*EU has been a steady supporter of Sri Lanka since the opening of the EU Delegation in the country in 1995
*Through the GSP+, the EU has unilaterally granted duty free access to about 7,000 Sri Lankan products
*Over-protecting local industries may reduce productivity and competitiveness of Sri Lankan products
by Sanath Nanayakkare
Denis Chaibi, Ambassador, Head of Delegation of the European Union to Sri Lanka and the Maldives had a series of discussions with a number of Sri Lankan authorities recently while he was on an official tour in the country. ‘The Island’ had an interview with Chaibi after he had concluded the round of talks. Below are some excerpts from that interview.
The EU, a Standards Super Power in the world, has consistently been supportive of Sri Lanka. How can Sri Lanka benefit from that support to build a best-in-class manufacturing infrastructure and receive international acceptance for its products and services in the global market?
. Indeed, the EU has been a steady supporter of Sri Lanka. Since the opening of the EU Delegation in the country in 1995, the EU taxpayers have provided roughly one billion Euro in development assistance. All of this in grants, with no significant conditions attached.
With 27 Member States and 450 million customers with high income, we are also the largest market in the world. Through the GSP+, the EU has unilaterally granted duty free access to about 7,000 Sri Lankan products – that’s 66% of the EU tariff lines.
To help Sri Lanka in taking full advantage of these GSP+ opportunities, the EU had also made available over 8 million EUR of grants for trade assistance, with the support of specialised UN agencies such as UNIDO and the International Trade Centre. This cooperation translates into real support for Sri Lanka’s national export strategy, help SME’s to get ready to export and encourage new export sectors. Diversification is important as Sri Lankan exports are still focused on very few products.
Sri Lanka has a number of strengths it can further work on. First is the focus on quality. There are opportunities in producing more quality goods for Sri Lanka to stay competitive in the global arena. To put it simply, many neighbouring countries can produce cheaper, but price is not the only way to stay competitive. Quality is another one.
Second, compared to many countries in the region Sri Lanka has high compliance with international labour and environmental standards. This a competitive advantage! Sri Lanka could move further towards sustainable production concepts such as organic produce, green production and Fair Trade practices. Such practices are highly valued by consumers around the world, and in particular in the EU. And they are ready to pay a premium for such products.
Third, beyond export promotion, Sri Lanka is reflecting on how to attract more investments and offer an attractive business environment. Investors can bring not only capital but also share their know-how and best practices.
Finally, a fourth strength would be to remain open for business! Over-protecting local industries may reduce productivity and competitiveness, meaning that products will be more expensive for Sri Lankans, and the possibilities to export will be limited as neighbours will produce better products for a cheaper price. Sri Lanka has a great opportunity to further develop its position as a regional trading hub and major trans-shipment centre. Yet, closing borders to imports is not conducive to these objectives.
Sri Lanka could look at coconut-based products which could be produced in Sri Lanka in the most effective and competitive way. Since the volume of production cannot compete with larger producing countries Sri Lanka could invest in niche products with very high added value marketing/branding their uniqueness. The EU supports geographical branding in Sri Lanka such as “Pure Ceylon Cinnamon”, this is one of the many way not only to add value but also offer new market access opportunity.
What should Sri Lanka do to gain support of the EU to obtain broader export market access?
.The EU market is already wide open: GSP+ grants unilateral tariff preferences on a large range of products to Sri Lanka. About €3 billion was imported into the EU from Sri Lanka in 2019 using the GSP+ preferences. This resulted in a positive trade balance for Sri Lanka of 1.5 billion euro in 2019 alone!
There has been impressive export growth in the months following the re-gaining of GSP+ in 2017 and in total, since its reinstatement, Sri Lanka’s exports to the EU have increased by more than 25%; Fisheries exports have literally doubled since the removal of the fish ban and regaining GSP+. Other notable growth sectors include clothing, tea, tyres, gems as well as motor vehicle parts and footwear.
We thus believe that GSP+ has worked and is working well for Sri Lanka. However, GSP+ still offers great future potential for Sri Lankan companies. GSP utilisation rate is currently still relatively low, and concentrated in a few sectors. We hope that this will improve in the future.
The recent reclassification of Sri Lanka as Lower Middle Income country, means that the GSP+ scheme can continue for at least another three years. On the other hand, this also requires Sri Lanka to continue implementing the 27 international Conventions GSP+ is based on – and all have been signed and ratified by Sri Lanka.
