The Sri Lankan FTA debate: Substance and semantics: Final Part

The role of FTAs in trade performance is vastly exaggerated in the Sri Lankan policy debate – Pic by Shehan Gunasekara

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The Sri Lanka-Singapore Free Trade agreement (SLSFTA) -hursday, 31 January 2019


Unlike the SLIFTA and the SLPFTA, SLSFTA is a modern FTA.It has a wider range of reform provisions going beyond liberalisationoftrade in goods to include other areassuch asservices, movement of professionals, telecommunications and electronic commerce, intellectual property rights, and government procurement. Overall, the subject coverage is similar to the other FTAs involving Singapore.

The SLSFTA was signed on 1 May 2018.However, whetheror when and in what form will the agreement come into force remain uncertain following the release in last November2018of the report of theCommittee of Experts (CoE)appointed by the President to evaluate it.

Singapore is one of the most opened trading nations in the world.Singapore’s average MFN applied duty rate is zero for all imports other than imports of beverages and tobacco for which the averagedrate varies from 1.6% to 85% (WTO 2018). Thus, the SLSFTA is unlike to have a direct impact on Sri Lanka’s exports to Singapore.

Some commentators have expressed concern that, under the agreement, Sri Lanka would be able to exports to other Southeast Asian countries with which Singapore has entered into Free Trade Agreements.It simply reflects the popularmedia practice of treating ‘trade within FTAs’ as ‘free trade’. This view ignores the fact that RoOs, which are an integral part of any FTA, preclude transhipment of goods to athird country though a FTA partner country.

Sri Lanka has little trade compatibility with Singapore on the import side (Table 2, part 2).This is because, over the past three decades, Singapore’s export structure has undergone a dramatic transformation. Commodity composition of exports is now dominated by petrochemicals, pharmaceuticals,high-tech parts and components of electronics, and surgical and scientific equipment.
Singapore is not a supplier of assembled (final) consumer electronics and electrical foods, automobiles, and low-end parts and comports of these products, which dominate Sri Lanka’s manufacturing imports.Therefore, the market penetration effect in Sri Lanka of Singapore products under the agreement is like to be negligible.

There is a fear that the agreement could open the door for industrial waste and other environmentally harmful products to enter Sri Lanka.This would entirely depend on theimplementationof the RoOs of the agreement by the Singapore authorities.Given the well-functioning instructions in Singapore with a proven record of adherence to the rule of law, one can hope that there would be little room for tweaking or lax implementation of the RoOs on Singapore’s part.

The Sri Lankan authorities anticipate that SLSFTA would help linking the Sri Lankan manufacturing sector to global production networks (global manufacturing value chain) (CBSL 2018).How this would happen is not clearly stated in the related government documents.One possibility could be Singapore-based firms operating within production networks relocating some sediments/tasks of the firms in Sri Lanka to exploit advantages from relative production cost differences.

Indeed, this process helped spreading production networks from Singapore to the neighbouring countries during the period from about the mid-1970s to the late 1990s (Athukorala and Kohpaiboon2014). However, because of the dramatic industrial transformation noted above, industries such as semiconductor and hard disk drive with potential to shift relatively low-end activities to low-cost locations have already disappeared from Singapore.

It is important to note that, the electronics firms currently in operating in Sri Lankan manufacturing export predominantly to countries like Japan, USA, Germany and some European countries. Their exports to Singapore and other ASEAN countriesare minuscule, notwithstanding duty free access to these markets under the WTO’s Information Technology Agreement.

Even if there were some opportunities for production relocation, whether the FTA would be an effective vehicle for facilitating the process is highly debatable, for two reasons. First, the very essence of global production sharing within global production networks is locating different segments of the production process globally, rather regionally or bilaterally. The relative cost advantage of producing/assembling a given part or components in the supply chain need not necessarily lie in a country within the jurisdictional boundaries of a specific FTA.

Second, there are formidable complications relating to the application of RoOs for trade within global production networks.Most of the task/segments produced/assembled within production networks have very thing value added margins in each location.In addition, most of imports and export of parts and components trained with production fall under the same HS 4-digit classifications. Therefore, the identification of the origin of trade within production network for granting tariff preferences becomes a major challenge (Athukorala&Kohpaiboon 2011).

