Key Economic Indicators for Sri Lanka - selected years

Table 1 Key Economic Indicators for Sri Lanka - selected years 1971 1981 1990 2005 Mid year population ( 000 persons) 12,690 14,847 17,015 19668 Growth of mid year population (%) 2.2 0.7 1.1 1.1 Real GDP growth rate 0.2 5.8 6.2 5.5 Per capita GNP at market prices (US$) 190 300 470 1188 Crude birth rate (per 000) 30.4 28.2 21.1 18.1 Crude death rate (per 000) 7.7 5.9 5.9 6.5 Life expectancy at birth- overall 65.5 69.9 69.9 75.0 Literacy rate - overall 78.5 87.2 87.2 92.5 Source: Central Bank of Sri Lanka, Annual Reports, 1971-2005. 32

Table-2: Key Economic Data for SAARC Countries-2004 Country Mid Year population Mn. Populat ion Growth -rate % GDP US$ Mn GNP per capita US$ Literacy rate (a) Life Expectan cy at birth (a) Crude birth rate (per 000) (a) Crude death rate (per 000) (a) Exports US$ Mn. Imports US$ Mn. Bangladesh 135.2 1.3 58,568 440 41.1 63 29 8 6,608 11,276 Bhutan 0.8 2.5 657 760 47.0 63 35 9 n.a. n.a. India 1,086.0 1.6 686,08 620 61.0 63 24 8 71,763 94,051 Maldives 0.3 1.5 719 2,410 97.2 67 36 6 122 645 Nepal 24.7 2.2 6,685 250 48.6 62 33 10 756 1,869 Pakistan 148.7 1.9 93,908 600 48.7 63 36 36 13,375 17,954 Sri Lanka 19.5 1.1 19,224 1,010 92.1 74 16 7 5,757 8,000 Notes: (a) data pertaining to year 2003. Sources: ADB Key Indicators-2005 Central Bank of Sri Lanka-2006. 33

Table. 3: Sri Lanka's Gross National Product (Sector shares as percentages of GNP)(a) 1978 1988 1998 2000 2005 1. Agriculture, forestry and fishing 30.3 26.3 21.1 19.4 17.2 2. Mining and Quarrying (b) 2.3 2.7 1.9 1.9 1.9 3. Manufacturing 18.5 15.4 16.5 16.3 16.8 4. Construction 4.8 7.3 7.6 7.3 7.2 5. Services 43.9 48.2 52.9 54.6 55.8 Electricity, gas, water and sanitary services 0.5 1.2 1.5 1.2 1.7 Transport, storage and communication 10.8 10.8 11.1 11.7 15.5 Wholesale and retail trade & hotels 19.9 19.9 21.5 22.6 22.6 Financial, real estate, dwellings & business Services 6.2 7.0 9.5 9.9 11.7 Public Administration, defence, other government services & other social & personal services 8.1 9.2 9.3 9.2 7.0 6. Gross Domestic Product 100.0 100.0 100.0 100.0 100.0 7. Net Factor Income from Abroad -0.6-2.6-1.3-2.0-1.1 8. Gross National Product 99.4 97.4 98.7 98.0 98.9 Note: (a) At constant prices Source: Author s calculations compliance on Central Bank of Sri Lanka, Annual reports, (1978 2005). 34

Table. 4: Composition of exports as percentages of total exports Category 1978 1988 1990 2000 2005 1. Agricultural Products 78.9 42.8 37.7 18.2 18.2 1.1 Tea 48.5 26.2 25.9 11.5 12.8 1.2 Rubber 15.1 7.9 4.0 0.5 0.7 1.3 Coconut products 10.2 3.3 3.6 4.1 3.6 1.4 Other agricultural products 5.1 5.4 4.2 2.1 2.9 2. Industrial Exports 14.1 48.3 54.2 77.5 78.0 2.1 Textile & Garments 4.5 30.4 31.8 54.0 45.6 2.2 Petroleum products 6.5 4.8 5.2 1.8 2.1 2.3 Other a 3.1 13.1 17.2 21.7 30.3 3. Mineral Products 5.0 5.6 4.5 1.8 2.3 3.1 Gems 4.0 4.4 3.8 1.7 1.9 3.2 Other 1.0 1.2 0.7 0.1 0.4 4. Unclassified 2.0 3.3 3.6 2.5 1.6 Total Exports 100 100 100 100 100 Notes: (a) Other industrial products include mainly, food, beverages and tobacco; machinery and equipment; diamond & jewellery; rubber products; ceramic products and other industrial products. Source: Central Bank of Sri Lanka, Annual Reports (1978 2005). 35

