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Sri Lanka's Policy Challenges within the International Dimension

“This event signifying revival of the electoral process is not to be looked upon as a single or isolated initiative. It falls into place as the beginning of a process, the trajectory of which has been defined with clear time frames. The next step is the elevation of the democratic process to a higher tier with the holding of Provincial Council elections in the entirety of the Eastern Province. Nominations are to be received next week, and the elections will be held on the 10th of May.”
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by Prof. G. L. Peiris

(March 30, London, Sri Lanka Guardian) Straddling the whole spectrum of Sri Lanka's policy in respect of its economy is a sharp change of focus from receipt of aid to relationships involving trade and investment. Sri Lanka's economy grew last year by approximately 6.5%. One of the most significant growth areas was the export sector. The improvement with regard to export performance in 2007, as compared with 2006, was about 14.%. While this was the case across the board, there were some specific industries which fared even better. Among these were apparel, electronics, rubber, wood products and gems and jewellery.

We have every reason to be proud of the performance of some Sri Lankan companies. Last year the award for the company which earned for the country the largest volume of foreign exchange from exports went to Loadstar. It is a matter of deep satisfaction to us that this company commands today more than 20% not of the regional market but of the global market in a particular type of heavy tyres. This is a remarkable example of the degree of success which can be achieved by imaginative techniques of value addition. This company, with an active Belgium partner, has been using high quality Sri Lankan latex and infusing advanced technology in order to turn out a product, the quality of which has resulted in an extensive demand in sophisticated markets in five Continents.

An equally impressive example of a company in the gem and jewellery sector is Blue Diamonds. This company has been importing diamonds from Antwerp and other sources, polishing, refining and cutting the stones in Sri Lanka, and exporting the value added product to international markets. Apart from the training and employment opportunities which this has afforded to a large number of Sri Lankan youth, the success of the company is indicated by the term 'Colombo Cut' which has now entered the vocabulary of the trade in many countries.

Outstanding success

The outstanding success story is, of course, the apparel sector. Thirty years ago no one imagined that Sri Lanka would achieve the status of an undisputed global leader in this field. With the termination of the Multi-Fibre Agreement and the end of the quota protection regime which this signified, many people believed that the garment industry in Sri Lanka, far from prospering, would not be able to survive at all.

What in fact happened, as the world sees today, is fundamentally different. This was due in large measure to the vision and sagacity of the leading companies in this field. They realized that the future lies not in the production of conveyor belt items, in respect of which our country could not realistically compete with far larger countries, but in a sustained emphasis on value added products which are intended for niche markets. It is through the pursuit of this phenomenally successful policy that Sri Lankan companies have been able in recent years to market their products to the world's leading buyers which are readily identifiable as household names - for example Victoria's Secret, Speedo and Ann Taylor in the United States and Marks & Spencer, TESCO and NEXT in the United Kingdom.

It is undeniable that a very powerful impetus has been provided for the growth of many of our industries, including the apparel sector, by the GSP+ arrangement, the benefit of which Sri Lanka enjoys today with the European Union. The effect of this arrangement is to provide, for 7200 categories of products from Sri Lanka, duty free access into the markets of the European Union. This arrangement came into being in 2005.

It is important to reflect at this time on the reasons why this concession was extended to Sri Lanka in the first instance. It must be remembered that Sri Lanka is the only country in Asia to enjoy this privilege. Its conferment on our country was principally due to the exemplary conditions which prevail in our garment factories. There was total compliance with labour standards. It is to Sri Lanka's credit that we never had sweat shops; and child labour, prison labour or forced labour of any kind was never used in our garment factories.

A renaissance in the rural areas

It was readily recognized that the garment factories had brought about a renaissance in the rural areas of the Island. More than any other single measure, the garment factories were instrumental in reducing appreciably the divide between the urban and the rural sectors. For the most part, the workers in garment factories were women who became the breadwinners of their families. At the moment about 350,000 persons are directly dependent on the garment industry for their employment, while the number indirectly dependent on it for employment is close on a million. If one takes into account the total number of their dependents, one is envisaging a segment of almost three million people.

The programme known as garments without guilt, which has been initiated and vigorously pursued by the Joint Apparel Association Forum (JAAF), indicates the extent to which the garment factories have gone beyond mandatory legal requirements to provide their workforce with an environment in every respect conducive to social mobility and wellbeing. Not only are facilities like meals and medical facilities provided, but the employees in these factories, in most cases situated in close proximity to their homes, are given training of a quality and relevance which opens up vistas of opportunity for social advancement which would have been considered inconceivable some years ago.

The extent of value addition achieved by the apparel sector today in our country is at a threshold as high as 55%. What makes this especially commendable is the fact that this has been achieved without in any way sacrificing or even diluting the most exacting standards in respect of preservation of the environment. This has received explicit recognition at the highest commercial level in countries of the European Union. We are greatly encouraged by the decision of Marks & Spencer to select Sri Lanka as the site of the world's first green apparel plant which is to be opened by Sir Stewart Rose, Chief Executive Officer of Marks & Spencer, in our country next month.

