; theSecretary General wasappointed bytheCouncil ofMinisters. TherôleoftheSecretariat
istoco-ordinate andmonitor theimplementation ofSAARC activities andtoservice themeetings of
theAssociation.
25. Member countries oftheSAARC agreed toform theSouth Asian Preferential Trading
Arrangement (SAPTA) inApril 1993. SAPTA isbased ontheprinciple ofoverall reciprocity and
mutual advantage oftheparticipants; negotiations aretocover allareas ofmerchandise trade, initially
onaproduct-by-product basis, andtakeintoaccount theneeds oftheleast-developed members
(Bangladesh, Nepal andtheMaldives). Allconcessions aretobeincorporated inthenational Tariff
Schedules andmade available toallparticipants, except forbenefits granted exclusively tothe
least-developed members. Following agreement oninitial schedules inApril 1995, SAPTA isexpected
tobecome effective from8November 1995. Notimetable hasbeensetforfurther expansion. Progress
willbemonitored byaCommittee ofParticipants which istomeetatleastonceayear. Concessions
maybesuspended forbalance-of-payments reasons, intheevent ofserious injury, andonthewithdrawal
ofaparticipating State. Anymember maywithdraw onsixmonths 'notice totheSAARC/SAPTA
Secretariat.
26. TheSAARC Chamber ofCommerce andIndustry (SCCI), comprising theChambers ofmember
countries, helditsfirstmeeting inDhaka inFebruary 1994.15
27. TheInstitute ofPolicy Studies (section (2)(ii)) hasrecommended thatSriLanka should consider
joining theAsiaPacific Economic Co-operation (APEC), noting thateast-Asian newly industrialized
countries areamajor source offoreign investment andcompeting countries already participate.16The
Ceylon Chamber ofCommerce shares thisview.17TheSriLankan Government hasnotyettaken a
decision inthiscontext.
(iii) Generalized System ofPreferences
28. Inmid-1995, SriLanka qualified forpreferential access under theGSPschemes ofmajor
developed countries, including theUnited States, Japan, Australia, Canada, Island, Norway andthe
14Members oftheBangkok Group are: Bangladesh, India, Republic ofKorea, Laos, Papua-New Guinea
andSriLanka; People 'sRepublic ofChina, Indonesia, Malaysia, Nepal, Thailand andPhilippines participate
asobservers. Presidential Commission onTariffs andTrade (1994).
15Institute ofPolicy Studies (1994).
16Institute ofPolicy Studies (1994).
17Ceylon Chamber ofCommerce (1995).WT/TPR/S/6
Page 24Trade Policy Review
EU. Thepreferences vary byproduct anddonor country. TheEUscheme wasrevised asof
1January 1995.18
(iv) Other agreements andarrangements
29. SriLanka participates inafurther range ofinternational agreements specifying rights and
obligations intrade-, currency- andinvestment-related areas. Forexample, SriLanka isafounding
member oftheMultilateral Investment Guarantee Agency (MIGA) oftheWorld Bank andhasentered
into17protection agreements withforeign countries. Ithasratified theConvention onSettlement of
Investment Disputes, which provides facilities forarbitration. SriLanka isalsoamember oftheAsian
Clearing Union (ACU); currency transactions withcompanies located inACU member States must
beeffected inAsian Currency Units orinthecurrency ofthemembers involved (Table II.5).19
Table II.5
Trade policies covered byinternational agreements, other thantheWTO
Policy area Agreement
Trade preferences Bangkok Agreement, SAPTA (from 8December 1995), GSTP and
some bilateral agreements (Chapter IV(2)(ii))
Standards TheSriLanka Standards Institution (Chapter IV(2)(viii)) isamember
oftheInternational Standards Organization
Trade controls forenvironmental reasons Obligations under theConvention onInternational Trade inEndangered
Species ofFlora andFauna (CITES), theMontreal Protocol andthe
Basel Convention (Chapter IV(3)(iii))
Investment protection SriLanka isafounding member oftheMultilateral Investment
Guarantee Agency andhasinvestment protection agreements with
17countries. SriLank'sConstitution provides protection forall
investments from countries withwhom bilateral treaties havebeen
concluded (Chapter III(4))
Intellectual property rights Treaty withtheUnited States covering intellectual property rights;
SriLanka isamember ofvarious international Conventions and
Treaties inthisarea(Chapter IV(4)(ii))
Exchange controls SriLanka isamember oftheAsian Currency Union andhasaccepted
theobligations ofArticle VIIIoftheIMFArticles ofAgreement
Source: WTO Secretariat based oninformation provided bytheGovernment ofSriLanka.
30. AnewAgreement with theEUonPartnership andDevelopment wassigned inJuly1994.
Itgrants notrade preferences, butspecifies areas forEUdevelopment co-operation andextends
investmentprotectiontoprojectsoriginatingintheEU.20Bothpartieshaveagreedtoencourage,promote
andprotectinvestmentonanon-discriminatorybasis.AbilateralinvestmenttreatywiththeUnitedStates
wasratified inApril 1993.
18WTO (1995).
19IMF (1994).
Other ACU members are: Bangladesh, India, Islamic Republic ofIran, Myanmar, Nepal andPakistan.
20Areasforexpandedco-operationincludeinvestment,privatesectorinitiatives,standards,intellectualproperty,
science andtechnology, agriculture andfisheries, tourism, information, culture andcommunication, poverty
alleviation, environment, human resources development anddrug abuse control.