"The Role of International Agreements and Diplomacy in Promoting Sri
Lankan Business"
(Dr. Kohona at PIM)
Dr. Palitha T.B. Kohona , Secretary to the Ministry of
Foreign Affairs delivered a public lecture at Postgraduate Institute of
Management (PIM) , Sri Lanka's leading business school under the theme
"The Role of International Agreements and Diplomacy in Promoting Sri
Lankan Business" on Tuesday (June 24). The Foreign Secretary highlighted
Sri Lanka's economic progress even under terrorist threats and the how
the country's economy is challenged by anti Sri Lankan propaganda
carried out by LTTE and others.
Dr. Wickrema Weerasooriya,
Distinguished Invitees,
Ladies and Gentlemen,
It is with great pleasure that I address you today on
the subject "The Role of International Agreements and Diplomacy in
Promoting Sri Lankan Business". I spent a considerable number of years
either negotiating international agreements affecting trade and
investment or interpreting them to ensure proper implementation. My
earliest experience in this area was with regard to fisheries
agreements. This early exposure to the fishing industry and its
regulation through international instruments is partly responsible for
my fondness for sushi and sashimi. I was particularly fortunate to have
been involved with the development of the treaty regime for Southern
Bluefin Tuna, then involving the three major producers of this product,
Australia, Japan and New Zealand. Although in Sri Lanka, we still tend
to think of fish as a livelihood provider for small operators, globally,
it is a multi billion dollar business. Southern Bluefin Tuna fetches in
excess of 200 dollars per kilo in the Tokyo Tsukiji fish market and it
is usually air freighted, when fresh. Intergovernmental agreements
regulate fisheries in many areas of the world. The European Economic
Community regulates fishing through quotas allocated to its member
states, largely as a conservation measure. You will recall that the
European cod fishery collapsed in the eighties due to over fishing and
had to be restored through multilateral action.
Subsequently my involvement extended to negotiating
trade and also investment protection agreements, in particular, the
Uruguay Round of Agreements. Today, a range of agreements, both
multilateral and bilateral, impact on trade and investments across the
globe. In the trade area, the most prominent framework is provided by
the World Trade Organisation Agreement and its related treaties. Many
countries of the world are parties to these agreements, which are
designed to liberalise world trade. These are not free trade agreements
but mechanisms designed to liberalise trade. The prevailing view is that
liberalised trade will increase global prosperity and will benefit more
people. The major trading powers of the world, the US, the EC, Japan,
China, India, Brazil, Australia et al, are all members of the WTO. A
prominent exception is the Russian Federation which is still negotiating
its accession conditions. But let me strike a note of caution, just in
case you begin to believe that we are in a jolly world of free traders
competing with each other on equal terms for market share. The members
of the WTO, especially the bigger ones, are the ones who have constantly
acted inconsistently with the sprit, if not the law, of the organisation
in the furtherance of their national interests. For example the US, the
EC and Japan subsidise their farmers to the tune of over 350 million
dollars per annum. In the process they have impacted adversely on
agriculture producers, especially on developing country producers.
Agriculture still remains the critical stumbling block in the Doha Round
which is being negotiated now. While the developed countries, tend to
emphasise liberalisation for the areas in which they are strong, for
example in the area of services, they are not too enthusiastic about
liberalising areas in which they are weak. Agriculture, textiles and
garments, aviation, are examples. In fact, some commentators believe
that the entire intellectual property regime under the TRIPS is
anti-competitive and it is a regime that is strongly supported by
developed countries.
More recently, as you know, I spent ten years at the
UN as the Head of the UN Treaty office. The UN Treaty office is the
custodian of over 500 multilateral treaties deposited with the Secretary
General, and on his behalf, is responsible for managing them, including
by providing interpretative statements. This was a minefield that had to
be negotiated with extreme care as each country had its own perception
on how a particular treaty impacted on its interests. In addition, under
Article 102 of the Charter of the UN, over 50,000 treaties were
deposited with the UN. What is significant about this treaty framework
is the intricate manner in which the international community was legally
interconnected and how bilateral relations were minutely regulated.
