RESTRICTED  
  
WT/TPR/G/3 47 
27 September 2016  
(16-5138) Page: 1/12 
Trade Policy Review Body  Original: English  
 
TRADE POLICY REVIEW  
REPORT BY  
SRI LANKA 
Pursuant to the Agreement Establishing the Trade Policy Review Mechanism (Annex 3 of the 
Marrakesh Agreement Establishing the World Trade Organization), the policy statement by 
Sri Lanka  is attached.  
 
  
Note: This report is subject to restricted circulation and press embargo until the end of the first 
session of the meeting of the Trade Policy Review Body on Sri Lanka . WT/TPR/G/347 • Sri Lanka  
 
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  Contents  
1   INTRODUCTION  ................................ ................................ ................................ ..........  3 
2   MACROECONOMIC ENVIRO NMENT AND ECONOMIC P ERFORMANCE  ............................  3 
3   TRADE POLICY  ................................ ................................ ................................ ............  5 
4   TRADE POLICY MEASURE S ................................ ................................ ..........................  7 
5   INTELLECTUAL PROPERT Y (IP)  ................................ ................................ ...................  9 
6   INVESTMENT  ................................ ................................ ................................ .............  10 
7   SECTORAL PERFORMANCE S ................................ ................................ .......................  10 
7.1   Agriculture  ................................ ................................ ................................ ................. 10 
7.2   Industry  ................................ ................................ ................................ .................... 11 
7.3   Services  ................................ ................................ ................................ .................... 11 
8   CONCLUSIONS ................................ ................................ ................................ ...........  12 
 
 WT/TPR/G/347 • Sri Lanka  
 
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  1  INTRODUCTION  
1.1.  This is the Fourth Trade Policy Review of Sri Lanka at the World Trade Organization (WTO). It 
is a historic occasion for Sri Lanka to present its Trade Policy Review to the WTO un der the 
National Unity Government (NUG) which was established by the coalition of the two main political 
parties of the country. The NUG is in the process of introducing transformative reforms to the 
national economy to align it with the global economic di rection while achieving the sustainable 
development goals declared in the Agenda of the United Nations Sustainable Development Summit 
held in 2015.  
1.2.  Sri Lanka, since its unilateral trade liberalization (1977) has initiated extensive reforms to its 
trade pol icy regime with a view to establishing a strong economic foundation taking in to account 
its capacities, constraints and national realities. These reforms, while placing the country in a 
stronghold in its economic development frontier have also contributed  towards its significant 
achievements in the social development frontier where Sri Lanka is placed at a high rank in the 
Human Development Index (HDI) while comfortably surpassing most of the Millennium 
Development Goal targets set for 2015. In the Global Competitive Index 2014/15, Sri Lanka ranks 
73 among 144 countries ahead of many emerging economies and also improving its record in a 
range of criteria since 2012/13.  
1.3.  Presently, the Government is in the process of initiating several measures to re -energize  the 
economy with particular emphasis on infrastructure development, enhancing investment and 
developing a competitive and predictable economic policy framework. These measures coupled 
with a stable political environment is expected to boost investment and  export -led economic 
growth while paving wa y towards achieving the country' s long term macro economic objectives of 
equitable distribution of income and poverty alleviation.  
1.4.  Sri Lanka also welcomes this review as an o pportunity to bring WTO members'  attenti on to 
the developments which have taken place in its trade policy regime since the last WTO review in 
2010 with special emphasis on the challenges it faces as well as the steps that are being taken to 
overcome such challenges.  
1.5.  The progressive and continuou s liberalization of its market to integrate itself into the 
multilateral trading system coupled with its fulfilment of WTO obligations has made Sri Lanka a 
more reliable and predictable trading partner. The country accords due prominence to advancing 
rule-setting and trade liberalizing efforts at the WTO with its proactive engagement in WTO 
negotiations. In supporting the rule -based multilateral trading system, Sri Lanka has taken 
immediate measures to ratify the Trade Facilitation Agreement (TFA) in May, 2 016. 
2  MACRO ECONOMIC ENVIRONMENT  AND ECONOMIC PERFORM ANCE  
2.1.  Sri Lanka was able to maintain its economic growth at an average rate of 6.4 % over the 
course of 2010 to 2015 despite the external pressure arising from global economic slowdown and 
the domestic econo mic challenges. The resilience of the economy to these challenges by 
maintaining overall growth and relatively stable macroeconomic environment reflects a peace 
dividend and a determined policy thrust towards reconstruction and growth. The per capita incom e 
has increased from US $2,744 in the year 2010 to US $3,924 in 2015 arising from an economic 
strategy of promoting inclusive growth with underlying macroeconomic foundation for financial and 
economic stability and robust economic performance.  
2.2.  The real GDP g rowth of 4.8 % reported in 2015 was mainly attributable to the increase in 
consumption demand and the modest growth in investment related activities particularly on 
infrastructure development. All three sectors of the GDP reflected moderate average annual 
growth rates reflecting the pro -growth economic policies followed by the Government. This has 
also improved the labour force participation rate of the country which reported the highest 
percentage in 2013 and 2015 at 53.8.  WT/TPR/G/347 • Sri Lanka  
 
