Adopt national trade policy
Posted on September 6th, 2016

By Niranjala Ariyawansha Courtesy Ceylon Today

United Professionals Movement (UPM) warns Sri Lanka that signing the Economic and Technological Cooperation Agreement (ETCA) with India, a country with a systematic national trade policy, will definitely make Sri Lanka face irreversible dangerous repercussions. UPM has urged the government to plan a trade policy, which the country lacks since independence, before signing ETCA. It has also highlighted that it must be carried out in a very transparent manner.

UPM points out that the government must do a comprehensive study of the economy of Sri Lanka before preparing a national trade policy.

UPM representatives who had talks with the government on ETCA for many months have submitted their 44-page document titled ‘Trade Liberalization: The Way Forward’ to the government. As professionals, they have shown the sectors of the economy that must be strengthened before signing ETCA. Ceylon Today interviewed the Chief Editor of the UPM architect Nalaka Jayaweera who prepared the document. Excerpts:

“Any country which liberalizes the service sector has to make drastic changes in the institutional framework. We have been demanding for it since 2002 when we had the Comprehensive Economic Partnership Agreement (CEPA). But the government appointed a committee consisting of three or four experts to plan the economic policies. Similarly, a couple of experts have drafted the ETCA. Can they draft a national trade policy haphazardly? If it is such a simple task, why couldn’t the so-called economists do it?” Architect, Jayaweera questioned.

UPM points out that the country has neither a trade policy nor an economic vision. UPM representatives withdrew from the discussions it had with the Minister of Development Strategies and International Trade, Malik Samarawickrama and the ministry officials on ETCA due to this situation. Jayaweera said the government had submitted a draft which had 68-70 pages for discussions, but they were not informed who drafted it.

Trade agreements

“We are not against trade agreements. We have never asked the government not to sign trade agreements. We must sign agreements with not only India but also any other country such as the US or Ethiopia. But we urge the government to design a national trade policy before doing so,” Jayaweera said.

According to UPM the discussions with the government had dragged on for six months producing no positive results. Commenting on it a lecturer at the Sri Lanka Medical College
Dr. Manoj Weerasinghe said, “I participated in four rounds of talks on behalf of UPM. Dr. Ravi Rathnayaka made a presentation. He had been away from the country for about 30 years and returned to Sri Lanka after his retirement.
“We asked what mandate they had to draft ETCA on behalf of Sri Lanka. There is no such mandate. There must be an institute to grant that mandate and no such intuition exists. In this context, when the ideas of the public are submitted, who is there to prepare the final report? We did not have answers to any of these questions.”

False allegations

Dr. Weerasinghe further charged that the government was making false allegations after UPM withdrew from the discussions on ETCA. He stressed that the process for the national trade policy must be similar to the procedure followed by the government with regard to the Constitutional reforms.
“This is concerned with the national economic policy. It cannot be an individual opinion. We can appoint a commission that will have the responsibility and accountability on all aspects. Then we can question the commission. But there is no such process now. We don’t know who drafted the ETCA,” Dr. Weerasinghe said.
He further said UPM had questioned about the analysis the government had done with regard to the economy, the economic vision of the nation and the national policy based on it.

“They are silent when we ask questions. That means they have no answers. But they say we are against India. The reality is that Sri Lanka has never done an analysis on the economy of the country. We must even now do that analysis and decide the economic vision of the country. We must sustain that vision through policy. That policy must be drafted legally,” Dr. Weerasinghe pointed out.

Negotiations without a vision

“But the government went ahead and drafted ETCA. What is the basis for negotiations without a vision or policy. We have no analysis on the economy. Therefore, we have no vision. Since we have no vision, we have no policy. We have no legal framework which is based on a policy. We cannot bypass all these and speak about the agreement. We asked how we could comment on it without a vision. But they said they could not delay drafting it. Then we withdrew from the discussions as we are professionals,” he noted.

UPM’s stand on the circumstances is to appoint a commission to prepare a national trade policy and international trade. Dr. Weerasinghe pointed out that the Constitution had facilitated it and the best example was the Salary Cadre Commission (SCC).
“The SCC had discussions with stakeholders and new salary scales were drafted. There can be issues, but the employees did not take trade union actions. In the past, most of the struggles were for higher salaries. Why can’t we follow the same process for a national trade policy?” he argued.

National Higher Education Policy

Jayaweera gave another example. He pointed out that 30-40 academics participated in the process of compiling the National Higher Education Policy in 2009.
“How many people will be needed to prepare a national trade policy? This must represent chilli cultivators in villages and top businessman of Colombo. A national trade policy cannot be drafted by a couple of individuals who meet on the 24th floor of Colombo Twin Towers,” Jayaweera pointed out.
Dr. Manoj Weerasinghe emphasized that the basic principle of UPM was providing a policy for international trade. He said trade agreements are only one tool of the foreign trade policy. The foreign trade policy includes other components such as the way a country conducts its foreign trade, import and export market, intellectual rights, and regulation of internal policies related to national security, he said.

“We cannot sign trade agreements without any of these,” he emphasized.

UPM also accuses that the government is spreading a myth that the country will come out of the economic crisis overnight merely by signing ETCA.
Debt burden

“The government says the debt burden will be reduced, one million jobs will be created, and trade deficit will be reduced as soon as ETCA is signed. How can you reduce the debt burden by signing the agreement? For example, Nepal signed so many agreements with India surprising the other nations. However, Nepal has not achieved anything. In this context, tell us how Sri Lanka will be all right as soon as the agreement is signed,” Dr. Weerasinghe said.

