Advocata urges faster phase-out of para-tariffs to boost trade competitiveness

Friday, 7 November 2025 00:27 - - {{hitsCtrl.values.hits}}

Think tank calls for accelerating removal of Cess and Port and Airport Levy
Warns prolonged protectionism has made domestic industries inefficient and uncompetitive
Recommends activating National Tariff Policy Committee to implement reforms and ensure transparency

As President Anura Kumara Disanayake delivers his 2026 Budget speech, a recent report by the Advocata Institute highlights a pressing reform yet to be attempted: the elimination of para-tariffs that have long insulated local industries from global competition.

In its policy recommendations for the 2026 Budget, Advocata argues that decades of protectionist policies, from the “produce or perish” era of the 1950s to the post-2005 high-tariff regime, have left Sri Lanka’s manufacturing sector stagnant.

While these policies aimed to nurture local industries, they instead encouraged inefficiency, inflated consumer prices, and reduced export competitiveness.

By 2019, trade openness had dropped to 63% of GDP, down from 104% in 2000, while exports fell from 33% to 23% of GDP.

The think tank’s report stresses that dismantling para-tariffs such as the Cess and Port and Airport Levy (PAL) should be treated not as a technical exercise but as a critical step towards an open and growth-oriented economy.

Although the Government introduced a National Tariff Policy in 2024, designed to simplify duties into a four-band structure (0%, 10%, 20%, 30%), progress on removing para-tariffs has been slow.

Advocata recommends three urgent actions: implementing a uniform and transparent tariff structure to reduce administrative complexity and corruption; expediting the phase-out of the Cess and PAL through closer inter-agency coordination; and operationalising the National Tariff Policy Committee approved by the Cabinet in March 2025.

The report concludes that completing these reforms would restore investor confidence, reduce trade policy uncertainty, and reconnect Sri Lanka’s economy with global markets.