Trade policy adjustments may become order of the day to face the challenges of COVID-19 crisis

By M. Shiham Marikar

The COVID-19 pandemic has disrupted the world economy, and has caused havoc in the economic activities of many countries. 

Well over 200 countries and territories are reported to be adversely affected. There is the fear of a looming recession in the economies of the developed Western countries.  

In this background it is natural that every country will seek ways and means to at least mitigate, if not eliminate the adverse effects on its economy, and the lives of the people. For this purpose there are bound to be adjustments and new alignments in the approaches to international trade, on which many countries depend for their economic growth and prosperity. Changes in the approaches to international trade is bound to take place both at the national and enterprise level. 

At the national level, countries will try to identify the sectors in their economies, as well as products and services in which they will have a competitive advantage, given the new demands in other countries, related to their own adjustments. It will have to be the same with Sri Lanka. 

In this context ‘Commercial Diplomacy’ will play an important role. For this purpose the Commercial Representatives in the Overseas Missions of Sri Lanka will have to be constantly fed with information on the products and services the export enterprises could supply competitively to international markets, given their existing strengths, as well as the new offerings they could provide. 

In countries where Sri Lanka do not have Missions, suitable private sector Trade Representatives, preferably Sri Lankan citizens based in such countries may have to be made use of on a remunerative basis. Their task will be to constantly look out for avenues and segments in the markets of their respective countries in which Sri Lanka’s products and services offerings could exploit opportunities.  This will also entail their determination of the possible innovations and product differentiations that may become necessary, given the new consumer demands, and possible import restrictions in such counties. In the overall context it will be beneficial for Sri Lanka to constantly look for new markets, moving away from traditional markets, given the developing new world order.  At the enterprise level, Sri Lanka’s export oriented enterprises while capitalising on the inherent strengths will have to look for new approaches. This will entail adjustments to their existing products and service profiles with differentiations and innovations to cater to the identified new demands and opportunities.  More importantly they may have to adopt a ‘Give and Take Policy’ because their trading counterparts may also look to protect their own interest. This could mean the need to source input requirements related to exports, as well as general import requirements on a reciprocative basis. In other words, new developments in international trade transactions, may possibly take the orientation of a ‘Barter System’ in some instances. 

This principle may need to be adopted in determining trade policies at the national level as well, to deal with the overall trading requirements of partner countries.

In the above background, and given the overall context of the new international trade order, Sri Lanka may have to embark on entirely new approaches in relation to both exports and domestic needs. In this regard the Agriculture sector as a whole, given the past glory of the country in Agriculture, offers a great overall opportunity. 

In particular, the country will be in a position to supply a range of fruits and vegetables, spices, processed food products, and beverages such as the world renowned ‘Ceylon Tea’, and natural herb based medicinal products and services. 

The concerns for health protocols by consumers the world over, as well as future developments in the Tourism Sector, is bound to create a demand for health foods and services. This is where Sri Lanka could capitalise on the known health benefits, and disease resistant properties of many Sri Lankan food products. 

Also the traditional natural product based medicinal system could effectively exploit the ‘Wellness Tourism Segment’ which incidentally in a priority sector identified under the ‘National Export Strategy’ (NES) hitherto the health benefits and disease resistant properties of specific Sri Lankan food products have not been promoted in international markets although there is research based analytical evidence of their efficacy related to health benefits.  

Such evidence applies to even the popular beverage ‘Ceylon Tea’ which research has proved contains any chemical constituents (a range of phenols and antioxidants) that resist several diseases. The disinfectant properties of certain spices, and other plants such a ‘Margosa’ is also a known fact. 

As such, this maybe the opportune time to popularise the intrinsic health benefits of many agriculture based products, given the health concerns of consumers the world over, in the background of the COVID-19 pandemic. 

Embarking on agriculture related production and processing activities will have another benefit in being able to supply the domestic food requirement, in order to be self-sufficient. The present policy perspective of confining imports to essential requirements to save foreign exchange will be the compelling factor to produce for supply to the domestic market.

Enterprises in other subsectors of the overall export sector such as Textiles and Apparel, Rubber Products, Light Engineering Products and ICT based products are among those bound to find opportunities to fulfil the overall health based requirements of consumers, which this brief article does not attempt to elaborate on.