The continuity of the GSP+ arrangement is now coming up for review in Brussels later this year. On my way to the United Kingdom, I visited Brussels last week to have discussions with Mr. Peter Mandelson, Trade Commissioner of the EU and Mrs. Benita Ferrero-Waldener, Commissioner of the EU for External Relations. In these discussions I set out clearly the point of view of the Government of Sri Lanka. The purpose of the review being conducted in Brussels is to decide whether Sri Lanka should continue to have the benefit of GSP+ for a further three years. All 15 countries (eleven of which are in the Central American, Southern American and the Andean Region), which are current beneficiaries of the GSP+ scheme, are required to apply in writing before 31st October this year for extension of these tariff concessions.

The criteria underpinning this process are of a multiple nature. Apart from the technical trade aspects, there are criteria of a more general nature. One of the principal requirements is that the beneficiary countries should furnish proof of their ratification and implementation of 27 international covenants which fall into four basic categories - human rights, labour issues, governance and the environment. Sri Lanka has enacted legislation which constitutes total compliance with this requirement postulated by the EU.

Human rights issues

In London, I have had detailed discussions with Ministers of the Government as well as with leading personalities in the Opposition regarding the human rights issues. Contextual factors are of overriding importance in this regard. It must be remembered at all times that Sri Lanka has a democratic government grappling with a ruthless terrorist organization. I do not have to emphasize to a British audience the vulnerability of a democratic government in these circumstances. The Government of Sri Lanka, in its response to the challenge of terrorism, is rightly constrained and constricted by a whole range of democratic principles, values and procedures which in no way inhibit the terrorist organization. This reality is poignantly underlined by the words which were addressed to Margaret Thatcher by the IRA in the immediate aftermath of the Brighton bombing. The IRA told Prime Minister Thatcher: 'Madam, it is we who choose the time, the place and the opportunity. You have to be lucky every time. We have to be lucky only once."

It is of crucial importance, in the interest of fairness, that governments and the public in the Western world should be aware of the excruciatingly difficult dilemmas with which democratic governments in our region have necessarily to contend. At the core of policy decisions which they are required to make is a practical and effective balance between freedom and security rights are hardly uncongenial to our political culture. One of the central characteristics of Sri Lanka's heritage and cultural traditions is that we have evolved over the centuries a caring and compassionate society which is deeply ingrained in the national consciousness of our people.

The regrettable reality, however, is that the government of Sri Lanka, through sheer necessity and certainly not by choice, has to operate in an environment in which schools, places of worship, markets and public transport are constantly in need of protection against attacks which are intended to destroy the lives of innocent persons. Adequate appreciation of the complexity of this situation is an essential prerequisite for any objective assessment or evaluation.

Credit must be given to the Government of Sri Lanka for its legitimate achievements in the most challenging situations. Pre-eminent amongst the government's achievements was its ability to conclude local government elections in the Eastern Province of the island after a period of almost a decade and a half, when these elections could not be held because of persistent terrorist activity. 101 members of local government institutions were freely elected two weeks ago to nine local bodies. By any dispassionate standard, this was no mean achievement. It called for considerable political courage and resolve. Independent organizations which maintained a continuous presence in the area throughout the election campaign have concluded that the elections were free and fair. The government's action, after clearing the Eastern Province by appropriate military means, has made it possible for the people of the area, after so long an interval, to exercise the most basic of all human freedoms - the right to exercise their franchise.

Revival of the electoral process

This event signifying revival of the electoral process is not to be looked upon as a single or isolated initiative. It falls into place as the beginning of a process, the trajectory of which has been defined with clear time frames. The next step is the elevation of the democratic process to a higher tier with the holding of Provincial Council elections in the entirety of the Eastern Province. Nominations are to be received next week, and the elections will be held on the 10th of May.

This resuscitation of democratic structures is accompanied by a multi faceted programme directed towards invigorating the economy of the Eastern Province. Abundant resources are being utilized for the development of highways, irrigation systems, health and education facilities and supporting activity in the agriculture, fisheries, tourism and industry sectors. The private sector has responded magnificently to the government call to participate fully in these initiatives. The apparel sector, for instance, has announced plans to open three large garment factories in the area shortly.

The government sees this as a unique opportunity to demonstrate to the people of a long afflicted area the reality of the peace dividend which will enrich their lives and transform their livelihood. This is a convincing demonstration of the pragmatic value of the peace initiative which is being carried forward by the government in a manner which will make the maximum impact on wellbeing of the people.

What we require at this point from the audience which I have the privilege to address on this occasion is empathy and understanding in respect of these developments which are taking place in my country as I speak to you today. Any decision to withhold GSP+ from Sri Lanka will result in the dissemination of poverty, adversity and deprivation on a scale which cannot but impose intolerable strain on the social fabric. Nothing could be more inimical than this for prospects relating to the advent of peace.

( Address Delivered by Professor G. L. Peiris, Minister of Export Development and International Trade at Asia House, London)
- Sri Lanka Guardian

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