UPM says the situation of India is entirely different from that of Sri Lanka. He points out that various government bodies have studied the economy of the country and reported on it since the time of Independence. He named India Research Economic Council as one foremost organization which had done so.

“Sri Lanka does not do anything. But India studies Sri Lanka more than us,” Dr. Weerasinghe said.
Commenting further Jayaweera said, “Everybody says Vietnam is a more developed country than Sri Lanka. But the reality is different. Vietnam ended its war with the US in 1976. From 1977 to 2004, they did a deep study and designed a system of law. They opened the economy in 2004. We can read the internal trade policy of Vietnam on the internet. They clearly state that these are our industries and we can open only this much. They say that you cannot bargain more than that. They are so well defined. Here we think of open economy as a lawless situation in which any rogue can do any racket and go scot free. The economy there is not the crazy economy we are discussing here.”

Jayaweera also said the Indian national trade policy also can be read on the internet. “Each paragraph refers to another act or standard. India does not allow any heap of garbage dumped in that country’s harbours like Sri Lanka. There is a way for that. But we don’t have such a system,” he further said.

International trade agreements

Another important fact pointed out by UPM is that Sri Lanka needs to focus on the international trade agreements which were signed previously. Sri Lanka signed GATT in 1994 opening the markets of certain goods to the world. The countries that had signed GATT and GATTS became the members of World Trade Organization (WTO) which was established in 1995.

Jayaweera said GATTS was an international joke. “After WTO was established, any agreement we sign must be in line with the commitments of GATT and GATTS. That is international law. GATT has a negative approach. GATT says we cannot import certain goods. GATTS has a positive approach and we state that we open these services. We are one of the couple of countries which have opened the entire service sector through GATTS. The contradiction is that by the time Sri Lanka opens 95 per cent of the service economy to the world, India is 95 per cent a closed economy in terms of GATTS. Sri Lanka is going to sign ETCA with such a country.”
The draft tabled by the government for the discussions with UPM includes, “Both countries are legally binding to the existing WTO, GATTS commitments.” In such a context, when Sri Lanka which has opened 95 per cent and India which has closed 95 per cent sign an agreement, Sri Lanka but not India has to take the adverse effects, said Jayaweera.
Mistakes in GATTS

“ETCA tries to exploit the mistakes in GATTS. We cannot sign international trade agreements out of the context of the WTO, GATTS commitments. If that is possible, a clause that says the parties are binding to the WTO and GATTS commitments is not necessary. Otherwise the so-called economic experts must say, “We don’t care about the GATT and GATTS commitment on WTO. This is a completely free trade agreement between Sri Lanka and India outside the GATTS. But everything is referred to GATTS commitments here,” he noted.

UPM argues that the ETCA draft produced for discussions was basically copied and pasted.
“This draft is pathetic product. This is not suitable even as the first draft. The English language of the draft had no flaws. That proves the fact that this is copied and pasted from other sources, Jayaweera said.

“Another clause of the ETCA draft is as follows: “The dispute between the Palk Straits is to be resolved by this agreement”.

“What is the dispute on the Palk Straits? Such a dispute will be a conflict between the two countries. If it is a border dispute, how can such a border dispute be resolved through a trade agreement? Indian fishermen poaching in Sri Lankan waters are not a dispute. The so-called dispute is defined by the agreement when there is no such dispute,” he argued.

ETCA draft

One clause of the ETCA draft says that the Mode 4 will not be open. But the next clause says that laws can be passed in terms of opening Mode 4 too. Jayaweera questions why it is necessary to pass laws to open Mode 4 if it is not to be opened.
Mode 4 (Movement for Natural Persons) provides for migrating for the purpose of jobs in the other country. Jayaweera’s argument is that in the context the Mode 4 is already opened under GATTS, no other agreement can close it.

“We pointed out to Minister Malik Samarawickrama that they are contradictory. We asked who drafted it? Nobody knows it. What they say is it was prepared by the Department of Commerce (DOC) wetted by Agency for International Trade (AIT). If it has been prepared by DOC wetted by AIT then they have shown their incapability, incapacity, inefficiency and complete ignorance about the system. On the other hand, if it is prepared by the AIT and wetted by DOC then DOC is irresponsible,” he further accused.

He said the head of DOC Sonali Wijeratna and the chief of AIT

Dr. Saman Kelegama must take the responsibility of this error.

Dr. Manoj Weerasinghe points out that Sri Lanka must bring its economy to the right path even in this context. He said the government policy is not negotiation based on a national trade policy but bringing out a policy through discussions. He also said although India was doing certain acts to undermine the protest against ETCA, Sri Lanka was doing nothing.

He highlighted that signing a trade agreement with a foreign country must be carried out carefully, because it is more serious than passing a Bill internally. After signing an agreement, both countries must agree to amend the clauses. He asked if India would agree to amend the conditions advantageous to them.

“The government says that the economy has been devastated. But can four or five people take the country out of the crisis? We have never done anything right. We demand to do it right at least now. Otherwise, ten years later, people will say we collapsed because we signed ETCA,” Dr. Weerasinghe said.

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