Countries enter into treaties voluntarily and in the process negotiate
benefits for themselves and invariably are required to make concessions.
The international treaty framework reflects a meticulous balancing of
global rights, obligations and standards across the entire spectrum of
human activity.
Sri Lanka, for its part, has developed complex chains
of interconnectivity with a range of countries around the world and
international organisations over the years. Some of these linkages go
back hundreds of years and even millennia. Many, originating in
cultural, religious, trading and colonial factors, are today based on
multilateral and bilateral treaties. While we emphasize our treaty based
linkages, we must not forget our very strong intrinsic cultural
connections, particularly in our own region. While the colonial links
have served us well, we must also exploit the important historical
cultural links within our own region - a region which is now vigourously
contributing to the economic advancement of the world.
Sri Lanka's contemporary bilateral and multilateral
treaty connections substantially underpin much of its global relations
whether they are political, economic, commercial, etc. It could be said
that very little of Sri Lanka's external relations is undertaken today
without relying on a complex web of multilateral and bilateral treaties.
An understanding of this factor would substantially facilitate our
trading and economic activities. While these treaties establish or
reflect bilateral interests and in many cases, global standards, they
also impose binding rights and obligations. Admittedly, we are part of a
system that is not perfect, but it is a system that is gaining in
strength. For example a letter posted in a roadside mail box in Colombo
would reach its destination in any corner of the world without
hindrance, thanks in part to our postal service, but essentially due to
a well established framework of international rules relating to postal
services first established in 1865. Similarly, international telephonic
communications, sea transportation, air travel, banking, trade
transactions, etc take place against the background of an intricate web
of international norms underpinned by treaties to which Sri Lanka is a
party. Modern commerce would not have reached today's level of
overriding importance in the absence of this treaty framework. We owe
our modern prosperity to a large extent to this framework of global
norms.
Sri Lanka, as a member of the international community,
is dependent on this network of norms for its development and continuing
prosperity and naturally others who are its members are also in a
position to use this facility to exert influence on us. They will
definitely insist on their treaty rights. In addition, it is the window
through which the world observes us. It is also the window for us to
show our best face to the world. We need to be constantly conscious of
its potential and its drawbacks. This is a challenge to our diplomacy.
While we benefit from it, we also open ourselves to the world through
it.
