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Trump 2.0 – What it means for Sri Lanka’s exports

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Trump

by Gomi Senadhira

The second term of Donald Trump as the President of the United States will begin on January 20, 2025. He will return to the White House for his second term, or Trump 2.0, with renewed emphasis on the “America First” doctrine and reshaping the global order, and both his supporters and critics have made clear that his second term will look nothing like the first. That means, Trump 2.0 will be even more volatile and disruptive than the first, with major changes in the US economic, trade, foreign and security policies with far-reaching implications for all countries. So, it is important and timely to ask what will be the impact of Trump 2.0 on Sri Lanka and plan how to respond to challenges and opportunities that would arise from those changes.

Here, the first and foremost area Sri Lanka should immediately focus on is the impending changes to the US trade and tariff policy. Sri Lanka, which accounts for 0.1% of the total US imports will certainly not be a priority in President Trump’s trade policy agenda. But Sri Lanka should consider the ongoing changes in the trade policy of the United States as the top priority because that market accounts for nearly a quarter of Sri Lanka’s total exports. Any major changes in the US trade policy, particularly tariff increases, will have an immediate and far-reaching impact on our exports, the GDP and export related jobs.

The “Tariff Man”

While on the campaign trail, Trump called himself a “Tariff Man,” and had promised to raise tariffs to 60% for all goods imported from China and to 10% to 20% for those imported from other countries. This he argues, would strengthen the US’s international trade position and boost US job growth. Then he had also promised to, “….  as one of my many first Executive Orders, I will sign all necessary documents to charge Mexico and Canada a 25% Tariff on ALL products coming into the United States…. This Tariff will remain in effect until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country!”

Mexico, China and Canada, with market shares of 15.1%, 14.1% and 13,6% respectively, are the three largest exporters into the United States. The European Union has a market share of 18.6%. With over 60% of the market share. In 2023 exports to the United States from Mexico were valued at $ 480 billion and from China were valued at $ 448 billion. When compared to these main exporters to the United States, Sri Lanka is a very small player. In 2023 our exports to the USA were valued at US$ 2.9 billion which amounted to 0.1% of total imports by the United States.

Right after the declaration of the election results, addressing a triumphant crowd of supporters in Florida, Trump summed up his approach to a second term as such: “I will govern by a simple motto: Promises made, promises kept.” So, will he keep these promises? And what would be the impact of these high tariffs on Sri Lanka? Though past performance is not a reliable guide to the future, the answers to some extent we may find in his previous presidency, Trump 1.0.

Trump 1.0

During his last presidential term (2017 -20) President Trump did not implement all his campaign promises. But what was implemented created uncertainty and volatility in the global markets. Most importantly in January 2018, the first Trump administration began setting higher tariffs (ranging from 7.5% to 25%) on a number of Chinese imports into the US with the objective of forcing China to change “longstanding unfair trade practices and intellectual property theft.” Prior to that, China, like all other members of the WTO, was entitled for MFN (Most Favoured Nation) tariffs in the United States. China joined the WTO in 2001, after 14 years of bilateral and multilateral negotiations, first under the auspices of GATT (General Agreement on Tariffs and Trade) and later under the WTO (World Trade Organisation). During the lengthy accession process one of the key steps was the signing of the US-China bilateral agreement which is generally considered the core of the accession agreement. The China specific higher tariffs imposed by Trump1.0 were above the prevailing MFN tariffs. In response, the Chinese government accused the US of engaging in protectionism and took retaliatory action, setting off a trade war between the two countries. After the trade war escalated through 2019, in January 2020 the two sides reached a “phase-one” agreement. During the Trump 1.0, the United States also pressured Canada and Mexico to negotiate a new trade agreement, US-Mexico-Canada Agreement (USMCA) replacing the quarter-century-old North American Free Trade Agreement (NAFTA). Under NAFTA and the USMCA Mexico and Canada get reciprocal duty-free market access into the United States.