Table 5: GTAP Substitution Elasticities GTAP Commodities Valueadded (σ VA ) Domestic/ Imports (σ D ) Sourcing of Imports (σ M ) Paddy rice 0.24 2.20 4.40 Wheat 0.24 2.20 4.40 Cereal grains nec 0.24 2.20 4.40 Vegetables, fruit, nuts 0.24 2.20 4.40 Oil seeds 0.24 2.20 4.40 Sugar canes, sugar beet 0.24 2.20 4.40 Plant-based fibers 0.24 2.20 4.40 Crops nec 0.24 2.20 4.40 Cattle, sheep and goats, horses 0.24 2.80 5.60 Animal products nec 0.24 2.80 5.60 Raw milk 0.24 2.80 5.60 Wool, silk-worm cocoons 0.24 2.20 4.40 Forestry 0.20 2.80 5.60 Fishing 0.20 2.80 5.60 Coal 0.20 2.80 5.60 Oil 0.20 2.80 5.60 Gas 0.20 2.80 5.60 Minerals nec 0.20 2.80 5.60 Cattle, sheep and goat, horse meat 1.12 2.20 4.40 Meat Products nec 1.12 2.20 4.40 Vegetable oils and fats 1.12 2.20 4.40 Dairy products 1.12 2.20 4.40 Processed rice 1.12 2.20 4.40 Sugar 1.12 2.20 4.40 Food products nec 1.12 2.20 4.40 Beverages and tobacco products 1.12 3.10 6.20 Textiles 1.26 2.20 4.40 Wearing apparel 1.26 4.40 8.80 Leather products 1.26 4.40 8.80 Wood products 1.26 2.80 5.60 Paper products, publishing 1.26 1.80 3.60 Petroleum, coal products 1.26 1.90 3.80 Chemicals, rubber, plastic pro 1.26 1.90 3.80 Mineral products nec 1.26 2.80 5.60 Ferrous Metals 1.26 2.80 5.60 Metals nec 1.26 2.80 5.60 Metal products 1.26 2.80 5.60 Motor vehicles and parts 1.26 5.20 10.40 Transport equipment nec 1.26 5.20 10.40 Electronic equipment 1.26 2.80 5.60 36

Machinery and equipment nec 1.26 2.80 5.60 Manufacture nec 1.26 2.80 5.60 Electricity 1.26 2.80 5.60 Gas manufacture, distribution 1.26 2.80 5.60 Water 1.26 2.80 5.60 Construction 1.40 1.90 3.80 Trade, transport 1.68 1.90 3.80 Financial, business, recreational services (private) 1.26 1.90 3.80 Public admin and defense, education, health 1.26 1.90 3.80 Source: The GTAP Database, Version 4. Table. 6: Regional Aggregation: 10 Regions of the Model Aggregated Regions GTAP Region 1. Sri Lanka (LKA) Sri Lanka 2. India (IND) India 3. Rest of South Asia (RAS) Bangladesh Bhutan Maldives Nepal Pakistan 4. Association of South East Asian Nations (ASEAN-5) Indonesia Malaysia Philippines Singapore Thailand 5. Rest of Asia (ROA) Hong Kong Korea Taiwan China 6. Japan (JPN) Japan 7. European Union (EU) United Kingdom Germany Denmark Sweden Finland Rest of European Union 8. North American Free Trade Area (NAFTA) United States of America Canada Mexico 37

