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Government Gazette

The significance of FTAs

With reference to the article to the business feature column of your newspaper by Rohantha Athukorale former Chairman SLEDB has requested good counsel on the significance of FTAs between Sri Lanka and other countries.

With the accelerating threat on the withdrawal of G.S.P. facility, may it be known that it is the FTSs that we have entered with our neighbours, that help to maintain the balance to keep home fires burning.

The former EDB Chief quotes that the strategic products of Sri Lanka namely tea and garments are below 6 per cent on quota utilisation after the operation of FTA. TRQ delays and custom clearance at Indian points and Port Crgo Clarence have contributed a loss of faith in the FTA by our exporters which was intended to promote trade competition and economic benefits.

These are matters for the top agenda for the SAARC meeting in August, the former Chief of EDB suggests. He has shown statistics to establish products list that have been affected by the operation of the FTA.

Products range from Vanaspathy, bakery shortening, desiccated coconut, tea, pepper and garments coming under TRQ that make the balance of payment favourable to Indian trade after the FTA.

There are 1,180 products in the negative list over to India against our 429 entitled for duty free concessions. Athukorale making his case for our exporters here argue the rational of including the consumable items in the list under FTA.

Being a market specialist on FTAs, the writer is aware on the practices in free trade and the consequences of making the liberalisation of trade. The simultaneous cry by the Vanaspathy Traders is justifiable in the free trade context where both partners produce the same product.

We have to examine this claim in the background of exporting apparel that brought this country US$ 2,900 million last year. Unlike Vanaspathy we are the only producer in the region where we qualify for the concessions for apparel from EU.

Our apparel exports have to be compared with the earnings from tea, rubber products, gem and jewellery and the earnings from the remittances from abroad. The foreign employment earnings stood at US $ 2,700 million last year according to the Ministry of Export Development.

According to Ministry sources there are almost 7,000 items without tariff duty given on our exports to the United Estate. The garment industry is heavily depending on this concession. Kingsley Bernard of Daya Group on behalf of garment exporters emphasised in a article to the press that the G.S.P. concession is a great patronage to local industry. The G.S.P. has to be reviewed this year.

This concession was granted to the garment industry because of the high quality of the finished product, worker facilities and the on-going training programmes available in Sri Lanka.

We alone enjoy this concessions in the region and therefore it is our craftsmanship to review it back. Apart from Vanaspathy our women (Vanithavo) folk who are the candles burning from both ends depend heavily on the apparel sector to run the families.

Therefor the G.S.P. stigma remains a crucial stepping stone for their future.

The Export Development Minister has justified once that the main features of the apparel industry are that those who are engaged in employment are rural girls who are sole breadwinners of the family units.

The other aspect is that these factories have been located in the rural hub and have become centres of income generation for the rural folk. It has reduced the income disparity between the town and the village base. These are merits that are universally accepted in terms of trading conditions and buyers in UK are so familiar with household names such as Marks and Spencer, Tesco Produced in Sri Lanka.

Apparel exports brought the country US$ 2,900 million last year. The criteria that the GSP review depends on a political nature. It is a technical evaluation on our obligation to conventions etc.

The outcome of democracy in the trouble torn area in the East under this administration is a positive assessment to review GSP. EU has a political approach to a value system of representative democracy on this question of reviving the G.S.P. This is also depending the policy on dissemination of poverty and social discontent in this part of the world, according to Export Ministry, sources.

The Minister of Export Development has briefed the Royal Commonwealth Society, London recently that there is an phenomenal leap towards economic progress in this part of Asia in 2007.

This could be due to commitments by the regional governments to be sensitive to resolve issues through the ballot.

He quoted Pakistan as an example.

The per capita income in the region is US$ 1,650 per year. The trade balance of Sri Lanka in international trade in 2007 stood at US$ 3,727.4 m. against India US$ 2,229.2m which make 60 per cent ratio of trade. Lanka depends on buses for her roads pharmaceuticals for her hospitals and books for students from India. India is the third trading supplier for Sri Lanka.

The question on pepper cited by the former EDB chief could be defined due to price slash in the world market.

Politically we have been stable as an independent state because our national movements and specially the mobilisation of peasantry forces that led the engine of growth got the inspiration from the neighbours specially in the 20th century.

Hence our commitments to FTAs with our neighbours would strengthen when the blows of the W.T.O. dash our country as it seems to have happened with the G.S.P. crisis. The working woman in Sri Lanka is a burning candle from both ends and heavily depend on the outcome of the G.S.P. in our industrial policy.


Gamin Gamata - Presidential Community & Welfare Service
Ceylinco Banyan Villas

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