Sri Lanka Considers High Import Taxes Amid US Tariff Pressure

Recently, the US government imposed a 30% tariff on Sri Lankan exports, effective August 1, 2025. While this is lower than the initially threatened 44%, it's still significantly higher than tariffs faced by some of Sri Lanka's competitors, like Vietnam (20%). This new US tariff puts significant pressure on Sri Lanka's crucial apparel sector, which heavily relies on the US market and is a major source of foreign income and jobs.

In response, Sri Lankan apparel manufacturers are reportedly asking the government to increase taxes on imported clothes by 300% to 400%. They are already thrilled that the government is imposing taxes on goods imported through online platforms like Temu and AliExpress. They hope this move will encourage Sri Lankans to buy locally made clothes. The Ministry of Industries seems to support this idea. If this tax hike goes through, you could end up paying an extra 300 to 1,200 rupees per imported clothing item.

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A Conflicting Stance

Critics point out the contradiction in Sri Lankan clothing manufacturers complaining about taxes on their products in other countries (like the US) while demanding much higher taxes on imports here at home. This kind of tax imposition could also affect ongoing discussions with the US to reduce their tariffs. These manufacturers are also asking for further discussions with the US to reduce the tariff.

Even the International Monetary Fund (IMF) suggests removing such import taxes. The IMF believes these taxes actually hurt Sri Lanka's ability to export goods. As the saying goes, "a tax on imports is a tax on exports."

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Lessons from History

In 19th-century Britain, industrialists fought to remove taxes on imported food. They argued that expensive food meant workers needed higher wages, which in turn made British manufactured products more expensive and harder to export. When food was cheaper, people had more money to spend on other things, contributing to economic growth.

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Benefits of Free Trade

When imported goods are cheaper, people have more money to spend on other things like travel, entertainment, or services. This creates new jobs and businesses in various sectors. That's why countries embracing free trade are generally more prosperous, with lower taxes creating more jobs. In contrast, countries that rely on protectionism often fall behind.

#SriLankaEconomy #ApparelTrade #ImportTaxes #EconomicPolicy #MadeInSriLanka

What is UNHRC resolution 46/1 on Sri Lanka?

UN Human Rights Council (UNHRC) adopted a resolution on 23 March 2021. The resolution was brought by Britain on behalf of a group of countries that are identified as a core group on Sri Lanka. The resolution was backed by the US which is not a member state of the UNHRC.

The countries that have co-sponsored the resolution so far are Albania, Australia, Austria, Belgium, Bulgaria, Canada, Croatia, Cyprus, Czechia, Denmark, Estonia, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malawi, Malta, Marshall Islands, Montenegro, Netherlands, New Zealand, North Macedonia, Norway, Poland, Portugal, Romania, San Marino, Slovakia, Slovenia, Spain, Sweden, Switzerland, United Kingdom of Great Britain and Northern Ireland and the United States of America.

The resolution titled ‘Promoting reconciliation, accountability and human rights in Sri Lanka' boosts the powers of the office of the UN High Commissioner for Human Rights with a view to future prosecutions.

22 countries voted in favour of the text, 11 opposed and 14 abstained, including India and Nepal. Most Muslim majority countries also abstained while Pakistan, Bangladesh and Uzbekistan voted against the motion.

Human Rights Council expresses its "deep concern" at the “deteriorating situation" in Sri Lanka through this resolution. UNHRC further criticized the erosion of judicial independence, marginalisation of minorities and impunity.

The resolution called on the Sri Lankan government to revise the Prevention of Terrorism Act (PTA). Any legislation on combating terrorism must comply fully with the State's international human rights and humanitarian law obligations.

According to the resolution, the Office of the High Commissioner for Human Rights (OHCHR) is expected to enhance its monitoring and reporting on the situation of human rights in Sri Lanka. The supposed measures include progress in reconciliation and accountability.

The High Commissioner on Human Rights is assigned by the resolution to present an oral update to the Human Rights Council at its 41st session. A written update must be made at the 49th session and a comprehensive report that includes further options for advancing accountability must be presented at the 51st session.

The resolution calls upon the Government of Sri Lanka to protect civil society actors, including human rights defenders. The government must investigate any attacks and ensure a safe and enabling environment in which civil society can operate free from hindrance, surveillance, insecurity and threat of reprisals.

