Public Commission on National Policy for Int’l Trade presents Interim Report to President


GMOA President, Dr. Anuruddha Padeniya, explaining a point to the President at the poster and audio visual exhibition on ‘Key Elements of an International Trade Policy’, held at the OPA premises.

The Public Commission on National Policy for International Trade appointed by the Professionals’ National Front (PNF) presented their interim report to President Maithripala Sirisena at a ceremony on February 4 at the Organization of Professional Associations (OPA).

A poster and audio visual exhibition depicting the key elements of an International Trade Policy themed "True independence through policy development" was organized by the PNF and held concurrently.

Many eminent personalities, politicians, professionals, business leaders and the public attended the exhibition.

The President was appreciative of the PNF’s efforts towards establishing a proper National Policy for International Trade as Sri Lanka strives to be a key player in the regional and global knowledge and trade economy.

Sri Lanka became an independent nation in 1948, 71 years ago. However, Sri Lankan citizens are still not privileged to be governed by national policies. Hence, the political leadership continues to govern in an arbitrary manner, which leads to many irregularities, discrepancies, discrimination and corruption.

Professionals decided to fill this vacuum by gathering under the Professionals’ National Front (PNF). When ‘Trade in Service’ was entertained under bilateral trade agreements without adopting the correct procedure, the PNF resisted it, and urged that a correct policy-driven path be followed. They also highlighted the deficiencies and dangers.

Most importantly, the PNF published a booklet on ‘Rational approach to trade agreement’, which was endorsed by local as well as international authorities, including the World Trade Organization.

Despite the attempts, the Ministry of Development Strategies and International Trade (MODSIT) and other relevant authorities proceeded in a manner detrimental to Sri Lanka. In this scenario, the PNF decided to establish a public commission on National Policy for International Trade.

The public commission appointed by the PNF comprised eminent personalities, Deshamanaya Prof. W. D. Lakshman and Rear Admiral Palitha Fernando, PC, as Co-Chairmen, Dr. Anula Wijesundere, P. Dayasiri Fernando, R. P. L. Weerasinghe and Dr Bandula Perera as Members and K. A. Thilakarathne as Member/Secretary. Their voluntary contribution towards this, as well as the voluntary submissions made by over 80 resource persons, were appreciated by officials of the PNF.

Summary of the findings and recommendations of the commission:

(i) Sri Lanka does not have an institutionalized procedure stipulated for pursuance of international trade agreements; a serious weakness, which apparently has led to haphazard initiatives without proper appraisal and consultation. It is therefore recommended that a systematic procedure be instituted by statute with regard to drafting, developing, negotiating, approving, implementing, reviewing and administering international trade agreements.

(ii) The following essential imperatives be stipulated through the above-mentioned legislation that would be institutionalized:

(a) That a strategically developed and a widely consulted Foreign Trade Policy, with proper understanding as to what trade is and what it can do and cannot, and how to safeguard national interests and domestic industries, and with a long-term development vision for the country, be adopted and approved by the parliament, without which bilateral or multilateral trade negotiations should not be pursued;

(b) That a proper understanding of what trade means, and what trade could and could not result, is imperative before contemplating any trade liberalization effort.

(c) That a public consultative procedure be stipulated by statute, which should elaborate how public comments are to be received in drafting /improving the terms of such agreements;

(d) That a Feasibility Assessment, elaborating what opportunities and threats the country may face through any such trade liberalization agreement, be made a legal prerequisite for any Government or an Agency thereof to proceed with ratification process of a trade agreement;

(e) That domestic quality assurance and screening procedure be laid down and institutionalized, prior to opening the economy for tariff liberalization.

(f) That it be made mandatory for the Government to conduct trade negotiation process professionally and transparently. The procedure adopted towards drafting terms and conditions and its details shall be made public information under the Right to Information Act.

