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Cablegate: Modified Cable: Sri Lanka - 2010 Nte Report On Sanitary And

VZCZCXRO8296
RR RUEHBI
DE RUEHLM #1011/01 3080737
ZNR UUUUU ZZH
R 040737Z NOV 09
FM AMEMBASSY COLOMBO
TO RUEHC/SECSTATE WASHDC 0723
INFO RUEHKA/AMEMBASSY DHAKA 2011
RUEHIL/AMEMBASSY ISLAMABAD 9047
RUEHKT/AMEMBASSY KATHMANDU 7285
RUEHNE/AMEMBASSY NEW DELHI 3440
RUEHKP/AMCONSUL KARACHI 2561
RUEHCG/AMCONSUL CHENNAI 9610
RUEHBI/AMCONSUL MUMBAI 6904

UNCLAS SECTION 01 OF 02 COLOMBO 001011

SIPDIS

USTR FOR GBLUE and VICTORIA KADER; DEPARTMENT FOR EB/TPP/BTA and
SCA/INSB

E.O 12958: N/A
TAGS: ECON ETRD EFIN CE

SUBJECT: MODIFIED CABLE: SRI LANKA - 2010 NTE REPORT ON SANITARY AND
PHYTOSANITARY (SPS) AND STANDARDS-RELATED FOREIGN TRADE BARRIERS

REF: SECSTATE 105978

1. (U) This cable corrects an earlier version by replacing
paragraphs 10 and 11 with paragraph 10 here. The following is in
response to reftel's request on Sanitary and Phytosanitary (SPS) and
Standards Related Foreign Barriers to trade in Sri Lanka.

STANDARDS
2. (U) The Sri Lanka Standards Institution (SLSI) is operating a
Compulsory Import Inspection Scheme (covering 102 items) per
regulations framed under the Imports and Exports Control Act, No. 1
of 1969 as amended by Act No. 28 of 1987. According to the Imports
Standardization and Quality Control Regulations of 2006, conformity
of the imported products to the relevant Sri Lankan Standards are
monitored. Samples are drawn from consignments accompanied by a
quality certificate from an accredited laboratory or manufacturer
registered with SLSI, which could be subject to testing or random
check, or if there is a reasonable doubt regarding the quality of
the consignment.
3. (U) Sri Lanka has introduced new food safety regulations.
According to the Adoption of Standards Regulations of 2008 (Ref. No.
1589/34 - FEB 2009), 158 SLSI standards were made mandatory starting
in September 2009 for certain food and beverage products. (NOTE:
Post will provide a PDF document containing notification of the
regulations per request. END NOTE.) The SLSI standards range from
commodities to processed products. Though these standards did exist
previously, they were for the most part voluntary. Some U.S.
companies are concerned that these newly-mandatory measures do not
factor in market preferences and could restrict trade. The Ministry
of Health, which is the CODEX focal point, plans to notify the WTO
with regard to this new regulation.

TECHNICAL BARRIERS TO TRADE

4. (U) In January 2007, the Ministry of Health adopted a regulation
for the import, sale and mandatory labeling of genetically
engineered (GE) food products, potentially costing U.S. industry as
much as $20 million. This regulation is moving towards full
implementation, although some aspects of it are irregularly enforced
or not enforced at all. Key problems with the regulation include:
mandatory Sri Lankan regulatory approval of foods with 0.05 percent
or more of GE content; labeling for products with more than 0.05
percent of GE content; and the requirement that shipments of bulk
commodities be accompanied by documentation certifying that there is
no GE content. Sri Lankan importers have raised several concerns
about the regulation, including that conformity with a 0.05 percent
GE content labeling threshold would be costly and that mandatory
labeling could needlessly raise consumer concerns with
biotechnology. Additionally, importers fear that bureaucratic
procedures in granting approvals - as well as Sri Lanka's technical
inability to carry out approvals - may obstruct and limit future
imports of GE products. For example, a 2008 U.S. GE corn shipment
was cancelled due to excessive bureaucratic delays. This decision
has discouraged many Sri Lankan importers from attempting to import
unprocessed GE bulk commodities, as it is understood that their
import license application will be ignored, delayed or refused.