The resolution also urges the Government of Sri Lanka to foster freedom of religion or belief and pluralism by promoting the ability of all religious communities to manifest their religion and to contribute openly and on an equal footing to society.

Does illegal re-exportation of pepper from Sri Lanka continue?

While Sri Lankan pepper cultivators lament about the low price for their crops, Indian pepper growers complain that Vietnam pepper is entering into their market through Sri Lanka. The news from India proves that the business of mixing local pepper with Vietnam products and re-exporting illegally is continuing affecting the local as well as Indian farmers.

Indian magazine website swarajyamag.com reported that Indian growers were complaining that they were hurt by imports of pepper into the country under the SAFTA (South Asian Free Trade Area) and duty-free under ISFTA (Indo-Sri Lanka Free Trade Agreement) from Sri Lanka, besides Nepal.

The report further stated, "growers allege that Vietnam pepper enters India cheaply in the garb of being produced in Sri Lanka or Nepal."

Also, the website said that "growers suspect that the invoice is showing a price higher than what the consignments are contracted at, raising concerns that pepper imports are paving way for hawala trade."

Hawala is an informal method of transferring money without any physical money actually moving.

In December 2019, Sri Lanka prohibited direct re-export and import of spices, including pepper for re-export purposes after minor processing, under the Commercial Hub Regulations in the Finance Act.

Under the SAFTA, imports up to 2,500 tonnes from Sri Lanka to India are duty-free. An 8 percent duty is levied, if imports are above the prescribed limit. However, certain traders are alleged exploiting this route to avoid paying customs duty of 43 percent and imported pepper for re-export purposes, after value addition within 120 days of the purchase. 

Sri Lanka's locally-grown pepper is recognised as high-quality products. Mixing and re-exporting pepper damage the reputation of locally-grown pepper internationally.  Some sources say that the mixing takes place on board certain ships at sea.

“Pepper is imported from Vietnam, the world’s biggest pepper producer and those involved in re-exporting it are so powerful that pepper is re-exported as a product of Sri Lankan often bypassing the country,” two years ago, Primary Industries Minister Daya Gamage said. The minister told a media conference that the law enforcement authorities, the finance and industry ministries and the Sri Lanka Customs must check how pepper shipped from Vietnam reached India as a product of Sri Lanka without even a rupee being paid as tax. He admitted though, that pepper could be exported to India with zero tax under the Indo-Sri Lanka Trade Agreement.

Sri Lanka President pardons a criminal Buddhist monk; more criminals expected to be pardoned

President of Sri Lanka, Gotabaya Rajapaksa pardoned a criminal Buddhist monk who had been jailed for life for possessing two T-56 firearms and 210 numbers of live ammunition illegally. 

Political monk Uwathenne Sumana Thero was charged under the firearm ordinance of Sri Lanka for the offence he committed in 2010, few weeks ahead of the Presidential. By that time, he was a supporter of Sarath Fonseka, former Army Commander, who contested as opposition common candidate against incumbent President Mahinda Rajapaksa. Formerly, he supported President Mahinda Rajapaksa's party. Sarath Fonseka lost the presidential election in 2010 and he too was court-martialled and jailed for years under the influence of President Mahinda Rajapaksa.

Another monk and three former supporters of Karuna faction broken away from Liberation Tigers of Tamil Ealam were also arrested. The Attorney-General withdrew the charges against them in June 2018.

After a lengthy hearing, Colombo High Court Judge Adithya Patabendi sentenced him for a lifetime rigorous imprisonment on 01 June 2020. He was forced to remove his robe and wear the prison jumper.  

Diana Gamage, a national list MP of Samagi Jana Balavegaya led by Opposition Leader Sajith Premadasa, recently appealed to the President to pardon Uwathenne Sumana Thero. Diana Gamage crossed over to the government and voted in favour of 20th amendment to the constitution going against the party decision. 

Sumana Thero had appealed against the judgement against him before the appellate court. He was pardoned under the condition of withdrawing the appeal. 