Beyond formal market access, it is also key for Sri Lankan exporters to comply with relevant European standards, in particular phytosanitary certificates (an official document required when shipping regulated articles such as plants, plant products or other regulated articles). We therefore support Sri Lanka in setting up relevant laboratories and in training its companies.
Anyone who has shopped for fruits and vegetables over the last year has seen that prices have increased drastically, and part of the reason is due to more concentrated demand and less competition.
European Importers also decide based on quantity and predictability of supply and other consumer requirements. So, Sri Lankan companies should be equipped with strong marketing and sales work force.
What do you think of the ongoing import ban in Sri Lanka?
The European Union believes that global problems, such as the pandemic and the ensuing economic crisis, can only be solved through global cooperation. We can help ourselves only by working together. For the recovery of the Sri Lankan and global economy, open and rules-based trade is essential as it gives confidence to businesses to invest, and re-start exchanges that bring in employment and revenues.
Sri Lanka is the only country in the world that has recently adopted an outright import ban. We understand that the Government took this decision to solve a dire problem of foreign currencies. The situation is indeed difficult, but as time goes by, the import ban appears less and less as a temporary measure, and more and more as an economic policy that will increasingly prove incompatible with an export drive.
For Sri Lankan companies, it is already getting more difficult to obtain the needed inputs for their production. Even if special provisions allow them to import raw material, the ban simply complicates business and makes producing in Sri Lanka more expensive.
Highly-restrictive trade measures imposed by an import ban also reduces much-needed State revenue from import tariffs and para-tariffs. Overall, I fear that the import ban reduces Sri Lankan exports competitiveness by adding hurdles when importing raw materials, and by reducing shipping options. The legal uncertainty of the measures will reduce Sri Lanka’s ability to attract European investments, which Sri Lanka has been calling for.
Last, but not least Sri Lanka is part of global trade through its membership and compliance with WTO rules. So notification of the decision to the WTO, and explanations on how these measures will be rescinded, are needed.
In short, trade cannot be a one-way street where the EU is opening its market to Sri Lanka, which benefit greatly from it with a positive trade balance, while EU producers cannot have access to Sri Lanka.
What was the outcome of your recent engagement with Sri Lankan Trade Minister Bandula Gunawardena and Foreign Affairs Minister Dinesh Gunawadena?
We had a very good and open exchange with both Ministers. On trade, we understand from the meetings that the government is keen to continue cooperation with the EU under GSP+ and many other areas. There are a variety of assistance projects in the pipeline in the area of agriculture, the justice sector and in terms of COVID-19 response. We also agreed with the Foreign Minister to soon resume our formal political consultations through an EU-Sri Lanka Joint Commission and working groups on development, human rights and trade.
Did you have a dialogue with President Gotabaya Rajapaksa?
Yes, of course. The last time all EU Ambassadors met President Rajapaksa was in June. We shared our concern about the import-ban but also discussed more broadly current challenges of the country and how we can work together to tackle them. This also included discussion about possible EU support in agricultural development, including cold storage facilities.
Deteriorating rural economy, and food security
By Dr. C. S. Weeraratna
Sri Lanka is a land of villages. There are around 14,000 of them. According to the Dept. of Census and Statistics, around 80% of the Sri Lankan population live in villages and estates. Most of them are farmers who are supposed to be suitable to be kings if the mud on their bodies are washed out. According to recent estimates, about 30 percent of the total households, in therural districts of Sri Lanka, live below the poverty line. A socio-economic survey, conducted in the recent past, indicates that although the rural sector has the ability to engage in productive activities, there are many constraints.
Wild elephants roaming in some of the dry zone villages,causing death to many and destroying property, aggravate the socio-economic hardships the rural sector has to face, affecting their health, education and many other aspects of the lives.
Chronic Kidney Disease:
Around 70,000 people of the country are affected by a chronic kidney disease (CKDu) . They are mostly in the rural areas of the country and are affected socially and economically. The patients in the final stages of CKDu have to go for dialysis which again affects the economy of rural people . In some families both parents have died and their children are helpless.
