- Heavy reliance on imported raw materials cited as key factor
- Govt. decision on next steps still pending
- 9 July deadline for submitting response
Concerns raised by the United States over forced labour in supply chains are beyond Sri Lanka’s control, according to Government officials who cite the country’s heavy dependence on imported raw materials as the principal reason for the issue.
Speaking to The Sunday Morning Business, Export Development Board (EDB) Chairman Mangala Wijesinghe revealed that a decision on the exact steps Sri Lanka would take to address the concerns raised by the US Trade Representative (USTR) over the country’s alleged failure to adequately prohibit imports produced using forced labour had not been finalised yet.
He added that negotiations were still ongoing.
“That decision is still pending. We have had discussions with the Ministry of Trade and the Treasury. Hopefully the Government of Sri Lanka will be able to provide feedback soon. The negotiations are still ongoing,” he stated.
He further revealed that the Ministry of Trade had been directly engaging and negotiating with its US counterparts in relation to the issue.
Wijesinghe added: “We have time till 9 July, by which we must submit our papers. We are working towards that target.”
Commenting on the accusation that Sri Lanka was importing goods from markets allegedly associated with forced labour, the EDB Chairman pointed out that this was beyond the country’s control, given its reliance on imported raw materials, adding that this fact was being discussed with the US.
“That is a matter beyond our control. Sri Lanka imports more than 40–50% of its raw materials, especially for apparel and other export sectors. Therefore, we have to rely on various countries such as China, India, and other relevant destinations,” he stated.
In a statement on 2 June, the Office of the USTR announced that it would be imposing only a 10% additional tariff on countries that had imposed forced labour import prohibitions, committed to such measures through reciprocal trade agreements, or implemented partial regimes preventing the importation of certain forced labour goods, while all other countries – which includes Sri Lanka – would be subject to a 12.5% additional tariff.
Reuters, which had exclusively reviewed the USTR proposal, has reported that the 14 economies which met the trade criteria for the 10% rate were Canada, Ecuador, the European Union, Indonesia, Mexico, Pakistan, Argentina, Bangladesh, Cambodia, El Salvador, Guatemala, Malaysia, Taiwan, and the UK.