SRI LANKA: Apparel hub grounded by national trade policies
Domestic trade barriers on raw materials are stopping South Asia from becoming a major global apparel hub, say trade experts.
Studies by the United Nations Development Programme (UNDP) show that trade barriers against each other are stopping South Asian countries from benefiting collectively in the global textile and apparel trade.
"It is the lack of intra-regional trade, on raw materials, that is hampering the region's prospects of developing as a global textile and clothing hub," said Ratnakar Adhikari, programme specialist at the UNDP's Asia Pacific regional centre in Sri Lanka.
"To develop as a hub, all the countries in the region should remove tariff barriers on raw materials.
"Right now, all the countries, except for Sri Lanka and the Maldives, list most of these raw materials under the sensitive list and are not required to reduce tariffs under the SAFTA," said Adhikari.
The SAFTA - the South Asia Free Trade Agreement - is expected to reduce trade barriers between the seven South Asian Association for Regional Cooperation (SAARC) countries.
But trade experts say the SAFTA is not aggressive enough.
Intra-regional trade among SAARC countries is less than 5% of the region's total trade with the rest of the world compared to intra-regional trade of more than 50% among North America Free Trade Area (NAFTA) countries and more than 20% in The Association of South East Asian Nations (ASEAN).
By Dilshani Samaraweera.
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