Let me pause over a few examples. Sri Lanka is a
Member of the WTO. The WTO Agreement requires Sri Lanka to take agreed
measures towards progressive trade liberalization. Currently a new
regime is being negotiated called the Doha Round. The previous one was
the Uruguay Round. We must engage actively in these negotiations both as
an individual country and as part of a group or groups that have common
interests. This would be a task for our diplomats. Cross-border trade is
enhanced, through bilateral Free-Trade Agreements (FTAs). Sri Lanka
concluded the first FTA with India in 1999, and a similar FTA was signed
with Pakistan in August 2002. The Agreement with India has resulted in
the bilateral trade reaching approximately US$ 3 billion. Sri Lanka is
now in the process of negotiating Comprehensive Economic Partnership
Agreements with both these countries. These are in the nature of
Economic Integration Agreements (EIAs) - a primary vehicle in
liberalizing trade policies, the ultimate benefactors of which will be
the people of Sri Lanka. The expansive nature of such Comprehensive
Economic Partnership Agreements, aiming at the liberalization of trade
in goods as well as services, is also consistent with the obligations
undertaken by Sri Lanka under the main substantive agreements of the WTO
system such as the General Agreement on Tariffs and Trade (GATT), the
General Agreement on Trade in Services (GATS), the Agreement on
Trade-Related Aspects of Intellectual Property Rights (TRIPS) and the
Agreement on Trade-Related Investment Measures (TRIMS), which were the
outcome of the Uruguay Round of Trade Negotiations held from 1986 to
1994. They entered into force as a package in 1995.
There are other important categories of international
agreements which benefit Sri Lanka economically. I note that Sri Lanka
uniquely provides extensive protection to foreign investments under
Article 157 of the Constitution. These investment protection treaties
ensure that globally accepted standards are respected by the parties in
their dealings with foreign investors. In particular, political risk is
covered. Bilateral Investment Treaties (BIT) play a major role in this
regard as they provide a degree of reassurance to foreign investors. Sri
Lanka has entered into over 25 such investment treaties with other
States. Most recently, the Government of Sri Lanka was able to finalize
two further Agreements with the Czech Republic and Jordan.
Following a proactive approach to establishing
economic and trading relations, the government in February 2007
concluded an Agreement on a Framework Programme for Financial
Cooperation with Hungary, while an Agreement on Economic and Technical
Cooperation with China was signed in February, 2007. Other developments
concerning the subject of bilateral economic relations were the signing
of an Agreement on Trade and Economic Cooperation with Israel (in April
2007) and a Trade Agreement with Jordan, in May 2007. Similar agreements
have also been signed with Iran. These agreements are always preceded by
considerable activity through the diplomatic channel.
Sri Lanka has also entered into over 50 Bilateral Air
Services Agreements. The conclusion of such agreements dates back to
1948, when Ceylon (as Sri Lanka was then known) entered into an Air
Services Agreement with India. This was immediately followed by
agreements with countries such as Pakistan (1949), Thailand, Myanmar and
Australia (1950) and the Netherlands (1953).
There has been renewed activity in the field of air
services, especially, during the recent past. For instance, in April
2007, Sri Lanka signed an Open Skies Air Services Agreement with
Switzerland. Also, a memorandum of Understanding which provides for
liberalized air services between Sri Lanka and China was signed in March
2007.
Currently agreements are being pursued with a range of
European countries. The European Commission has asked that Sri Lanka
enter into a EC wide agreement on air services which will ensure
consistency with Community law. Along with air services agreements, we
also seek to make visa formalities easier for our business people. This,
as you will appreciate, is not an easy task.
Sri Lanka is a State Party to the major international
conventions and protocols concerning environmental protection, such as
the Montreal Protocol, the Vienna Convention on the Ozone Layer, the UN
Climate Change Convention, the Kyoto Protocol to the Climate Change
Convention, the Convention on Biological Diversity, the Cartagena
Protocol on Bio-safety, the Basal Convention on the Control of
Transboundary Movements of Hazardous Wastes, the Stockholm Convention on
Persistent Organic Pollutants and the Convention on International Trade
in Endangered Species.
Domestic legislation has been enacted to ensure that
the international obligations arising from these multilateral
instruments are adequately given effect to in Sri Lanka. For instance
the Flora and Fauna Protection Ordinance introduced as far back as 1937,
the National Environment Act of 1980 and other relevant legislation
which have been amended consistently to meet the international
standards.
The critical importance of Sri Lanka's participation
in these multilateral environmental agreements is two fold. For one, we
become part of the global effort to ensure the sustainability of our
environment for future generations. On the other hand, we create
business and economic opportunities. Compliance with key environmental
treaties is an essential precondition for the extension of the GSP+. In
addition, under the Kyoto Protocol we could join the global carbon
credit market under the Joint Implementation Mechanism. There are also
significant subsidies being offered by the EC and others for environment
standards compliant investments. Sri Lanka is also pushing to have
accepted the principle that tropical rainforests must be ascribed a
marketable carbon value.