9. Middle East (MIE) Rest of Middle East 10. Rest of the World (ROW) All other countries Table 7: Commodity Aggregation: 10 Sectors of the Model Aggregated Commodity (1) Agriculture, Forestry and Fishing (AGRI) GTAP Commodity Paddy rice (pdr) Wheat (wht) Cereal grains nec (gro) Vegetables, fruit, nuts (v_f) Oil seeds (osd) Sugar cane, suger beet (c_b) Plant based fibers (pfb) Crops (nec) Bovine cattle, sheep and goats, horses (ctl) Animal products nec (oap) Raw milk (rmk) Wool silk-worm cocoons (wol) Forestry (for) Fishing (2) Mining and Quarrying (MINQ) Coal (col) Oil (oil) Gas (gas) Minerals nec (omn) (3) Processed Food (PROF) Bovine cattle, sheep and goat, horse meat prods (cmt) Meat products nec (omt) Vegetables oils and fats (vol) Dairy products (mil) Processed rice (pc Sugar (sgr) Food products nec (ofd) Beverages and tobacco products (b_t) (4) Textiles (TEXT) Textiles (tex) (5) Wearing apparel (WEAP) Wearing apparel (wap) leather products (lea) (6) Petroleum, Coal Products Petroleum, coal products (p_c) (PECP) (7) Machinery and Equipment Electronic equipment (ele) (MAEQ) Machinery and equipment nec (ome) (8) Transport Equipment (TREQ) Motor vehicles and parts (mvh) Transport equipment nec (otn) 38

(9) Other Heavy Manufactures (OTHM) Wood products (lum) Paper products, publishing (ppp) Chemical, rubber, plastic products (crp) Mineral products nec (nmm) Ferrous metals (i_s) Metals nec (nfm Metal products Manufactures nec (omf) (10) Services (SERC) Electricity (ely) Gas, manufacture, distribution (gdt) Water (wtr) Construction (cns) Trade, transport (t_t) Financial, business, recreational services (osp) Public admin and defence, education, health (osg) Dwelling (dwe) 39

Table 8: Experimental Designs for Sri Lanka's Trade Liberalization Experiments Level of Tariff Reduction or Elimination Unilateral Liberalization E-1 Uniform External Tariffs 15% on Global Basis. Regional Liberalization E-2 South Asian Free Trade Agreement 100% between Sri Lanka and SAARC Countries. Unilateral cum Regional Liberalization E-3 SAFTA plus 15% uniform external tariffs 100% between Sri Lanka and SAARC countries plus 15% on Global basis Sensitivity Analysis Unilateral Liberalization E-4 Uniform External Tariff 15% on Global basis -Central scenario E-4.1 50% increase of ESUBM 15% on Global basis E-4.2 100% increase of ESUBM 15% on Global basis Regional Liberalization E-5 SAFTA 100% between Sri Lanka and SAARC countries -Central scenario E-5.1 50% increase of ESUBM 100% between Sri Lanka and SAARC countries E-5.2 100% increase of ESUBM 100% between Sri Lanka and SAARC countries E-6 Unilateral cum Regional Liberalization 100% between Sri Lanka and SAARC countries plus 15% on Global basis -Central scenario E-6.1 50% increase of ESUBM 100% between Sri Lanka and SAARC countries plus 15% on Global basis E-6.2 100% increase of ESUBM 100% between Sri Lanka and SAARC countries plus 15% on Global basis 40

Table 9: Experiment-1 15 Percent Uniform Import Tariffs Estimated Welfare and Trade Effects Region EV US$ mil. % of QGDP GDP TOT Volume Exports of Volume Imports of Export Price Import Price DTBAL US$ mil. (percentage changes) ASEAN 4.73 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2.48 EU -97.48 0.00 0.00 0.00 0.00 0.00 0.00 0.00 38.77 IND -0.95 0.00 0.00 0.01 0.02 0.00 0.01 0.00 11.52 JPN 18.42 0.00 0.00 0.00 0.01 0.00 0.00 0.00 22.86 LKA 201.84 1.53 0.84 1.50-0.30 3.32 1.09 0.00-149.00 MIE 10.20 0.00 0.00 0.01 0.00 0.00 0.01 0.00-4.23 NAFTA -23.25 0.00 0.00 0.00 0.00 0.00 0.00 0.00 32.66 RAS -21.82-0.02-0.01-0.04 0.00 0.08 0.03 0.01 8.83 REA 18.09 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.66 ROW -47.81 0.00 0.00 0.00 0.00-0.01 0.00 0.00 35.46 41

