Sri Lanka began potent work on entering a historic and a groundbreaking global trade pact that would give the country’s exports a boost similar to another GSP Plus -and this pact is also set to impact a whopping one fifth of global trade in a few years from now.
The Department of Commerce of Sri Lanka forayed the country on 12 July to WTO’s ground-breaking Information Technology Agreement (ITA) that completes its highly successful 20thanniversary global run this month.
“According to the latest reports, today’s exports of global information technology products is bigger than global trade in automotive or pharmaceuticals” stressed Minister of Industry and Commerce Rishad Bathiudeen on 12 July. Minister Bathiudeen was addressing the launch of two day long in-depth analysis and assessment of Sri Lankan IT industry, IT policy and trade/customs regime organized by the Department of Commerce under him and led by two top experts from WTO Geneva. Senior Statistician-Market Access Intelligence Section of WTO Eric Shing and Counsellor of Market Access Division of WTO Xiaobing Tang arrived in the island on 11 July to move this critical session forward. Joining the event were DG Commerce of Sri Lanka Sonali Wijeratne and reps from the Computer Society of Sri Lanka, SLAASCOM, FITIS, Telecom Regulatory Commission, Mobitel, Verite Research, Institute of Policy Studies, EDB, FCCISL, ICTA and several private sector IT firms.
The WTO ITA concluded in 1996 and entered into force on 1 July 1997, aims to bring all taxes and tariff on information technology products (by signatory members) to zero. ITA membership that was at 29 when the members first met in Singapore in 1997, has, after twenty years of its existence increased to 82. In the subsequent landmark deal under ITA (Called “ITA Expansion” and also called as the “ITA Phase II”) in 2015 December, 53 WTO member countries agreed to eliminate tariffs on 201 more IT products. The initial value of $1.7 trillion trade gain in 1997 has increased thereafter to $3 trillion after tariff elimination of 201 new products (including semiconductors, smart phones, medical equipment, GPS navigation systems, and even touch screens) in 2015-in that, one fifth of overall global trade and an astounding 97% of global ITC trade now runs under WTO ITA!
“ICT is changing our world including Sri Lanka” said Minister Bathiudeen, and added: “Sri Lanka is rapidly emerging as a world’s ICT destination of choice. The ICT sector of Sri Lanka has become the fourth largest export earner. The export earnings of ICT grew 500% from 2006-from US$ 166 Mn in 2006 to US$ 900 Mn in 2016. The sector now employs over 85000. Our unity Government leaders have given high priority to develop our ICT. By its ICT Road Map 2015-2020 the telecommunication and digital infrastructure has been identified as two of the key areas that would define the future of Sri Lanka.”
“This is not a run of the mill, general IT sector review of Sri Lanka” stressed DG Commerce Wijeratne, and added: “But is an in-depth analysis of two aspects of our IT-its tariff structure and schedule. WTO ITA has many benefits including innovation, value chain strengthening etc but for Sri Lanka, exports increase and FDI diffusion are the prominent gains. In fact, the commitment of a country to WTO ITA is now a major indicator to draw high FDI quantum to the country.”
WTO’s Xiaobing said: “After the expansion of the ITA, it now includes next-generation semiconductors (MCOs) and many products based on such semiconductors.” WTO’s Shing stressed that the vast array of zero duty on high tech products benefits the country both ways. “Sri Lanka can import such very high tech products totally duty free –which is usually an unimaginable accomplishment since they are high priced. Any hi-tech products exported from Sri Lanka too can immediately benefit by same zero tariffs at importers’ end.”
Sri Lanka is not a member of ITA yet and awaits to give its concurrence to join either as an active or a passive signatory once the domestic stakeholder-needs are assessed and they are updated on the huge benefits of it-two key objectives of this pioneering two day Colombo session.