These international agreements confer extensive
benefits to Sri Lanka. The benefits gained through our international
network of treaties have helped Sri Lanka in great measure to expand our
exports, find new markets, attract more investors and in the process,
create employment, reduce poverty and achieve economic development. Our
success in expanding our trading activities has contributed
significantly to our compliance with wider global standards. Outside the
international legal framework, but in line with UN goals, Sri Lanka has
shown considerable success in accomplishing the Millennium Development
Goals, which aim at reducing poverty and improving the lives of people,
as agreed upon at the Millennium Summit in 2000. We should be proud that
the number living in poverty in Sri Lanka has dropped to 15.2%. Our
literacy rate remains very high. The Government has a target of
achieving a 50% computer literacy rate by 2010. While much more needs to
be done, the progress Sri Lanka is making is noteworthy, especially at a
time when the entire country is challenged by the brutal terrorism
perpetrated by the LTTE.
In this context, it needs to be remembered that the
LTTE, consistent with the strategy of other terrorist groups who have
sought to cripple the economies of target countries, has aimed its
sights at the economy of this country. It is a strategy which appears to
be succeeding to some extent, unfortunately due to the conscious or
unwitting acquiescence of certain international players. The LTTE has
attacked major economic targets in the country, and has threatened to
continue such attacks. Unfortunately, against this obvious background,
we also hear talk of trade concessions being withdrawn, development
assistance being reduced and harsher economic conditions being imposed
by our international partners. This approach does not help at a time
this country is struggling to maintain its democracy and its democratic
institutions in the face of the LTTE's determined efforts to cripple it
economically. Tourism and inward investments have been a key focus for
the LTTE. No great wisdom is needed to understand the terrorist motive.
The LTTE's prime motive has always been to see that Sri Lanka is
debilitated economically, that its development is stultified, and the
lives of its people made miserable. Terror is sown to reap a harvest of
misery. What then is remarkable is that the successive Governments of
Sri Lanka have continued the process of ensuring economic development
amidst vast difficulties.
Against the background of broad relations underpinned
by treaties and other agreements, Sri Lankan governments have taken
proactive diplomatic initiatives to maintain a continuous dialogue with
key international players with a view to ensuring continued economic
connectivity and national security. For example, H.E. the President has
made several visits to targeted countries over the last two and a half
years. He has also attended the General Assembly of the UN, the ILO,
meeting different world leaders, the G11 Summit, the Baoa Forum, the
Commonwealth Heads of Government Summit and the World Food Summit.
Almost all his visits have enabled business delegations which have
accompanied him to exploit resulting opportunities. All of these visits
have been used by the President to consolidate our bilateral relations,
to explain Sri Lanka's position to the world, to highlight positive
developments, reassure the world of our policy approaches, including on
economic issues, and to listen to the views of our interlocutors. Every
possibility has also been used to encourage and facilitate economic and
trading contacts. For example, the President, in his address at the Rome
Food Summit, proposed the creation of regional and national buffer
stocks of food, funded internationally, as a means of countering the
global food crisis. The Prime Minister, the Minister of Foreign Affairs
and other Ministers have also made similar visits to a range of
countries. Visits have also been undertaken at senior officials' level.
Some of the benefits obtained following these contacts to facilitate
business may not be obvious but nevertheless are very significant. Many
foreign delegations at senior level have come to our fair isle in recent
years. Regular visits to Sri Lanka have been undertaken by senior
officials of the UN and other international organisations. Importantly,
in the face of a determined terrorist challenge and its sophisticated
propaganda machine, we have used these visits to explain to the world
measures undertaken by the government and its security forces to counter
the brutal threat of terrorism that confronts us, the evolution of the
political process designed to address the concerns of our minorities,
particularly the Tamil minority, the APRC process, measures taken to
consolidate and advance our democratic institutions, in particular,
holding elections in the Eastern Province after a lapse of 14 years, and
measures undertaken to address the economic and social needs of our
people. The achievements of our country in recent times, including our
success in substantially attaining the Millennium Development Goals, our
high ranking in the UN Human Development Index, in initiating vast
development programmes, building extensive new infrastructure, including
roads, three power plants and two harbours and in creating opportunities
for industrial and services expansion have been highlighted. In
addition, these visits have contributed towards encouraging inward
investments and foreign tourist arrivals, particularly from new sources.