Table 10: Experiment-1 15 Percent Uniform Import Tariffs Estimated Percentage Changes in Regional Output and Trade Sector ASEAN EU IND JPN LKA NAFTA RAS REA MIE ROW (a) Industry Output AGRI -0.00 0.02 0.02-0.00-0.96-0.02 0.00-0.00 0.03 0.00 MINQ 0.01-0.01-0.00 0.00-7.57 0.00 0.01 0.00 0.00 0.00 PROF 0.01 0.02 0.02 0.00-7.60 0.00-0.01 0.01-0.01 0.00 TEXT 0.00-0.01-0.03 0.01-8.43 0.03 0.02 0.06-0.03-0.02 WEAP -0.11-0.07-0.13-0.00 20.55-0.08 0.03-0.09-0.07-0.05 PECP -0.01 0.00-0.01 0.00 1.64-0.00-0.00 0.00-0.00-0.00 MAEQ 0.01 0.00 0.00-0.00-15.95 0.00 0.03-0.00 0.01 0.00 TREQ -0.01-0.01-0.04 0.02-18.01 0.00 0.06-0.01-0.02 0.01 OTHM 0.01 0.00-0.02 0.00-4.70 0.00-0.00 0.00-0.02 0.00 SERC -0.00-0.00-0.00-0.00 0.70-0.00-0.01 0.00 0.00-0.00 (b) Aggregate Exports AGRI -0.03 0.07 1.25 0.02-9.74-0.14-0.21-0.04 0.42 0.01 MINQ 0.05-0.06 0.01-0.15-8.53 0.00-0.14-0.02 0.01 0.00 PROF 0.03 0.05 0.19-0.02-16.14 0.03-0.13 0.07-0.09 0.03 TEXT 0.11 0.01-0.16 0.13-6.79 0.39 0.03 0.20-0.04-0.03 WEAP -0.20-0.11-0.28-0.11 21.48-0.13 0.04-0.15-0.23-0.18 PECP -0.03 0.00-0.00-0.00 24.57 0.00 0.06-0.01-0.03 0.00 MAEQ 0.01 0.00 0.09-0.01-21.67 0.01 0.20-0.00 0.06 0.01 TREQ -0.03-0.02-0.44 0.07-19.08 0.00 0.24-0.04-0.11 0.02 OTHM 0.02 0.00-0.08-0.00-11.74 0.01-0.24 0.01-0.08-0.00 SERC -0.01 0.00-0.01-0.01-15.00 0.01 0.11-0.01-0.02 0.00 42

Table 10: 15 Percent Uniform Import Tariffs (continued) Estimated Percentage Changes in Regional Output and Trade Sector ASEAN EU IND JPN LKA NAFTA RAS REA MIE ROW (c) Aggregate Imports AGRI 0.00 0.00-0.00-0.01-9.20-0.04-0.15 0.01-0.04-0.03 MINQ 0.01-0.01-0.00-0.00-1.49-0.00-0.05-0.00 0.02-0.00 PROF -0.01 0.00 0.05-0.01 25.94-0.01-0.09-0.01 0.01-0.00 TEXT -0.03-0.02 0.00 0.01 18.95-0.02-0.07-0.01-0.01-0.02 WEAP 0.01 0.04 0.04 0.01 20.09 0.17-0.12 0.01 0.02 0.00 PECP 0.02-0.00-0.01 0.00-5.18-0.00-0.03 0.00 0.01-0.00 MAEQ 0.00-0.00-0.00 0.00 3.04-0.00-0.05 0.00 0.01-0.00 TREQ 0.00-0.00 0.00 0.02 4.69-0.01-0.10 0.01 0.01-0.01 OTHM 0.00-0.00-0.00 0.00 0.02-0.01-0.05 0.00 0.00-0.00 SERC -0.00-0.00-0.00-0.00-7.39-0.01-0.12-0.00 0.01-0.02 43