Put simply, the rise of global production sharing strengthens the case for multilateral (WTO-based) or unilateral, rather than regional (FTA) approach, to trade liberalisation. To quote Victor Fung, the Honorary Chairman of Li & Fung, the world’s largest supply-chain intermediary based in Hong Kong: ‘Bilateralism distorts flows of goods ….In structuring the supply chain, every country of origin rule and every bilateral deal has to be tackled on as additional considerations, thus constraining companies in optimising production globally’ – Victor Fung, Financial Times, 3November2005.

These considerations suggest that more appropriate policy option for facilitating a country’s engagement in global production network is unilateral liberalisation or becoming a signatory to the ITA.Bothpolicy options assure unconditional duty-free access to the required inputs. The case for such broader liberalisation, rather than following the FTA route lies in that global production sharing is a global phenomenon, rather than a regional or bilateral phenomenon.

One of the main envisagedgainsto Sri Lanka from the SLSFTA is attracting FDI from Singapore.It is expected that the provisions in the investment chapter (Chapter 10) (safeguards against expropriation, most-favoured nation treatment, repatriation of capital and return from investment) would entice Singapore investors to come to Sri Lanka.Howeverthese provisions are exactly similar to those embodied in the Bilateral Investment Protection Treaty (BIPT) between the two countries that has been in force over three decades (since September 1980)(https://investmentpolicyhub.unctad.org).

Notwithstanding this long-standing treaty, Sri Lanka has so far been able to attack only a tiny share of rapidly expensing oversees FDI from Singapore. The total stock of outward FDI from Singapore increased from $32 billion 1994-5 to over 560 billion in 2015-16 (Table 5). However, during this period Singaporean FDI in Sri Lanka amounted to a mere $ 1.2 billion (based on investment approval records of the Board of Investment).This compassion is much in line with the available multicounty evidence that a BIPT (or an FTA with an FDI chapter, for that matter) is unlikely to entice foreign investors unless they are appropriately embodied in a broader reform addenda to improve the overall investment climate of the country (Hallward-Driemeier 2003).

The data relating to the evolving patterns of outward FDI from Singapore seems to suggest that, even with required broader reforms, opportunities for Sri Lanka to attract Singaporean investors are not very promising (Table 5).This is because there is limited compatibility between the sectoralcomposition of Singaporean outward FDIand both Sri Lanka’s development priories and the current stage of economic development. Over a half of outward FDI from Singaporeis in the financial sector.These investments are primarily destined to high-income countries.

The manufacturingshare of FDI, which is relevant for Sri Lanka’s objective of joining global production networks, accounts for a smaller and declining share of total outward FDI (16% in 2015-16, compared to 25% in1994-95).MNEs accounts for the lion’s share of Singapore’s manufacturing industry (over 80% output).As noted, the SLSFTA is unlikely to be relevant for these MNEs because they make investment location decisions at their headquarters based of a wider inter-country assessment.


Report of the Presidential Committee

A fuller assessment of the report of the Presidential Committee of Experts (CoE) onSLSFTA is beyond the scope of this article.However, we would like to make some brief observations on the report’s key recommendation: ‘Priority need to be given to unilateral trade policy reforms instead of relying on FTAs’.

We fully agree with this recommendation.In fact, we have provided empirical evidence in support of this view, whereas CoE’srecommendation is based a priority reasoning. In addition, we have discussedinherent limitations of the FTA approach to trade opening compared to unilateral and multilateral reforms.We also endorse the recommendation that ‘national trade policy must align with a coherent national development policy framework’. However, we find that the recommendation made by the CoE is not consistent with the objective of addressing supply-side issuesto improve the country’s competitiveness in the context of the rapidly changing global economic order.The recommendations are simply ‘old [import-substitution] wine in new bottles’.

The CoE recommends‘to focus on targeted liberalisation so as to avoidinterference with the growing or infant industries; infants have to grow at home,they cannot start off as exporters,’following the examples of Japan, South Korea and Brazil during 1965-1985.