I am certain that there are areas where we could perform better. We will
keep trying.
It is important to note that despite the adverse
publicity and the determined efforts to denigrate the country, even from
within, Sri Lanka received a record level of FDI, US $ 751 million, in
2007 and tourist arrivals though unsteady, recorded increases from the
Middle East, Eastern Europe and Asia. As you are aware, a bond issue of
US $ 500 million resulted in an over subscription of US $ 1.6 billion.
It is evident that Sri Lanka's proactive engagement in
the world stage has brought tangible benefits, in particular, the
government's active diplomacy has clearly resulted in increased
development assistance flows to this country. Japan has increased its
bilateral assistance to Sri Lanka to US $ 618 million. China has emerged
as a major development partner and is funding projects to the value of
over one billion dollars. The contribution of Iran to our development
efforts exceeds US $ 1.9 billion. India is also emerging as a major
participant in our development projects with over US $ 500 million. The
Republic of Korea contributes in the region of US $ 117 million. The
Asian Development Bank and the World Bank are also major collaborators
in our development efforts. Countries such as the US, Germany, France,
Spain, Australia, the Czech Republic, Austria and Hungary are also
important partners. The European Union is especially significant with
its contribution of over Euros 129 million. At a time when global
development assistance levels have dropped, Sri Lanka, seeking to
provide a better economic future for its people, has succeeded in
increasing assistance to itself. These development projects create
opportunities for business and, of course, increased prosperity for the
people.
In this context, I would also like to spend a little
time looking at Sri Lanka's economic performance. Trade is an important
element in our economic advancement and our prosperity. Historically Sri
Lanka benefited enormously from international trade and there was a time
when this country was a major emporium in East-West trade relations.
Then Sri Lanka featured in an exaggerated manner in the imagination of
Western cartographers. This can only be explained in terms of our
impressive trade links. In more recent times, traders from afar came to
Sri Lanka looking for valuable commodities such as cinnamon, gems and
elephants. Things are not too different today and it is very important
for us to maintain our trade relations unaffected by extraneous factors.
We must continue to deploy our diplomatic service to advance our
economic and trade relations. There is much in the statement that "The
business of today's diplomats is business". I note that many modern
foreign services have been amalgamated with their trade ministries. Take
for example Australia, New Zealand, Singapore, the UK and Canada.
As you know, Sri Lanka's per capita income has now
surpassed US$ 1617 a year. We are now a middle income country, albeit at
the lower end. Our economic growth rate was 6.8% in 2007. Our industrial
exports increased by over 8% during the same time while agricultural
exports increased by about 6%. Unemployment is at a historic low
although inflation is a problem. Inflation, which is afflicting a broad
range of countries worldwide, appears to be unavoidable given that Sri
Lanka is deeply dependent on imports of energy and essential consumables
which have all substantially increased in cost at the source. In many
instances, prices have escalated tremendously. It is hoped that global
conditions would improve and help us to deal with this problem better in
the future. Sri Lanka's proactive managements of its international
relations has assisted in confronting the terrorist challenge in a
substantive manner. Importantly, it is to be remembered that Sri Lanka
is a party to 12 of the UN sponsored treaties in this area and is a
party to the SAARC Convention on Terrorism. Sri Lanka played an active
role in fashioning UN and SAARC approaches to terrorism. These treaties
which command wide participation bind their parties to a global
framework to counter different aspects of terrorism, including terrorist
fund raising. Sri Lanka has concluded bilateral agreements, including
with the US, Thailand, Myanmar, Laos, Cambodia on intelligence sharing
and security cooperation matters. Cooperation in intelligence sharing
has resulted in successful naval operations by our Navy and the
prosecution of LTTE operatives in other countries. Furthermore, the
constant efforts made by Sri Lanka has succeeded in having the LTTE
proscribed in the US, Canada, 27 countries of the European Union, India
etc. The LTTE fronts, the TRO and other charities, are proscribed in the
US and Canada. We hope that the EU will follow soon. This will have a
serious effect on LTTE fund raising efforts around the world. Some of
these countries, in particular the US, Canada, the UK, France, Italy and
Australia, have commenced judicial action against LTTE fundraisers,
gunrunners and extortionists and its front organizers. It is important
to note that terrorism is a scourge that has been condemned as an
unacceptable means of political expression by the international
community and should not be given a new lease of life through misguided
efforts to penalise the government.
