Minister of Development Strategies and International Trade, Malik Samarawickrama last week defiantly countered criticism from a group of professionals and trade unions representatives for signing the Singapore-Sri Lanka Free Trade Agreement (SLSFTA). Addressing a forum organised by the Organisation of Professional Associations of Sri Lanka (OPA), the Minister explained that the pact, which became operational from May 1, 2018, was not signed in secret but was the culmination of a transparent and inclusive process.
“We had eight rounds of negotiations and about 20 consultations with a wide range of stakeholders including chambers, industry associations, professional associations, etc. We also kept the Cabinet informed regularly after every round of negotiations and received their observations,” the Minister said.
According to him, the SLSFTA negotiations which commenced on July 7, 2016 and concluded during November 13-14, 2017, were conducted by the Cabinet-approved National Trade Negotiation Committee with 12 of its subcommittees, being chaired by relevant public sector institutions.
But, the OPA - the umbrella organisation for 48 professional associations representing 33 professions and over 50,000 professionals in the country – complained that the association was left out in the consultation process.
“Unfortunately, the OPA was not involved which I accept is a mistake. Going forward, we will ensure that OPA is involved at every stage of the consultations,” Minister Samarawickrema assured.
Professional services
Speaking on the clause of liberalisation of professional services, the Minister said that Mode 4 – which deals with movement of natural persons, has not been allowed since the SLSFTA bars movement of independent professionals. However, he explained that Sri Lanka has made limited commitment to allow business visitors and intra-corporate transferees in a few sectors with a motive of supporting measures to attract foreign investments to Sri Lanka.
“Any company that makes a significant investment overseas would like to have its senior management and the technical staff to accompany that investment to ensure that the investment provides the desired results. Accordingly, in selected sectors, Sri Lanka has made commitments for intra-corporate transferees from senior management.”
Therefore, the Minister claimed that the commitment to trade are limited to the existing level of openness in Sri Lanka’s legal and regulatory framework and the agreement does not offer new markets in this regard.
Challenging the view of the Minister that Mode 4 has been disallowed, a participant, who spoke during question time, opined that if the SLSFTA is read with a holistic view, this is not the case. The speaker claimed that for example, under the Manpower Companies, 87201, 87203, 87204 and 87205 are liberalised.
“Apart from that, under government procurement construction including services is liberalised. And then under investments, turnkey is liberalised, he said.
Noting that liberalisation of turnkey meant liberalisation of ‘design and build’, he questioned how the Minister could claim professionals won’t be coming given that ‘Turnkey’ definition does not stipulate a minimum investment.
“This shows that any company can come in the guise of a turnkey investor to even build a single house in this country and bring professionals along with them. Your interpretation looking at one angle maybe right, but if you take the whole agreement from one corner to other corner, there are so many loopholes,” he alleged.
In response, Minister Samarawickrema said that if the agreement was in anyway harmful to Sri Lanka, it would not have been allowed to be passed through either the Cabinet or the President. He also explained that Sri Lanka has made commitments for intra-corporate transferees only for senior management along with a clear definition.
“These senior management categories are defined as managers, executives, and specialists. Each category has a clear definition in the agreement. For example, an executive is an employee who is either a director of the company or receives only limited supervision from the general body of shareholders,” the Minister noted.
Therefore, he explained that intra-corporate transferees of defined senior management linked to investment are allowed in sectors such as IT, financial services, sub sectors of maritime services (repair and rental services), construction industry (where a Sri Lankan company would have a majority ownership), hotels and restaurants, travel agency (where the majority ownership would be with a Sri Lankan company), advertising, technical testing services and sports events organisation.
“Even these senior management intra-corporate transferees are subject to all immigrations laws and regulations. They must also have at least 5 years of experience in the relevant industry or professional field,” the Minister pointed out.
He further added that given the stringent definitions of senior management categories within intra-corporate transferees, it is likely that the Singaporean companies will only transfer the most required and important categories of employees to a Sri Lankan branch/subsidiary.
New Trade Policy
During discussions at the forum, Minister Samarawickrema was also questioned on the legitimacy of the new Trade Policy. The Minister clarified the policy had in fact received Cabinet approval in August 2017.
“Some were saying this trade policy is a fake document but it is certainly not so,” said Samarawickrema at the forum also attended by the Secretary to the Ministry, Chandani Wijewardena and Managing Director for the Agency for Development, Mangala Yapa.
According to him, the policy was prepared by two committees; a representative committee with the participation of several representatives of government agencies and later brought to a focused paper by a group of experts headed by Economic Advisor to President Dr. Sarath Rajapathirana. It was also made publicly available for comments, the Minister said.
Allegations were also leveled that prior to discussions on the Singapore FTA, the Sri Lankan negotiators were sent to Singapore to obtain training on how to negotiate an agreement. Denying such claims, Minister Samarawickrema said that the specific visit was intended for initial discussions on the FTA itself and not for training purposes.
Responding to remarks that the Minister had expedited the signing without obtaining proper approval and sticking to procedures, the Minister said he obtained the authorisation from the Cabinet and also followed every instruction given by the Attorney General.
“The mere fact that the President has already appointed a committee to look into the agreement arouses suspicions in the minds of the general public. If that was a good one, why appoint another committee to study it,” another participant questioned.
In response, the Minister said while the President has appointed a committee to study the FTA, he is in fact willing to consider revisions, if somebody could point out a specific clause to say it is detrimental.
“We can discuss with the Singaporeans because there is a revision process and we can make the necessary amendments. So far nobody has pointed out such a clause,” the Minister added.