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  3   2010  2011  2012  2013  2014  2015a 
DEMOGRAPHY        
Mid-year population ('000 persons)b, c 20,675  20,869a 20,424a 20,579a 20,771a 20,966  
Growth of mid -year population (%)b 1.0 1.0a 0.7a 0.8a 0.9a 0.9 
Population density (persons per sq.km)b 330 333a 326a 328a 331a 334 
Labour force ('000 p ersons)d, e 8,108  8,555  8,454  8,802  8,805  8,973  
Labour force participation rate (%)e 48.1 47.8 52.6 53.8 53.3 53.8 
Unemployment rate (% of labour force)e 4.9 4.2 4.0 4.4 4.3 4.6 
OUTPUTf       
GDP at current market price (Rs. billion)  6,414  7,219  8,732  9,592  10,448a, g 11,183  
GNI at current market price ( Rs. billion)  6,344  7,147  8,578  9,366  10,212a, g 10,932  
Per capita GDP at market price (Rs.)h 310,214  345,925  427,559  466,112  503,032a, g 533,398  
Per capita GNI at market price (Rs.)h 306,839  342,473  419,975  455,126  491,638a, g 521,412  
Per capita GDP at market price (US$) h 2,744  3,129  3,351  3,610  3,853a, g 3,924  
Per capita GNI at market price (US$)h 2,714  3,097  3,291  3,525  3,766a, g 3,836  
REAL OUTPUT (percentage)f       
GNI 7.9i 8.5 8.3 2.8 4.9a, g 4.8 
GDP 8.0i 8.4 9.1 3.4 4.9a, g 4.8 
Sectoral classification of GDP        
Agriculture  7.0i 4.6 3.9 3.2 4.9a, g 5.5 
Industry  8.4i 9.3 9.0 4.1 3.5a, g 3.0 
Services  8.0i 8.9 11.2 3.8 5.2a, g 5.3 
AGGREGATE DEMAND AND SAVINGS (% of GDP)f      
Consumptio n 76.9 79.8 72.8 75.4 76.0a 77.4 
Private  68.5 71.3 65.2 67.6 67.7a 68.6 
Government  8.5 8.6 7.6 7.8 8.3a 8.8 
Investment  30.4 33.4 39.1 33.2 32.0a 30.1 
Net exports of goods and services  -7.3 -13.2 -11.9 -8.6 -8.0a -7.4 
Exports of goods and services  19.6 20.9 19.8 20.3 20.9a 20.5 
Imports of goods and services  26.8 34.1 31.7 28.9 28.9a 28.0 
Domestic savings  23.1 20.2 27.2 24.6 24.0a 22.6 
Net primary and secondary income from rest of 
the world  5.4 6.1 6.1 5.2 5.5a, i 5.2i  
National savings  28.5 26.3 33.3 29.9 29.5a 27.8 
EXTERNAL TRADE        
Trade Balance (US$ million)  -4,825  -9,710  -9,417  -7,609  -8,287  -8,430  
Exportsk 8,626  10,559  9,774  10,394  11,130  10,505  
Importsk 13,451  20,269  19,190  18,003  19,417  18,935  
Terms of trade (percentage change)  27.4 -8.9 -1.5 4.6 4.3 2.3 
Export volume index (2010=100) (percentage 
change)  -13.3 10.2 -0.2 6.7 4.3 4.6 
Import volume index (2010=100) (percentage 
change)  19.6 23.6 0.5 -1.5 9.5 10.6 
EXCHANGE RATES        
Annual average        
Rs./US$  113.06  110.57  127.60  129.11  130.56  135.94  
Rs./SDRp 172.50  174.54  195.38  196.19  198.35  190.16  
NEER (2010=100) (24 -currency basket)q 100.00  99.84  90.44  91.39  91.99  96.61  
REER (2010=100) (24 -currency basket)q, r 100.00  101.84  95.80  100.61  101.94  106.18  
Year end        
Rs./US$  110.95  113.90  127.16  130.75  131.05  144.06  
Rs./SDRp 170.84  174.87  195.31  201.36  189.86  199.63  
a Provisional.  
b As reported by the Registrar General's Department.  
c Mid-year population estimates in 2000 were prepared based on the Census  of the Population and 
Housing - 1981 and thereafter until 2011 were prepared based on the Census of the Population and 
Housing  - 2001. Mid -year population estimates in 2012 onwards were prepared based on the final 
report of the Census of Population and Housing – 2012. 
d Data up to 2011 for household population aged 10 and above while that  of 2012 onwards for those aged 
15 and above.  
e For 2000, data excludes both Northern and Eastern Provinces. For 2010, data excludes Northern 
Province. From 2011 onwards, data covers the ent ire Island.  
f Rebased GDP estimates (base year 2010) of the Department of Census and Statistics have been used 
from 2010 onwards.  
g Revised.  
h Estimates updated with latest population figures . 
i Data is under the 2002 base year . 
k Excludes re -exports and r e-imports from 2007 onwards . 
p Special Drawing Rights (SDR), the unit of account of the IMF.  
q Exchange rates have been defined in the terms of indices so that the appreciation/deprecation of the 
rupee relative to other currencies is directly reflected by a rise/fall in the values of the effective 
exchange rate indices.  
r CCPI is used for the computation of the  Real Effective Exchange Rate ( REER). The REER is computed by 
the adjusting Nominal Effective Exchange Rate (NEER) for inflation differentials with t he countries whose 
currencies are included in the basket.  WT/TPR/G/347 • Sri Lanka  
 
