Development Strategies and International Trade Minister Malik Samarawickrema while requesting the opposition to change their narrow minded thinking, yesterday reiterated that the Free Trade Agreement with Singapore has been very cleverly negotiated by the government ensuring more dividends for the country and its posterity.
The Minister also requested the Opposition members to shed narrow minded thinking and join hands with the government to ensure better future for the younger generation.
“Unlike other FTAs signed by Singapore with other countries where the level of liberalization is more than 90% of tariff lines, in the FTA with Sri Lanka, we limited it to 80%. So, 20% of tariff lines or 1,487 items, were kept protected because of a concern on domestic industries and revenue,” he stressed.
Joining the Parliamentary debate on the Sri Lanka-Singapore Free Trade Agreement,(SLSFTA), Minister Samarawickrama said that Sri Lanka has received a proposal from Singapore for investment amounting to 14.8 billion Dollars in an oil refinery for export of petroleum products in just the past two and a half months since the agreement came into effect.
Excerpts from the speech:
“The Sri Lanka-Singapore FTA provides a binding commitment and framework for bilateral trade and investment, which we did not have earlier. This will encourage much needed investment into our country. It is important to understand that not every FTA is meant to “balance trade between two countries” or “bridge the bilateral trade deficit”.
“Sri Lanka has trade surpluses with some countries and deficits with other countries. Sri Lanka would need to sign a range of FTAs aimed at different purposes–some FTAs aimed at boosting exports (to gain new and preferential market access) as well as give domestic producers access to lower cost inputs; while other FTAs are aimed at leveraging on the trade-investment nexus.
“The first allegation is made is that the signing of this FTA has not received Cabinet approval. Hon. Speaker, for your information, the Cabinet of Ministers was first updated via an Interim Report in August 2017 on the progress, including the areas and extent of liberalization and the status of the consultative process carried out with stakeholders. On 21 st December 2017, a Cabinet paper was submitted by me containing the draft agreement.
“Based on that, positive observations were made by His Excellency the President and 14 other Cabinet ministers by 9 th January 2018. Taking into account these observations, a revised agreement was submitted to the Cabinet for approval. At the Cabinet meeting of 16th January, Cabinet approved the agreement submitted and granted approval for me to sign it during the visit of the Singapore Prime Minister on January 23. Furthermore, I would like to inform this House that the agreement came into force on 1 st of May after the Anti-Dumping and Safeguard Measures Acts were passed in Parliament.
“Recently at a press conference Minister S B Dissanayake has stated that he is against the FTA. However, he is one of the 14 Cabinet Ministers who have sent in writing that he has NO objections to the signing and Parliamentary Debate on SLSFTA on July 17, 2018.
“Implementation of the Singapore FTA! His exact words, in the letter signed by him are:“Ihatha yojanawa kriyathmaka kereema sambandayen magey virodhathawayak nomatha.”
“Agreeing in Cabinet then. But playing narrow political games now. This is the hypocrisy of members of the opposition!
Another argument is that we did this without consultations. I can responsibly state to the members of this House that we frequently kept stakeholders informed of the status of the negotiations and possible commitments that were to be undertaken. Over the 18 months, about 20 consultation sessions were held with a wide range of stakeholders including business chambers, trade associations, and professional bodies.
“Another assertion is that we can never amend the agreement – this is not true.
“Article 17.10 of the Agreement provides for amendments to be made to the agreement. Furthermore, under article 17.1 there is a high-level committee established to monitor, review and supervise the implementation of the Agreement as well as to recommend amendments.
“The first meeting of this committee will be held within the first year and thereafter at regular intervals and take up issues relating to the agreement that either party would have.
“Article 17.12 of the Agreement provides for termination of the agreement by either party by giving notice, and it will be effective one year from the date of notification.
“There has been much debate on the liberalization of services. Let me be very clear – as we have repeated time and again, we are NOT opening up to any country the independent movement of persons.
“Singapore FTA, there can be services workers only if they are part of a company here – so it is always linked to investment in Sri Lanka. Even then, we have restricted it to senior management. Such senior managers will initially be issued visa for 2 years and will get it only for a maximum of 5 years. The option of renewing this visa is ours. To be eligible in the first place, that worker should have been employed in the relevant Singaporean company for at least one year and should have 5 years industry or professional experience. Above all this, our country’s immigration laws will always apply and there is no exemption from that.
