Flexible Trade Policies in Agriculture Sectors of Developing Countries: Proposing a Technical Approach for Sri Lanka

After two decades of liberalized economic policies together with early accession to WTO, Sri Lanka could not achieve the exp ected fast economic growth. Agriculture growth in particular fell sharply. WTO Doha round expects a deeper liberalization. Instead, we will benefit more from being a friend of the "Development Box" and securing flexibility in tariff revisions. In asserting this, the paper analyzes impacts of liberalized policies on agriculture, stress the need for flexible trade policies and formulate a design for self designating Special Products (SP) and Special Safeguard Mechanisms (SSM). The past economic growth favoured mostly urbanised population. Sluggish rural agricultural growth, hurt with increased food imports, was the main cause of this unbalance development. Therefore the sustainable growth of the agriculture sector, facilitated by some protection, is necessary for equitable economic development. As the country budget restricts domestic support, the SP and SSM modalities would be the most suitable protective tools. WTO Hong Kong meeting allows flexibility in tariff schedules to address rural development (RD), food security (FS) and livelihood security (LS) needs through protection. The study identified appropriate criteria to designate agriculture products contributing to RD, FS, and LS for protection from dumping and import surges. The study recommends SP and also Volume and Price triggers for products as appropriate to invoke SSM for Sri Lanka.