In spite of the country receiving around 100 billion cubic meters of water, annually, there are frequent water shortages, mostly in the rural areas where there are around 12,000 tanks. Most of them are silted, reducing the water holding capacity of these tanks, causing rural communities to face shortage of water which seriously affects crop production and various domestic activities.
Lack of reasonable transport facilities, in the rural areas, is one of the main setback to Sri Lanka’s overall prosperity. People living in some rural areas have to cross rivers, using inflated rubber tubes, as there are no bridges. A large number of rural roads remain in a dilapidated condition but, the authorities were more interested in constructing highways.
Fertilisers are a major input in crop production. During the last two cropping seasons, inorganic fertilisers, and pesticides, were not available due to the utterly foolish decision of the former government. Currently, fertilisers are available but they were not available at correct times.
Farmers are forced to obtain seeds at a high cost. For example, a kg of chilli seeds is around Rs. 170,000 and a kg of cabbage seed is sold at Rs 400,000 in the market.
Pest attacks cause considerable problems to farmers. Last year there was the sena caterpillar called “Fall Armyworm” (Spodopteria Frugipedera) which destroyed large extents of cultivated crops. According to press reports, the same pest destroyed thousands of hectares of maize in Ampara causing severe difficulties to the farmers. Brown Plant Hopper tends to destroy paddy.
Those farmers who manage to harvest the crop of rice/vegetables are unable to sell it for a reasonable price. Currently, paddy farmers are unable to sell their Yala paddy crop to cover the costs. Often vegetable farmers are forced to destroy their produce due to inability to market their produce at reasonable prices. Marketing of agricultural products, at a profit to the farmer, is an issue which the authorities need to take cognizance of.
Unemployment is rampant in the country. As a result of government-imposed restrictions on imports, commercial activities of thousands of companies are slowing down, seriously affecting the private sector in the aftermath of the COVID-19 pandemic. Most of those companies have been compelled to reduce employment, non-renewal of employment contracts, and halting new recruitments, resulting in an increase in unemployment. Thousands of workers, in the construction sector, have already lost their jobs. These business enterprises are currently facing liquidity issues due to a loss of revenue and difficulties in the importation of raw material. Thousands of SMEs have closed down mainly due to lack of inputs, resulting in an increase in unemployment.
As a result of these limiting factors, rural economy is deteriorating. For the success of any development programme to improve the rural economy, it is essential to address the problems of the rural communities. However, the previous governments did not give priority to these critical issues, faced by farmers, who continue to live in abject poverty as a result. Most of them have to pawn their jewellery, or resort to some other ways ,to obtain finances to obtain agricultural inputs, such as seeds, fertilisers, pesticides and labour. Some of them have become prey to micro-credit companies.
All these issues cause untold hardships to thousands of farmers and have a negative impact on the rural economy. No effective actions appear to have been taken, by the relevant authorities, to implement appropriate solutions to these problems, except appointing committees. Those representing the farming community, in the Parliament, appear to be not concerned about the plight of our farming population who have voted them to power.
There is no centralized planning in farming in the country which, sometimes, leads farmers to cultivating the same crop/s, ultimately resulting in gluts. Previous governments attempted to solve this problem by implementing programmes, such as Api Wawamu-Rata Nagamu and Divineguma. But we continue to spend nearly Rs.300 billion, annually to import food. If the authorities are genuinely keen to improve the rural economy, they need to address these issues.
Food Security is closely related to rural economy. According to the United Nation’s Committee on World Food Security, food security is at maximum level when all people, at all times, have physical, social and economic access to sufficient, safe and nutritious food, to meet their dietary needs and food preferences for an active and healthy life. According to World Food Programme’ s latest food security assessment, about three in 10 households (6.26 million people) in Sri Lanka are food insecure. Cost of essential foods has increased during the last few months hindering the population’s ability to consume nutritious food in sufficient amounts. The food security situation is worst among people living in the estate sector.
Nutritious food to meet the dietary requirements of people need to contain mainly carbohydrates, proteins, vitamins and minerals. The local production of carbohydrates (mainly rice and sugar), and proteins (fish and milk) is inadequate to meet the demand. Hence, these food items are imported. During the last few years, we have spent nearly Rs. 300 billion, annually, on food imports, although it has decreased during the last few months, mainly due to restrictions on import of some food.