We were surprised to see Brazil listed here an example to follow.Brazil is certainly not a development success story (Thomas 2006).Yes, Brazil achieved rapid industrial growth during the import substitution era, but the Brazilian manufacturing industry has miserably failed to maintain this growth spurtduring the ensuing decades.In spite of country-specific advantages such as the ample domestic resource base, the vast domestic market and access to markets in neighbouring countries, only a handful of firms emerged during the import-substitution era have continued to remain internationally competitive.Give the lacklustre economic performance in a land of ample unexploded potential, Brazil is known in development policy circles as ‘the eternal land of the future’ (Edwards 2010).

Export-oriented industrialisation in Japan and South Korea (and, also Taiwan) was certainly guided and aided by the state.However, their development success was not based on blanket industrial protection as advocated by the CoE (Perkin 2013. Studwell, 2013, Li 1995, Park 1970, Tsai 1997). Trade protection and other government support to firms in these countries were strictly time bound and, more importantly, subject to stringent export performance requirement (export discipline). 

FT Link

• The Sri Lankan FTA debate: Substance and semantics: Part 1 was published in the Daily FT of 29 January and can be seen at http://www.ft.lk/columns/The-Sri-Lankan-FTA-debate--Substance-and-semantics--Part-1/4-671833
• The Sri Lankan FTA debate: Substance and semantics: Part 2 was published in the Daily FT of 30 January and can be seen athttp://www.ft.lk/columns/The-Sri-Lankan-FTA-debate--Substance-and-semantics--Part-2/4-671923

Exporting firms always enjoyed duty free status in procuring imported inputs for export production.Culling those firms, which did not measure up, was an integral part of their policy.More importantly, all those countries had strong, committed leadership that was vital for effective implementing these policies.President Park Chun He, who engineered the Korean export-oriented growth miracle, summed up his policy vision as follows:

‘The economic planning or long-range development programme must not be allowed to stifle creativity or spontaneity of private enterprises. We should utilise to the maximum extent the merit usually introduced by the price mechanism of free competition, thus avoiding the possible damages accompanying a monopoly system. There can be and will be no economic planning for the same of planning itself’ (Park 1970, p. 214).

The CoE has ignored dramatic changes in the global economy in making therecommendations that ‘infants have to grow at home’.This conventionalinfant industry argument is based on the standard trade theoretical assumption that ‘countries trade in goods produced from beginning to the end within its geographical boundaries’.

It is not consistent with global production sharing, which has been the prime mover of export-oriented industrialisation in this era of economic labialisation. To be successful in this form of specialisation, a firm has to have a global focus ‘at birth’.It is important to notethat most (if not all) of the successful exporting firms in Sri Lankan manufacturing emerged ‘de novo’ benefitting from the concurrent liberalisation of foreign trade and investment regimes (Athukorala 2019).

We do not agree with the CoE’s recommendation for postponing trade reforms until achieving the required supply side capabilities. Trade liberalisation should instead be an integral part of the overall reform package.It is not possible to achieve supply-side desiderata emphasised in the report such as factor efficiency and productivity growth, improving innovative capacity under a protectionist trade regime.

Contrary to the CoE’s claim, in East Asian countries trade reforms have gone hand in hand with supply-side reforms. By ‘trade liberalisation’ we mean here a move towards a relative more uniform tariff suture that hasa low average tariff, withprovisions for duty-free access to intermediate inputs for export production, not mindless dismantling of all trade barriers..

Relating to trade policy reforms, the CoE recommends combining para tariff (PT) with customs duties in order to provide protection to domestic manufacturers.The existing cocktail of PTs was introduced in an arbitrary fashion during 2005 – 2015 for revenue raising purposes, not for protecting industries. Thanks to tariff reforms introduced at successive stages during the preceding two decades, by the early 2000s Sri Lanka had been approaching an important policy phase marked by shifting the agenda away from protection and towards achieving a stable and predictable trade policy regime.

This process was interrupted by the arbitrary introduction PTs and upward adjustment the rates.PTs are an anomaly in the import duty structure that complicates customs administration.There is also evidence that PTs are now a major cause of anti-export bias in the incentive structure.Combining TPs and customs duties would help perpetuating the ant-export bias.

