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Loss of AGOA benefits to impact Sri Lankan economy

The unprecedented shift in US foreign policy following the election of Donald Trump as the President has contributed to further volatility on the political economy with particular implications for Sri Lanka vis-a-vis the US potential retraction from the African Growth And Opportunity Act (AGOA). If GSP plus is compromised, the potential loss of rival economic benefits such as provisions of AGOA would create considerable dent in Sri Lankan export market.

Sri Lankan apparel companies have begun operating in Ethiopia and Kenya to gain duty free access to the US market under the provisions of AGOA. In 2015, Iran agreed on a long-term deal on its nuclear program with the group of world powers. Under the accord, Iran agreed to limit its sensitive nuclear activities and allow international inspectors in return for the lifting of economic sanctions.

However, President Trump’s administration announced that US will leave the deal indicating that Washington will begin to reinstate sanctions. In addition to sanctions imposed by US on Iran in August, 2018, the remaining sanctions will be imposed in November this year. Accordingly, port operators, ship builders, petroleum related transactions and transactions of foreign financial institutions with central bank of Iran will be mainly affected.

 

 
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