WTO and Sri Lanka’s Farm Trade

Abstract

The study seeks to examine the impact of the WTO's agreement on agriculture (AoA) on Sri Lanka’s agricultural trade performance. It is found that under the AoA regime, Sri Lanka’s share in the world’s total agricultural trade has increased. The importance of farm trade in the country’s overall foreign trade has improved. Further, evidence suggests that Sri Lankan agriculture has opened in new economic environment. In new trade order, value of Sri Lankan farm exports has grown faster than that of imports resulting into significant expansion of trade surplus. The normalised trade balance in agriculture has enhanced dramatically.

Furthermore, the study finds that in the emerging liberalised farm trade order Sri Lanka’s comparative advantage is much better than other leading farm producers especially in the exports of: tea, copra, coconuts and natural rubber. For food grains Sri Lanka heavily relies on imports. In the WTO trade negotiations, Sri Lanka may press for an effective and substantial cut in developed countries protective measures and trade distorting agricultural subsidies, in order to safeguard and enhance its food production capacity.

Keywords: WTO, Agreement on Agriculture, Farm Trade, Sri Lanka, India, Pakistan, Bangladesh, Comparative Advantage, Indo-Sri Lanka Free Trade Agreement