Availability of rice locally has decreased mainly because of inadequate availability of plant nutrients (nitrogen, phosphorus and potassium) through inorganic fertilisers. This has caused large amounts of rice to be imported. There appears to be no effective programmes to increase sugar production in the country. About two decades ago, in the1990s, sugarcane was cultivated in about 25, 000 hectares. At present, only about 12,000 ha are under sugarcane. The sugar factory, in Kantale, remains out of production, for nearly 15 years.
Availability of fish and milk has reduced due to a number of factors which the government appears to be not taking appropriate measures to increase the production of these items. According to press reports, the government is planning to import cattle from India and Pakistan to increase local milk production. It is foolish to import cattle to enhance milk production in the country without implementing an integrated programme to upgrade local cattle, making available cattle feed and improving veterinary practices in the country.
In Sri Lanka, during the last two decades, perhaps a few thousands of research studies, related to food security, involving billions of rupees worth of scarce resources, have been conducted. It is important that we utilize these research findings to find solutions to the pressing problems of the country. But there appears to be no effective system to make use of the research findings. Lack of an integrated plan is a factor responsible for the decline in food security. There has been rhetoric on rural economic development during the last few years. It is meaningful and effective actions that are necessary.
A first indication of readiness to go on a new path
By Jehan Perera
None too soon, President Ranil Wickremesinghe appears to be putting the brakes on the government’s policy of repression in dealing with public protests. His decision to initially sign the Gazette notification declaring key areas of Colombo to be High Security Zones was roundly criticised by human rights organisations including the Human Rights Commission of Sri Lanka. The business sector also complained that this decision which appears to have been made by the security establishment would be injurious to business. Revoking the High Security Zones made practical sense in view of the dubious legal basis of the declaration. The High Security Zones were to be set up under the Official Secrets Act which has hardly anything in common with the purpose of the new regulations.
The High Security Zone concept, which was practiced in the North and East of the country during the time of war, would have made it difficult for vehicles to even park on the roads without first obtaining special permission. There were also legal cases filed in the Supreme Court alleging violation of constitutional rights. The president would also have been aware of the resolution on Sri Lanka that is about to be presented for a vote at the UN Human Rights Council in Geneva. As many as 26 countries have agreed to co-sponsor the resolution, of which 10 are current members of the UNHRC. Sri Lanka is finding itself isolated in terms of human rights in the eyes of the international community which can have costly consequences in terms of reducing the international sympathy and support that the country needs at this time.
The president’s early resort to the security forces to clamp down on the protest movement came as a surprise as his prior track record would have suggested a more nuanced approach to dealing with public agitation. As a follow up to the revocation of the High Security Zones, the president needs to consider revamping government policy on addressing the protest movement. So far the government approach has focused on suppressing the protest movement, on the justification that it will destabilise the economy through strike actions and by chaos on the streets. However, in Sri Lanka’s democratic system a policy of repression is unlikely to be workable. A government that is reluctant to go to the polls must not use the security forces as its prop. The president’s withdrawal of the High Security Zones in Colombo may be understood as an acknowledgement of this reality.
There is general acknowledgement that the President is the most suitable for the task of negotiating with, and making the political case, for more international aid to come to Sri Lanka. During his recent visits to foreign countries he met with top world leaders and would have made his mark. However, it is also important that the president should make his mark on the Sri Lankan people. He needs to win the trust of the people who did not vote for him. Having consolidated himself following his election by parliament to be president, he needs to take a more pro-active role in addressing the roots of the protest movement and not simply quashing its manifestations. There is a need to inform the people what the government will be doing to directly address the terrible impact of the economic crisis on the poorer sections of the population.
There is a widespread sense that those arrested for being members of the protest movement ought not to be subjected to the heavy hand of the law. At the present time, both in Geneva and in Sri Lanka, government spokespersons are denying the severity of the problems that exists. Successive governments denied the excesses that occurred during the war period, both in Geneva and at home. In Sri Lanka the majority of the population were prepared to go along with the denials of war time excesses due to the nature of the ethnic conflict that pitted the ethnic communities against one another. However, a policy of denying the impact of the economic crisis on the poor will not be able to garner similar support from any community in Sri Lanka and will end up pitting the majority of people against the government, just as happened during the height of the Aragalaya.
