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Is Sri Lanka serious about benefiting from European Union support?

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*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.

Q.

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?

A

. 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.

Q.

What should Sri Lanka do to gain support of the EU to obtain broader export market access?

A

.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.

Q.

What do you think of the ongoing import ban in Sri Lanka?

A.

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.

Q.

What was the outcome of your recent engagement with Sri Lankan Trade Minister Bandula Gunawardena and Foreign Affairs Minister Dinesh Gunawadena?

A.

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.

Q.

Did you have a dialogue with President Gotabaya Rajapaksa?

A.

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.



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Port City Bill Requires Referendum

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by Dr Jayampathy Wickramaratne,PC

The Colombo Port Economic Commission Bill was presented in Parliament on 08 April 2021, while the country was getting ready to celebrate the traditional New Year. With the intervening weekend and public holidays, citizens had just two working days to retain lawyers, many of whom were on vacation, and file applications challenging the constitutionality of the Bill in the Supreme Court within the one-week period stipulated in the Constitution. One wonders whether the timing was deliberate.

Special economic zones are common. They are created mainly to attract foreign investments. In return, investors are offered various concessions so that their products are competitive in the global market. Several negative effects of such zones have also been highlighted. The sole purpose of this article, however, is a discussion on the constitutionality of the Bill.

The Bill seeks to establish a high-powered Commission entrusted with the administration, regulation and control of all matters connected with businesses and other operations in and from the Colombo Port City. It may lease land situated in the Colombo Port City area and even transfer freehold ownership of condominium parcels. It operates as a Single Window Investment Facilitator for proposed investments into the Port City. It would exercise the powers and functions of any applicable regulatory authority under any written law and obtain the concurrence of the relevant regulatory authority, which shall, as a matter of priority, provide such concurrence to the Commission. The discretion and powers of such other authorities under the various laws shall thus stand removed.

The Commission consists of five members who need not be Sri Lankan citizens, quite unlike the Urban Development Authority, the Board of Management of which must comprise Sri Lankan citizens only. One issue that arises is that the vesting of such powers upon persons with loyalties to other countries, especially superpowers, would undermine the free, sovereign, and independent status of Sri Lanka guaranteed by Article 1 of our Constitution. It would also impinge on the sovereignty of the People of Sri Lanka guaranteed by Article 3 read with Article 4.

The removal of the discretionary powers of the various regulatory authorities is arbitrary and violative of the right to equal protection of the law guaranteed by Article 12 (1).

Under Clause 25, only persons authorized by the Commission can engage in business in the Port City. Clause 27 requires that all investments be in foreign currency only. What is worse is that even foreign currency deposited in an account in a Sri Lankan bank cannot be used for investment. Thus, Sri Lankans cannot invest in the Port City using Sri Lankan rupees; neither can they use foreign currency that they legally have in Sri Lanka. The above provisions are clearly arbitrary and discriminatory of Sri Lankans and violate equality and non-discrimination guaranteed by Article 12. They also violate the fundamental right to engage in business guaranteed by Article 14 (1) (g).

Under clause 35, any person, whether a resident or a non-resident, may be employed within the Port City and such employee shall be remunerated in a designated foreign currency, other than in Sri Lanka rupees. Such employment income shall be exempt from income tax. Clause 36 provides that Sri Lankan rupees accepted within the Port City can be converted to foreign currency. Under clause 40, Sri Lankans may pay for goods, services, and facilities in Sri Lankan rupees but would be required to pay a levy for goods taken out of the Port City, as if s/he were returning from another country! The mere repetition of phrases such as ‘in the interests of the national economy’ throughout the Bill like a ‘mantra’ does not bring such restrictions within permissible restrictions set out in Article 15.

Clause 62 requires that all disputes involving the Commission be resolved through arbitration. The jurisdiction of Sri Lankan courts is thus ousted.

In any legal proceedings instituted on civil and commercial matters, where the cause of action has arisen within the Port City or in relation to any business carried on in or from the Port City, Clause 63 requires Sri Lankan courts to give such cases priority and hear them speedily on a day-to-day basis to ensure their expeditious disposal.

The inability of an Attorney-at-Law to appear before the court even for personal reasons, such as sickness, shall not be a ground for postponement. These provisions are arbitrary and violate Article 12.

Clause 73 provides that several Sri Lankan laws listed in Schedule III would have no application within the Port City. Such laws include the Urban Development Authority Act, Municipal Councils Ordinance, and the Town and Country Planning Ordinance. Under Clauses 52 and 53, exemptions may be granted by the Commission from several laws of Sri Lanka, including the Inland Revenue Act, Betting and Gaming Levy Act, Foreign Exchange Act, and the Customs Ordinance.

