The Democratic Socialist Republic of Sri Lanka, an island nation in the Indian Ocean, has a population of approximately 21 million. It is situated in a strategic location for sea traffic, has excellent harbors, and possesses one of the largest ports in South Asia.

The constitution provides for Sri Lanka's legal and institutional framework; it includes provisions for the legislature, the judiciary, and the executive, i.e. the President of the Republic, the Cabinet of Ministers, and the public service. It also contains provisions for sovereignty, fundamental rights, Buddhism, language, citizenship, principles of state policy, the superior courts, franchise and elections, finance, and public security.

Sri Lanka, a middle-income economy, has performed relatively well during last few years. The economy has shown resilience in the aftermath of the global financial crisis and following the resolution of the internal conflict, with an average annual growth rate in real GDP of 6%. Sri Lanka’s Growth is mainly driven by the construction, tourism, wholesale and retail trade, and financial services sectors.

Trade played an important, albeit declining role in the economy during the past decade, as trade in goods and non-factor services declined from the equivalent of about 55% of GDP in 2011 to 49% in 2015. While exports and imports grew in absolute terms over the review period, the merchandise trade deficit widened as imports increased more rapidly from US$12 billion to nearly US$19 billion, and exports from US$8 billion to US$10 billion. Sri Lanka's merchandise exports remain heavily concentrated with agriculture and clothing accounting for over 70% of 2015 total exports, while imports remain more diversified.

Trade, investment, and related policies are developed under the aegis of the Ministry of National Policies and Economic Affairs with the necessary inputs furnished by the various other government bodies including the Department of Commerce of the Ministry of Industry and Commerce, the Department of National Planning of the Ministry of National Policies and Economic Affairs, and the Trade and Investment Policy Department of the Ministry of Finance. They work under broad mandates for trade, tariff, and investment policies, including pursuing preferential trade negotiations; implementing revised tariffs under reciprocal trade agreements; and reviewing import tariff policies and border measures.

The implementation of Sri Lanka's trade policies is largely carried out by the Department of Commerce. The Department plays a key role in coordinating and integrating Sri Lanka's bilateral, regional and multilateral trade policy objectives and their implementation. The Ministry of Development Strategies and International Trade, created in 2015, has oversight committees to monitor progress in regard to trade-related policies conducted by other ministries and departments, and advisors and designated members of agencies for international trade and development.

All ministries and institutions concerned with international trade have regular consultations with the private sector, although there are no specific laws on the matter. These consultations take place through trade associations, industry associations, as well as trade chambers. In dialogues concerning particular sectors, individual exporters, manufacturers, or industrialists are often included for their comments and inputs through a series of meetings or individual consultations.