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  2.3.  Agriculture sector on average grew by 4.5 during the reference period. The sector reported 
5.5% growth in 2015 contributing to 7.9% of the GDP. Factors such as favourable weather 
conditions, i ncreased prices of agriculture products and value addition in several other key sub -
sectors i.e. coconut, fruits and vegetables have been the key contributors for this improved 
performance.  
2.4.  The average growth rate of the industry sector reported for the reference period was 6.2%. 
Having contributed to 26.2% of the GDP, the sectoral growth indicated 3.0% in 2015 in 
comparison to 3.5% recorded in 2014. The slow growth was largely attributed to lower 
performance in construction and mining and quarrying a ctivities. The manufacturing sector has 
been the key contributor to the growth in the industry sector. The Government continued its 
technical assistance, infrastructure upgrading and promoting regional industrialization etc. for the 
development of the indu stry sector.  
2.5.  The services sector accounting 56.6% of GDP expanded by 5.3% in 2015 in comparison to 
5.2% in 2014. This was largely attributed to the growth in financial services by 15.8%, while real 
estate activities, transport activities and wholesal e and retail sale also accounted for significant 
contribution to maintain the growth momentum in the services sector.  
2.6.  Inflation remained below mid -single digit levels throughout the reference period reflecting 
prudential demand management policies fo llowed by the Central Bank of Sri Lanka and favourable 
supply side developments in the domestic and international markets. Notably, inflation reported 
the lowest annual average at 0.9 in 2015 while the 3rd quarter of 2015 reported negative figure, 
after 20  years.  
2.7.  The floating exchange rate system was administered ensuring an adequate level of liquidity 
in the system thereby strengthening the stability of the foreign exchange market and the external 
competitiveness. In 2015, Sri Lanka permitted greater  flexibility in the determination of the 
exchange rate. The volatility in the domestic foreign exchange market resulting from high volume 
of foreign exchange outflows on account of increased imports, debt service payments, reversal of 
foreign investments f rom government securities market and lower than expected foreign currency 
inflows was appropriately managed by the timely intervention of the Central Bank of Sri Lanka.  
2.8.  The external sector performance reflected the dynamism of the global as well as t he domestic 
economic environment. Trade deficit on absolute terms has been widening over the reference 
period. Despite the benefits of lower expenditure on fuel imports, the slowdown in the  growth of 
demand for Sri Lanka' s traditional exports and the decli ne in prices have resulted in a marginal 
expansion of the trade deficit in 2015. The Government' s export -led economic growth policy is 
envisaged to boost exports and curtail the trade deficit to ensure external sector stability.  
2.9.  The Balance of Paymen ts (BOP) registered a deficit in 2015 largely due to lower inflows to 
the financial account. The BOP in 2015 recorded an overall deficit of U.S. dollars 1,489 million in 
comparison to the surplus of U.S. dollars 1 ,369 million in 2014. Sri Lanka' s official foreign reserve 
also declined to U.S. dollars 7.3 billion at the end 2015 from U.S. dollars 8.2 billion at the end of 
2014. The reduction was mainly due to scheduled foreign currency debt service payments, 
payments to the IMF Stand -By Arrangement (SBA) and  the supply of liquidity to the domestic 
foreign exchange market.  
2.10.   However, amidst all these developments and challenges, it is expected that with appropriate 
policies, the economy will return to a high growth path in the medium term while addressing  the 
key constraints including low government revenue to GDP ratio, falling exports to GDP ratio and 
insufficient inflow of Foreign Direct Investments. Other structural and emerging challenges that 
confront the Government range from ensuring energy securit y, renewable energy development, 
bridging the skill development gap, issues of food security, low productivity and lack of 
diversification in agriculture, introducing diverse range of financial products and services and 
improving public transportation etc.  
3  TRADE POLICY  
3.1.  Taking cognizance of the changing  development priorities, the G overnment policy statement 
presented in November 2015 envisioned promoting a globally competitive, export -led economy WT/TPR/G/347 • Sri Lanka  
 