The European Union has become Sri Lanka's major
trading partner. Bilateral trade exceeds US$ 3 billion affecting over
100,000 jobs directly. Against this background it is vitally important
for us to continue to enjoy the GSP + concession in the future. At
present we are making a concerted effort through our diplomatic missions
to maintain this concession.
The question has been asked whether Sri Lanka could
satisfy the conditions related to the extension of the GSP+ facility
when it comes up for review this year. We will continue our efforts to
convince our partners that we will be able to meet the conditions
underlying the granting of the GSP+ concession. I note that Sri Lanka is
a party to the key conventions that underpin the GSP+ facility in the
areas of human rights, the environment, labour and good governance. Sri
Lanka has performed exceptionally well and been commended in the areas
of the environment and labour enabling us to market our clothing under
the slogan "Garments without guilt". Many comments have been made
concerning Sri Lanka's compliance with the commitments undertaken under
the different human rights conventions, in particular the ICCPR. I note
that the Supreme Court has held that the ICCPR is justiciable under the
law of Sri Lanka and the convention has been adequately given effect
under our law. While the wider struggle against the brutal terrorist
challenge continues, in parallel, the government has taken a range of
measures to ensure that global human rights standards are met within the
country. The One-Judge Commission on Disappearances (the Tillakaratna
Commission) was appointed to investigate alleged disappearances. An
Independent Commission of Inquiry is investigating a number of high
profile incidents. It commenced public hearings in early March. Until
the end of last month, its inquiries were observed by a group of
International Independent Group of Eminent Persons. It is true that the
IIGEP has decided to conclude its work and has also made certain
comments. Both the Commission and the Attorney General's Department have
responded to these comments. Sri Lanka's military has been provided
extensive human rights training by the ICRC. Sri Lanka has also
continuously interacted with high level UN officials responsible for
different aspects of human rights and has not hesitated to invite them
to Sri Lanka.
Unfortunately, today Sri Lanka is being subjected to
the type of scrutiny to which even developed countries are not subject.
The standards that are being applied to us, for an in explicable reason,
appear to be the harshest. I cannot help but ask, how long is it since
that minorities were accorded equal treatment in many countries of the
developed West, including those who stand in judgement over us? This
question can be posed legitimately but I do not propose to pursue it.
What is important is to recognise that Sri Lanka, fighting the most
brutal terrorist organisation in the world, has made a genuine effort to
protect global human rights standards while protecting the vast mass of
its civilian population while maintaining the sovereignty and integrity
of the country.
It is also an unfortunate to observe the cynical
willingness of some to accept allegations made by organisations overtly
sympathetic to the LTTE and some NGOs, who have a vested interest in
continuing their operations in this tourist heaven. I wish that the
current tendency to preach from an exalted pulpit would, at least, be
limited to those who could boast of a gentler past.
Ladies and Gentlemen, in a globalised world it is not
unexpected that everything that we do and do not get highlighted,
sometimes disproportionately. Unfortunately, given the sophistication of
the propaganda machine of the LTTE, many real and perceived actions in
our performance get flashed across the world in real-time. Some of this
material gets picked up by NGOs and even governments. It is for us to
deal with these barrages of propaganda as effectively as possible. This
is our challenge. |