A declaration of an amnesty for all those accused and arrested for being part of the protest movement would be an act of follow-up statesmanship considering the controversy these arrests are causing both internationally and nationally with the human rights groups and the general public. The ongoing arrests of some who have been part of the protest movement have been justified on the basis that they engaged in violence or supported it. Others are accused of having burnt down the houses of government ministers, including the president’s own ancestral house which contained his family library and valuable works of art. Some have been arrested without being charged before the courts.
Magnanimity, empathy and fairness are very powerful in binding the community together. This is an opportunity for the president to show his empathy with all those others who down the years have lost their own homes to violence, during the two JVP insurrections and during the long period of the ethnic war. The government plans to compensate its members who lost their houses. It needs to also compensate those who lost their lives due to government failure, the most recent being those who died standing in long lines, or when their substandard gas cylinders exploded.
At present, the government is denying the veracity of studies done by international organisations, including UN organisations, on the extent of the malnutrition and stunting that affects children. They are also denying the veracity of claims of corruption in the procurement of fuel and other large contracts, even in the midst of economic crisis. It is also doing little to ameliorate these problems. The government points to the restoration of reasonable supplies of petrol, diesel, cooking gas and electricity which can create an impression of normalcy, but only for those who can afford the much higher prices at which these commodities are available. The government denials of the unequal distribution of the burden will ring hollow with the masses of people, whose support is needed if the government is to govern in a stable political environment.
Instead of denying the existence of problems, the government needs to accept their existence and take measures to address them. This applies to both the problems within the country and that are being discussed internationally. It needs to recognise that its denials have got no traction in Geneva, which is why Sri Lanka has had to face nine resolutions, each one getting more difficult to respond to. The resolution that will be voted on in the UN Human Rights Council later this week will call for greater support for the UN’s evidence gathering mechanism that has already been set up and to provide more support to those countries that pursue universal jurisprudence for crimes committed by Sri Lankan political and military leaders anywhere in the world.
The government needs to use every opportunity it can to seek the support of the international community. With the draft resolution now presented, the eyes of the international community are upon Sri Lanka. While it is too late to change the draft resolution, which will be soon voted on, the government can still seek to restore goodwill among those that are pursuing the resolution on Sri Lanka at the UN Human Rights Council session in Geneva. An amnesty for those who participated in the protest movement could send a positive signal that the government is willing to heed the concerns of the international community regarding human rights and democratic freedoms. The possibility of amnesty to be part of a Truth and Reconciliation Commission in which there is acknowledgment of past violations, expression of regret and accountability for them can also be explored.
Treaty for a Lost City – inconvenient facts or legal myths?
By Andrew Sheng
Asia News Netowrk
Is Hong Kong a lost city or being re-born after its baptism of fire? Hong Kong was always a “borrowed place, borrowed time”, to quote the legendary journalist Richard Hughes (1906-1984), immortalised in John Le Carre’s novels on the intersection of media and espionage in cities like Berlin or Istanbul located at the borderlands of great power conflicts. Having returned the city on 1 July 1997, can Britain hold China to the terms and conditions of the 1984 Joint Declaration with China?
Chinese University of Hong Kong Law Professor CL Lim’s book, ” The Sino-British Joint Declaration” is a meticulously researched legal history of how the Joint Declaration came into being and whether it still has the force of law on both parties. There is a presumption that the Joint Declaration granted democratic rights to Hong Kong. The legal story is much more complex. This book draws on the British National Archives and study of the Basic Law of the Hong Kong Special Administrative Region (1990), the International Covenant on Civil and Political Rights (1966) [ICCPR], United Nations Charter, etc., to lay out the facts and opinions for the reader to judge who is right or wrong.
Cities and states are defined by their Constitutions, communal values, geography, cultures and histories. Prior to 1841, Hong Kong was a barren rock that was indisputably part of China. Hong was ceded under the Treaty of Nanjing after the First Opium War (1839-42); but the expiry of the 99 year New Territories lease meant that Britain could not hold onto Hong Kong after 1997. The People’s Republic of China (PRC), following earlier Chinese governments, has never recognised any “unequal treaty” with the Western Powers, but adopted the face-saving principle that “a sovereign may delegate under international law such control or authority to another for a limited period.” Once that sovereignty is resumed, the PRC will not brook any interference in its internal sovereign matters.
