Unequal partners in trade agreements
Posted on September 1st, 2018

by Lakshman I. Keerthisinghe Courtesy Ceylon Today

Not only must we fight to end disastrous unfettered free trade agreements with China, Mexico, and other low wage countries, we must fight to fundamentally rewrite our trade agreements so that American products, not jobs, are our number one export.

-Bernie Sandersp (American Politician)

There has been much criticism in both political and civil society circles that Singapore Free Trade Agreement is detrimental to Sri Lanka’s national interests. A Fundamental Rights petition filed by the Government Medical Officers Association (GMOA) along with two other petitions was taken up before the Supreme Court recently regarding the said agreement.

Petitioners state that purported Free Trade Agreement (FTA), Sri Lanka had entered into with Singapore, is inimical to the interests of Sri Lanka. The said Agreement is totally incompatible with Sri Lankan interests and granted totally unfair and uneven asymmetric advantages and benefits to Singapore’s interests at the expense of Sri Lanka’s interests.

Petition

Petitioners cited Minister of Development Strategies and International Trade, Director General of Customs, Members of the Cabinet of Ministers, the Attorney General and others as respondents.

They challenge the action and/or the decision of the Minister to enter into the purported FTA between Sri Lanka and Singapore; executed on 23 January 2018. No approval of the Cabinet of Ministers has been obtained prior to the Agreement being entered into by the Minister. If any purported approval has been granted by the Cabinet of Ministers, the petitioner state that is illegal and bad in law.

For the purpose of entering into any agreement between the Sri Lankan Government and any other foreign State, its nationals or of corporations, companies and other associations incorporated or constituted under its law for investments in Sri Lanka, the approval of Parliament is necessary, by resolution passed by not less than two-thirds of the whole number of MPs (including those not present) voting in its favour.

Insufficient legislation has been introduced in Sri Lanka to ensure equal status competition and to eliminate disparities and inequalities in trading and supplying services in Singapore. In a Clause of the Free Trade Agreement (SlSFTA), the term national” is defined to mean ‘citizens of Singapore’ and ‘permanent residents of Singapore’, however, in the context of Sri Lanka, same term means ‘citizen of Sri Lanka’ only.

The term the national person of a party” is defined as a ‘natural person who is a national of a party’. Such an apparent and patent disparity may facilitate a person of a ‘third party’ country, who is qualified to apply and obtain the status of a permanent resident of Singapore, to have the benefit of accessing the domestic market, through this purported SLSFTA.

In 2016, Sri Lanka recorded a Gross Domestic Product (GDP) per capita of $ 3,759.20 whereas GDP of Singapore is $ 52,600.60 and assert that hence in an objective perspective, a citizen of Singapore, would not in all probability, be induced into or be attracted to invest his time and resources in Sri Lanka, in view of such a vast disparity of GDP and bipolarity of the economic affluence of the two countries. They express apprehension that the said Clause has been included to provide a gateway or an opportunity for totally unknown third party nationals to have access to the Sri Lankan market, merely on the basis of satisfying the requirement of permanent residency of Singapore.

Clauses

Certain purported Clauses of SLSFTA relating to ‘reduction and/or elimination of customs duties’ place Sri Lanka under obligation to reduce or eliminate the existing Customs duties and taxes with additional obligation to further eliminate them in the future petitioners caution. Most of the goods referred to in the Tariff schedule of Singapore are already exempted from Customs duties irrespective of the purported SLSFTA.

The exploitation by foreign nationals, without an effective regulatory framework in Sri Lanka to safeguard the interests of domestic service sectors, may lead to detrimental competition, placing Sri Lankan citizens in a highly-disadvantageous position, depriving competition on an equal status.

The legislation and regulatory framework in Singapore has already established effective protective measures to safeguard the interest and welfare of their domestic service providers. It is alleged that there is a notorious lack of parity which taints the entire transaction process, which seriously impacts Sri Lankan citizens.

The Ministry in a detailed response to prevalent criticisms said the aim is to achieve a diversification of exports and export markets; to create linkages to global production and value chains; integrate Sri Lanka to the global economy; and by virtue of nexus between trade and investment, attract Foreign Direct Investments (FDI) into the country.

In conclusion, it must be stated that Sri Lanka should concentrate on enhancing the export of local products to the world markets in order to enhance the national economy.

(The writer is an Attorney-at-Law with LLB, LLM, MPhil.(Colombo)
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