During that period almost all Asian countries benefited significantly as the manufacturers shifted their production facilities in China into the countries in the region to avoid Trump’s tariff hikes. As a result, the region’s exports to the US had increased steadily since the beginning of the trade war. Vietnam’s exports to the US more than doubled from US$48 billion in 2017 to US$ 118 billion by 2023. Thailand’s exports increased from US$32 billion to US$ 58 billion and India’s exports increased from US$ 50 billion to US$87 billion.

Unfortunately, during Trump 1.0, Sri Lanka was the only Asian country that failed to benefit from the diversification of sourcing away from China into other Asian countries. Sri Lanka’s exports to the US declined during that period from US$ 2.978 billion in 2017 to US$ 2.976 billion by 2023.

Trump 2.0 – another trade war looms

Notwithstanding all these agreements signed with China, Mexico and Canada President Trump has now promised to introduce a 60% tariff on all imports from China and has vowed to apply higher 25% tariffs on all goods coming from Canada and Mexico! In addition, he has also promised to introduce a 10% to 20% tariff on all other countries. Will these tariff hikes be fully implemented or are these threats simply “useful negotiating tool”?

Given the unpredictable style in which President Trump operates, it is difficult to predict which of the campaign promises will really be fully implemented. But we can certainly anticipate an all new U.S. tariff regime in 2025. Most probably, it will be something less than a blanket tariff hike, with significant carve outs for FTA (free trade agreement) partners and essential goods, but still be much higher than what we have now. Higher tariffs on most Chinese goods will certainly arrive early. With higher import tariffs being imposed by the US and possible retaliatory actions by other countries, it’s really difficult to guess as to how the tit-for-tat game ends. But the year 2025, will be remembered as a year of a major trade war between the world’s largest trading nations and market instability.

Impact on Sri Lanka

When higher tariffs are introduced by the United States there will be risks and opportunities for Sri Lankan exporters. Most of our exports to the US already pay a high tariff of over 10%. Even if across the board a 10% to 20% tariff is introduced it will not have a major impact on those exports. Other exports with lower tariffs, like tea and rubber products, may face some market access issues. But, overall impact will be favourable to Sri Lanka. If we plan and strategize correctly and intervene pro-actively Sri Lanka could benefit from the anticipated changes in the US trade policy. But it is important to remember that Sri Lanka was the only Asian country that failed to benefit from the China specific tariff hikes during Trump 1.0. So, this is not the time for a “wait-and-see” approach.

As the anticipated changes, had been well signalled much in advance, relevant government agencies, Sri Lankan businesses exporting to the US and the trade associations (AmCham–Sri Lanka and the Joint Apparel Association Forum – JAAF) should do everything they can to moderate the adverse effects and to benefit from possible trade and investment diversions. This is essential as the US importers have already shifted at least some of their orders for 2025 away from China and Mexico to minimize the possible adverse impact of very high tariffs anticipated from January 20th. The recent “slow surge in orders” received by Sri Lankan apparel exporters as well as the recent investment by an American engineering technology group at Wathupitiwala, could have resulted from this discreet shift of sourcing.

Why did Sri Lanka fail to attract any noteworthy US investment relocated from China during and since the last Trump administration? Can we reverse that now and start to benefit from American customers’ demand to diversify supply chains? It is possible to find the answers to these two questions in the speech made by  the US Ambassador Julie Chung at the foundation stone laying ceremony for the new American factory at Wathupitiwala, last October, where she stated,  “SHIELD’s decision to shift its facility in China to establish a manufacturing facility here in Sri Lanka is a testament to the growing interest of US investment in Sri Lanka….Manufacturing moves like this one, driven by customer demand to diversify supply chains, represent a great opportunity for Sri Lanka. If the new government can strengthen the investment climate, implement anti-corruption measures, and strengthen business-friendly governance and transparency, there is potential for even more manufacturers to make similar moves.”

(The writer, a former public servant and a diplomat, can be reached at senadhiragomi@gmail.com)



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Educational reforms under the NPP government

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PM Amarasuriya

When the National People’s Power won elections in 2024, there was much hope that the country’s education sector could be made better. Besides the promise of good governance and system change that the NPP offered, this hope was fuelled in part by the appointment of an academic who was at the forefront of the struggle to strengthen free public education and actively involved in the campaign for 6% of GDP for education, as the Minister of Education.

