US embassy cable - 03COLOMBO2017

UNCLAS SECTION 01 OF 03 COLOMBO 002017 
 
SIPDIS 
 
SENSITIVE 
 
FOR E, EB, SA/INS, SA/RA 
DEPT PLEASE PASS TO USAID FOR BERNADETTE BUNDY - ANE/SA, 
USTR FOR AUSTR WILLS; TREASURY FOR SRI LANKA DESK; NSC FOR 
ELIZABETH MILLARD; COMMERCE FOR ARIADNE BENAISSA 
 
E.O. 12958: N/A 
TAGS: ECON, ETRD, BEXP, PREL, KIPR, KTEX, CE, ECONOMICS 
SUBJECT: IN VISIT, COMMERCE DAS WILLIAMSON EMPHASIZES 
IMPORTANCE OF STABILITY FOR INVESTMENT AND GROWTH 
 
REFS: A) Colombo 1983 B) Colombo 1957 
 
Sensitive but unclassified. Please handle accordingly. 
 
1. (U) Summary: During her visit, Commerce DAS Williamson 
heard updates on the current political environment and 
emphasized to public and private sector interlocutors the 
importance of a stable, predictable environment for growth 
and investment.  Williamson applauded the government's work 
to date on the peace process and economic reform, urged an 
amicable resolution of the ongoing domestic uncertainty and 
confirmed the USG's commitment to expanding the bilateral 
trade relationship.  End summary. 
 
2. (U) Commerce DAS Molly Williamson, accompanied by DOC 
Sri Lanka Desk Officer Ariadne Benaissa, met with key 
business and government contacts in a two-day visit, coming 
a week after the President took over three ministries and 
suspended Parliament.  She met with officials from the 
Ministry of Commerce, including the Minister, the Board of 
Investment (BoI), the private/public sector IPR Working 
Group, the Ceylon and the American Chambers of Commerce, 
individual business leaders, the Joint Apparel Association 
Forum, and visited a leading edge US software development 
firm. 
 
3.  (U) At all meetings, Williamson delivered the message 
that the US is looking for trading partners with stability, 
predictability, rule of law, a business-friendly 
environment and a trainable workforce.  She noted that Sri 
Lanka had received attention from the USG because it 
tackled its problems on its own, and attracted 
international support for those efforts.  She applauded the 
GSL's commitment to the peace process, economic reform and 
trade liberalization, and expressed appreciation for the 
stance taken at Cancun.  Williamson promoted more 
commercial interaction, including visits to the US to 
explore opportunities and attend trade shows, sending trade 
delegations, and general public relations to promote a 
positive image of Sri Lanka.  She supported the robust TIFA 
relationship, and cautioned the Sri Lankans about the 
realities of potential FTA discussions, explaining the 
constraints of US political dynamics. 
 
Impact of Political Uncertainty 
------------------------------- 
4. (SBU) DAS Williamson's schedule was unaffected by the 
political maneuvering, except for its primacy as a 
discussion topic.  She heard from all parties that the 
moves by President Kumaratunga were unexpected, and had a 
negative effect on the country's international reputation, 
foreign investment and on individual business relationships 
(reftels).  Both private and public sector groups expressed 
the desire that that the President and PM come to a 
resolution quickly, so they could get back on the track of 
development and growth.  Many interlocutors complained that 
business deals were now on hold, pending resolution.  None 
saw a threat of violence or unrest in the current 
circumstances. 
 
5.  (U) Major issues DAS Williamson discussed with these 
representatives included IPR Protection, infrastructure 
development, education, TIFA talks, and the prospect of FTA 
discussions. 
 
IPR 
--- 
6. (SBU) On the day of DAS Williamson's arrival, November 
13, the Parliament Speaker signed the new IPR legislation, 
bringing it into effect.  At the meeting with 
representatives from the private sector and the GSL Offices 
of Intellectual Property, Consumer Affairs, Police and 
Attorney General, DAS Williamson was briefed on current 
efforts to begin implementation of the law.  These efforts 
include: establishment of special IPR units in the police 
and Attorney General's office, a series of public lectures 
about the law, training programs for police and customs, 
newspaper ads and WIPO assistance to conduct a study on 
using IP to become more competitive.  IP Office Director 
Dr. Karunaratna relayed the GSL's desire to become an IPR 
policing hub for the region.  Opportunities for 
implementation support were explored, including Dept. of 
Commerce programs for lawyers and judges, industry 
association programs, training by US Customs in New Delhi, 
and help from the new Microsoft Office, due to open soon. 
Infrastructure Development and Education 
---------------------------------------- 
7. (U) DAS Williamson heard from the private sector, as 
well as from the BoI, about the importance of developing 
infrastructure to enable growth.  Projects are planned or 
are already underway for roads, ports, airports, power and 
water.  BoI Chairman Arjunna Mahendran relayed that five 
infrastructure projects, worth $150 million, were put on 
hold as a result of the current political dispute.  In 
addition to infrastructure, he said he saw growth potential 
in the telecom sector including Back Office Processing and 
call centers, and in textile manufacturing.  The BoI target 
for annual Foreign Direct investment is $1 billion by 2006. 
 
8. (SBU) At the BoI and the Chambers of Commerce, DAS 
Williamson explored the education situation, and heard 
about insufficient capacity at the universities, and how 
many graduates do not emerge with the skills employers 
demand.  English language skills, once very strong, have 
declined, and new programs to bring English back into the 
curriculum are underway.  There is an effort to train a 
core group of workers in English and IT to staff operations 
such as call centers.  Finding educated workers was not a 
problem for Virtusa, an award-winning, growing US software 
development company that DAS Williamson visited, as it 
offers on-the-job training for new employees. 
 
TIFA/FTA 
-------- 
9. (SBU) DAS Williamson emphasized at each meeting that 
there are no bilateral FTA negotiations currently underway, 
but the robust, effective TIFA process has successfully 
addressed many issues that would need to be dealt with in a 
strengthening trade relationship.  Commerce Minister 
Karunanayake confirmed what was said during the TIFA talks, 
that the GSL is close to signing the WTO Information 
Technology Agreement, and was waiting for a response from 
the USG in Geneva.  DAS Williamson also engaged garment 
sector representatives, emphasizing the importance of 
taking steps to reduce the impact of the MFA phase-out, and 
saying they should not expect an FTA to cushion the impact. 
Recommended steps include improving productivity and 
competitiveness, as well as diversification out of 
garments.  She also offered to assist the group with their 
visit (planned for mid-January) to the southeastern US to 
explore options of importing inputs from US mills. 
 
10.  (SBU) Comment: This visit was important for two 
reasons. First, DAS Williamson could see firsthand that the 
political situation was not unstable, as depicted in the 
international media, and that the GSL and business 
representatives are ready to move forward on all fronts. 
Second, she gave a dose of US political reality to those 
anxious to start the FTA process.  Her description of the 
mandated procedure and likely timing was educational for 
most, and appreciated by all.  End comment. 
 
DAS Williamson did not have an opportunity to clear this 
cable. 
LUNSTEAD