Analysts believe that the pardoning of this Buddhist monk who had politically supported the opposition was a precursor for pardoning Duminda Silva, the former ill-famous politician now condemned for the murder of Bharatha Lakshman Premachandra. Duminda Silva is the brother of Raynor Silva, the owner of ABC media network which is a major propaganda tool of Rajapaksa regime. 

A section of Buddhist leaders of Sri Lanka urge the government to give permission to bury COVID-19 dead bodies

Inter-Religion Relations Subcommittee of Sri Lanka Amarapura and Ramanna Buddhist Sangha sects wrote to President Gotabaya Rajapaksa urging to take an immediate decision regarding the issue of burying the COVID-19 dead bodies.

The Buddhist clergy urged the government to consult a committee comprised of experts including epidemiologists and religious leaders and take an urgent decision. 

Further, the Inter-Religion Relations Subcommittee requested to give permission to bury the dead bodies under a concrete layer or any other suitable manner so that the virus is not leaked into the groundwater. 

The letter mentioned that the issue would create unrest among Muslims of the country and the government would be embarassed.

 

Some of the murdered COVID-19 positive prisoners were ones released by court

A woman lamented before Wattala Magistrate Court of Sri Lanka yesterday saying the prison authorities of Mahara prison had killed her husband who had been bailed out by the court. She told that she had deposited the bail for the man to get him released by the time he was shot dead. 

The postmortem reports of this particular man and three others were submitted to Wattala magistrate court yesterday. Ther four of them were COVID-19 positive persons. Prison authorities shot them dead in an incident they claim a prison riot. The prisoners staged a protest before that demanding PCR tests conducted and patients separated from others. 

Eleven prisoners were killed in the incident and Minister of Prisons Lohan Ratwatta earlier told that the cause of the deaths was not shooting. However, the postmortem revealed that the prisoners had died due to gunshot injuries. 

Eight of the killed prisoners are COVID-19 positive. Their postmortems have now been conducted and the postmortems of the three other prisoners are to be conducted. 

Dead bodies of four of the COVID-19 positive prisoners were previously cremated. The Attorney General's Department wanted the bodies of the other four prisoners also cremated with immediate effect but the Committee to Protect the Rights of the Prisoners protested destroying the evidence of a crime. 

The decision regarding the dead bodies was postponed until December 30. 

The slain prisoners are not convicted and they are only suspects. The authorities and the media loyal to them claim that they are drug offenders. Although the authorities try to justify the killing of prisoners, section 13 (4) of the constitution of Sri Lanka highlights “No person shall be punished with death or imprisonment except by order of a competent court, made in accordance with the procedure established by law.”

Amnesty International said issuing a statement on killing of prisoners in Sri Lanka that prison authorities should ensure an end to the use of unlawful and excessive force against prisoners agitating against their detention conditions during the outbreak of COVID-19 within prisons. "Ensure that force is only ever used against prisoners where it is strictly necessary and proportionate to a legitimate objective," the statement said. 

"The incident at Mahara Prison Complex is the third time this year that lethal force has been used against prison inmates in Sri Lanka since the outbreak of COVID-19 in the country. In March, two prisoners were killed and several others injured in Anuradhapura prison in North Central Province, following a protest related to COVID-19. On 18 November, a prisoner was shot dead while trying to escape from Bogambara Prison in Central Province, where more than 100 inmates had tested positive for COVID-19," the statement further said.

Baby farm owner arrested in Sri Lanka

A Sri Lankan man who engaged in trafficking of babies was arrested at Matale on December 21, police media spokesman Deputy Inspector General Ajith Rohana said. The man was released on bail today by the magistrate court.

The suspect known as Manjula Ukwatta was banned recruiting more pregnant women to his baby farms.  

The arrest was made following a comprehensive investigation by the Police Children's and Women's Bureau. Twelve pregnant women were also found from the custody of this person. 

The man is accused of running the baby farm giving wide publicity online using social media. He appears to have close links with media and religion also. 

The women who had unwanted pregnancies were given shelter in this man's centre and their children were sold to wealthy people after the childbirth, police said. Police further said that the man had not followed the laws of Sri Lanka in terms of child adoption. 

A few Sri Lankan social media influencers exposed this racket and the owner of the suspected baby farm counter-argued that he was providing a service. 

The suspected trafficker ran an organization called CSCN - Center For Social Change Nation Lanka