Reforms in the education sector are underway including, a key encouraging move to mainstream vocational education as part of the school curriculum. There has been a marginal increase in budgetary allocations for education. New infrastructure facilities are to be introduced at some universities. The freeze on recruitment is slowly being lifted. However, there is much to be desired in the government’s performance for the past one year. Basic democratic values like rule of law, transparency and consultation, let alone far-reaching systemic changes, such as allocation of more funds for education, combating the neoliberal push towards privatisation and eradication of resource inequalities within the public university system, are not given due importance in the current approach to educational and institutional reforms. This edition of Kuppi Talk focuses on the general educational reforms and the institutional reforms required in the public university system.

General Educational Reforms

Any reform process – whether it is in education or any other area – needs to be shaped by public opinion. A country’s education sector should take into serious consideration the views of students, parents, teachers, educational administrators, associated unions, and the wider public in formulating the reforms. Especially after Aragalaya/Porattam, the country saw a significant political shift. Disillusionment with the traditional political elite mired in corruption, nepotism, racism and self-serving agendas, brought the NPP to power. In such a context, the expectation that any reforms should connect with the people, especially communities that have been systematically excluded from processes of policymaking and governance, is high.

Sadly, the general educational reforms, which are being implemented this year, emerged without much discussion on what recent political changes meant to the people and the education sector. Many felt that the new government should not have been hasty in introducing these reforms in 2026. The present state of affairs calls for self-introspection. As members affiliated to the National Institute of Education (NIE), we must acknowledge that we should have collectively insisted on more time for consultation, deliberations and review.

The government’s conflicts with the teachers’ unions over the extension of school hours, the History teachers’ opposition to the removal of History from the list of compulsory exam subjects for Grades 10 and 11, the discontent with regard to the increase in the number of subjects (now presented as modules) for Grade 6 classes could have been avoided, had there been adequate time spent on consultations.

Given the opposition to the current set of reforms, the government should keep engaging all concerned actors on changes that could be brought about in the coming years. Instead of adopting an intransigent position or ignoring mistakes made, the government and we, the members affiliated to NIE, need to keep the reform process alive, remain open to critique, and treat the latest policy framework, the exams and evaluation methods, and even the modules, as live documents that can be made better, based on constructive feedback and public opinion.

Philosophy and Content

As Ramya Kumar observed in the last edition of Kuppi Talk, there are many refreshing ideas included in the educational philosophy that appears in the latest version of the policy document on educational reforms. But, sadly, it was not possible for curriculum writers to reflect on how this policy could inform the actual content as many of the modules had been sent for printing even before the policy was released to the public. An extensive public discussion of the proposed educational vision would have helped those involved in designing the curriculum to prioritise subjects and disciplines that need to be given importance in a country that went through a protracted civil war and continue to face deep ethno-religious divisions.

While I appreciate the statement made by the Minister of Education, in Parliament, that the histories of minority communities will be included in the new curriculum, a wider public discussion might have pushed the government and NIE to allocate more time for subjects like the Second National Language and include History or a Social Science subject under the list of compulsory subjects. Now that a detailed policy document is in the public domain, there should be a serious conversation about how best the progressive aspects of its philosophy could be made to inform the actual content of the curriculum, its implementation and pedagogy in the future.

University Reforms

Another reform process where the government seems to be going headfirst is the amendments to the Universities Act. While laws need to be revisited and changes be made where required, the existent law should govern the way things are done until a new law comes into place. Recently, a circular was issued by the University Grants Commission (UGC) to halt the process of appointing Heads of Departments and Deans until the proposed amendments to the University Act come into effect. Such an intervention by the UGC is totalitarian and undermines the academic and institutional culture within the public university system and goes against the principle of rule of law.

There have been longstanding demands with regard to institutional reforms such as a transparent process in appointing council members to the public university system, reforms in the schemes of recruitment and selection processes for Vice Chancellor and academics, and the withdrawal of the circular banning teachers of law from practising, to name a few.

