Political economists have pointed out that what the country urgently required was an industrial policy and not a national policy on trade.

An initial draft of the ‘National Trade Policy of Sri Lanka’ prepared by former United Nations Director of Trade and Investment for the Asia-Pacific region, Dr. Ravi Ratnayake was put forward by the Ministry of Development Strategies and International Trade.
Dean of the Faculty of Management and Finance of the SANASA University, Kegalle, and Lecturer of Political Economy at the University of Peradeniya, Prof. Sumanasiri Liyanage added that the said draft had been formulated to provide theoretical colouring for the justification of the proposed Indo-Sri Lanka Economic and Technological Technical Cooperation Cooperative Agreement and bilateral trade agreements.

“Any trade policy or exchange rate policy should come within the broader framework of an industrial policy,” Prof Liyanage further explained.

He cited the cases of South Korea and Taiwan as countries that had developed following the establishment of an industrial policy.

“The draft also mentions in several instances the need to create a level playing field. This is a fallacy,” Prof. Liyanage declared. “The need for an industrial policy as opposed to a trade policy has also been highlighted by Emeritus Professor of Political Economy at the Harvard Kennedy School, Dwight H. Perkins in relation to the East-Asian region.

“We have got the wrong end. This will not produce positive results but instead adverse ones,” he said.

“With politically and economically powerful nations such as India, there is no level playing field. There is no such thing called free trade.  It does not take place on the basis of comparative advantage as the classical, orthodox theorists would have one believe. It takes place on the basis of absolute advantage,” added Prof Liyanage.