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Free Trade Agreement with United States proposed

As the peace process moves forward, enhanced opportunities for strengthening the economic relationship between Sri Lanka and the United States, in terms of investment and trade, are being examined in earnest, senior officials of the Bush Administration assured a visiting Sri Lankan delegation at a series of meetings in Washington last week.

The delegation consisted of Professor G.L. Peris, Minister of Enterprise Development, Industrial Policy and Investment and Constitutional Affairs, Ravi Karunayake, Minister of Commerce and Consumer Affairs, Malik Samarawickrema, Chairman of the United National Party and Ranjith Fernando, Secretary to the Ministry of Enterprise Development, Industrial Policy and Investment Promotion and Constitutional Affairs.

Professor G.L. Peiris pointed out the close inter-relation between the success of the peace process sand the condition of the economy. He said that as Sri Lanka prepares for the removal of protection ensured by the quota system with the Multi-Fibre Agreement ceasing to be operative at the end of 2004, a compelling case could be made out for some equitable form of tariff concession in respect of Sri Lankan exports into the United States.

The Sri Lankan delegation had extensive consultations with officials of the United States Treasury, the Office of the United States Trade Representative, the Department of Commerce and the Bureau of Economic Affairs of the State Department. Among the key officials of the American Government involved in these discussions were Ambassador Jon Huntsmon and Ambassador Sean Donnelly.

Minister Karunanayake recounted many of the steps taken by the Government of Prime Minister Ranil Wckcremesinghe to revive the economy and emphasized the critical role which accelerated economic development will play in the return of ethnic harmony to the country. In that context, he underscored the importance of further strengthening and deepening trade relations with the United States. The United States, he pointed out, provides markets for approximately 66% of Sri Lanka's total apparel exports which, in turn, account for 53% of the country's foreign earnings. He voiced the concern of local industry with regard to the competitive scenario which would unfold with the elimination of quotas.

Ministers G.L. Peiris and Ravi Karunanayake expressed Sri Lanka's desire to commence discussions for negotiating Free Trade Agreement with the United States which would allow duty free access for each country's products into the markets of the other. Ambassador Jon Huntsmon proposed that both sides examine in earnest institutional arrangements through which trade flows could be strengthened. This mechanism of Joint Commission was discussed as a means of initiating the discussion.

American officials recognised that Sri Lanka's strongly established tradition in respect of the open economy, high literacy rates, constitutional guarantees relating to foreign investment and the procedures of the Board of Investment provide an excellent basis for Sri Lanka to be regarded as an appropriate country to be considered for a Free Trade Agreement with the United States. Preliminary discussions commenced in Washington to lay a foundation for this.

The Sri Lankan delegation also took the opportunity to meet with senior officials of large American companies such as General Electric and Lockheed who had shown an interest in investing in Sri Lankan ventures. The Chief Executive Officers of these companies indicated that in view of the macro-economic environment engendered by the policies of the new government, they are prepared to embark on investment on a significant scale in Sri Lanka.

The Sri Lankan delegation briefed these companies in detail about arranging opportunities for investment in infrastructure related projects.

Saman Udagedera, Minister Counsellor of the Sri Lankan Embassy in the United States, and representatives of Sandler, Travis and Rosenberg, a law firm whose services had been retained by the trade to lobby Sri Lanka's case of Free Trade Status with the United States, participated in the discussions.

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