In making the recommendation for combining PTs with customs tariffs, the CoE has overlooked an important feature of the tariff structure: almost all intermediate imports to the country come under zero-duty tariff lines, but these imports are subject to PTs.So, removingPTs would directly help, rather than hinder, domestic producers.Ability to procure intermediate inputs at world-market prices is an important determinant of the competitiveness of manufacturing exports.


Concluding remarks

The role of FTAs in trade performance is vastly exaggerated in the Sri Lankan policy debate.

Most politicians, and much of the media, often do not seem understand the distinction between ‘free trade’ and ‘trade under FTAs’.In reality, FTAs areessentially preferential trade deals and actual trade effect is conditioned by the choice of commodity coverage, which is basically determined by political considerations and lobby group pressure, and rules of origin.

The actual coverage of FTAs in world trade much lower that portrayed in the Sri Lankan debate. Over 80% of world trade is taking place under the standard Most Favoured Nation (MFN) tariff system.

The failure to make progress with the process of multilateral liberation under the WTO does not make a valid case for giving priority to FTAs. The proliferation of FTAs over the past three decades has been drivenlargely by a number of non-economic factors, including the bandwagon effects.If the road to multilateral approach to trade reforms is closed, then the better and time-honouredalternative is unilateral liberalisation combined with appropriate supply-side reforms.

The outcome of FTAs or unilateral liberalisation depends crucially on supply-side reforms needed to improve firms’ capability to reap gains from market opening.However, even with effective supply-side reforms, FTAs would not promote trade in the absence of significant compatibility in trade patterns of the partner countries.Trade compatibility depends on the nature of economic structures and the stage of development of the countries. Location of the countries in the same region (the ‘neighbourhood’ factor) does not necessarily ensure trade compatibility. Our estimates of trade compatibilityand the analysis of the experience under the SLIFTA and SLPFTA cast doubt on potential trade gains from signing FTAs with countries in the region.

Giving priory to FTAsin the national trade and development strategy is not consistent with the Government’s objective of linking domestic manufacturing to global production networks(global manufacturing value chain).Global production sharing is a global, not necessarily a regional phenomenon.The relative cost advantage of producing/assembling a given part or components in the supply chain need not necessarily lie in a country within the jurisdictional boundaries of a specific FTA.

There is no evidence to support the view that Sri Lanka needs an ‘intermediary’ country (Singapore) to join production networks. The electronics films currently in operating in Sri Lankan manufacturing export predominantly to countries like Japan, USA, Germany and some European countries.Their exports to Singapore and other ASEAN countries minuscule, notwithstanding duty free access to these markets under the WTO’s Information Technology Agreement.

The available evidence on the role of FTAs in attracting FDI is mixed, at best. The only policy inference one can make from this evidence is that FTAs can play a role at the margin in enticing foreign investors provided the other preconditions on the supply side are met.

Proliferation of FTAs has the adverse side effect of complicating the tariff structure, giving rise to inefficiencies in resource allocation.Overlapping of the standard MFN tariffs with FTA tariff concessions and multiple RoOsattached FTAsweaken efficiency improvements in the custom system, and opens up opportunities for corruption

Concluded
(Athukorala is Professor of Economics, Australian National University, and can be reached via Prema-chandra.athukorala@anu.edu.au. Silva is former Ambassador and Permanent Representative to WTO and former Deputy Head UN-ESCAP New Delhi Office and can be reached via dayalucky1@gmail.com. Silva’s contribution to the article comprise his own views and do not reflect the organisation that he is currently affiliated with. The full article with references is available on request from: dayalucky1@gmail.com.)




