Gomi counters Minister Samarawickama’s rejoinder


Gomi Senadeera, Sri Lanka’s former top trade representative in Geneva has issued the following statement in response to Development Strategies and International Trade Ministry statement.

The text of the statement:

First of all, let me thank the Development Strategies and International Trade Ministry for the statement (published on 10th October 2018) in response to my article headlined "Garbage in garbage out – Garbage and Blue Asbestos in Sri Lanka Singapore Free Trade Agreement" (published on 26th September 2018) as it provides us with an opportunity for public discussion on the subject.

Unfortunately, it appears that the ministry had not read my article and even the agreement carefully before responding to the issues I had raised in my article.

For example, the ministry’s states, "For general understanding of the Rules of Origin Criteria of SLSFTA, it is worthwhile to state in order for products manufactured in Singapore using non-originating raw materials (imported raw materials) to become eligible for Customs duty concessions under SLSFTA, origin criteria listed below should be complied with:

 I. Sufficient working or processing + comply with value addition of 35% of FOB or

II. Sufficient working or processing + comply with CTH (change of tariff no at 4- digit level between finished product and imported inputs) or

III. Sufficient working or processing + comply with Product Specific Rules (PSRs)"

But the text of the agreement states "products which are not wholly obtained in a Party are considered to be sufficiently worked or processed in the territory of one or both Parties if:

(a) it is classified in a heading, at the four digit level, of the HS different from those in which all the non-originating materials used in its manufacture are classified ("change in tariff heading"); or

(b) it fulfills a qualifying value content of not less than thirty-five (35) percent in accordance with Article 6 (Qualifying Value Content); or

(c) it satisfies the applicable Product Specific Rule"

 There is a significant difference between the two. We know that the value addition threshold in the Rules of Origin at 35% is ridiculously low and is hugely favourable to Singapore. But changing it in a press release is not going to have difference. You may hoodwink the general public with it. But not Singaporean exporters or Sri Lankan importers.

The issues related to garbage I had raised in the article had not even been addressed in the ministry’s statement and on the issue of blue asbestos; we have received a koheda yanne? Malle pol type of response.

The ministry statement points out that the SLSFTA does not contain any Product Specific Rule for Asbestos sheets (HS Code 6811.40.10/20). Yes. That is true. But SLSFTA does contain Product Specific Rules for HS 6812 "Fabricated asbestos fibres; mixtures with a basis of asbestos or with a basis of asbestos and magnesium carbonate; articles of such mixtures or of asbestos" and for crocidolite or blue asbestos (HS 6812.80)

As the ministry officials may not have noticed the inclusion of these product specific rules I reproduce below the relevant sections from the agreement for their easy reference.(See table)

(*"CTSH" means that all non-originating materials used in the production of the good have to undergo a change in tariff classification at the 6-digit level. It is much simpler than change of tariff classification at 4- digit level as stated in the ministry statement.)

Crocidolite asbestos or blue asbestos is the most hazardous type of asbestos. Studies have shown that it may be responsible for more illnesses and deaths than any other type of asbestos. According to one source of information, the use of this product is prohibited in Sri Lankan construction industry, since 1987. Last year, Sri Lanka also attempted to prohibit the import of less hazardous white asbestos. But that was withdrawn when one of our trading partners protested. Singapore had banned the import and use of asbestos (all types) since 1989.

Under these circumstances why did we include very liberal Product Specific Rules of Origin for crocidolite and related products? As I have already explained in my article "Garbage in garbage out", the product specific rules are included in a trade agreement only when one of the parties to the agreement has a strong interest in trading in that product. Then an explicit request is made by the interested party, which would be carefully analysed and negotiated before specific rules are formulated. Sri Lanka does not produce, import or export blue asbestos. We know how hazardous this product is. The views of the president, government and people of this country on blue asbestos are well known. So, the request for product specific rules couldn’t have been originated from Sri Lanka. Did Singapore request the rules? But Singapore also does not produce these products.

To understand the full implication of the above product specific rules covering crocidolite/ blue asbestos and related products I request ministry to explain the following;

1.    Who requested the inclusion of product specific rules for the blue asbestos related products?

2.    If Singapore requested for the rules then do they have any asbestos to export, other than asbestos waste?

3.    Why did we agree to these rules?

4.    What are products / byproducts covered under HS 6812.99 Other: other?

 Once the ministry provides necessary explanation we will be in a position to move forward with this discussion without continuing to provide misinformation.

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