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  with an emphasis on inclusive growth. In this context, The NU G is in the process of introducing 
necessary reforms to the national trade policy closely aligned to the principles and commitments to 
the WTO. The expected trade policy reforms will include macro -level measures viz. improvement of 
overseas market access f or Sri Lankan products, integration of trade promotion in the national 
development framework by further rationalization of trade and tariff policies, facilitation of a fair 
trading environment, encouragement of investment and undertaking implementation of trade 
facilitation commitments.  
3.2.  The new policy initiatives of the G overnment also incorporate encouraging small and large 
scale entrepreneurs to participate in the global economy and positioning of Sri Lanka in the global 
value chain in order to sustain th e contribution of the industry, agriculture and service sectors to 
the growth momentum.  
3.3.  Sri Lanka continues to rely on the multilateral trading environment as a fair and equitable 
means of recognizing development needs of small economies within the global trading 
environment. The proliferation of RTAs and their commitments beyond WTO are matters of 
concern for small economies such as Sri Lanka where there would be a possibility of getting 
marginalized particularly due to erosion of preferences.  
3.4.  Sri Lanka co ntinues to play an active role in the WTO negotiations and noting the outcome of 
the 10th Ministerial meeting held in Kenya in December, 2015, expects positive gains through the 
implementation of those decisions. Sri Lanka has been selected as the Coordina tor for the Asia 
Pacific Developing countries in the WTO for the year 2016 and is expected to play an active role 
towards successful implementation of the Ministerial decisions while contributing to address the 
remaining major issues relating to agricultur e, Non - Agricultural Market Access (NAMA) and 
services.  
3.5.  The slow progress in the negotiation of the remaining major areas relating to agriculture and 
NAMA remains a concern for Sri Lanka and therefore places its high expectations to finalize these 
major ne gotiations prior to the 11th Ministerial Conference scheduled for 2017.  
3.6.  Sri Lanka is a net food importing developing country and is also recognized as a Small and 
Vulnerable Economy (SVE). It is therefore expected that necessary flexibilities be provided f or 
small economies such as Sri Lanka during the process of agriculture negotiations. Sri Lanka, as a 
member of G33 and SVE, continues to support its position for such flexibilities.  
3.7.  While  being cognizant of the country' s commitments to multilateral liberal ization at the WTO, 
Sri Lanka further pursues its liberalization objective through bilateral and regional trade 
agreements such as Indo -Sri Lanka Free Trade Agreement (ISFTA), Pakistan Sri Lanka Free Trade 
Agreement (PSFTA), SAARC Preferential Trading Arra ngement (SAPTA), South Asian Free Trade 
Area (SAFTA), Asia Pacific Trade Agreement (APTA), Bay of Bengal Initiative for Multi Sectoral 
Technical and Economic Cooperation (BIMSTEC) and Indian Ocean Rim Association (IORA).  
3.8.  Sri Lanka' s exports continue to be concentrated in a basket of few products despite the 
efforts exer ted to diversify the country' s exports and markets. Export of apparel products 
continues to dominate by contributing to 50% of total export revenue during the period under 
review. This was fo llowed by traditional export products such as tea, coconut, spices and  rubber 
products. The NUG therefore, focuses on pragmatic approaches aimed at product and market 
diversification. A comprehensive work plan towards achieving this objective is expected b e 
introduced during the latter part of 2016.  
3.9.  Sri Lanka considers that the WTO Technical Assistance particularly under Standard Trade 
Development Facility (STDF) and Aid for Trade programmes are of immense value to the country 
to further facilitate its inte gration to the world trading system. In addition, the bilateral assistance 
programme extended by the European Union (EU) is expected to advance trade related capacity 
development in the country.  
3.10.   Sri Lanka strongly believes that it is of paramount importanc e to develop necessary 
infrastructure to facilitate the export sector particularly in view of establishing sustainable living 
environment. Sri Lanka has economically suffered from the prolonged internal conflict which ended 
in 2009. The Government, through  its trade and economic policies expects to develop equitable WT/TPR/G/347 • Sri Lanka  
 