The Commission being empowered to grant exemptions from Sri Lankan laws undermines the legislative power of the People and of Parliament and violates Articles 3 and Article 4 (c) of the Constitution.

Several matters dealt with by the Bill come under the Provincial Councils List. They include local government, physical planning, and betting and gaming. Article 154G (3) requires that such a Bill be referred to Provincial Councils for their views. As Provincial Councils are not currently constituted, passage by a two-thirds majority will be necessary in the absence of the consent of the Provincial Councils.

The exclusion of the Municipal Councils Ordinance from the Port City area is not possible under the Constitution. When the Greater Colombo Economic Commission was sought to be established in 1978 under the 1972 Constitution, a similar exclusion was held by the Constitutional Court not to be arbitrary. Since then, under the Thirteenth Amendment under the 1978 Constitution, local government has been given constitutional recognition and included under the Provincial Council List. Under the present constitutional provisions, therefore, the Port City cannot be excluded from laws on local government.

The writer submits that in the above circumstances, the Colombo Port Economic Commission Bill requires to be passed by a two-thirds majority in Parliament and approved by the People at a Referendum. Quite apart from the constitutional issues that arise, such an important piece of proposed legislation needs to be widely discussed. It is best that the Bill is referred to a Parliamentary Committee before which the public, as well as citizens’ organizations and experts in the related fields, could make their submissions.

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Investigative Journalism?

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I usually end up totally exhausted when I finish reading the local newspapers from the Pearl. There are so many burning questions and so much is written about them but there are no conclusions and definitely no answers. For example, we seem to have three burning issues right now and this is not in order of importance.

We have a lengthy report that has been published on the Easter Sunday carnage. Everybody knows what I am talking about. However, no one, be it an editor, a paid journalist or a single one of the many amateurs who write to the papers, has reached a conclusion or even expressed an opinion as to who was responsible. At least not a believable one! Surely there are energetic and committed young people in the field of journalism today who, if asked, or directed properly will go out and find a source that would give them at least a credible hypothesis? Or do conclusions exist and has no one the courage to publish them?

At least interview the authors or should I use the word perpetrators of that report. If they refuse to be interviewed ask them why and publish an item every day asking them why! Once you get a hold of them, cross-examine them, trap them into admissions and have no mercy. It is usually geriatrics who write these reports in the Pearl and surely a bright young journalist can catch them out with a smart question or two, or at least show us that they tried? The future of the country depends on it!

We have allegations of contaminated coconut oil been imported. These are very serious allegations and could lead to much harm to the general populace. Do you really believe that no one can find out who the importers are and what brands they sell their products under? In this the Pearl, where everyone has a price, you mean to say that if a keen young journalist was given the correct ammunition (and I don’t mean 45 calibres) and sent out on a specific message, he or she couldn’t get the information required?

We are told that a massive amount of money has been printed over the last few months. There is only speculation as to the sums involved and even more speculation as to what this means to the people of the Pearl. Surely, there are records, probably guarded by extremely lowly paid government servants. I am not condoning bribery but there is nothing left to condone, is there? There are peons in government ministries who will gladly slip you the details if you are committed enough and if you are sent there to get it by a boss who will stand by you and refuse to disclose his sources.

I put it to you, dear readers, that we do not have enough professional, committed and adequately funded news organisations in the country. We can straightaway discount the government-owned joints. We can also largely discount those being run by magnates for personal gain and on personal agendas. As far as the Internet goes, we can forget about those that specialise in speculative and sensationalist untruths, what are we left with O denizens of the Pearl? Are there enough sources of news that you would consider willing to investigate a matter and risk of life and limb and expose the culprits for the greater good of society? Can they be counted even on the fingers of one hand?

In this era when we have useless political leaders, when law and order are non-existent when the police force is a joke, it is time the fourth estate stepped up to the mark! I am sure we have the personnel; it is the commitment from the top and by this, I mean funding and the willingness to risk life and limb, that we lack. Governments over the last few decades have done their best to intimidate the press and systematically destroy any news outlet that tried to buck the usual sycophantic behaviour that is expected from them by those holding absolute power.

Do you think Richard Nixon would ever have been impeached if not for the Watergate reporting? Donald Trump partially owes his defeat to the unrelenting campaign carried out against him by the “fake news” outlets that he tried to denigrate. Trump took on too much. The fourth estate of America is too strong and too powerful to destroy in a head-to-head battle and even the most powerful man in the world, lost. Let’s not go into the merits and demerits of the victor as this is open to debate.

