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Cablegate: Sri Lanka: Trade Minister Wants Tifa Talks

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FM AMEMBASSY COLOMBO
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RUEHCG/AMCONSUL CHENNAI 6919
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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

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