The Effect of Non-tariff Measures on Top Ten Agricultural Exports of Sri Lanka

Agricultural exports generate a considerable amount of foreign exchange to Sri Lanka. Even though Sri Lanka has a competitive edge in international market through agricultural exports, a thematic analysis of literature revealed that non-tariff measures imposed by developed countries act as a considerable trade barrier. This study analyzes the effects of non-tariff measures on top ten agricultural exports by using a panel data set with top ten agricultural commodities at Harmonized Commodity Description and Coding System 6-digit level, exported from Sri Lanka to 21 countries from 2018 to 2022. Gravity model and panel data regression were employed with inventory approach to investigate the effect of non-tariff measures while incorporating insights from 30 respondents including agricultural experts and customs officers. Tea, cinnamon, coconut products (molded products, coconut milk, activated carbon, desiccated coconut), animal feed, fish products, pepper, and herbal preparations were derived as top ten agricultural exports while the Sanitary and Phytosanitary measures (SPS), Technical Barriers to Trade (TBT), pre-shipment inspections (PSI), and Export-related Measures (ERM) were identified as the most prominent types of non-tariff measures that affected on the abovementioned commodities. The analysis revealed that SPS measures have a significant negative impact on the exports of tea (− 1.166), cinnamon (− 5.021), pepper (− 6.249), and herbal products (− 0.347) at 5% level significance while TBT measures show a negative effect on tea (− 0.104), cinnamon (− 1.358), coconut milk (− 0.356), animal feed (− 2.214), and pepper (− 0.705) exports at 1% level of significance. Moreover, pre-shipment inspections adversely affect the exports of cinnamon (− 0.682), desiccated coconut (− 0.869), and fish products (− 2.063) from Sri Lanka at 1% level of significance while Export-related Measures have a significant negative impact on export of tea (− 0.093), coconut milk (− 0.849), pepper (− 1.401), and fish-related (− 6.098) products at 1% level of significance. The findings highlight the substantial challenges posed by these trade barriers on the country's foreign exchange earnings and the need for strategic measures to address these barriers and enhance the country's international competitiveness.