The Centre for a Smart Future (CSF) has called for the establishment of an independent Trade and Productivity Commission to help manage industry pressures arising from Sri Lanka’s renewed tariff rationalisation efforts and potential free trade agreement negotiations.
The Colombo-based think tank said a trade adjustment mechanism should have its own analytical capacity and a mandate to monitor implementation, warning that a consultative body that primarily receives industry submissions and refers them for ministerial decisions would be insufficient.
The recommendation comes as the government considers a trade adjustment mechanism alongside tariff reforms. CSF said Sri Lanka could draw on an institutional framework for a trade adjustment programme approved by the Cabinet in 2019, rather than designing a new system from the ground up.
Full statement:
Centre for a Smart Future (CSF) has welcomed indications from the government that a trade adjustment mechanism is being considered to accompany Sri Lanka’s renewed tariff rationalisation drive and the possible resumption of FTA negotiations, but has cautioned that it will only work if it is anchored by an independent, analytically-capable institution, rather than a consultative body that merely receives industry submissions and forwards them for ministerial decision.
In a new Policy Note, ‘Designing a Credible Trade Adjustment Programme for Sri Lanka’s Renewed Tariff Rationalisation Plans’, CSF – independent public policy think tank – notes that Sri Lanka has been here before: a similar tariff push a decade ago generated industry pushback and political pressure that eventually stalled the reform. A detailed institutional framework for a trade adjustment programme was approved by the Cabinet of Ministers in early 2019 but only nominally operationalised.
“The templates and reference material for technical design already exist,” the Policy Note states. “What is required now is the institutional will to implement them firmly and credibly.”
CSF’s central recommendation is setting up an independent Trade and Productivity Commission, with its own Secretariat, dedicated analytical capacity, and a mandate to monitor follow-through, and is interlocked with the National Tariff Policy Committee already proposed under the National Tariff Policy of February 2026. “A body that merely convenes stakeholders for consultation, receives submissions, and forwards them for ministerial decision will not function as an effective adjustment mechanism,” the Policy Note cautions, noting also that limited fiscal space for spending on adjustment support must be spent smartly.
Part of a wider toolkit of support, CSF recommends setting up Industry Competitiveness Councils to resolve sector-specific regulatory and facilitaiton constraints, TVET-based worker retraining, and timebound investment promotion to absorb displaced workers and capital.
The think tank argues the present moment offers a clearer opportunity than in 2017-2019, as there is a “government that firmly believes in worker-friendly policies as well as in transparent engagement with the private sector sans corrosive lobbying”. CSF encouraged taking the political decision to establish the right institutional mechanisms now, rather than in response to the industry pressures that trade liberalisation will predictably generate. (Newswire)