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  status for all communities living in the country in strengthening their engagement in the national 
development activities. Priority attention has been paid to enhance productivity and improve th e 
links between rural and urban sectors thereby ensuring filtration of the benefits gained from the 
foreign trade to the rural communities.  
3.11.   Towards achieving sustainable economic development in the country, Sri Lanka continues to 
emphasize on innovation, p rivate sector investment, improvement of public service delivery, 
strengthening the competitiveness and growth of the SME sector in to a transformative stage and 
further enhancement of private -public partnership. Special emphasis has been placed in the 
National Budget towards achieving these objectives.  
3.12.   The Department of Commerce of the Ministry of Industry and Commerce and the Ministry of 
Development Strategies and International Trade continue to play a key role in trade policy 
formulation, co -ordination, negotiation and implementation.  
3.13.   The NUG realizes Sri Lanka' s trade potential as a way to accelerate the transformation of 
the economy and generate new and more attractive employment opportunities. Sri Lanka 
continues to concentrate on capitalizing the oppo rtunities created by trade, Foreign Direct 
Investment and regional integration.  
3.14.   The outward oriented trade policy of the Government aims at developing its economic 
infrastructure as a potential trading hub in Asia, making required policy environment and 
necessary infrastructure towards achieving this objective. Sri Lanka can leverage its strategic 
location and geographical proximity to the powerhouses in the world economy towards realizing its 
own growth potential. The new trade policy framework of Sri Lank a would focus on how Sri Lanka 
can best explore the opportunities through regional synergies and its proactive engagements of 
the Preferential Trade Agreements (PTAs).  
4  TRADE POLICY MEASURE S 
4.1.  The Government of Sri Lanka has recognized the need to adopt polic y reforms that 
strengthen the country 's competitiveness in the global market thereby ensuring sustainable and 
inclusive growth. The Government has identified the need for a revision of trade and investment 
policies coupled with reforms for promoting innova tion, entrepreneurship and skills formation 
needed to push Sri Lanka forward within the global trading system. It has identified not only the 
need to strengthen competitiveness in traditional sectors such as apparel, natural resources 
transformation and to urism but also the need to establish necessary conditions for a thriving 
knowledge economy, the integration of productive local companies in to global value chains, and 
the attainment of higher value addition in the manufacturing sector. In positioning Sri  Lanka as an 
economic hub in the region, key value added thrust areas such as financial and services sector, 
information technology science,  digitalization of the economy, bio -medical and nano sectors, 
tourism industry, Meetings Incentives Conferences and Events (MICE) tourism sectors, port and 
airport logistical corridor and other transport related enterprises and value added trade will be the 
main economic drivers.  
4.2.  Sri Lanka' s foreign trade policy is committed to the objectives of trade liberalization and  
deeper integration to the global economy. It is highly reflected in its unwavering commitments in 
the successful bilateral, regional and multilateral trade agreem ents. In most of the cases, 
Sri Lanka has been progressively reducing its tariffs and in gene ral has continued to remain low. 
Further, future measures would be sought to optimize the utilization of manufacturing and services 
opportunities available in the regional and global trading and investment arena while maintaining 
an appropriate policy spac e for strengthening and developing the domestic industry.  
4.3.  Sri Lanka' s trade policy mainly focuses on value based measures than non -tariff measures. 
Sri Lanka continues to implement the WTO Customs Valuation Agreement since 7 January 2003. 
One of the key de velopments in the import and export procedure during the period under review is 
the implementation of a single electronic gateway where a single window to all public and private 
sector entities involved in export and import provides regulatory information through a single 
electronic gate way and the payments associated with clearance are made online. In addition, 
Sri Lanka uses ASYCUDA system since 1994 and has substantially improved the processing of 
documents relating to trade. Sri Lanka has secured 20th position in relation to efficiency of WT/TPR/G/347 • Sri Lanka  
 
