Seeing business sense
The UN Human Rights Council resolution is still making headlines and likely to do so for many weeks to come. There is graffiti screaming “Obama is mad” scrawled on Colombo’s walls and politicians as well as other stakeholders continue to express their displeasure of the US Therefore, holding the largest trade exhibition in nearly two years and holding trade talks with the same country lends an interesting dimension to the strained relations.
Despite the voiced anti-US sentiment, the world’s biggest economy’s importance to Sri Lanka as a positive trade partner is growing. In 2011, out of a bilateral trade value of $ 2.476 billion, $ 2 billion was favourable to Sri Lanka, prompting analysts to identify Uncle Sam as the most paramount. Sri Lanka’s exports to the US in 2011 were a record $ 2.144 billion, whilst imports from US were only $ 332 million.
In 2010, the balance of trade amounted to $ 1.5 billion in favour of Sri Lanka, with exports amounting to $ 1.75 billion and imports being only $ 168 million. Sri Lanka is the 114th largest market for the US, with exports amounting to only $ 307 million though up by 71.7% from 2010.
Reflecting continuity in the momentum, in January this year exports to US have increased by 23% despite overall performance declining by 0.6%. Though India is Sri Lanka’s biggest trading partner, the balance of trade favours the giant neighbour heavily. It is also hugely challenging for Sri Lanka’s exports to be priced competitively against the multitude of Indian companies.
On the sidelines of Expo 2012, Sri Lanka and the US yesterday successfully concluded the 10th round of talks under the bilateral Trade and Investment Framework Agreement (TIFA). US Embassy Sri Lanka and Maldives Chargé d’Affaires Valerie Fowler in her speech reiterated that the bringing together of business leaders, entrepreneurs and investors to develop plans to enhance bilateral economic relations was the aim of the meeting. She added that these talks would provide an opportunity for experts, American and Sri Lankan, to think creatively about how investment and business opportunities can help foster national reconciliation in Sri Lanka.
Given that exports declined marginally in January 2012 in comparison with the previous year and growing anxiousness over fuel and exchange rate issues not to mention a possible dip in tea imports to Iran, the Sri Lankan Government and policymakers would do well to keep a broad mind and separate politics from business.
The Expo inauguration was marked by a tough speech from President Mahinda Rajapaksa, who insisted that the country would not brook any interference from outsiders even though it remained committed to peace. The Government agrees that economic prosperity is part, though not the whole, of peace. Therefore, it would make sense to allow business ties to prosper, especially when the trade deficit is so positively in Sri Lanka’s favour.
Tea and apparel as Sri Lanka’s top foreign exchange earners are keen on new markets, but this cannot be achieved overnight and the Government must maintain an even keel if it wishes to navigate the country to prosperous shores.