(g) That Parliamentary approval for any such agreement and its individual clauses be made an essential prerequisite prior to any action be taken with regard to implementation of an international trade agreement; and if that agreement earmarks any national commitments stepping beyond a given parliamentary tenure or accepting any judicial authority beyond the Sri Lankan judicial system, a 2/3rd majority in the parliament and a referendum in its favour be made necessary for such agreements to be valid,

(h) That no liberalization be authorized without leaving open the avenues to reverse it unilaterally. Termination Clauses shall be an integral and obligatory part of any international trade agreement

(i) That there should be a mechanism to hold those who are associated with signing of trade agreements, including the relevant officials, responsible and accountable for the outcomes of such agreements

(j) That the present Sri Lankan legal framework should developed to international standards or at least to match counterpart legal system

(iii) The following strategies also are strongly recommended for the government to adhere in relation to international trade and investment, with or without trade agreements:

(a) If any concessions are granted to foreign firms, Sri Lankan enterprises in the same domain shall also be privileged for all those concessions. Never should it be allowed to discriminate against local producers.

(b) Segments and degrees of liberalization that may be accorded through a trade agreement shall be debated in detail, while entertaining opinions from industry stake-holders. No liberalization shall be accorded without serious and practicable reciprocity, as well as without taking measures to prevent economic-social-environmental negative implications

(c) All national and sectoral policies (including economic policies and trade policies in particular) should promote national inventions, innovations and technological advancements. For this, ‘learning and acquiring skills by doing’ is of paramount importance.

(d) Economic multiplier effect is very important vis-à-vis rapid economic development. Thus, policies and regulatory provisions should be re-oriented and geared to ensure that local enterprise and investors are given priority when implementing national economic and development activities. Preference shall be given to local industrialists, entrepreneurs and businessmen within the public sector procurement procedure also so that expenditure on such contracts would be ploughed back into our national economy. No trade agreement shall become obstacle towards such a national preference policy.

(e) Sri Lanka’s strategic industrial niches shall not be made open to foreigners with or without trade agreements.

(f) There shall be a mandatory mechanism to assess human resource shortages and urgent steps shall be taken to develop such human resource skills in-house to address the unemployment issues and the developmental goals

(g) Socio-political and cultural elements have to be seriously taken into account if liberalization of labour inflow is considered. If any specific skill is needed, it is always advisable to have limited inflows on restricted and revocable visas, rather than blanket opening through trade agreements

(h) Environmental impacts and safety impacts are paramount and should not be ignored by policy- makers. Mechanisms shall be laid down to check and screen which types, qualities and capabilities should come in and which should not; and it is not recommended to open the economy for liberalized imports and labour inflows until such mechanisms are properly in place.

(i) Transparency in governmental interventions and policies and adoption of a clearly defined participatory process in policy formulation and/or drafting international agreements will help avoid conflicts among various stakeholders, while it will minimize the possibility of nationally harmful effects of such interventions and agreements entered into.

(j) Constitutional provision should be made to the effect that no Government shall have authority to impoverish the people and their future generations by alienating public assets, including land and strategic locations, without obtaining approval Parliament (with special majority), and a Referendum held for such purpose.

(iv) Even if liberalization of tariff on a particular set of domains is thought necessary, it cannot be static for that sector for all times. Those sectors that require protection from time to time evolve dynamically. Therefore, the country should retain the power and authority to impose, lift or moderate import duties and restrictions, their scope and depth. Since international trade agreements by nature becomes rigid, unilateral liberalization appears less damaging and more flexible compared to liberalization through bilateral or multilateral agreements, unless clear exit clauses can be instituted through specific provisions in such agreements.

(v) Trade liberalization is no panacea for all economic ills. Besides, bilateral liberalization could prove to be futile as no trade agreement prevents parties enter into similar agreements with other countries, when a spectrum of competing nations sign trade agreements with an intended large market, any preferential advantage a bilateral agreement may have given to a country in the first instance may be lost as all other competitors also would gain the same advantage through their own agreements. Ultimately, bilateral trade agreements amount to a contractual trap with no advantage but obligations only, in the long run.

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