The need for a system where the evaluation of applicants for the post of Vice Chancellor cannot be manipulated by the Council members is strongly felt today, given the way some candidates have reportedly been marked up/down in an unfair manner for subjective criteria (e.g., leadership, integrity) in recent selection processes. Likewise, academic recruitment sometimes penalises scholars with inter-disciplinary backgrounds and compartmentalises knowledge within hermetically sealed boundaries. Rigid disciplinary specificities and ambiguities around terms such as ‘subject’ and ‘field’ in the recruitment scheme have been used to reject applicants with outstanding publications by those within the system who saw them as a threat to their positions. The government should work towards reforms in these areas, too, but through adequate deliberations and dialogue.

From Mindless Efficiency to Patient Deliberations

Given the seeming lack of interest on the part of the government to listen to public opinion, in 2026, academics, trade unions and students should be more active in their struggle for transparency and consultations. This struggle has to happen alongside our ongoing struggles for higher allocations for education, better infrastructure, increased recruitment and better work environment. Part of this struggle involves holding the NPP government, UGC, NIE, our universities and schools accountable.

The new year requires us to think about social justice and accountability in education in new ways, also in the light of the Ditwah catastrophe. The decision to cancel the third-term exams, delegating the authority to decide when to re-open affected schools to local educational bodies and Principals and not change the school hours in view of the difficulties caused by Ditwah are commendable moves. But there is much more that we have to do both in addressing the practical needs of the people affected by Ditwah and understanding the implications of this crisis to our framing of education as social justice.

To what extent is our educational policymaking aware of the special concerns of students, teachers and schools affected by Ditwah and other similar catastrophes? Do the authorities know enough about what these students, teachers and institutions expect via educational and institutional reforms? What steps have we taken to find out their priorities and their understanding of educational reforms at this critical juncture? What steps did we take in the past to consult communities that are prone to climate disasters? We should not shy away from decelerating the reform process, if that is what the present moment of climate crisis exacerbated by historical inequalities of class, gender, ethnicity and region in areas like Malaiyaham requires, especially in a situation where deliberations have been found lacking.

This piece calls for slowing-down as a counter practice, a decelerating move against mindless efficiency and speed demanded by neoliberal donor agencies during reform processes at the risk of public opinion, especially of those on the margins. Such framing can help us see openness, patience, accountability, humility and the will to self-introspect and self-correct as our guides in envisioning and implementing educational reforms in the new year and beyond.

(Mahendran Thiruvarangan is a Senior Lecturer attached to the Department of Linguistics & English at the University of Jaffna)

Kuppi is a politics and pedagogy happening on the margins of the lecture hall that parodies, subverts, and simultaneously reaffirms social hierarchies

by Mahendran Thiruvarangan

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Build trust through inclusion and consultation in the New Year

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Looking back at the past year, the anxiety among influential sections of the population that the NPP government would destabilise the country has been  dispelled. There was concern that the new government with its strong JVP leadership might not be respectful of private property in the Marxist tradition. These fears have not materialised. The government has made a smooth transition, with no upheavals and no breakdown of governance. This continuity deserves recognition. In general, smooth political transitions following decisive electoral change may be identified as early indicators of democratic consolidation rather than disruption.

Democratic legitimacy is strengthened when new governments respect inherited institutions rather than seek to dismantle them wholesale. On this score, the government’s first year has been positive. However, the challenges that the government faces are many.  The government’s failure to appoint an Auditor General, coupled with its determination to push through nominees of its own choosing without accommodating objections from the opposition and civil society, reflects a deeper problem. The government’s position is that the Constitutional Council is making biased decisions when it rejects the president’s nominations to  the position of Auditor General.

Many if not most of the government’s appointments to high positions of state have been drawn from a narrow base of ruling party members and associates. The government’s core entity, the JVP, has had a traditional voter base of no more than 5 percent. Limiting selection of top officials to its members or associates is a recipe for not getting the best. It leaves out a wide swathe of competent persons which is counterproductive to the national interest. Reliance on a narrow pool of party affiliated individuals for senior state appointments limits access to talent and expertise, though the government may have its own reasons.

