Sarath Wijesinghe Former Ambassador to U A E and Israel

 Trade Agreements in General

Trade Agreement or trade pact is a wide range of arrangements on tax, tariff, and trade practices that often includes investment guarantees, common preferential and free trade practices advantageous to the respective country or the region involved. No country in the world can live in isolations without such arrangements to deal with on trade and commerce with the rest of the world. It is inevitable and essential that we should enter into trade agreements for us to promote our trade business and industry. Agreements could be bilateral (BTA) or multilateral as the case may be. BIT is an agreement between two countries or territories, and multilateral (MTA) are arrangements with more than one side or a territory. Small nations should be cautious entering into agreements with asymmetrical major world and regional powers with political and economic interests. Being a small nation Sri Lanka should be careful and enter into agreements after careful and through scrutiny, like Singapore, Hong economically advanced in the international trading arena.

Diplomacy and International Trade agreements

When business and trade is modernized, ferociously competitive, and part and parcel of the world economic and political order, instruments on trade agreements are more organized and complicated for promotion and implementation. In the diplomatic circle and foreign policy practices, countries give special preference and priority for commerce and trade over traditional diplomatic practices based on the Conventions on diplomatic relations. Ambassadors are expected to promote trade and commerce on the short and long term developments in the country using the goodwill and resources of the host countries and the region to benefit of the county or region of representation. Ambassadors based in Sri Lanka work hard to promote their business, trade, and contracts with Sri Lanka for the benefit of the sending country. It is to the credit to the Indian High Commissioner working hard to promote FTCA by canvassing the Government as well as private sector which is his mandate to promote his country. Even Ambassadors from developed and major powers such as USA, India, China, European Union, are active in canvassing their products and resources individually promoting trade and trade agreements to be beneficial to the host country. It is time for Sri Lankan Foreign Office and the Ambassadors worldwide to promote our trade and business giving priority for investments, exports and developments in relation to our economy. They go beyond and outside scope of  their duties under Vienna Convention of Diplomatic Relations in the host country to promote business, trade, investments and developments for their  the country and the region represented. Agreements entered into and the trade practices agreed upon are effective internationally with power of implications with the effective arbitration process, and legitimacy derived through WTO and multilateral instruments the countries are agreed upon. Small Nations and territories should be extra careful in entering into trade and related instruments with major powers, due to the complicated process on repudiation of agreements with the powerful countries and regions as the effect depends of the enormity of the other party.

Indo Sri Lanka Accord 1987

When India, the other party of the 1987 accord was unable to fulfil the conditions of the agreements on disarming the armed group as agreed,  Sri Lanka was helpless until terrorism that engulfed the country for three decades was eradicated from the Sri Lankan by Sri Lankan Security forces with no external support. It is no secret that India gave a blind eye on armed groups using the Indian soil for terrorism for which they unfortunately paid the highest price by the death of the loving Prime Minister Rajive Gandi. Sri Lanka was assisted by China, Pakistan and Israel when the world looked the other way when Sri Lanka needed assistance. 1987 Accord is still in force with the effective clauses on Foreign Policy as effective as the 1815 Convention entered into with the British and the Chieftains in the Kandiyan Kingdom which is also still in force. There are developed regional zones covering groups of states on political trade and other areas with multilateral trade arrangements. SAARC and the Europe Union are the closest to us. European Union has 28 member states with a population of 58 million with instruments on Human Rights, Governance, Free Movement, Service Sector, Common Policies, Agriculture, Fisheries and regional development. It appears that SAARC is trying to follow EU – the most developed Regional Organisation both of which are currently going through difficult time. Sri Lanka has preferential and free trade agreements with India, Iran, Egypt, Singapore and Israel, EU, SAARC and currently in the process of upgrading its agreement with India to ECTA, with the existing SAFTA, South Asian Free Trade Agreement and BIMSTEC which are still  on the formative stages. Sri Lanka should be careful in entering into new international trade pacts, without fully studying and scrutinizing the long and short term implications, as we have continuously made historic mistakes throughout our history.

It is advisable to be cautious

Therefore it is advisable to be cautious in dealing with the future of the country. Sri Lanka should be careful in entering into agreements with parties interested in Sri Lanka based on economic and political ambitions and strategies. Previous agreements with India have failed and there are on-going contentious unresolved issues on Fishing, Maritime Boarders, and many other political and economic confrontations. Agreement concluded giving 80% of entire Harbour for 99 long years to Chinese Company with 15,000 acres around Hambatota” Harbour in a hurry with no proper research or evaluation is worrying on any international standard. There appear to be pressure on the Sri Lankan Government to expedite both agreements which has long-term future ramifications.

Sale of Magampura-( Hambantota)- Harbour

Sale of Magampura” Harbour to China on ninety nine year lease with thousands of acres around with oil tanks and modern developed Harbour with an enormous profit margin is a grave mistake long term with irreparable consequences running to     the next few centuries. It is reported that further 15000 acres will be given to China in addition to the implementation of the Port City Project abundant for a year due to differences between the Sri Lankan Government and the Chinese Company. Sri Lank had to pay a heavy price for the foolish steps taken antagonizing China who will not forget friends and forgive enemies. Ninety nine years is almost 100 years and the citizen is not aware of the contents of the MOU entered into in a hurry with no proper research and evaluation for reasons only known to few individuals involved. It appears that under the MOU Sri Lanka is prohibited from setting and even improving any harbour within  100 KM distance. Similarly ECTA if implemented without proper research and evaluation resulting consequences are bound to be disastrous because Indians are not soft and amenable as Chinese to Sri Lanka. It is no secret that China was antagonized during and after the regime change process orchestrated with the involvement of foreign hands. She is patriotic and will not forget close and dear friends and forgive enemies as well who proved themselves to be the Economic giant bypassing all traditional Economic Giants who seek assistance from Chin.

