SRI LANKA TRADE AND FOREIGN POLICY ON TRADE AGREEMETNS
Posted on October 10th, 2018

Sarath Wijesinghe former Ambassador UAE and Israel 

 Trade and Foreign policy is synonymous and linked together 

Trade and Foreign policy is synonymous and directly linked to each other in the new world order where states have given priority to trade over foreign policy interacting with the rest of the world, states and international organizations. Trade Policy is statement of intent and deliberations of a system of principles for a rational outcome on subjective decisions, as a result of collective deliberations of the policy makers in governance or private sector with future strategies. Trade Policy is as or more important to a nation than the foreign policy on which the goodwill and reputation depends on in the family of states. Policies are made by the legislators in a state backed by intellectuals and academies for the betterment of the state and the subjects with short and long term plans for the nation. Trade and Foreign” are mixed and interwoven fields where trade is prioritized today due to new world trends on promoting trade over other parts of governance with the help of foreign relations as a main tool thereby Ambassadors and heads of    foreign offices worldwide have been given specific instructions to give top priority to trade in place of traditional duties as Ambassadors representing the country to enhance the friendly relations and maintain goodwill.  In Sri Lanka Ambassadors from very powerful counties creep into the offices of powerful Sri Lankan Ministers and politicians looking for contracts, assignments, and enter into trade agreements in promotional duties for their respective countries even bypassing protocol practices. They use direct and indirect influence to promote their countries and trade unlike our some Ambassadors. USA, India, France, UK, USSR and many power blocks such as EU Ambassadors give priority to trade and commerce related matters to promote their business transforming traditional diplomacy to trade diplomacy. It is doubtful how many Sri Lankan Ambassadors are following the new  world trends of promoting Sri Lanka and trade, due to the absence of a correct, firm and coherent foreign and a trade policy with specific instructions and strategies from the governance to the foreign officials   to promote trade diplomacy. Trade policy may be closed, open, protectionist, liberal, or depend on any political ideology or a vision of a visionary of the state, but the underlying feature is the need and applicability of  state  friendly set of principles to be applied in the formulation and application of the policies. Same principle applies to the foreign policy as set of policies as to how the state acts and interacts with the rest of the world and the states in the international community through which how the state manages trade, politics, security and other areas of governance indicates the two policies will not exist in isolation in the competitive world order for success and existence. 

Singapore Agreement 

Singapore Agreement which is the most  comprehensive and  controversial trade agreement ever  with 1083 pages only in English entered into under most suspicious and fast tract circumstances which could be retrieve only via the internet has 9900 items in the list of exemptions on custom duties which has short and long term effects and implementations  to Sri Lanka was signed before the President of Sri Lanka who himself has subsequently  appointed a commission to review the instrument  with no provisions to terminate,  amend or change without complicated and rigorous arbitration procedures to be taken place only in Singapore is a lesson for  the future governances to be extremely careful in concluding on   such circumstances when other countries such as EU, UK, Canada , USA and WTO members take stringent precautionary measure of going through cooling periods and screening by legislature and professional and business organizations. Most probably it is carefully drafted by the Singapore side which is mostly beneficial to them with little or no apparent benefits to Sri Lanka. 

Trade Policy 

Trade policy is a collection of rules and regulations which pertaining to trade. Every nation has some form of trade policies in place with legislature and public officers formulating which are most appropriate to the country, and laws related to exchange of goods or services involved in local or international trade including Taxes, subsidies, export, import, and related regulations. Internal or international trade cannot exist in isolation as it is interconnected by rules, conventions, agreements bonded by International central organizations such as World Trade Organization (WTO) General Agreement of Traffic and Trade (GATT) which binds states, international organizations, and UN agencies with conventions agreements and determinations and arbitrations by international and local courts which are binding on states and institutional local and international indicating that a country must have a clear coherent and firm trade policy to be successful economically and politically as a member state whether small, large, weak or powerful. On the book Sri Lankan Trade Policy said to be liberalized on paper, but not in reality with the two main political of the current unity government has different policies on trade and economy, where United National Party is for full liberalization   and the other main partner SLFP ( SLPP includes) is for  closed economy with protectionism and pro national  open economy  with limitations and human face, when the TNA the other partners of the government concentrates policies  on ethnic/regional confined to  North and East  with  other pro government small parties such as JVP has different ideologies but always supportive to the unity government considering the former President MR” as the common enemy . ISFA (Indo Sri Lanka Free trade Agreement), ISFA (Indo Sri Lanka Free Trade agreement) ASFPA (South Asian Free Trade Agreement) and APTA (Asia pacific trade agreements are inactive and not in operation  with no effects on the economy. Despite being a members of WTO , GATT  number of MOUs, bilateral and multilateral agreements have been  entered into with no comprehensive knowledge planning or Parliamentary approval. There appear to be no proper coherent trade policy for the country in the new political and administrative setup of continues political struggles for power by all the parties concerned. 