The recent furor arising out of the Grade 6 children’s textbook having a weblink to a gay dating site appears to be an act of sabotage. Prime Minister (and Education Minister Harini Amarasuriya) has been unfairly and unreasonably targeted for attack by her political opponents. Governments that professionalise the civil service rather than politicise them have been more successful in sustaining reform in the longer term in keeping with the national interest. In Sri Lanka, officers of the state are not allowed to contest elections while in service (Establishment Code) which indicates that they cannot be linked to any party as they have to serve all.

Skilled Leadership

The government is also being subjected to criticism by the Opposition for promising much in its election manifesto and failing to deliver on those promises.  In this regard, the NPP has been no different to the other political parties that contested those elections making extravagant promises.  The problem is that  the economic collapse of 2022 set the country back several years in terms of income and living standards. The economy regressed to the levels of 2018, which was not due to actions of the NPP. Even the most skilled leadership today cannot simply erase those lost years. The economy rebounded to around five percent growth in the past year, but this recovery now faces new problems following Cyclone Ditwah, which wiped out an estimated ten percent of national income.

In the aftermath of the cyclone, the country’s cause for shame lies with the political parties. Rather than coming together to support relief and recovery, many focused on assigning blame and scoring political points, as in the attacks on the prime minister, undermining public confidence in the state apparatus at a moment when trust was essential.  Despite the politically motivated attacks by some, the government needs to stick to the path of inclusiveness in its approach to governance. The sustainability of policy change depends not only on electoral victory but on inclusive processes that are more likely to endure than those imposed by majorities.

Bipartisanship recognises that national rebuilding and reconciliation requires cooperation across political divides. It requires consultation with the opposition and with civil society. Opposition leader Sajith Premadasa has been generally reasonable and constructive in his approach. A broader view  of bipartisanship is that it needs to extend beyond the mainstream opposition to include ethnic and religious minorities. The government’s commitment to equal rights and non-discrimination has had a positive impact. Visible racism has declined, and minorities report feeling physically safer than in the past. These gains should not be underestimated. However, deeper threats to ethnic harmony remain.

The government needs to do more to make national reconciliation practical and rooted in change on the ground rather than symbolic. Political power sharing is central to this task. Minority communities, particularly in the north and east, continue to feel excluded from national development. While they welcome visits and dialogue with national leaders, frustration grows when development promises remain confined to foundation stones and ceremonies. The construction of Buddhist temples in areas with no Buddhist population, justified on claims of historical precedent, is perceived as threatening rather than reconciliatory.

 Wider Polity

The constitutionally mandated devolution framework provided by the Thirteenth Amendment remains the most viable mechanism for addressing minority grievances within a united country. It was mediated by India as a third party to the agreement. The long delayed provincial council elections need to be held without further postponement. Provincial council elections have not been held for seven years. This prolonged suspension undermines both democratic practice and minority confidence. International experience, whether in India and Switzerland, shows that decentralisation is most effective when regional institutions are electorally accountable and operational rather than dormant.

It is not sufficient to treat individuals as equal citizens in the abstract. Democratic equality also requires recognising communities as collective actors with legitimate interests. Power sharing allows communities to make decisions in areas where they form majorities, reducing alienation and strengthening national cohesion. The government’s first year in office saw it acknowledge many of these problems, but acknowledgment has not yet translated into action. Issues relating to missing persons, prolonged detention, land encroachment and the absence of provincial elections remain unresolved. Even in areas where reform has been attempted, such as the repeal of the Prevention of Terrorism Act, the proposed replacement legislation falls short of international human rights standards.

The New Year must be one in which these foundational issues are addressed decisively. If not, problems will fester, get worse and distract the government from engaging fully in the development process. Devolution through the Thirteenth Amendment and credible reconciliation mechanisms must move from rhetoric to implementation. It is reported that a resolution to appoint a select committee of parliament to look into and report on an electoral system under which the provincial council elections will be held will be taken up this week. Similarly, existing institutions such as the Office of Missing Persons and the Office of Reparations need to be empowered to function effectively, while a truth and reconciliation process must be established that commands public confidence.