Table 11: Experiment-2 South Asian Free Trade Agreement - SAFTA Estimated Welfare and Trade Effects Region EV US$ mil. % of QGDP GDP TOT Volume Exports of Volume Imports of Export Price Import Price DTBAL US$ mil. (percentage changes) ASEAN -172.95-0.03 0.00-0.03-0.03-0.08-0.03-0.01 92.32 EU -652.40-0.01 0.00-0.02 0.02-0.03-0.02-0.01 730.52 IND 4445.28 1.35 0.41 3.6 3.02 9.47 3.72-0.03-1109.38 JPN -798.59-0.02 0.00-0.07 0.08-0.11-0.07 0.00 563.20 LKA 253.55 1.92 0.11 3.91 0.88 7.54 4.62 0.29-189.64 MIE -129.64-0.03-0.01-0.04 0.00-0.22-0.01 0.03 265.78 NAFTA -370.89 0.00 0.00-0.02 0.03-0.03-0.03-0.02 504.92 RAS -1574.64-1.72-0.56-3.90 31.66 24.98-2.11 0.78-1333.88 REA -403.22-0.03 0.00-0.04 0.00-0.07-0.06-0.02 151.26 ROW -70.51 0.00 0.00 0.00 0.01-0.03 0.00 0.00 324.9 44

Table- 12: Experiment-2: South Asian Free Trade Agreement-SAFTA Estimated Percentage Changes in Regional Output and Trade Sector ASEAN EU IND JPN LKA NAFTA RAS REA MIE ROW (a) Industry Output AGRI 0.02 0.05-0.36 0.02 2.14 0.00-0.36 0.01 0.13 0.02 MINQ 0.07 0.06-2.44 0.14-9.23 0.04-2.54 0.06 0.05 0.04 PROF 0.11 0.02-2.48 0.01-2.29 0.01 2.15 0.03 0.07 0.01 TEXT -0.61 0.07 0.58-0.05-2.81 0.03 3.86-0.44 0.10 0.01 WEAP 0.02 0.11-11.74 0.03-11.30 0.04 16.16 0.22 0.16 0.06 PECP -0.04-0.02 0.38 0.02 0.86-0.03 4.12-0.01 0.14 0.00 MAEQ -0.04-0.03 1.67 0.01 3.80-0.02 6.27 0.02 0.01-0.06 TREQ -0.01-0.08 15.56-0.05 84.70-0.03-50.38 0.00-0.30-0.06 OTHM -0.35 0.00 0.09 0.01 4.59 0.01-0.83 0.00-0.08-0.02 SERC -0.05 0.00 0.14 0.00 0.03 0.00 0.06 0.00-0.02 0.00 (b) Aggregate Imports AGRI -0.13 0.12-2.19 0.08 33.14-0.16 71.48 0.14 0.06-0.01 MINQ 0.12 0.18-2.96 0.37-10.89 0.15 72.07 0.26 0.11 0.10 PROF 0.23 0.07-14.64 0.30 9.36 0.15 15.85 0.26 0.34 0.05 TEXT -1.40 0.07 8.70-0.45 13.11-0.03 34.68-1.18 0.02-0.10 WEAP -0.01 0.19-26.52 0.33-12.19 0.18 27.97 0.33 0.22 0.10 PECP -0.12 0.01-5.42 0.26-0.76-0.04 101.88-0.08-0.88 0.01 MAEQ -0.01-0.03 43.81 0.13 7.59-0.01 102.74 0.04 0.02-0.11 TREQ -1.47-0.15 227.67-0.14 800.74-0.06 448.34-0.06-2.06-0.19 OTHM -0.14 0.02 9.25 0.10 15.61 0.05 43.63 0.00-0.53-0.06 SERC 0.18 0.09-14.77 0.22-16.46 0.09 2.12 0.18 0.31 0.08 45

