Amar Breckenridge, Senior Associate at Frontier, spoke today at a policy round table convened by the Kadirgamar Institute, Sri Lanka’s leading foreign policy institute. Amar spoke on the implications of Brexit for South Asia, and Sri Lanka in particular.
Citing the results of Frontier’s trade modelling, Amar emphasised that the priority attached by the UK to retaining a deep level of integration and friction-free trade with the EU was likely to constrain the extent to which it pursued free trade agreements with other partners. In South Asia, India was a possible candidate whose trade agreements with the UK could be constrained going forward. For smaller countries like Sri Lanka, one of the key issues was the way in which the UK would implement unilateral tariff preferences for developing countries. It was likely that, in the medium term, Sri Lanka would have to rely less on preferences. This was partly because its own development would affect its eligibility for preferences, and partly because further liberalisation by the UK could erode the preference margin. Amar suggested that Sri Lanka should therefore rely more on domestic reform measures to reduce trade costs and boost competitiveness.
Amar also observed that Brexit was taking place at a time of heightened fragility in the rules-based multilateral trading system. Countries like Sri Lanka had the opportunity to argue the case for the multilateral trading system. This would require a reorientation of trade diplomacy away from exemptions from trade rules via special and differential treatment, and in favour of using trade rules to anchor domestic reforms.
Frontier regularly advises on international trade.
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