Trust in institutions requires respect for constitutional processes, trust in society requires inclusive decision making, and trust across communities requires genuine power sharing and accountability. Economic recovery, disaster reconstruction, institutional integrity and ethnic reconciliation are not separate tasks but interlinked tests of democratic governance. The government needs to move beyond reliance on its core supporters and govern in a manner that draws in the wider polity. Its success here will determine not only the sustainability of its reforms but also the country’s prospects for long term stability and unity.

by Jehan Perera

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Not taking responsibility, lack of accountability

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While agreeing wholeheartedly with most of the sentiments expressed by Dr Geewananda Gunawardhana in his piece “Pharmaceuticals, deaths, and work ethics” (The Island, 5th January), I must take exception to what he stated regarding corruption: “Enough has been said about corruption, and fortunately, the present government is making an effort to curb it. We must give them some time as only the government has changed, not the people”

With every change of government, we have witnessed the scenario of the incoming government going after the corrupt of the previous, punishing a few politicians in the process. This is nothing new. In fact, some governments have gone after high-ranking public servants, too, punishing them on very flimsy grounds. One of the main reasons, if not the main, of the unexpected massive victory at the polls of this government was the promise of eradication of corruption. Whilst claiming credit for convicting some errant politicians, even for cases that commenced before they came to power, how has the NPP government fared? If one considers corruption to be purely financial, then they have done well, so far. Well, even with previous governments they did not commence plundering the wealth of the nation in the first year!

I would argue that dishonesty, even refusal to take responsibility is corruption. Plucking out of retirement and giving plum jobs to those who canvassed key groups, in my opinion, is even worse corruption than some financial malpractices. There is no need to go into the details of Ranwala affairs as much has been written about but the way the government responded does not reassure anyone expecting and hoping for the NPP government to be corruption free.

One of the first important actions of the government was the election of Ranwala as the speaker. When his claimed doctorate was queried and he stepped down to find the certificate, why didn’t AKD give him a time limit to find it? When he could not substantiate obtaining a PhD, even after a year, why didn’t AKD insist that he resigns the parliamentary seat? Had such actions been taken then the NPP can claim credit that the party does not tolerate dishonesty. What an example are we setting for the youth?

Recent road traffic accident involving Ranwala brough to focus this lapse too, in addition to the laughable way the RTA was handled. The police officers investigating could not breathalyse him as they had run out of ‘balloons’ for the breathalyser! His blood and urine alcohol levels were done only after a safe period had elapsed. Not surprisingly, the results were normal! Honestly, does the government believe that anyone with an iota of intelligence would accept the explanation that these were lapses on the part of the police but not due to political interference?

The release of over 300 ‘red-tagged’ containers continues to remain a mystery. The deputy minister of shipping announced loudly that the ministry would take full responsibility but subsequently it turned out that customs is not under the purview of the ministry of shipping. Report on the affair is yet to see the light of day, the only thing that happened being the senior officer in customs that defended the government’s action being appointed the chief! Are these the actions of a government that came to power on the promise of eradication of corruption?

The new year dawned with another headache for the government that promised ‘system change.’  The most important educational reforms in our political history were those introduced by Dr CWW Kannangara which included free education and the establishment of central schools, etc. He did so after a comprehensive study lasting over six years, but the NPP government has been in a rush! Against the advice of many educationists that reforms should be brought after consultation, the government decided it could rush it on its own. It refuses to take responsibility when things go wrong. Heavens, things have started going wrong even before it started! Grade Six English Language module textbook gives a link to make e-buddies. When I clicked that link what I got was a site that stated: “Buddy, Bad Boys Club, Meet Gay Men for fun”!

Australia has already banned social media to children under 15 years and a recent survey showed that nearly two thirds of parents in the UK also favour such a ban but our minister of education wants children as young as ten years to join social media and have e-buddies!

Coming back to the aforesaid website, instead of an internal investigation to find out what went wrong, the Secretary to the Ministry of Education went to the CID. Of course, who is there in the CID? Shani of Ranjan Ramanayake tape fame! He will surely ‘fix’ someone for ‘sabotaging’ educational reforms! Can we say that the NPP government is less corrupt and any better than its predecessors?

by Dr Upul Wijayawardhana

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