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  handling port operations indicating a much improved and highly conducive operational 
environment for trade in addition to policy developments.  
4.4.  Rationalization of the tariff structure was one of the major policy directi ves of the last budget 
proposal. In the year 2009, Sri Lanka had a five -band tariff system and it was transformed into a 
four-band system in 2010 which continued till the end of 2015. According to the new budget 
proposal to rationalize the tariff system, a  three -band tariff structure has been introduced. 
Accordingly, the current tariff bands remain at 0%, 15% and 30%. Further, out of the total of 
6965 tariff lines at HS eight digit level, 3922 tariff lines or 56% has zero tariff rate while 1324 lines 
are wi th 15% and 1457 lines are with 30% tariff. A few tariff lines are subject to luxury rates.  
4.5.  Overall, Sri Lanka has made substantial progress in simplifying its trade regime while making 
it more transparent, especially through the elimination of quantitative  restrictions, reduction and 
simplification of tariff schedule and improving the public access to up -to-date information.  
4.6.  In order to promote inward transfer of technology thereby lowering the cost of production 
and improving competitiveness, import duties  on inputs and capital goods have been either 
reduced or eliminated while conforming to the multilateral disciplines of non -discrimination.  
4.7.  Sri Lanka grants preferential tariffs under its bilateral and regional agreements on reciprocal 
basis. There are no major changes to this area from the previous review report except for 
commencement of negotiations in 2016 on comprehensive free trade agreements with India, China 
and Singapore. The market access gained under prevailing FTAs/RT As is significant, although 
Sri Lanka is yet to reap the full potential. South Asian Preferential Trade Agreement (SAPTA), 
South Asia Free Trade Area(SAFTA), Asia Pacific Trade Agreement (APTA), India – Sri Lanka Free 
Trade Agreement (ISFTA), Pakistan Sri Lanka Free Trade Agreement ( PSFTA) and the Global 
System of Tariff Preferences (GSTP) are currently active. Sri Lanka has also submitted its 
application to receive preferential treatment from the EU under the Special Incentive Arrangement 
for Sustainable Development and Good Governan ce of the EU Generalized Scheme of Preferences.  
4.8.  Food Act No. 26 of 1980 and their subsequent amendments in 2009 and 2011 govern the 
SPS regulation in Sri Lanka. Sri Lanka as a member of Codex Alimentarius Commission, the World 
Organization for Animal Healt h (OIE) and International Plant Protection Convention (IPPC) follows 
their continuous guidelines to assure food safety and address related issues.  
4.9.  Sri Lanka has notified 50 trade related technical regulations and 39 SPS notifications to the 
WTO as of July 2016. Ministry of Health remains the National Focal Point for all SPS related 
matters while the Sri Lanka Standards Institution acts as the National Focal Point for the 
formulation of National Standards giving due consideration to equivalent standards esta blished by 
other countries and relevant international organizations.  
4.10.   The preparation of the national legislation relating to trade remedies has been in progress 
and due to be enacted in the near future.  
4.11.   In line with the conditions laid down by the EU, Sri Lanka has made the necessary 
infrastructure development and control measures which facilitated market access to EU for 
Sri Lankan fish and fish products in June, 2016. The timely administered policy measures within 
the fisheries sector has made it an indus try with high growth potential while having due 
compliance to the international standards and regulations.  
4.12.   Sri Lanka has been gradually implementing its trade policy, moving the economy away from 
protectionism towards greater trade openness and global econ omic integration. Traditional focus 
has been on the trade policies which affect imports and exports trade, with primary attention to 
tariff, non -tariff barriers, export policies and phytosanitary measures. This focus has been 
broadened to establish appropr iate policy framework for Sri Lanka aligning with its international 
commitments. Trade in services, intellectual property, government procurement, trade facilitation 
and customs valuation, Agreement on information technology, e -commerce are prominent new 
areas o f consideration for the country' s proactive engagement. For Sri Lanka, the multilateral 
trading system remains a key instrument in developing a fair and equitable global trading 
environment taking in to consideration its status and development needs as a small economy.  WT/TPR/G/347 • Sri Lanka  
 
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  4.13.   Sri Lanka has deposited its Instruments of Acceptance of the Trade Facilitation Agreement 
(TFA) with the WTO, becoming the 81st country to accept the implementation of the Agreement. 
With the aim of accelerating the implementation, Sri Lanka with the assistance of the WTO, has 
conducted a need assessment in 2014 which was followed by a team from the World Bank to 
assess the implementation requirements of the country. Sri Lanka highly relies on capacity, 
technical and related infrastructu re development assistance for implementation of its category C 
requirements. The country has developed a coordinating mechanism with the Geneva -based 
international organizations with the objective of seeking their expertise assistance for successful 
implem entation of the TFA in the country. It is noteworthy that Sri Lanka has already progressed 
on some aspects of the trade facilitation requirements such as ASYCUDA based single -window 
mechanism to process customs documentation online. The National Committee on Trade 
Facilitation (NCTF) has also been setup with joint participation of relevant government institutions 
and the private sector. Sri Lanka expects to implement on priority basis the launching of a trade 
portal, single window and establish a NCTF Secre tariat. While appreciating the support of the 
donor community for various trade related programmes in the country, Sri Lanka particularly looks 
forward to their continued support towards implementation of priority areas identified.  
4.14.   The Department of Import  and Export Control continues to administer the import and export 
measures only on selected products on the basis of economic, national security, health and 
environment reasons. The Imports and Exports (Control) Act No. 1 of 1969 and Special Import 
License  Regulation No. I of 1977, as amended, regulate the list of goods subject to import 
licensing and there have been no major developments from the previous report.  
5  INTELLECTUAL PROPERT Y (IP)  
5.1.  The Intellectual Property Act No . 36 of 2003 which makes provisions  for a variety of 
Intellectual Property rights and their acquisition, management and enforcement governs the 
intellectual property system of Sri Lanka. Considering the growing importance of preserving 
intellectual property rights to effectively support and  facilitate businesses and innovators in the 
protection and uses of their IP, Sri Lanka has given due prominence for necessary regulatory 
reforms. In this regard, the following amendments to the national legislation have been initiated 
and will be finalize d in the near future:  
(a) Proposed Amendments to the Intellectual Property Act No.  36 of 2003 for registration of 
Geographical Indications (GI) to enhance the protection for GIs specifically for Ceylon Tea and 
Ceylon Cinnamon ; 
(b) Proposed Amendments to th e Intellectual Property Act No.  36 of 2003 introducing 
exceptions to copyright provisions facilitating access to printed material by the visually impaired or 
print disabled with a view to ratifying the Treaty obligations ; 
(c) Proposed Amendments to the Int ellectual Property Act No.  36 of 2003 with the objective 
of signing the Madrid Protocol by end of 2017/early 2018. Electronic filing of applications will be 
facilitated for local and international applicants for registration of Trade Marks eliminating the 
necessity to file through IP agents ; 
(d) Implementation of the "IP hub"  project with the assistance of World Intellectual Property 
Office (WIPO) which includes IP policy formulation, upgrading, modernization of the National 
Intellectual Property Office (NI PO) including upgrading of the IP Automated System (IPAS) ; 
(e) Introduction of the voluntary registration of original creative work (Copyright 
registration) via the proposed amendment to the Intellectual Property Act No.  36 of 2003. A 
copyright division wi ll be setup in the NIPO which will also be responsible for monitoring the 
Collective Management Societies.  
5.2.  Sri Lanka deposited the Instrument of Acceptance for amending the  WTO Agreement on 
TRIPS on 9th September, 2015. The amendment incorporates additiona l health related flexibilities 
to the TRIPS Agreement addressing the concerns of the developing countries.  
5.3.  A Steering Committee on Intellectual Property Development (SCIP) was established in 2015 
with the objectives of; improving dissemination of informati on to the general public, organizing a WT/TPR/G/347 • Sri Lanka  
 
