US embassy cable - 03COLOMBO1856

UNCLAS SECTION 01 OF 02 COLOMBO 001856 
 
SIPDIS 
 
DEPT PASS TO USTR; COMMERCE FOR ARI BENAISSA; TREASURY FOR ROY 
ADKINS 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: ECON, ETRD, PREL, CE, ECONOMICS 
SUBJECT: DUSTR MEETING WITH SRI LANKAN PRESIDENTIAL ADVISOR 
KADIRGAMAR 
 
1.  (U) THIS TELEGRAM IS SENSITIVE BUT UNCLASSIFIED; PLEASE 
HANDLE ACCORDINGLY. 
 
2. (SBU) Summary: During a meeting with Presidential Advisor 
Lakshman Kadirgamar, a senior opposition MP and former Foreign 
Minister, DUSTR Shiner outlined her TIFA talks with the GSL and 
her discussions with businesses and members of civil society. 
Kadirgamar appeared to support the GSL's desire for an FTA with 
the United States, and was pleased that Ambassador Shiner 
reached out to a broad cross section of Sri Lankan society on 
opportunities to expand and diversify bilateral trade during 
her visit.  However, he made it clear that the Peoples' 
Alliance's continued support for any future FTA would depend on 
regular consultations with opposition leaders by GSL and U.S. 
officials.  If the United States and Sri Lanka agree to pursue 
an FTA such consultations could serve more than political ends. 
For example, a better understanding of tools the United States 
has used to address agriculture sensitivities in FTAs helped 
ally fears Kadirgamar expressed about the impact of free trade 
on Sri Lankan farmers.  End Summary. 
 
3.  (SBU) DUSTR Josette Shiner met with former Sri Lankan 
Foreign Minister and presidential advisor Lakshman Kadirgamar 
at his residence on October 14, following the third US-Sri 
Lanka Trade and Investment Framework Agreement Joint Council 
Talks.  DUSTR Shiner met with Kadirgamar in lieu of a meeting 
with President Kumarantunga, who was out of the country.  The 
discussion revolved around the US FTA vetting process, Sri 
Lanka's capacity to implement a potential FTA and its 
components and Kadirgamar's interest in ensuring that 
sufficient information about the value and content of an FTA is 
presented to civil society. 
 
4.  (SBU) DUSTR Shiner briefed Kadirgamar on the TIFA talks and 
her meeting with representatives from the business community 
and civil society.  Kadirgamar asked how civil society viewed 
the FTA process, as he perceived a lack of information among 
the public.  Shiner said she had met many groups, including 
labor, NGOs, think tanks and business groups.  Many indicated 
an FTA was necessary and that Sri Lanka's only hope for future 
economic expansion was to embrace globalization and trade 
liberalization. 
 
5. (SBU) Kadirgamar then asked what criteria the US used to 
judge the worthiness of an FTA partner.  He was concerned that 
Sri Lanka's smaller market might make it seem less attractive 
than it is.  Ambassador Lunstead pointed out that small 
populations did not necessarily mean a small trading partner. 
He cited the example of Malaysia, which has a similar sized 
population to Sri Lanka (roughly 20 million people), but is the 
US's 12th largest trading partner.  DUSTR expanded on this 
point by indicating that Sri Lanka is valued for more than just 
the domestic market, but also as a potential gateway to South 
Asia and beyond. 
 
6. (SBU) Kadirgamar said he understood there were some concerns 
about the agriculture sector and its prognosis under an FTA. 
In particular, he thought there was a fear that small farmers 
would be displaced.  Farming is the "psyche of the nation" and 
therefore was a particularly sensitive topic (Note: Major crops 
in Sri Lanka include tea, coconuts, rice, chilies and onions. 
End Note).  DUSTR Shiner assured Kadirgamar the US would work 
with the GSL to enhance understanding of the FTA process and 
its benefits if it proved feasible to move forward with 
negotiations.  Agriculture is generally an extremely sensitive 
area and she explained provisions in the Singapore and Chile 
FTAs to alleviate the shocks that could accompany reduction in 
tariffs.  The US also considers capacity building 
opportunities, in an effort to promote "win-win" solutions. 
 
7. (SBU) Kadirgamar then turned the conversation to IPR (note: 
Kadirgamar has considerable experience and expertise in the IPR 
field; he has worked for WIPO and continues to consult with the 
organization. End note).  DUSTR Shiner noted that IPR 
enforcement was a challenge in all countries, including the US. 
Sri Lanka has the opportunity to put a regime in place and 
establish a working group that could address ongoing concerns 
and problems.  Kadirgamar then referred to the recently passed 
IPR legislation, complaining that the GSL had submitted the 
bill for a vote without consulting with the opposition.  This 
led to a Supreme Court challenge and delay in implementation of 
the legislation. 
 
8. (SBU) AUSTR Wills asked if Sri Lanka could establish a legal 
framework that would meet a demanding international standard 
and also enforce it.  Kadirgamar said the legislation was not a 
problem, but that enforcement remains a challenge throughout 
South Asia.  He then offered his personal views on several 
countries, including China, which had good laws but poor 
enforcement and Singapore, which did not implement legislation 
until it had a structure in place to enforce the law. 
 
9. (SBU) Whether there is an FTA or not, DUSTR Shiner urged 
that Sri Lanka look at the example of Jordan, which has adopted 
the philosophy that it can attract more money and investment as 
an IPR protector than violator.  This has led to outsourcing of 
pharmaceutical processing, IT processes and other benefits. 
Econoff noted that Sri Lanka faced a "perfect timing" 
situation, with new legislation, an opportunity to put key 
enforcement regimes in place, and the interest of the 
international community and the industry to help build 
capacity.  DUSTR Shiner argued that countries that got out in 
front on IPR enforcement would have a strong competitive 
advantage, particularly in the knowledge and services sectors. 
 
10. (SBU) DUSTR Shiner asked Kadirgamar, who is Tamil, about 
the views of Sri Lanka's Tamil population with regard to the 
US-Sri Lanka relationship.  Kadirgamar said Tamils were a 
pragmatic, enterprising people who would see value to the 
relationship. A continuation of the peace process would 
continue to open up the Tamil areas in the north and east and 
allow more Tamils to understand the problems of the system they 
are under (note: referring to LTTE control of portions of the 
north and east. End note). 
 
11. (SBU) In closing, Kadirgamar suggested a continued dialogue 
with civil society, casting a wide net to gain as much of a 
cross-section of society as possible.  DUSTR Shiner agreed this 
was good advice and hoped to be able to continue the dialogue 
with the GSL and Sri Lankan society. 
 
12. (SBU) Comment: Kadirgamar was engaging and seemed positive 
overall on a potential FTA, though he clearly indicated to the 
US that agriculture issues could be sensitive.  He asked the US 
to help persuade the GSL to use a more collegial approach to 
dealing with these issues with the opposition (Note: President 
Kumaratunga's participation in the World Economic Forum in 
Singapore precluded her meeting with Amb. Shiner.  During her 
speech to the World Economic Forum on October 14, Kumaratunga 
criticized the WTO and called for a renegotiation of the world 
trade agenda. In subsequent comments to the press, however, she 
commented favorably on the GSL's desire for bilateral FTAs with 
the US and other countries.  End note).   End Comment. 
 
13. (U) DUSTR Shiner cleared this cable. 
ENTWISTLE