The Sri Lankan FTA debate: Substance and semantics: Part 1
The Sri Lankan FTA debate: Substance and semantics: Part 2

February 4: Sri Lanka’s Moments and Lapses over 71 Years

Rajan Philips-February 2, 2019, 8:36 pm 

In November 2014, to mark its own eightieth anniversary, the British Council published a list of 80 greatest world moments over 80 years (1934-2014), based on a survey of 10,000 adults in ten countries in four continents (the five BRICS – Brazil, Russia, India, China and South Africa, and five others – Egypt, Germany, Japan, UK and USA) and ranked by eminent experts in diverse fields from diverse countries. The list starts with the invention of the Worldwide Web in1989 and ends with innovations in German ballet dancing, perhaps indicative of the distribution of judges and the survey population. Fourth on the list is the UN Universal Declaration of Human Rights in 1948, the same year Sri Lanka became independent. Decolonisation is ranked 36, as the Independence of former Colonies of Europe. Thanks to the Indian independence movement (the role and influence of Mahatma Gandhi is ranked 29), Britain handed over independence to the colonial conformists in the model colony that was Ceylon, while the island’s anti-colonial revolutionaries were underground in India. This is old water long run under even older bridges.

What is new are the many moments on the list of 80 landmarks assigned to information technology, besides the worldwide web, and how these global technology moments are transforming Sri Lanka in ways that only a few among us seem to be noticing with some consistency. Third on the list of 80 is the widespread availability of home computers since the 1980s. The list goes on: the growth of social media (#12); mobile phone (#15); public television (#24); Nano Technology (#25); Email (#26); digital photography (#42); and Wikipedia (#47). With the exception of public television that took over forty years, since its initial launching by the BBC in 1936, to arrive in Sri Lanka, the integration of other information and media technologies in Sri Lankan society has been swift and comprehensive. In a country, where the landline telephone was once an exclusive luxury, the mobile phone represents the omnipresent necessity for cordless technology.

The impact of social media on Sri Lankan society is largely unfathomed, although there is great interest in whatever impact that social media is having on the country’s politics. The first use of social media in Sri Lankan politics was in the January 2015 presidential elections. It certainly created a buzz but it is highly unlikely that social media contributed to any significant movement of votes. Stories about the corruption of the Rajapkasas were broadcast over social media, although quite a few of them later turned out to be pure fabrications. The sinister use of social media in Sri Lanka was in fomenting anti-Muslim sentiments and organizing anti-Muslim violence in parts of the Kandy District in March 2018.

A positive use of social media came to the fore in the mobilization of public opposition to Maithripala Sirisena’s presidential antics late last year. The famous tweet from a protestor at Temple Trees, "I am not here for Ranil, but for democracy," generated a rare response from the Prime Minister: "That is what democracy is all about." That may have been the high point of Ranil Wickremesinghe’s participatory democracy. He is reported to have gone dormant in social media interactions after he was re-sworn as Prime Minister. Ironically, the Rajapksas (the father, the son and the uncle) are believed to be the heaviest users of social media among Sri Lankan politicians. However, and not so ironically, their politics and political messaging failed to resonate in social media during the shutdown of parliament and earlier during the orchestrated Colombo protest march over nothing. The disconnect is not implausible, because social media empowers the individual, though not always positively or for positive purposes, and it can hardly be the medium for the Rajapaksa brand of politics that dismisses individuals and wants to treat people as social animals.

A broken party system

The point is also that 71 years after independence Sri Lanka finds itself strung between new forms of technology and old forms and old questions of politics. The antics of October-November and their continuing aftermath have created a special backdrop to the 71st independence anniversary that will be officially commemorated tomorrow. The President and the Prime Minister who will be leading the ritual celebrations tomorrow were not born at the time of independence. That in itself is not a problem, but the problem stems from their dubious abilities and commitments to meet the challenges of today’s circumstances, some of which they themselves have created or aggravated separately and together over the last four years. The two men together raised high hopes at independence anniversary celebrations in 2015 and 2016. Everything has been going downhill ever since.

Last year especially, they were at each other’s throat, the President more than the Prime Minister, trying to outdo one another in the Local Government elections. They both failed, Sirisena more miserably than Wickremesinghe, and yet it was Sirisena who wanted the ouster of Wickremesinghe as PM based on the LG elections. After losing every battle from that time, the President is still not calling off his war against the Prime Minister. He makes it a point to send public overtures to Sajith Premadasa, perhaps still trying to wean him away from Wickremesinghe. And Mr. Premadasa doesn’t seem to be averse to receiving and reciprocating them, although there is not a hell of a lot that he can do with them. The President’s newest harebrained idea is to use the rump of the SLFP that he is supposedly leading to become the vehicle for a new national government that will be open to anyone except Ranil Wickremesinghe. At the same time, the Prime Minister never seems ready to give up on placating the President to have another crack at the national government.

