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Lankan delegation to meet US trade chief on Tuesday; talks focus on tariffs
View(s):By Mimi Alphonsus
A Sri Lankan delegation will meet United States Trade Representative Jamieson Greer on Tuesday, April 22, to negotiate tariffs announced by US President Donald Trump, a government minister reveals.
Labour Minister and Deputy Economic Development Minister Anil Jayantha Fernando said the delegation would consist of officials from the Foreign Ministry, Trade Ministry, and Finance Ministry. The meeting was a result of an exchange of letters with the United States Trade Representative, the minister said.
Earlier this month the United States announced sweeping tariffs on several countries. Sri Lanka was among the hardest hit, with a 44% tariff. Subsequently, a 90-day grace period was announced, (with a reduced 10% tariff) during which the Sri Lankan government hopes to negotiate for better terms.
A committee comprising industry stakeholders and government officials was appointed soon after the new tariffs were announced to advise the government. Export Development Board Chairman Mangala Wijesinghe, a member of the committee, said that renegotiating tariff rates with the US was essential for Sri Lanka to build up enough foreign reserves to meet the debt repayment commitments in 2028. Besides appealing on the basis of Sri Lanka’s IMF programme and debt payments, Mr. Wijesinghe also revealed that increasing US imports to Sri Lanka would be a point of discussion.
It is unclear what else will be on the negotiation table.International media reported that the US has shown a willingness to use trade concessions to isolate China—potentially by lowering tariffs for third countries, like Sri Lanka, in exchange for those countries preventing China from shipping goods through their territory. The Sunday Times was unable to verify whether such proposals would be entertained by Sri Lanka at the meeting.
The US is Sri Lanka’s largest export market, buying more Sri Lankan goods than the next three countries combined. They account for 25% of Sri Lanka’s export market. In 2024, nearly USD 3 billion of foreign exchange was earned through exporting mostly apparel, tea and rubber products to the US alone. Export industries are bracing for a severe reduction in demand for their products if negotiations prove unsuccessful.
“Forty percent of apparel is exported to the US, so they are a very important market,” said Yohan Lawrence, the Secretary General of the Joint Apparel Association Forum (JAAF). “If the tariff rates don’t change, the industry will shrink without a doubt,” he said.
Asked whether the industry is preparing to enter into other markets outside the US, Mr. Lawrence said they had tried to do so for years. “Negotiating better market access, especially in Japan, Korea, Canada, Australia and New Zealand, has been a priority of JAAF, but it isn’t possible without free trade agreements and zero duties to help with market access,” he said.
A collective of free trade zone unions have warned that more than 100,000 jobs, particularly done by women, were on the line. “We urge the govt. to put effort into upskilling workers rather than slashing salaries and laying people off,” a spokesman said. The collective also demanded that union representatives be included in the committee advising the government.
| US move renews debate on tariffs in Lanka The US tariffs have renewed debate about Sri Lankan exports and trade policy. Economists are advising that the government use this crisis to revisit its extensive tariff and para-tariff policies. Currently, in addition to customs duties, importers must pay taxes such as CESS and Ports and Airports Development Levy (PAL) as well. “Certain industries have got used to these para-tariffs to protect them from imports,” said Anushka Wijesinha, an economist at the Centre for a Smart Future. “Industries will, of course, be impacted by removing tariffs, but there needs to be an evidence-based mechanism to discern the real impact on workers and the economy and mitigate accordingly, rather than relying on industry lobbyists that sometimes overstate their importance.” Mr. Wijesinha is pushing for the Trade Adjustment Programme (TAP) to create a transparent mechanism to phase out tariffs and is also advocating for more free trade agreements. He emphasised the need to make reforms rather than focusing narrowly only on the US tariff issue. Other economists are sceptical, raising doubts that tariffs will be removed given that they are a major source of government revenue and are already accounted for in the budget. Mathisha Arangala of Verite Research emphasised the need for greater diversification of exports. “No matter the number of free trade agreements we have, we need to produce goods that those countries want,” he said. Pointing to Sri Lanka’s agreement with Thailand, he said that Thailand refused to concede on apparel—one of Sri Lanka’s major exports—because Sri Lanka is a competitor in that sector. Mr. Arangala proposes diversification into high value-added exports such as electronic parts, motor vehicle parts, and machinery as a way to tap into the Asian supply chain and provide essential products that are in demand in emerging markets outside of Europe and the US. Verite Research is encouraging the government to go for multilateral discussions with the US rather than a bilateral agreement. “We should get together with other countries, perhaps through the World Trade Organisation, and provide united demands,” he said, “Sri Lanka has very little leverage with a power like the US on its own.” | |
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