By Janaka Wijayasiri and Suwendrani Jayaratne
In the context of the growing importance of standards in international trade and production, this study examines the implications of standards on two agricultural and food exporting sectors in Sri Lanka – tea and fisheries – and their strategic response. These two export industries were chosen as they make a significant contribution to the country in terms of foreign exchange earnings and employment generation. In addition, both the tea and fisheries industries are increasingly confronted with challenges in meeting various standards when accessing markets abroad, especially in industrialized countries. Given that there are hardly any studies on this issue in Sri Lanka, this study attempts to fill this gap in the literature by examining the following questions:
What are the different types and forms of standards required for exporting tea and fish from Sri Lanka? International trade in agriculture and food is increasingly governed by a range of standards (covering quality, safety, social and environmental issues) that are set and enforced by both the public and the private sectors. The study provides a typology of standards governing the two industries.
What are the costs and benefits in meeting these standards? Have standards acted as non-tariff barriers (NTBs) to trade by imposing additional production costs or have they helped to expand export opportunities by improving their competitive advantage?
What are the implications of standards for tea and fish exporters, especially small and the medium-size enterprises (SMEs)? Does the implementation of standards lead to marginalization of SMEs?
What strategic responses have been made by the tea and fish exporters to meeting the standards demanded by markets abroad? How did the tea and fisheries exporters respond to this emerging challenge and how successful was their response? It is typically assumed that developing countries are “standard takers” with few, if any, alternatives available to them, but this far from truth. In fact, developing countries frequently have room to manoeuvre when confronted with standards. They can choose to comply with the standard, challenge it or even exit from supplying a particular market.