This book reads like a series of Queen’s Counsel briefs, densely argued on complex and subtle points presenting different opinions and perspectives. In normal legal disputes, the arbiter would be an independent court, but there is no final decision between China and United Kingdom, which are the five members of the UN Security Council that can veto any rulings at the United Nations level. The only appeal left is to the court of global public opinion, which is today dominated by the English-speaking media. As media today becomes more and more ideologically driven, it is unlikely that deeply held views will be changed by legal or rational arguments.
The genesis of the Joint Declaration was the need to ensure a smooth return of Hong Kong to China. In 1983, when the New Territories lease (covering 92% of Hong Kong) was running out, Britain initially sought to renew the lease, but found that China under Deng Xiaoping was adamant that China would resume sovereignty over Hong Kong. With confidence slipping, the Hong Kong currency was under attack, only to be restored by a peg against the US dollar. This gave impetus to settle the terms and conditions of return. As the book painstakingly pointed out, British negotiators were operating from a weak hand, wanting to retain as much influence and economic benefits as possible post-1997.
As described in Chapter 3, democracy under colonialism was never part of the negotiations. Hong Kong representatives played no part in the discussions between two sovereign powers. The Joint Declaration itself did not mention the word “democracy”. It basically stated that the Hong Kong SAR “will enjoy a high degree of autonomy, except in foreign and defence affairs” (Article 2) and that rights and freedoms will be ensured by Hong Kong SAR law (Article 5). Since the Basic Law, HKSAR’s constitution, is PRC law, the final interpretation falls to the Standing Committee of the National People’s Congress, not necessarily by the Hong Kong Court of Final Appeals.
The real point of dispute lies in the National Security Law, which was passed by the National People’s Congress in 2020, after the Hong Kong legislature was unable to enact Article 23 of the Basic Law. As public disorder arose with violent protests, the practical issue was whether HKSAR government could handle them without a National Security Law. Hong Kong was uniquely handicapped because in every other international financial centre, there exists very draconian national security laws that protect the integrity and security of the financial system, economy and sovereignty. Hong Kong was deeply polarised. No compromise seemed possible, and continued protests and violence would have destroyed Hong Kong. Between a rock and a hard place, the National Security Law was the least painful alternative barring more physical violence.
Treaty on a Lost Place highlighted the absurd situation of two sovereigns signing one piece of paper having different points of view. Such constructive ambiguity papered over destructive alternatives. The last British Governor Chris Patten was successful in persuading some Hongkongers that one man-one vote was what they deserve. Whether that is a cure all for Hong Kong’s ill is another matter. That his Conservative Party leadership was elected opaquely by of British people shows that different systems may not always practice what they preach. Hong Kong elites failed to correct the injustices that many young faced in not providing them affordable homes with meaningful, well paid jobs. Beijing’s mistake perhaps was to trust that Hong Kong could on her own resolve these contradictions within the larger struggle between China and the West on many fronts.
A Treaty is only a piece of paper. A city is not lost to Britain or China, but lost in its own direction, which must be re-found. The answers will not be found in international law, because that is itself being rediscovered in a new age of multipolar contestation. This book is a major contribution to our understanding of how international law is only one of many guides to the future. Hong Kong has to rediscover her own identity inside a larger identity. That is the tragedy and opportunity facing all islands within the grand ocean of mankind.
22A: Jayasumana asks govt. to stick to SC ruling, warns against moves detrimental to unitary status
Defeat bid to protect the corrupt
Deteriorating rural economy, and food security
‘Dates have the highest sugar content to fight Coronavirus’
U.S. Congress to probe assets fleecing by US citizens of Sri Lankan origin
Sunday Island 27 December – Headlines
News4 days ago
UK considers imposing sanctions on Gen. Silva, others over ‘war crimes’
News3 days ago
Wigneswaran wants SL taken to International Criminal Court
News3 days ago
Lanka girls from ‘unimaginable’ backgrounds driven to sex trade by currency crisis: ex-President
News6 days ago
Corruption: Ex-top House official alleges negligence of successive Speakers
News2 days ago
Ex-HRCSL head challenges ‘Bureau of Rehabilitation Bill’
Features4 days ago
THIS AND THAT
News6 days ago
PMB declines to release Rs 1.2 bn FD for paddy purchasing
News1 day ago
SJB fears for life of IUSF convener taken out of prison at night