Table 12: South Asian Free Trade Agreement-SAFTA (continued) Estimated Percentage Changes in Regional Output and Trade Sector ASEAN EU IND JPN LKA NAFTA RAS REA MIE ROW (c) Aggregate Exports AGRI -0.15-0.06 23.17-0.16 32.37-0.20 29.68-0.18-0.78-0.25 MINQ -0.06 0.00 2.92-0.05 2.04-0.09 27.35-0.13-0.28 0.00 PROF -0.43-0.02 16.13-0.23 17.92-0.08-4.95-0.15-0.33-0.05 TEXT -0.16-0.05 20.89 0.15-2.06-0.17 72.75 0.02-0.07-0.01 WEAP -0.67-0.08 75.38-0.16-2.13-0.06 313.18-0.06-0.28-0.18 PECP -0.01-0.01 3.68-0.12 0.85-0.01-5.84 0.04-0.1-0.01 MAEQ -0.03-0.03 7.58-0.09 5.60-0.01 17.61-0.03-0.17 0.00 TREQ -0.11-0.03 26.81-0.17 13.49 0.00 109.56-0.10-0.23 0.01 OTHM -0.08-0.03 10.65-0.09 5.63-0.04 21.70-0.06-0.18-0.02 SERC -0.09-0.04 9.61-0.10 4.89-0.02-2.35-0.09-0.17-0.02 46

Table 13: Experiment-3 Combined Trade Policy: SAFTA cum 15 Percent Uniform Import Tariffs Estimated Welfare and Trade Effects Region EV US$ mil. % of QGDP GDP TOT Volume Exports of Volume Imports of Export Price Import Price DTBAL US$ mil. (percentage changes) ASEAN -164.76-0.03 0.00-0.03-0.03-0.07-0.03-0.01 93.38 EU -737.98-0.01 0.00-0.02 0.02-0.03-0.03-0.01 751.52 IND 4397.97 1.34 0.41 3.57 3.00 9.38 3.68-0.03-1092.74 JPN -765.14-0.02 0.00-0.06 0.09-0.10-0.06 0.00 573.13 LKA 442.63 3.35 0.98 5.19-0.31 8.97 5.44 0.27-285.97 MIE -116.67-0.02-0.01-0.04-0.01-0.21-0.01 0.03 257.24 NAFTA -396.13 0.00 0.00-0.02 0.03-0.03-0.04-0.02 526.31 RAS -1592.56-1.74-0.57-3.92 31.54 24.83-2.12 0.78-1322.73 REA -375.79-0.02 0.00-0.04 0.00-0.06-0.05-0.02 149.69 ROW -109.43 0.00 0.00-0.01 0.01-0.03-0.01 0.00 350.17 47

Table -14: Combined Trade Policy: SAFTA cum 15 Percent Uniform Import Tariffs Estimated Percentage Change in Regional Output and Trade Sector ASEAN EU IND JPN LKA NAFTA RAS REA MIE ROW (a) Industry Output AGRI 0.02 0.07-0.35 0.02 1.45-0.02-0.33 0.00 0.16 0.02 MINQ 0.08 0.05-2.40 0.14-15.93 0.04-2.53 0.06 0.06 0.04 PROF 0.13 0.03-2.53 0.01-9.12 0.02 2.09 0.04 0.07 0.01 TEXT -0.6 0.06 0.53-0.03-10.70 0.06 3.73-0.38 0.07-0.01 WEAP -0.06 0.05-11.70 0.03 4.47-0.03 15.91 0.15 0.12 0.02 PECP -0.05-0.02 0.38 0.02 2.66-0.03 4.12-0.01-0.14-0.00 MAEQ -0.01-0.03 1.74 0.01-11.57-0.01 6.29 0.01 0.00-0.05 TREQ -0.36-0.08 15.11-0.03 53.06-0.03-50.35-0.02-0.32-0.05 OTHM -0.05 0.00 0.13 0.01 0.07 0.01-0.80 0.00-0.10-0.02 SERC -0.01-0.00 0.14-0.00 0.94-0.00 0.06 0.00-0.02-0.00 (b) Aggregate Exports AGRI -0.17 0.19-1.13 0.10 23.03-0.31 71.72 0.09 0.54 0.00 MINQ 0.17 0.12-2.90 0.21-18.45 0.15 71.84 0.24 0.12 0.11 PROF 0.27 0.12-14.98 0.27-6.46 0.18 15.55 0.34 0.26 0.10 TEXT -1.29 0.07 8.37-0.32 6.40 0.32 34.37-0.99-0.02-0.12 WEAP -0.16 0.10-26.41 0.25 4.25 0.08 27.68 0.22 0.08-0.04 PECP -0.15 0.01-5.37 0.25 23.32-0.04 101.85-0.09-0.91 0.01 MAEQ -0.00-0.03 44.24 0.11-13.33-0.00 103.07 0.03 0.07-0.10 TREQ -1.48-0.16 221.74-0.06 624.86-0.06 447.95-0.10-2.13-0.17 OTHM -0.12 0.02 9.45 0.09 4.32 0.06 43.75 0.01-0.61-0.06 SERC 0.16 0.09-14.60 0.21-26.80 0.09 2.48 0.17 0.29 0.08 48