For all their infirmities, the UNP and the SLFP have been Sri Lanka’s alternative governing parties. The UNP, although founded by as a motley collection of different political groups, was the party of independence. Its creator was also the father of the nation and first Prime Minister, DS Senanayake. The SLFP was the democratic alternative to the UNP and was founded three years after independence by SWRD Bandaranaike. Today the UNP is the political vehicle of Ranil Wickremesinghe and is forever in some part of an alliance or front for contesting elections, often unsuccessfully. Although the junior of the two and began as an opposition party, the SLFP has spent more time in government than the UNP. Today the SLFP is in virtual death throes.

For the last 25 years the President of the SLFP has also been the President of Sri Lanka: Chandrika Kumaratunga (1994-2005); Mahinda Rajapaksa (2005-2015); and Maithripala Sirisena (2015-?). But during the last four years, Maithripala Sirisena has been presiding over the dismemberment of the Party of SWRD Bandaranaike. The Rajapaksas have spirited away about one half of the Party. Many of the remaining members are not happy with Sirisena, who is fearing a challenge from Chandrika Kumaratunga for the control of the official party or its breakaway and leaving Sirisena in the political lurch. Sri Lanka’s political party system was insubstantially developed at the time of independence, and whatever that grew afterwards is not working like a democratic party system should. Even the numerically smaller but organizationally vibrant Left Parties and minority political Parties have lost their identities. And this is one of the sadder and more tragic developments after 71 years of independence.

Other moments and lapses

"The spread of English as a global language" is ranked 11th in the list of 80 moments, one step ahead of the growth of social media. What was a global moment about the English language became a huge lapse in Sri Lanka, not so much because of the Sinhala Only Act of 1956 under Prime Minister SWRD Bandaranaike, but because of its aggressive implementation after his death which he may not have condoned. The tragic hypocrisy again was that those who had a head start in English and their children did not lose anything, but generations of students who would have gained fluency in English in the normal course of education were shut out of that opportunity in the name of swabasha streaming. The 13th Amendment belatedly recognized English as a link language and there is now a hunger for learning English, but there is no infrastructure to satisfy that demand.

Sri Lanka has fared better on a different innovative moment (#69): "the development of shipping containers."This was also a rare, if not unique, instance where the institutional and professional body of expertise that began with the building and operation of the Colombo harbour under colonial rule was able to continually upgrade the harbour and its operations in keeping with the global development of port technology. This was unique because in almost all other departments of engineering and infrastructure that were started quite systematically under colonial rule, the record after independence is disgraceful failure. Transport is the worst sector. There are no transport moments after 1934 in the British Council list of 80 – they had all happened much earlier, except the "Growth of low cost air travel" since the 1970s. Sri Lankans have immeasurably benefited from low cost flying, but the successive governments’ mismanagement of the national carrier is a different story. The daily exposure of the rot at SriLankan, the national carrier, is again a national shame.

The key moments on the social front are: the mass production of penicillin (#2); Greater equality for women in many parts of the world (# 10); the invention of the contraceptive pill (#22); and the growing recognition of Gay and Lesbian rights (52). The sixties began with the pill and ended with the coming out of gay pride. Sri Lanka was not concurrently buffeted by these sweeping changes, but these changes are gradually finding their way into South Asian and Sri Lankan societies. The Indian Supreme Court’s ruling to decriminalize homosexuality is a landmark ruling in the slow march from social intolerance to social refinement.

Globally, Sri Lanka’s independence coincided with the emergence of the Cold War (# 37) that split the allies who fought the Nazis. The Cold War ended with the breakup of the Soviet Union (# 8). The beginning of the end came earlier with the fall of the Berlin Wall (# 27), which is also considered to be the beginning current phase of globalization. The financial infrastructure for globalization had been anticipated in 1944 Bretton Woods Agreement (#51) that set up first the IMF and then the World Bank. These developments became the facts of life for countries like Sri Lanka influencing foreign policy and the management of the economy.

