An Evaluation Of Sri Lanka`s International Trading Agreements

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Sri Lanka`s economic reforms were launched in response to widespread public discontent with poor industrial performance and widespread rent-seeking within a distorted incentive system. While there have been some slippages over time, the strong growth of recent years has helped to increase domestic political support for change. Externally, WTO agreements have guaranteed and extended the institutional framework for the integration of international markets. These signs are therefore positive for new initiatives aimed at exposing long-protected service sectors to competition, further reducing and harmonizing customs protection, streamlining drawback and exemption systems, and finding other sources of government revenue that are less distorted by competition. Given Sri Lanka`s current export basket, it is essential that such efforts be supported by liberal and predictable conditions of access to major export markets outside the region. The country has also made progress in creating international actors for the development of trade, transport and logistics infrastructure, so that it has become an important target for foreign direct investment (FDI). Higher inflows benefited the economy as a whole, with 2018 being the highest year since foreign direct investment and $2.3 billion in investment records began. Sri Lanka has continued to promote international trade and economic cooperation through actively participating in several international and regional organizations. On 15 April 1994, Sri Lanka signed the Final Act of the Uruguay Round (UR) to reap the benefits of expanding world trade, facilitated by the removal of tariff and non-tariff barriers and the strengthening of rules and disciplines in international trade. The implementation of EC rules is essential for the Sri Lankan economy, as it covers not only measures to reduce tariffs and non-tariffs, but also a wide range of issues, including the integration of textiles and clothing into GATT, trade in agriculture and services, trade-related investment measures and intellectual property rights. Sri Lanka`s main export products are expected to benefit significantly from the implementation of the UR Act.

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