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  "Heads of Intellectual Property Offices Conference" in Sri Lanka for the member states of South 
Asian Association for Regional Cooperation (SAARC), establishing a coherent Intellectual Property 
Strategy, accession to WIPO administered Treaties/Protocols/Agreements, infrastructure 
development etc.  
6  INVESTMENT  
6.1.  The Board of Investment of Sri Lanka (BOISL) Act of 1978 continues to provide the necessary 
legal framework for the promotion of investment in Sri Lanka. During the  review period of 2010 to 
2015, the total inflow of FDI into Sri Lanka was US $6.9 billion compared to US $3.1 billion for the 
earlier review period of 2005 -2009.  
6.2.  The Land (Restrictions on Alienation) Act of 2014 imposed new restrictions on the sale, 
transfe r or lease of land, properties or condominiums. The Finance Act of No. 12 of 2012 Part IV 
and Commercial Hub Regulations No. 1 of 2013 were amended with certain provisions to provide 
additional concessions to foreign investors involved in certain business activities such as entrepôt 
trade, by exempting from the provisions of customs ordinance, Exchange Control Act and Import 
and Export Control Act No. 1 of 1969.  
6.3.  Sri Lanka has remained in compliance with its commitments to WTO TRIM s Agreement.  
6.4.  Sri Lanka is a  highly conducive location for investment opportunities in the South Asian 
region offering a well -educated and skillful work force, low cost manufacturing environment and 
attractive incentives. The NUG being conscious of the low inflow of investment compar ed with the 
regional peers in the recent past, created a strategic road map for improving and reforming the 
investment climate. It was proposed to restructure the present BOISL with a view to improve 
operational efficiency and facilitate investments while connecting local and global investors with 
emerging world business competencies of global value chains that manage raw materials and 
competencies of different countries successfully. It is envisaged to augment the capacities of the 
enabling environment to connect local and global investors effectively.  
6.5.  Major investment initiatives include western megapolis infrastructure worth around US$40 bn 
to be implemented over a period of 15 years, development of the Colombo International Financial 
City ( CIFC) costing approximately US$ 1.5 bn and development of Kandy, Colombo, Hambantota 
Economic Corridor and the Eastern region development plans, including Trincomalee and 
surrounding areas. The NUG has also identified key thrust areas for potential investment over 
US$2 billion which are; Oil refinery, renewable energy, integrated car manufacturing, 
manufacturing steel bridges for the region, fertilizer, manufacturing triple super phosphate, 
satellite technology, air craft repair and logistical support and integrated sugar  industry.  
6.6.  The key impediments for attracting FDIs to Sri Lanka are expected to be addressed via 
removal of tax on leasing of land to foreigners, removal of restrictions on land ownership, 
introduction of an investor friendly foreign exchange management Bi ll, exemption of income tax 
from dividends derived from listed shares by non -citizens and foreign companies on investment 
received through inward remittance, for expeditious processing by the BOISL. Further, in line with 
the present liberalization of excha nge control, Sri Lanka intends to abolish Securities Investment 
Account (SIA) and instead substitute a system whereby foreign investors could channel their 
investment to the country through any bank account existing in the formal banking system which 
is expected to promote inward remittance and investment inflows.  
7  SECTORAL PERFORMANCE S 
7.1  Agriculture  
7.1.  Agriculture sector plays an important role in the economy of Sri Lanka contributing to GDP, 
employment, foreign exchange earnings while supplying resource inputs to the industrial sector. 
During the period of review, it contributed to 7.9 % of the GDP. However, the contribution of this 
sector to the national economy is highly volatile due to unpredictable weather conditions, seasonal 
yield variations and world marke t prices.  WT/TPR/G/347 • Sri Lanka  
 