5. (U) During October 2009 discussions under the United States-Sri
Lanka Trade and Investment Framework Agreement (TIFA), the United
States raised concerns regarding Sri Lanka's mandatory labeling
requirement, noting a lack of scientific justification, and adding
that the regulation would essentially act as a nontariff barrier.
Sri Lanka stated that they would follow CODEX Alimentarius
guidelines pertaining to the labeling of GE foods, and noted that
CODEX had not yet ruled on this issue. The United States also
reminded Sri Lanka of the trade ramifications of their GE policy,
including the previously mentioned corn shipment as well as a
rejected November 2008 food aid shipment of rice. Sri Lankan
regulators were not persuaded to change their position. The USG
will continue to raise the issue.

6. (U) USDA has sent several local scientists and regulators for
training in biotechnology and biosafety at Michigan State
University. The most recent regulator to participate in this
program is the Director of Biosafety at the Ministry of Environment,
who is a senior regulator with respect to agricultural
biotechnology. He is also the coordinator for the National
Biosafety framework. His view of biotechnology was positively
transformed by the training, and he acknowledged several previous
personal misconceptions. USDA and the State Department will
continue to work with Ministry of Environment officials to affect

COLOMBO 00001011 002 OF 002


regulatory change.

SANITARY AND PHYTOSANITARY (SPS) MEASURES

7. (U) POULTRY: Sri Lanka has banned the importation of U.S.
chicken meat that is not mechanically deboned. During the October
2009 United States-Sri Lanka TIFA meeting, Sri Lanka openly admitted
that this measure was in place to protect its domestic industry and
contended that this was permitted under the use of a WTO safeguard
mechanism. The U.S. government responded that if this were the
case, that safeguard should be formally raised within the WTO.
Additionally, Sri Lanka had imposed avian influenza bans on all
poultry and poultry products imported from several U.S. states. As
of October 2009, these bans were all removed. Sri Lanka imposed
these bans due to the detection of low pathogenicity notifiable
avian influenza, an action which is not supported by the World
Organization for Animal Health (OIE). Sri Lanka was reluctant to
remove the bans and continues to believe that their actions were
justified - raising concerns that such action may reoccur.

8. (U) BEEF: A ban on U.S. beef imports remains in effect due to
the detection of bovine spongiform encephalopathy (BSE) in the
United States in 2003. This ban is also not supported by the OIE,
and Sri Lanka is one of five countries in the world to have taken
absolutely no action to lift any part of their BSE-related U.S. beef
ban. This issue was raised during the October 2009 TIFA. Sri Lanka
defended their position by incorrectly citing the guidelines and
recommendations of the OIE's guidelines for meat and poultry.

9. (U) MICROBIOLOGICAL TESTING OF MEAT IMPORTS: In September 2009,
Sri Lanka started 100% testing of all imported meat products for
various pathogens. This policy change was not notified to the WTO.
Importers have complained that the additional demurrage costs
associated with the testing are unnecessary, and that government
testing methods are not sound. The U.S. Department of Agriculture
additionally argues that the USDA Food Safety Inspection Service
attestation which mandatorily accompanies all meat exports is a
sufficient assurance of wholesomeness. During the October 2009
TIFA, Sri Lanka was asked to provide its regulation on
microbiological testing, especially as it relates to their testing
protocol, targeted pathogens, and acceptable pathogen levels. The
U.S. government also emphasized the importance of notifying the WTO
SPS committee of this regulation.

10. (U) Seed Potato: Sri Lanka lifted a ban on imports of seed
potato from the United States in March 2007, initially instituted
due to fears that the Colorado Potato Beetle (CPB) could have been
introduced into Sri Lanka by these imports. However, Sri Lanka now
requires a certificate from a plant entomologist stating that the
CPB does not exist in the potato tuber to accompany the seed potato
imports. The United States has pressed for the removal of this
certificate requirement on the grounds that it was not
scientifically justified. In July 2008, Sri Lankan officials
visited the U.S. potato industry to further review the issue. It is
hoped that as a result of this visit, the issue will be resolved and
a visual inspection at the time of shipment will be considered
sufficient to address any concerns. Although this issue may be
addressed, recent 2008 import permits have included overly
restrictive virus tolerances and requirements on generations of seed
potatoes. There is concern that the generation requirements are not
being applied to seed potatoes imported from other markets such as
Europe. The CPB area freedom certificate, virus tolerances, and
restrictive generation requirements all need to be addressed before
the Sri Lankan market can grow into a strong commercial export
market for U.S. seed potatoes.

11. (U) Information contained in this cable will also be provided to
requesting offices as a Word document via email. Questions should
be directed to EconOff Ken Kero-Mentz at keroka@state.gov.


BUTENIS

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