Relevance of trade facilitation in South Asian economies: Sri Lankan perspective

Abstract

Introduction :

The term ‘Trade Facilitation’ refers to reducing the complexity and cost of the trade transaction process. Such facilitation seeks to ensure that trade-related activities take place in a well-organized and transparent manner, covering the whole trade chain across national borders from exporter to importer.

Chowdhury (2005) empirically analyzed trade reforms and economic integration in South Asia (SA). His results suggest that small economies like Bangladesh and Sri Lanka acquire relatively low gains from trade even though these countries have adopted liberalized trade policies. Otsuki et al., (2012) examined the progress and challenges of SA in trade liberalization and facilitation, quantifying the gains from trade to the region based on the gravity model approach for 101 countries. India is the only country in SA with a large economy compared to other countries in the region. Therefore it is not appropriate to apply/adopt the Indian experience and policies in economies like Sri Lanka, Nepal, Bhutan in their trade facilitation process. Empirical studies on trade facilitation process are not available for small economies. This study focuses the trade facilitation process in SA with reference to Sri Lanka. Findings of this study will help to refine related policies in trade facilitation in Sri Lanka.