Foreign Policy 

Correct foreign policy for a nation is a pre requisite for development and prosperity. It has a direct and indirect impact on the economy of a nation in a developing world, when it is difficult to live in isolation in the modern political and economic world order. The advent of modern technology has promoted increased globalization and interconnected world community with/via internet and digitalization playing a large role in redefining political dynamics both domestic and international. It is doubtful that the basis of foreign policy based on Friendly with all and angry with none” on non-alignment policies, is still in practice considering the conduct and the statements of the governance on foreign policy and international safaris. It is also doubtful whether Sri Lanka has a foreign policy at all today, when the President, Prime Minister and the Foreign Minister giving different versions and statements resulting instability and loss of confidence of the member states and the International Organizations when the   minority governance is hanging on a thread with uncertain and unholy union of the President and Prime Minister from parties with conflicting view policies and interests on political, and economic fronts. No policy statements on Trade and foreign policy have been pronounced since the formation of the coalition government currently limping on want of clear majority to one party of the worrying two main parties with diverse views on politics and economy when the wish of the citizen is the resolution of these conflicting policy differences in the interest of the country. When the world is moving fast in the digital age, Sri Lanka is still lagging behind want of clear-cut policies for main areas of governance. Apart from foreign policy and trade apparently  no clear-cut polices are pronounced on  Land, Education, Agriculture, Water, Energy and many other areas which are interconnected to the subject for discussion on  foreign policy and trade as a prioiraty.  

Want of Foreign /Trade policy or Sri Lanka 

Foreign and Trade Policy should be prepared by the highest echelons of the governance with long thought, knowledge, experience and considerations with the consultation of intellectuals, academics experienced expert Sri Lankan friendly politicians with no hidden interests financial or other agendas. We have blundered and made historical errors from the 1815 Convention with British handing over sovereignty of Sri Lanka to the Crown followed by many hurriedly made, Political and trade agreements including the FTZ with Singapore without a termination clause, and conditions detrimental to Sri Lanka despite protests from professionals to be cautious and pass through the Parliament for scrutinizing and approval. Singapore though only 1/18th size of North East, is a world economic powerhouse with want of space which has  controlling power on Port City” with the China Company in charge, and an seasoned international legal experts unlike limited Sri Lankan law/Professionals insufficiently competent on the subject including the AG’s department pressed with workload and lack of knowledge and experience on such complicated  international affairs, and limited or no competent lawyers which is a bitter truth we are compelled to gulp and to take remedial measures by employing experts and competent Sri Lankan expatriates. It is important to note that Americans are skeptical on trade and political agreements after the victory of Donald Trump and his trade policy is restricted to Pro American National and  controlled free economy. EU is a powerhouse and the biggest trader with 16.5% world trade in hand of free economy restricted for the benefits of the members of the EU protected by EU regulations. UK moots fair trade and with the exit from Brixith” the trade will be restricted and regulation based with strong nationalist mood of the sovereign Britain independent from EU. Russia is the 156th WTO member and the Trade is strictly rule based with freedom to the private sector with cautious approach with state restrictions. China is the 201st member of WTO and a largest trading power on inward FDI with careful and Rule Based trade policy shows that there is no unrestricted trade policy anywhere in the world with cautious approaches on entering into trade agreements unlike Sri Lanka observing Trade Agreements as a panacea for economic miracles inviting countries and companies for free trade utilizing our strategic situation, beauty, natural resources, and now with freedom to purchase properties and free money movement. Regional Trade Instrument CHARGUBAMAS” – the carbon copy of EU with adoptions for Caribbean is an ordeal models and hard bargaining for us to learn from when Sidath Rampal” once a leader of British Guiana and a Secretary General of Commonwealth Secretariat fought hard with hardest bargaining for his country and the Carrabin countries on formation of trade agreements with EU and the West with protective and pro country approaches. Unfortunately in Sri Lanka entering into a Trade and Foreign Agreements are drafted in a hurry by incompetent inexperience professionals at the risk of the present and future of the nation. It is the duty of the professionals to urge the governance to be cautious in entering into trade agreements which are effective and binding the future generations with asymmetrical legal giants awaiting to trap smaller countries in knowledge and experience, when knowledge and experience is available in the world for a price and tapping the local and worldwide expatriates ever  prepared to serve the nation on invitation. [email protected]

2 Responses to “SRI LANKA TRADE AND FOREIGN POLICY ON TRADE AGREEMETNS”

  1. Dilrook Says:

    We never had any policy – trade, foreign, domestic, etc. Everything was done under external pressure and internal political expediency.

    India FTA is the main reason for the forex crisis we are in today. Our trade deficit with India has worsened to over $4 billion on goods trade alone. Investments and services are on top of that. This must end. All arrivals with South Asian passports must be snapped a fee of $500. Let the others do the same which benefits Sri Lanka.

    If not for the Indian FTA, we could set up a motor car plant in the country. We had a few in the 1970s. Now it is not profitable because cheap Indian products flood the market with very low taxes.

    Indian artwork imports directly compete with local products. They must be taxed heavily. For instance, telecast/braodcast of Indian entertainment material must carry a tax of $5 per minute. It will open up a new local industry and enhance local artistes’ economy.

    Narcotics trade must be clamped down. It is a massive drain on the economy on many fronts.

    A continuing annual tax on luxury car brands must be imposed. This will discourage people from importing them. 5% on the advertised value of the vehicle is a good start for an annual tax.

  2. aloy Says:

    Fully agree with Dilrook. I is the only way to arrest the slide of the Rupee. If you look around in the suburbs of Colombo, there is a small and cheap Indian car tucked away in one corner of every house. This is a huge drain on foreign reserves. The result is the pain every one has to suffer including the people who just eke out a living in remotest areas of the country. When every thing costs so high we cannot export as our products are too costly.
    GOSL should set about stabilizing the rupee in a systematic way disregarding the party politics; all the parties in Diyawanna has contributed to this mess up in the economy, to my mind.

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