“Look at all the conditions we have built in to this agreement! So for anyone to say we have blindly opened up is irresponsible and is propagating lies.
“Another argument is that non-nationals of Singapore can take undue advantage of the FTA. This is again a baseless claim. The SLSFTA Singapore defines a “National” as a citizen of Singapore or a Permanent Resident of Singapore. Obtaining PR in Singapore is not easy – it is a long and stringent process, and more stringent requirements in recent years. It is only this cohort of Singapore Nationals who are eligible to enter under the FTA, and all other nationalities are excluded from the FTA.
“There have also been ridiculous allegations that this agreement allows for paddy to be freely imported – that is simply not the case. Under the ‘Rules of Origin’ chapter, agricultural produce like paddy, wheat or meat - it must be wholly obtained in Singapore. In the case of meat – the animals must be born and raised in Singapore; in the case of paddy, spices, fruits and vegetable it must be wholly grown and harvested in Singapore to be eligible for tariff concessions – and remember Singapore doesn’t have a single paddy field! Furthermore, it is mentioned that Pakistan and Thailand rice can be imported through Singapore. This is not allowed under the Rules of Origin criteria. In any case, rice is kept in the Negative List of the Agreement. On other process or manufactured products too, those products should have 35 percent value addition or sufficient working or processing undergone in Singapore. Therefore simple diversion of Parliamentary Debate on SLSFTA on 17 July 2018.
“Another frequently cited issue is about manpower agencies. Even under the prevailing laws and regulations of our land, a Singaporean recruitment services company could set up a company in Sri Lanka. Sri Lanka’s commitment in this sector does not include Mode 4 in any capacity – it is completely unbound. Unlike in other Mode 4 commitments, there is no reference even for senior management personnel for such recruitment companies, under this services sub-sector. A Singaporean recruitment company can set up an office in Sri Lanka, as is already allowed in the current legal structure, but it cannot recruit personnel from abroad since mode 4 is unbound or no commitment taken to open. Any such recruitment company that wishes to hire work from overseas has to go through the regular processes of immigration, line ministry approvals – the
current laws and regulations prevail, and the FTA creates no new liberalisation in this regard.
“It has also been alleged – very irresponsibly - that the FTA will pave the way for waste products to be dumped in Sri Lanka. Again, this is totally false. The many items called ‘waste products’ are already under the duty- free list and have been included in the India-Sri Lanka and Pakistan-Sri Lanka Agreements and there are no evidence to suggest that these
products are coming in to the country in any harmful manner. Even under the Singapore FTA, these products cannot just come into the country and have to go through the regular import licensing requirements and standards and regulations applicable to protect plant, human and animal life. Furthermore, Sri Lanka rights under article 20 of GATT /1994 of WTO to take measures to protect human animal or plant life is ensured by inclusion of article 17.7 on General Exemption under chapter 17 of the Agreement. Therefore, Sri Lanka is free to introduce environmental measures to protect human, animal or plant life.
“Furthermore our rights under International environmental conventions that Sri Lanka is Signatory to such as Basel More broadly, let me reiterate that this FTA with Singapore has been very cleverly negotiated by us. Unlike other FTAs signed by Singapore with other countries where the level of liberalization is more than 90% of tariff lines, in the FTA with Sri Lanka, we limited it to 80%. So, 20% of tariff lines or 1,487 items, were kept protected because of a concern on domestic industries and revenue. Items like footwear, confectionery and many other sensitive items have been kept out of the agreement. The liberalisation programme under this FTA has been carefully designed to have the least impact on domestic industry and revenue collection. We have included all revenue sensitive items in the negative list of items which will not be subject to removal of tariff. Therefore, 97.8% revenue from customs duty is protected. Our tariff liberalization will take place over a period of 12-15 years!
“In fact, the revenue earned through tariffs on good imported from Singapore last year was 35 Billion rupees. The revenue loss for over the next fifteen years due to the FTA is only 733 Million rupees – which when annualized, on average, is just 51 Million rupees. That is just 0.14% per year! So anyone who claims the Singapore FTA causes revenue loss to the Government cannot do basic arithmetic!
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