Editorial

While the world is at war on trade, and one-time proponents of free trade have turned to protectionism and vice-versa, Sri Lanka’s current dispensation has opted for free trade.

The US has waged a trade war on the EU and on China both of whom have retaliated with tit-for-tat tariffs on imports from each other. Britain is in absolute turmoil over its exit strategy from the EU with senior ministers resigning in protest blaming their Prime Minister for not protecting local industry from the fallout.

Still, Sri Lanka is jumping onto the Free Trade Agreements (FTA) wagon trying to play catch-up with the train it missed in years gone by.
Trade agreements are still being signed throughout the world. This week, the EU signed one with Japan. One might have thought there was one already in existence between the two economic powerhouses, but the signing seems to send a message to the current US Administration that free trade agreements are not dead.

This nomenclature ‘free trade’ has new meaning. FTAs give preferential treatment between countries at the expense of others. The EU advocates free trade but imposes conditions as part and parcel of ‘free trade’. This week the EU wrote to Sri Lanka protesting against the imposition of the death penalty and once cut GSP + duty concessions because Colombo did not comply with its writ. The US, though adopting protectionist policies nowadays, imposes economic sanctions on its enemies as a political weapon.

On the other hand, one of the biggest advocates of ‘free trade’ today is China, once an inward-looking nation.According to the Government, the FTA with Singapore is aimed at opening a door to the vibrant South East Asian (ASEAN) markets. These countries, especially Hong Kong, Singapore, Taiwan and South Korea had phenomenal economic growth through exports and are among the rich nations of the world today. All this happened while Sri Lanka stagnated and languished behind till in 1977, a liberalised open economy gave it some impetus – but not enough.

In a statement issued before this week’s debate in Parliament on the FTA with Singapore, the Ministry of International Trade argued that the ASEAN-China Free Trade Area Treaty (2006); ASEAN-India FTA (2010); China-Singapore FTA (2009); Japan-Singapore Economic Partnership (2002); US-Singapore FTA (2009); Vietnam- South Korea FTA (2015) were ‘win-win’ agreements that helped both parties to prosper.

Opponents of the Singapore FTA claim that it would allow Singaporean services and professional services, and labour to come here. That is an incorrect premise. Where Sri Lankan labour is concerned, it is more in an outward direction; while many sectors locally are starved of labour. Young people entering the job market each year, prefer jobs overseas, or are driving tuk-tuks at home.

The bigger concern, however, may well be the China FTA which is on the drawing board. If the sale of the Hambantota harbour and the Colombo Port City are anything to go by, Sri Lanka better watch out for the local ‘Chinaman’ who is doing the negotiations on its behalf. For the fact that the Chinese have leading Sri Lankan politicians in their silk pyjama pockets is no state secret anymore.

Then again, no country today can get along without all-powerful China. Local manufacturers need to therefore, up their ante and keep a watchful eye on these negotiations. Unfortunately, pending foreign negotiations are outside the scope of the Right to Information Law, and were kept out by this Government when the law was being drafted, for obvious reason.

Things could also come to grief with India if China uses the proposed FTA with Sri Lanka in order to gain preferential access to the huge Indian market mainly through the proposed Hambantota Industrial Zone. The Chinese, having gained a geo-strategically crucial foothold at Hambantota for the next 99 years must have an industrial park there to make it commercially viable. India also has an FTA with Sri Lanka on the drafting table that is causing even more jitters in this country purely because of its proximity.

No one can envy the Government’s position; desperately wanting to show some visible, tangible results on the stagnant economic front domestically, and being in-between two emerging economic powerhouses in the neighbourhood breathing down each other’s necks.

But for all this to work, the Government must also put its own house in order. Political instability within the National Unity Coalition Government has become the very antithesis of unity and bi-partisanship. Coupled with a negative bureaucracy and corruption from top to bottom of the administration, these need to be fixed for any FTA to work.

Waste of President’s time

President Maithripala Sirisena’s latest overseas sojourn raised a few eyebrows at home; not least, that he attended two low-level meetings in Italy and Georgia. So much so, questions were being asked if these visits were for astrological reasons; reasons notoriously associated with some Presidents and Prime Ministers of this country.

The Rome meeting on forestry was organised by the UN’s Food and Agriculture Organisation (FAO). The President later vowed to ensure Sri Lanka’s forest cover was maintained at 32 per ent (it is now recorded at 29.7%). It would be a good start to achieving his grandstanding targets if he can stop the destruction of the Wilpattu National Park for a controversial housing scheme by a politician in his own Cabinet.

The meeting in Georgia was organised by the Open Government Partnership (OGP), an initiative of former US President Barack Obama and his Secretary of State John Kerry as a quid-pro-quo- for the largesse the US State Department was offering to countries subscribing to its mandate. In Sri Lanka’s case, the re-positioning of the UNHRC resolution in Geneva and the re-establishment of democracy and good governance credentials were early advantages the country received from a once hostile Government in Washington DC.

However, the President visiting Tiblisi, Georgia’s capital, for what essentially was a working level official meeting begs the question if he is being properly advised on these matters. Sri Lanka’s participation at the 2016 OGP in Mexico City was by the then Deputy Minister of Foreign Affairs.

If the President believed that his presence would score brownie points with the present US Administration, it was a waste of Presidential time, and the taxpayers’ money.