SRI LANKA: TRADE MINISTER WANTS TIFA TALKS

UNCLAS SECTION 01 OF 02 COLOMBO 001606 SIPDIS SENSITIVE, SIPDIS STATE FOR SCA/INS AND EB/TPP/BTA/ANA; STATE PASS TO USTR FOR HIRSH AND ANAND; COMMERCE FOR E YESIN AND B LOPP; TREASURY FOR S CHUN; MCC FOR D NASSIRY AND E BURKE E.O 12958: N/A TAGS: ECON EINV ETRD PREL CE SUBJECT: SRI LANKA: TRADE MINISTER WANTS TIFA TALKS ¶1. (SBU) Summary and comment: Trade Minister Jeyaraj Fernandopulle told Ambassador Blake during their introductory meeting that he would welcome a round of Trade and Investment Framework Agreement (TIFA) talks. However, since Fernandopulle did not inspire confidence that he would be ready to act on lowering Sri Lankan trade barriers, post recommends post develop with USTR a request for specific market opening commitments from the GOSL before we schedule the TIFA talks. End summary and comment. The Political Trade Minister -------------- ¶2. (SBU) Ambassador Blake called on triple-hatted Minister Jeyaraj Fernandopulle September 29 to discuss trade and politics. Fernandopulle is Minister of Trade, Commerce, Consumer Affairs, and Marketing Development; he is also Minister of Highways; finally, he is the ruling Sri Lanka Freedom Party's (SLFP) chief whip in Parliament. He received the Ambassador at his office in Parliament, wearing the long white tunic shirt preferred by many Sri Lankan MPs. A television in the office tuned to the Sri Lankan equivalent of C-SPAN was broadcasting debate from the nearby chamber. ¶3. (SBU) The Ambassador began by expressing his desire to promote trade and investment between Sri Lanka and the United States. With this, Fernandopulle immediately interjected that Sri Lanka was eager to obtain duty free status for garment exports to the United States as a tsunami relief measure. When the Ambassador replied that a bill in Congress called for this but had not progressed recently, Fernandopulle raised the Millennium Challenge Account, asking if Sri Lanka's grant was delayed. The Ambassador explained that a team from the Millennium Challenge Corporation had just been in Colombo to inform the government that the irrigation component of Sri Lanka's compact proposal would require a longer review period before a compact might be concluded. Ready for TIFA Talks, but not Aware of Trade Barriers -------------- -------------- ¶4. (SBU) The Ambassador then raised the bilateral Trade and Investment Framework Agreement (TIFA),saying that he and Deputy U.S. Trade Representative Karan Bhatia had agreed in Washington that it would be worth scheduling a new round of TIFA talks only if Sri Lanka was ready to reduce trade barriers. "Are you?" the Ambassador asked the Minister. When Fernandopulle did not reply directly, the Ambassador pointed out that bilateral trade was ten-to-one in Sri Lanka's favor, and repeated his question. Fernandopulle replied "yes," but said the problem was not trade barriers but "the time factor" and "prices." It was hard to get ships from the East Coast of the U.S. to Sri Lanka, and, he seemed to suggest, the price of U.S. goods was high. He then asked what barriers the Ambassador was referring to. ¶5. (SBU) Ambassador Blake noted for example that Sri Lanka's new law on labeling of genetically modified food might soon impede export of safe and widely used American food products. The Minister was unfamiliar with the law, but urged Econoff to meet with the Director General of the Commerce Department to discuss that and any other barriers to trade. A similar exchange ensued with regard to pending pharmaceutical regulations; again the Minister was not eager to discuss specifics. He noted though that Sri Lanka mostly imported medicines from India and Pakistan. Fernandopulle then said he had spoken to American businessmen about increasing U.S. exports of chicken and beef to Sri Lanka, whose Buddhists preferred not to slaughter livestock. "If there are any barriers to importing chicken and beef, we will remove them," the Minister averred. (Note: Sri Lanka has long had a complete ban on imports of chicken, whole and in parts, to protect domestic producers.) ¶6. (SBU) On the timing of TIFA talks, Ambassador Blake said that Bhatia would be in India in late November, making early December a good time for talks in Sri Lanka. The Ambassador said he was aware that the parliamentary budget process would be taking place at that time, and asked if that would prevent Fernandopulle from meeting then. The Minister assured the Ambassador that he could be available. Politics: The Rebels and the Opposition -------------- ¶7. (SBU) Turning to politics, Minister Fernandopulle mentioned that COLOMBO 00001606 002 OF 002 he had participated in the February talks between the government and the Tamil Tigers in Geneva. He then informed the Ambassador that he had quietly been to see the LTTE in April, explaining that he himself was a Tamil and a Catholic whose family had migrated from Tamil Nadu long ago. His opinion of the conflict was that "we must talk - fighting is not the solution." Fernandopulle said the Tigers were weak now, and that moral support from the United States, in the form of recent arrests, had contributed to their weakness. He predicted that the Tigers might offer to return to the 2002 Ceasefire Agreement but would ask for the town of Sampur back as a condition. ¶8. (SBU) Fernandopulle also said that he was a member of the SLFP committee currently discussing a possible unity government with the opposition United National Party (UNP). His recommendation to the President, however, was not to trust the UNP - it might one day try to drop the SLFP and form a government of its own. Also, the JVP would respond to an SLFP-UNP coalition by making it impossible for the government to run. Comment -------------- ¶9. (SBU) Minister Fernandopulle is a character. He is by no means a free trader, though, so getting him to deliver more than non sequiturs about trade barriers will be a challenge. He does seem to value U.S. engagement with Sri Lanka though, so this may be an angle we should pursue in TIFA talks, perhaps by asking for specific market-opening commitments as a precondition to talks. Post will work with Department and USTR on ideas for what forms of market opening we should seek. BLAKE