Sri Lanka –Singapore Free Trade Agreement comes under criticism
Chief negotiator dismisses concerns expressed by critics
Sri Lanka will for over 15 years, eliminate tariffs on 80 per cent of Singapore’s exports resulting in a potential tariff savings of about US$10 million each year, according to a media release issued by Singapore’s Ministry of Trade and Industry (MTI).
United Professionals Movement (UPM) activist, Architect Nalaka C. Jayaweera told the Business Times “the agreement contains one of the most liberal rules of origin, which will allow more exports from Singapore to qualify for the lower tariffs and Sri Lanka will not be able to attract the anticipated Foreign Direct Investment (FDI) via this FTA.”
He asked as to why the so-called architects of the agreement were not talking about immediate benefits to the country in dollar terms like the claim of $10 million per annum made by Singapore
Mr. Jayaweeera said “to minimise relevant negative impacts through trade liberalisation process it should be noted that relevant legal, regulatory and institutional frameworks should be in place.”
The Nat i o n a l Re g i s t r a t i o n Mechanisms and National Policy Frameworks should be in place with the institutional framework with necessary and absolute powers to intervene and interfere when possible misuse or exploitation of any trade agreement happens, he added.
He noted that “several service sectors including architecture, engineering, legal, computing, construction, management consultancy and financial are on the FTA’s positive list but without registration mechanisms.”
“It open doors for ‘non-nationals with sub-standard qualifications’ to enter and practice, compromising the positions held by Sri Lankan professionals and also putting consumers of the industries at risk,” he warned.
The present government has disregarded the fact that Sri Lanka is not a state like Singapore and that this country has a large rural base and an agricultural sector that needs to be protected and fostered not just to provide employment but also for food security.
Millions of Sri Lankans are employed abroad because the local economy is unable to provide even the existing population with jobs; he said questioning that in such a situation what will happen if the country’s production base is further undermined?
Architects of this agreement including International Trade Minister Malik Samarawickrema have misled the Cabinet of Ministers, parliament and the people by declaring Sri Lanka as a free trade area to countries in the world in accordance with the dictates of World Trade Organisation (WTO), Member of the JVP Central Committee and convener of Voice against Corruption Wasantha Samarasinghe alleged.
He made this allegation when he addressed a fully packed public forum in Colombo recently.
Mr. Samarasinghe who is also the President of the Inter- Company Employees' Union told the gathering at the National Library Services auditorium in Colombo recently that ,"although the agreement is called as SLSFTA , it is really an agreement indirectly signed with WTO under the aegis of Singapore.”
He added that this was the fulfillment of the last stages of neo- liberalist economic policy in Sri Lanka by the present coalition regime.
Elaborating this fact, he revealed that though the front page topic of the agreement was the free trade agreement between the Republics of Sri Lanka and Singapore, the rest of 1083 page agreement was drafted under the heading of the “Establishment of Free Trade Area.”
According to the objectives of the agreement, it has been stated that “this agreement is to liberalise trade and investment of parties in consistent with the Article 24 of General Agreement on Tariffs and Trade (GATT) and article 5 of GATS which cover international trade in goods and services.”
The workings of the GATT agreement are the responsibility of the Council for Trade in Goods ( Goods & Services Council) which is made up of representatives from all WTO member countries.
This agreement was signed with the aim of bringing Sri Lanka’s international trade and services under the all provisions and regulations of the WTO with the aegis of Singapore, he argued.
This has effectively opened the country’s trade in goods and services not only to Singapore but also to other countries in the world, he claimed.
Totally rejecting this claim, Chief negotiator of the agreement K. J. Weerasinghe told the Business Times that Article 24 of the GATT provides an important exception to Article I ( most favoured nation clause) by permitting countries to enter into preferential free trade agreements (PTAs).
SLSFTA has been devised in consistent with GATT and GATS and it clearly provides provisions to enter into FTAs between two member countries, he said adding that this doesn’t mean that the country has opened its doors for other countries through this agreement.
This agreement was approved by the Cabinet on January 16, 2018 after receiving the Attorney General’s opinion in double quick time and it was signed within a week on January 23, he disclosed.
He said the government would look at new laws to counter sudden surges in imports and perceived unfair trade practices.
Mr. Samarasinghe expressed his doubt as to whether the Cabinet of Ministers and MPs have given their consent with or without knowledge of the contents of the over 1083-page agreement. He said that there was no sufficient time for them to go through even 100 pages of the agreement.
He asked as to why the government took measures to sign the agreement in an unnecessary haste.
Sri Lanka will have to struggle to replace revenue lost from removing import tariffs and other taxes on 3600 tariff lines within a short period of signing this agreement, he said adding that several local industries including paint manufacturers will have to close down their businesses.
Mr. Samarasinghe revealed that the architects of this agreement should explain the rationale behind the removal of tariffs and other taxes on paddy, kithul toddy and allied products, coconuts, desiccated coconuts, coconut based products, clinical waste and paints, etc.
Mr. Weerasinghe said that Singapore is not cultivating or harvesting paddy or sugar cane and therefore this will not affect Sri Lanka in any way under ‘wholly obtained’ definition of the rule of country origin criteria.
FTAs are international agreements that reduce or eliminate entirely tariffs and non-tariff barriers to trade, such as quotas, technical barriers to trade, and unnecessary customs procedures that cause costly delays at ports, he said pointing out that the country implements other international laws, treaties and regulations that would protect local industries products and services as well as the revenue from import and export taxes.
Therefore Sri Lanka has the authority to prevent the dumping of any hazardous waste in the country, he pointed out.
The Sri Lankan Parliament has ratified the SLSFTA and it has become a binding agreement/ law that no future government will not be able to change, Mr. Samarasinghe said adding that if the government wants to terminate the agreement it has to go before an arbitration panel and pay massive compensation to do so.
The Anti-Dumping and Countervailing Duties Act and Safeguard Measures Act have already been enacted under the Chapter on Trade Remedies. This will prevent any misuse of the SLSFTA, or any other imports from any source to the country, thus ensuring protection to both local industries and the consumer, chief negotiator, Mr. Weerasinghe said adding that a trade adjustment package will be put in place to assist local industry to become internationally competitive.
Local industry will be better positioned to attract FDI together with technical expertise, and to establish Sri Lanka’s active participation in the Global Value Chain/Networks.
The SLSFTA is a significant step towards enhancing market access and trade potential integrating the country into the global economy which is opportune, and much needed for Sri Lanka’s economic growth, he pointed out.
Mr. Samarasinghe expressed his doubt as to whether the Cabinet of Ministers and MPs have given their consent with or without knowledge of the contents of the over 1083-page agreement. He said that there was no sufficient time for them to go through even 100 pages of the agreement.