Table 14: Combined Trade Policy: SAFTA cum 15 Percent Uniform Import Tariffs (continued) Estimated Percentage Change in Regional Output and Trade Sector ASEAN EU IND JPN LKA NAFTA RAS REA MIE ROW (c) Aggregate Imports AGRI -0.14-0.05 22.95-0.16 20.12-0.23 28.89-0.17-0.77-0.26 MINQ -0.05-0.02 2.91-0.05 0.58-0.09 27.30-0.13-0.25 0 PROF -0.42-0.01 16.01-0.23 41.25-0.09-5.06-0.15-0.31-0.05 TEXT -0.18-0.06 20.76 0.16 12.46-0.19 76.61 0.02-0.07-0.03 WEAP -0.65-0.04 75.37-0.15 6.73 0.07 313.73-0.05-0.26-0.18 PECP 0.01-0.02 3.64-0.12-4.13-0.01-5.87 0.04-0.09-0.02 MAEQ -0.03-0.03 7.50-0.09 7.14-0.01 17.54-0.03-0.16-0.01 TREQ -0.11-0.03 26.49-0.15 12.98-0.01 109.45-0.09-0.24 0.01 OTHM -0.10-0.03 10.55-0.09 5.60-0.04 21.61-0.06-0.18-0.02 SERC -0.09-0.04 9.50-0.10-3.31-0.02-2.45-0.09-0.16-0.03 49

Table 15: Sensitivity Analysis (Experiments 4, 5 & 6) Estimated Welfare and Trade Effects 15 % Uniform Import Tariff SAFTA SAFTA cum 15% Uniform Tariff Central scenario 50% 100% Central 50% 100% Central 50% 100% increase in ESUBM increase in ESUBM scenario increase in ESUBM increase in ESUBM scenario increase in ESUBM increase in ESUBM E-4 E4-1 E4-2 E-5 E5-1 E5-2 E-6 E6-1 E6-2 EV (US$ Mil) 201.84 247.40 295.60 253.55 367.38 492.01 442.63 592.46 743.46 EV % of GDP 1.54 1.87 2.24 1.92 2.73 3.74 3.35 4.44 5.63 QGDP 0.84 1.21 1.57 0.11 0.04 0.06 0.98 1.32 1.64 TOT 1.50 1.45 1.45 3.91 5.91 7.93 5.19 6.90 8.77 DT BAl -149.00-186.38-223.71-189.64-234.51-289.90-285.97-329.78-370.16 Vol. of Exports -0.30 0.35 0.98 0.88 1.73 2.44-0.31 0.49 0.93 Vol. of Imports 3.32 4.45 5.60 7.54 10.9 14.41 8.97 12.06 14.82 50

