Group Assignment

Impact of NAFTA on Sri

Lankan International
Business

OUR TEAM B6
MBA/15/3677
MBA/15/3783
MBA/15/3795
MBA/15/3812
MBA/15/3825
MBA/15/3837
MBA/15/3846
MBA/15/3868
MBA/15/3890

Group B6

Bandara D M G N M
Lakshani R B R
Mendis B P M
Perera D R
Piumal M A D S
Ranawaka R A C S
Ratnayake R M S D
Silva H K C N
Warnakula K N

Impact of NAFTA on Sri Lankan International Business

514 International Business

MBA

OUTLINE
Regional

Economic Integration
What is NAFTA
Latest Trends NAFTA
Impact on Sri Lankan International Businesses
Affected Industries
-Garment
-Rubber
-Pharmaceutical
-Defence
-Telecommunications
Recommendations
Group B6

Impact of NAFTA on Sri Lankan International Business

514 International Business

MBA

Regional Economic Integration

Regional

Economic Integration is a process in

which neighboring states enter into an
economic agreement in order to upgrade
cooperation through common institutions and
rules

Four

Main Types
Free Trade Area
Customs Union
Common Market
Economic Union

Group B6

Impact of NAFTA on Sri Lankan International Business

514 International Business

MBA

NAFTA
NAFTA

is a broad agreement that sets the

rules for international trade between three
North American Countries

Countries

- The United State

- Canada
- Mexico
Group B6

Impact of NAFTA on Sri Lankan International Business

514 International Business

MBA

Latest Trends
Exports - US $ 2,493 Billion (14%)
Rank 2nd Position (EU Rank 1st )
Combined GDP US$ 20 Trillion
Combined Population 444 Million
Trans-Pacific Partnership (TPP)
Source: International Trade Statistic 2015, World Trade Organization

Group B6

Impact of NAFTA on Sri Lankan International Business

514 International Business

MBA

Impact on Sri Lanka

Low

impact on Sri Lankan imports

Impact

on Sri Lankan exports

-Mexico factor

Group B6

Impact of NAFTA on Sri Lankan International Business

514 International Business

MBA

Impact on Sri Lankacontd

US Imports from Mexico 84-94
9% CAGR

US Imports from SL 84-94

14%
CAGR

Source: US Census Bureau

Group B6

Impact of NAFTA on Sri Lankan International Business

514 International Business

MBA

Impact on Sri Lankacontd

US Imports from Mexico 94-04
12%
CAGR

US Imports from SL 94-04

5% CAGR

Source: US Census Bureau

Group B6

Impact of NAFTA on Sri Lankan International Business

514 International Business

MBA

Garment Industry
Driving

force of the Sri Lankan Exports

XX%

of total exports in 1994 came down to

YY% in 2014
- Competition from Mexican garment
- TPP (future threat)

Group B6

Impact of NAFTA on Sri Lankan International Business

514 International Business

MBA

Rubber Industry
Major

export product to North American

Region
- Natural rubber
- Manufactured rubber
Rubber Exports to NAFTA Countries (1993)
1600
1400
1200
1000
LKR Million

800
600
400
200
0

LKR Mn

USA

Canada

Mexico

Source: Sri Lanka Customs

Group B6

Impact of NAFTA on Sri Lankan International Business

514 International Business

MBA

Rubber Industrycontd
Rule

of Origin provisions under NAFTA

Total Rubber exports from 1993 -2014

80
70

MT

60
50
40
30
20
10
0

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Source: Sri Lanka Customs

Group B6

Impact of NAFTA on Sri Lankan International Business

514 International Business

MBA

Pharmaceutical industry
NAFTA

Preamble

Fact:

Sri Lanka imports

pharmaceuticals from USA trading area
(US Department of State, 2015)

Implications

of Interpharma Pvt. Ltd

-Spill over effect of advanced patented

technology
-Cost leadership in quality controlled drugs.
Group B6

Impact of NAFTA on Sri Lankan International Business

514 International Business

MBA

Defence industry
Fact:

rise of SL recurrent expenditure

as a per cent of GDP from 1.4% in 2013
to 1.7% in 2014 due to increased
defence expenditure. (Central Bank of
Sri Lanka, 2014)
Importation of aircraft parts: overhaul
commercial and military aircrafts.
Two national economic motivators:
-Remove restrictions on cross border flow of
industrial goods.
-Reduce FDI restrictions.

Group B6

Impact of NAFTA on Sri Lankan International Business

514 International Business

MBA

Telecommunication industry
Definition

of Telecommunication
services under NAFTA- the exclusion.
Value addition of Canadian mobile
operators to Sri Lankan clientele.
Impact of operating a radio
transmitting station by International
Broadcasting Bureau in SL.
-Low cost services.
-Fuel value addition and service
differentiation among local competitors
Group B6

Impact of NAFTA on Sri Lankan International Business

514 International Business

MBA

Recommendations
Explore

the possibility of joining TransPacific Partnership (TPP)

Source: Countries involved in TPP negotiations, www.seattleglobalist.com

Group B6

Impact of NAFTA on Sri Lankan International Business

514 International Business

MBA

Recommendationscontd
Finding

new markets especially for manufactured

rubber products

Differentiate

finished products from other competitors.

Negotiate

and sign Free Trade Agreements and MOU

between Sri Lanka and other free trade areas (US and
Canada) other than competitive Mexico

Identify

potential new export products which has

shown exponential growth in terms of both volume
and export proceeds during recent years (Coconut
products, Sea food, Gems etc)
Source: Countries involved in TPP negotiations, www.seattleglobalist.com

Group B6

Impact of NAFTA on Sri Lankan International Business

514 International Business

MBA

Thank You