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  7.2.  The major focus of the Go vernment in relation to the agriculture sector is to formulate a new 
agriculture policy including setting up granaries with state of the art technology for paddy, maize, 
gingelly, pepper, black gram etc. and cold rooms fo r vegetables and fruits, developing local fishery 
harbours, creating an agro -livestock and fish processing park as well as the removal of import 
duties pertaining to agriculture machinery and equipment.  
7.3.  In order to achieve this objective, the G overnment re cognizes optimal strategy to increase 
yields from this sector through private public partnership especially in productivity improvement 
related investments, drip irrigation methods, greenhouse technology, introduction of high quality 
seeds and mechanizatio n in productivity improvement. Similarly, strengthening the supply chain 
linkages via collaborative partnership, disseminating the knowledge to the private sector farms, 
improving the storage and marketing facilities of farmers to optimize the land usage t hrough 
intercropping, use of high yield plants and seeds and technology are proposed to revitalize the 
agriculture sector in the country.  
7.4.  The agriculture sector is intended to be a means of inclusive growth as well as a potential 
export sector. For this pu rpose, the Government aims to transform the current agricultural sector 
into an agribusiness export industry by 2020. Twenty three Agricultural Development Mega Zones 
have also been proposed  in order to make Sri Lanka' s agricultural products globally compe titive. 
The national agricultural policy also includes measures to increase domestic production to ensure 
food security, enhance productivity and reduce unit costs of production, improve living standards 
and income of farming communities, application of en vironmentally friendly techniques in 
agriculture.  
7.2  Industry  
7.5.  Sri Lanka has continuously adopted an export oriented industrial strategy by diversification of 
industrial exports, expansion of their manufacturing base to all regions of the country and 
strengthe ning backward and forward integration. It also promotes and sustains the socio economic 
development equitably across the country. The main objective of the Government has been to 
promote value added export of industrial products.  
7.6.  Sri Lanka' s manufacturing sector has been largely driven by the textiles and clothing sector 
rubber and plastic sector and food and beverage industry. The fastest growing sectors in the 
recent past in Sri Lanka have been the apparel, rubber and plastic products. Sri Lanka has been 
keen to develop its manufacturing sector due to the uncertainties associated with high reliance on 
agricultural output that are subject to domestic and international market fluctuations and 
vulnerability to climati c changes. In this regard, the G overnment has been keen for product as well 
as market diversification giving more emphasis on the development of value -added products which 
create high demand in foreign markets. The comparatively low cost of both skilled and unskilled 
labour and backward and forwar d linkages within global value chains have played a vital role for 
this purpose in addition to the numerous support services provided by the line ministries and 
agencies.  
7.7.  Clothing and garment sector has become the second largest contributor to the foreign 
exchange earnings of Sri Lanka. The growth and success of this sector is duly attributable to the 
far sighted industrial policy introduced by Sri Lanka in 1977 through its trade liberalization policy. 
Clothing sector has matured as complete apparel solutio ns provider well linked to the supply chain 
network of South Asia and many countries in the world. The apparel sector produces a wide array 
of branded clothing which accounts for 90% of production. Availability of skilled labour, technology 
and conducive b usiness environment have complemented the growth of this industry. The clothing 
sector has also gained a prestigious image through their due consideration to eth ical 
manufacturing (concept of " Garments  without Guilt" ), sustainable environment policies (Gre en 
Factories) and corporate social responsibilities.  
7.3  Services 
7.8.  The services sector which accounts for 56.6 % of GDP in 2015 has maintained an average 
growth rate of 7% for the reporting period. Sri Lanka has made its primary commitments under 
the GATS to lib eralize 3 main sectors namely; banking insurance and other financial services, 
telecommunication services and tourism and travel related services. As a further step towards WT/TPR/G/347 • Sri Lanka  
 
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  liberalization of services, Sri Lanka has negotiated for higher level of Commitment s under the 
SAARC Agreement on Trade in Services (SATIS). The NUG expects to persue further liberalization 
with its key potential markets for services through the comprehensive free trade agreements 
under negotiation  
8  CONCLUSIONS  
8.1.  Sri Lanka has maintained a consistent adherence to outward looking market oriented policies 
throughout the period under review. It remains committed to the multilateral WTO rule based 
system and will work together with the other members for greater coherence and fulfilment of the 
WTO liberalization agenda.  
8.2.  The resilience of the economy has enabled the country to successfully weather the new 
challenges in the aftermath of the global financial crisis and also the resolution of domestic conflict 
within the country which involved extensi ve re -construction, re storation of infrastructure, 
re-settlement of displaced persons across the island. The country is now poised towards becoming 
a geo -economic hub in the Indian Ocean through major economic reforms and expansive plans for 
infrastructure  facilities, establishment of Mega Zones/economic corridors for development in 
technology, finance and industry.  
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