Export Price 1.09 0.99 0.95 4.62 7.17 9.82 5.44 7.62 9.91 Import Price 0.00 0.00 0.00 0.29 0.49 0.72 0.27 0.42 0.58 Table 16: Sensitivity Analysis (Experiments 4, 5 & 6) Estimated percentage Change in Sri Lanka s Output & Trade 15 % Uniform Import Tariff SAFTA SAFTA cum 15% Uniform Tariff Central scenario 50% 100% Central 50% 100% Central 50% 100% increase in ESUBM increase in ESUBM scenario increase in ESUBM increase in ESUBM scenario increase in ESUBM increase in ESUBM (a) Industry Output AGRI -0.96-1.32-1.61 2.14 3.77 4.95 1.45 2.94 4.13 MINQ -7.57-9.78-12.01-9.23-14.36-19.77-15.93-23.04-29.67 PROF -7.60-8.05-8.59-2.29-2.12-0.02-9.12-9.12-7.38 TEXT -8.43-7.69-7.19-2.81-3.62-6.28-10.7-11.21-13.02 WEAP 20.55 30.86 41.14-11.3-21.93-37.43 4.47-2.58-14.30 PECP 1.64 1.98 2.46 0.86 1.59 2.52 2.66 3.96 5.58 MAEQ -15.95-22.75-29.28 3.80 15.95 35.34-11.57-8.71-0.92 TREQ -18.01-19.75-21.45 84.7 127.11 201.74 53.06 74.12 110.51 51

OTHM -4.70-6.87-9.17 4.59 14.59 28.28 0.07 8.01 18.47 SERC 0.70 0.27-0.17 0.03-0.55-1.09 0.94 0.36 0.00 52

Table 16: Sensitivity Analysis (Experiments 4, 5 & 6) Continued Estimated percentage Change in Sri Lanka s Output & Trade (b) Aggregate Exports AGRI -9.74-11.23-12.37 33.14 54.19 69.95 23.03 43.95 61.05 MINQ -8.53-11.03-13.54-10.89-17.03-23.54-18.45-26.85-34.73 PROF -16.14-22.57-28.97 9.36 25.27 62.15-6.46 2.20 29.63 TEXT -6.79-10.99-15.77-13.11 23.34 29.04 6.4 12.32 15.46 WEAP 21.48 32.38 43.23-12.19-23.68-40.25 4.25-3.39-15.97 PECP 24.57 43.17 66.48-0.76-1.54-2.33 23.32 40.12 60.79 MAEQ -21.67-31.80-41.49 7.59 26.66 56.58-13.33-8.11 4.38 TREQ -19.08-27.39-35.78 800.74 1187.61 1847.33 624.86 820.37 1142.3 OTHM -11.74-17.72-24.02 15.61 51.47 96.25 4.32 31.39 65.68 SERC 15.00-22.11-29.29-16.46-29.59-43.58-26.8-41.21-53.82 (C)Aggregate Imports AGRI -9.20-8.22-7.17 32.37 51.00 70.07 20.12 39.51 59.37 MINQ -1.49-2.46-3.23 2.04 5.35 9.85-0.58 2.92 6.22 PROF 25.94 26.37 27.11 17.92 25.65 33.76 41.25 47.44 53.17 TEXT 18.95 25.12 31.16-2.06-6.62-14.39 12.46 9.17 2.62 WEAP 20.09 29.81 39.30-2.13-12.40-28.63 6.73-0.48-12.24 PECP -5.18-6.18-7.03 0.85 0.76 0.79-4.13-4.80-5.07 MAEQ 3.04 3.71 4.38 5.60 7.50 9.95 7.14 8.65 10.20 TREQ 4.69 5.26 5.89 13.49 19.10 25.87 12.98 15.31 18.04 OTHM 0.02-0.52-1.06 5.63 10.31 16.25 5.6 9.49 14.19 SERC -7.39-7.15-6.87 4.89 7.01 9.72-3.31-1.39 0.48 53

Figure 1: Multi Region Open Economy of the GTAP Model 54

Figure 2: Nested Production Structure of the GTAP Model Gross Output (Leontief, σ = 0) Value Added Separable Intermediate Inputs (CES, σ VA ) (CES, σ D ) Separable Land Skilled Unskilled Natural Capital Domestic Foreign Labour Labour Resources Armington Composite (CES, σ D ) Source: Hertel (1997). Sources of export supply 55