Now, do we have anything like that in the Pearl? Surely, with 20 million-plus “literate” people, we should? We should have over 70 years of independence built up the Fourth Estate to be proud of. One that would, if it stood strong and didn’t waver and collapse under pressure from the rulers, have ensured a better situation for our land. Here is Aotearoa with just five million people, we have journalists who keep holding the government to account. They are well-funded by newspapers and TV networks with audiences that are only a fraction of what is available in the Pearl. Some of the matters they highlight often bring a smirk of derision to my face for such matters wouldn’t even warrant one single line of newsprint, should they happen in the Pearl.

Talking of intimidation from the rulers, most of us are familiar with the nationalisation of the press, the murder and torture of journalists, the burning of presses to insidious laws been passed to curtail the activities of Journalism. These things have happened in other countries, too, but the people and press have been stronger, and they have prevailed. We are at a watershed, an absolutely crucial time. It is now that our last few credible news sources should lift their game. Give us carefully researched and accurate reports with specific conclusions, not generalisations. Refuse to disclose your sources as is your right, especially now that the myopic eye of the UNHCR is turned in our direction.

All other ways and means of saving our beloved motherland, be it government, religion, sources of law and order and even civil society leadership seems to have lapsed into the realm of theory and rhetoric. Our last chance lies with the Fourth Esate and all it stands for. I call for, nay BEG for, a favourable reaction from those decision-makers in that field, who have enough credibility left in society, DON’T LET US DOWN NOW!

 

 

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The world sees ugly side of our beauty pageants

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Yes, it’s still the talk-of-the-town…not only here, but the world over – the fracas that took place at a recently held beauty pageant, in Colombo.

It’s not surprising that the local beauty scene has hit a new low because, in the past, there have been many unpleasant happenings taking place at these so-called beauty pageants.

On several occasions I have, in my articles, mentioned that the state, or some responsible authority, should step in and monitor these events – lay down rules and guidelines, and make sure that everything is above board.

My suggestions, obviously, have fallen on deaf ears, and this is the end result – our beauty pageants have become the laughing stock the world over; talk show hosts are creating scenes, connected with the recent incidents, to amuse their audience.

Australians had the opportunity of enjoying this scenario, so did folks in Canada – via talk show hosts, discussing our issue, and bringing a lot of fun, and laughter, into their discussions!

Many believe that some of these pageants are put together, by individuals…solely to project their image, or to make money, or to have fun with the participants.

And, there are also pageants, I’m told, where the winner is picked in advance…for various reasons, and the finals are just a camouflage. Yes, and rigging, too, takes place.

I was witnessed to one such incident where I was invited to be a judge for the Talent section of a beauty contest.

There were three judges, including me, and while we were engrossed in what we were assigned to do, I suddenly realised that one of the contestants was known to me…as a good dancer.

But, here’s the catch! Her number didn’t tally with the name on the scoresheet, given to the judges.

When I brought this to the notice of the organiser, her sheepish reply was that these contestants would have switched numbers in the dressing room.

Come on, they are no babes!

On another occasion, an organiser collected money from the mother of a contestant, promising to send her daughter for the finals, in the Philippines.

It never happened and she had lots of excuses not to return the money, until a police entry was made.

Still another episode occurred, at one of these so-called pageants, where the organiser promised to make a certain contestant the winner…for obvious reasons.

The judges smelt something fishy and made certain that their scoresheets were not tampered with, and their choice was crowned the winner.

The contestant, who was promised the crown, went onto a frenzy, with the organiser being manhandled.

I’m also told there are organisers who promise contestants the crown if they could part with a very high fee (Rs.500,000 and above!), and also pay for their air ticket.

Some even ask would-be contestants to check out sponsors, on behalf of the organisers. One wonders what that would entail!

Right now, in spite of the pandemic, that is crippling the whole world, we are going ahead with beauty pageants…for whose benefit!

Are the organisers adhering to the Covid-19 health guidelines? No way. Every rule is disregarded.

The recently-held contest saw the contestants, on the move, for workshops, etc., with no face masks, and no social distancing.

They were even seen in an open double-decker bus, checking out the city of Colombo…with NO FACE MASKS.

Perhaps, the instructions given by Police Spokesman DIG Ajith Rohana, and Army Commander, General Shavendra Silva, mean nothing to the organisers of these beauty pageants…in this pandemic setting.

My sincere advice to those who are keen to participate in such events is to check, and double check. Or else, you will end up being deceived…wasting your money, time, and energy.

For the record, when it comes to international beauty pageants for women, Miss World, Miss Universe, Miss Earth and Miss International are the four titles which reign supreme.

In pageantry, these competitions are referred to as the ‘Big Four.’

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