WTO and International Instruments on Trade and Commerce

WTO is an intergovernmental organization commenced on 1/1/95, with 123 Nations replacing GATT to establish fair trade, assist in the activation of trade agreements, coordination   of investments, Services, Intellectual Property, Dispute settlements, and matters relation to key factors in economic development and related matters in economic developments, Create Trade developments, poverty alleviation, exploitation of natural resources, matters relation to Law Education , Law enforcement, Trade development, market access to developing countries. Developed countries and powerful regions dominate WTO with Regional arrangements. It is not well established with precedents and practices on international trade and commerce in which neither Sri Lankan Government nor our business community and the SME’s are not conversant with. On this matter we have to learn a lot from Small countries such as Singapore and Hong Kong developed in intentional business dealings of high international standards. They enter into bi lateral and multilateral agreements with the rest of the world with tact and confidence. Is our commerce Ministry and the department able and competent to keep pace in competition is questionable and the response on important and contentious matters with inert reactions indicates the Ministry is either slow or incompetent to handle modern trade. As the WTO is powerful and has full control on the process and procedure, small states with less knowledge and resources have to be extra vigilant. India is a large, competent country with excellent background and knowledge on Law, procedure and international goodwill with the international executive and judicial bodies, it is safer and prudent on our part not to be in a hurry and cautious before leap into any conclusions

Do we really need an Agreement with India on Traffic and Service Sector?

Sri Lanka and India are two friendly countries with practical difficulties and differences due to the geographical location and closeness. To our luck we are separated by sea with no physical land borders as with the case of other SAARC countries, experiencing difficulties on water border/boundary and many other disputes. We have disputes with India on illegal fishing and illegal immigrants, and Indian Labour issues. Sri Lanka settled Indian Labour issue by the Sirima – Shastri Agreement, and Kahthivi issue by Sirima- Gandi agreement which are achievements based on correct foreign policy. India is suspicious of Sri Lanka due to close friendship and moral assistance by China on economic and security fronts. It is a known secret that there was cold war between Sri Lank and India on security, economic strategies and regional politics which is not over yet. We are excellent trade partners without any agreement or complicated bonds. India wishes to have direct or indirect political and economic control on Sri Lanka on regional security and leadership control ambitions. Trade balance is in favour of India and there is hardly an exportable item to India to enjoy the concessions offered. Sri Lanka is experiencing the Board of Investment, with investment facilities and tax holidays performing a successful investment regime incorporating all the ingredients of a free trade environment. Sri Lankan service sector is in an unsatisfactory situation, with 10% of the population government sector which is inefficient and indiscipline lot seeking perks instead of service. 1.8 of the population is in employment overseas manly on unskilled labour. There is a boom on the employment in the security sector which does not contribute on industry or production. The other non-productive sector is the three wheeler drivers who will not make a contribution to the economy and the armed forces paid by the government as a group of public servants. Our country is lavish in giving public holidays compared to the world index on holidays. 21 annual holidays,12 Poya holidays,54 weekends, 182 holidays for government servants, with 8 hour job with working hours of 1456 out of 8760 hours with 51% population doing nothing with Janasaviya” is a dreadful situation.  The other employed sector is undergoing hardships being under pay and less perks and training facilities. Opening the doors for the service sector for Indians ,who are already in employment illegally, will bring disastrous results, by over flooding the entire labour sector, with cheap labour and influx of diseases and cultural implications. It was reported in India of the 3 million applications for 340 clerical vacancies and lack of toile facilities to 50% Indian population which is an indication of the Indian economy and the living conditions. Therefore it is not prudent even to consider such agreement and a Tunnel and a Bridge to connect Sri Lanka through Talimanner”. Let Sri Lanka be an island for her glamour, beauty and security.

Way Froward

Sri Lanka is well secured and  situated as an Island, on the main Silk Route where 350 ships per day  are  passing by  through  the silk route so close to Hambantota Harbour. We have now one of the best harbours, airports and a road network connecting the newly developed   Hambantota city – with expressways direct to Colombo- and old traditional town named after ancestral sea voyagers from Middle East and Europe, travelled on the silk route. China has been a dear friend of Sri Lanka for thousands of years bonded economically and culturally with no strategic or geographical. India has a strategic and economic interest on Sri Lanka and any steps taken with India to be taken carefully on long term economic and political bonds due to enormity and historic differences in the political spectrum. Previous trade agreements with India have not been successful and fruitful in the past and India’s overwhelming interest on Sri Lanka and contentious issues will have to be viewed carefully considering the long term ramifications. Best approach is to take seriously the views of the professionals and the business community in formulating a state policy with specific attention on the proposed agreements/s to prevent future arms twisting and complicated legal and international implications and complications.

Writer could be reached on sarathdw28@gmail.com.( FB Sarath Wijesinghe)