Sri Lanka’s foreign policy in the past has been driven more by domestic ethno-political considerations than economic interests. What was Anglo-mania and India-phobia in foreign policy soon after independence became China-mania and Anglo-India phobia under the Rajapaksas. The present government has tried to be all things to all people both in domestic politics and international relations, but has little to show as results for its efforts. At the same time, there is a new Cold War emerging over trade, technology and climate change, and globalization is giving way to greater emphasis on regional blocs. Where and how Sri Lanka will adapt to these changes are questions that should preoccupy those aspiring to be presidential candidates. But they are usually preoccupied by other matters such as dual citizenship, cabinet expansion, or trading in presidential pardons.

UK arrest warrant for Sri Lanka attache over throat-cut gestures revoked

Priyanka Fernando conviction appeared to trigger stream of diplomatic exchanges

The chief magistrate said there had been a catalogue of disappointing issues with the case. Photograph: Nick Ansell/PA

Owen Bowcottand Diane Taylor-Fri 1 Feb 2019 16.20 GMT

An arrest warrant for a former Sri Lankan military attache, convicted of public order offences after making cut-throat gestures at protesters, has been revoked without a court hearing following Foreign Office involvement.

The private prosecution of Brig Priyanka Fernando has degenerated into extraordinary legal confusion, forcing the chief magistrate, Emma Arbuthnot, to take control of the case.

On Friday, she told Westminster magistrates court there had been a catalogue of “disappointing” issues and she did not know how such a sensitive case could have gone to trial without it “ever coming across my desk”.

Fernando was filmed making cut-throat gestures aimed at Tamil protesters outside the Sri Lankan high commission in London on 4 February 2018. Demonstrators were highlighting concerns about human rights violations against Sri Lanka’s Tamil minority. Footage of the incident went viral on YouTube.

Following his provocative gesture, the Sri Lankan government condemned Fernando for behaving in an “offensive manner” and suspended him from his job. The Foreign Office (FCO) also protested; Fernando left the UK shortly afterwards.

Majuran Sathananthan and four others involved in the Tamil protest initiated a private prosecution against Fernando arguing that his behaviour caused them “harassment, alarm and distress” and constituted public order offences. They were represented by Paul Heron, of the Public Interest Law Centre (PILC).

Last week the brigadier was convicted in his absence at Westminster magistrates court of two offences under section 4A and section 5 of the Public Order Act which involve using threatening words or behaviour likely to cause harassment, alarm or distress. The court also issued an arrest warrant for Fernando, who remains in Sri Lanka.

The conviction appears to have triggered a stream of diplomatic exchanges, with the UK ambassador in Sri Lanka called in for meetings.

After consultations with the FCO over the status and extent of Fernando’s diplomatic immunity, the chief magistrate abruptly withdrew the arrest warrant – a decision made without a public hearing.

At the hearing on Friday, Fernando was, for the first time, represented in court. Peter Carter QC, for the protesters, outlined a series of “rather unusual” options to deal with the case, including determining the diplomatic status of Fernando.

Carter said that even if the brigadier had enjoyed immunity for official functions, that would not protect him from prosecution for what was clearly not authorised activity.

Nick Wayne, counsel for Fernando, suggested using section 142 of the Magistrates Court Act 1980, a rarely used power to reopen cases where a mistake has been made.

Belinda McRae, counsel for the FCO, confirmed that the court had been given a certificate explaining Fernando’s diplomatic status. The chief magistrate adjourned the case until 1 March for a full hearing to resolve the legal confusion.

Before the hearing, an FCO spokesperson said: “The FCO, which is not a party to these legal proceedings, has been contacted by Westminster magistrates court seeking clarification of the brigadier’s diplomatic status in the UK at the time of the incident. The FCO is providing documentation to assist the court.”

The Crisis in Sri Lanka

Mahinda Rajapaksa speaks to the media on November 11, 2018 in Colombo, Sri Lanka. Paula Bronstein / Getty

BY KANISHKA GOONEWARDENA-

“In the name of God, go!” Rarely have these words of Oliver Cromwell been recycled with such farce and frequency as during Sri Lanka’s recent political crisis, not least by parliamentarians addressing rivals. As far as crises go, however, it was a remarkably peaceful affair outside of parliament and unrelated to any kind of revolution. Everyday life continued as usual even in Colombo despite extra-bold newspaper headlines, which were greeted in the distant North by “near silence.”

The Crisis in Sri Lanka.docx by on Scribd

Charles’ Removal Linked To Probe On 143 Containers: Mangala’s Coordinating Secretary, Finance Min. Secretary Have Given Unlawful Orders: Sirisena Stirring Up Issues Behind The Scenes

Former Customs Director General P.S.M. Charles has been removed from her position after she ordered probes on 143 suspicious containers, Colombo Telegraph can now reveal.

Mangala

Some of these containers had direct links to Thusitha Halloluwa, a Coordinating Secretary of Finance and Media Minister Mangala Samaraweera, the subject minister of the Customs Department. Halloluwa had exerted pressure on Charles to appoint his ‘associates’ at the Customs Department to probe the suspicious containers and transfer the officers who are currently handling the issue.

Charles has been removed from office after she flatly turned down their orders. Colombo Telegraph can also reveal that the forthright state official, the first woman to head the Customs Department, has also run into several confrontations with Finance Ministry Secretary Dr. R.H.S. Samaratunga over the same matter.

After Charles’ removal, Samaraweera sought Cabinet approval to appoint retired Navy officer, Rear Admiral Shemal Fernando as the Director General of Customs. The move sparked a fierce trade union action by customs unions who protested the appointment of a retired military officer as the Director General of Customs.

Samaraweera then made another move by appointing Finance Ministry Additional Secretary H.G. Sumanasinghe as the Acting Director General of the Department, in a desperate attempt to end the trade union action.

The Customs unions, however, demanded the reinstatement of Charles, saying she was transferred out due to the influence of smugglers who were at the heart of several controversial deals.

Thusitha Halloluwa

Addressing a press conference in Colombo yesterday, Sudath de Silva, a spokesman of the Customs union said several senior officials including Finance Ministry Secretary Dr. R.H.S. Samaratuga and several top-notch political figures of the current government maintained close ties with the smugglers.

The discussions between Finance and Media Minister Mangala Samaraweera and the union turned hostile last evening and the union representatives stormed out of the meeting room as the minister remained adamant about the removal of Charles.

The Minister said the new Director General was appointed according to a Cabinet decision and the unions had no say in the matter. The union representatives told the Minister that they would not back down until the reinstatement of Charles.

Sirisena’s observations

As the discussions with the Minister failed, the Customs officers at the Colombo Port continued their work-to-rule campaign. They have not allowed the Acting Director General of the department to assume duties.

Presenting the Finance Minister’s version of the story, a spokesman close to him told Colombo Telegraph, it was Samaraweera who appointed Charles to the Director General’s position initially, along with four other females as heads of institutions under the purview of his Ministry.

“The Minister has a weekly review meeting every Thursday for heads of institutions overlooking sectors that generate revenue for the government. Over the past few months, there was a noticable decrease in the revenue generated by the Cumstoms Department. That was one main reason for the replacement of the former Director General,” the spokesman said.

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Who is afraid of Deshapriya?

Is there any hurdle to hold PC elections under PR system?  

The threat on Monday by Chairman of the Elections Commission Mahinda Deshapriya to resign if Provincial Council elections were not held before the Presidential Election is an indication of his Commission’s helplessness. 

 2019-02-01

In a way, it also points to the degree of ‘Independence’ of the Independent Elections Commission.  
The Elections Commission Chief responding to journalists questioned them in return as to whom they were suggesting to bring to book for not holding Provincial Council Elections.  
And ironically, now the journalists have to ask that very Elections Chief as to who he was expecting to hold the PC elections before the Presidential Election.  
And he seems to think that whoever was responsible for the delay in holding PC elections would be moved by his threat and take prompt action to hold those elections.

Last Friday’s adjournment debate showed who the culprits were behind the PC election delay. The debate was on the election delay and it ended abruptly for want of quorum - 20 out of 224 members of Parliament. One might argue that the United National Party (UNP) wanted to disrupt the debate since one of the UNP members had raised the quorum issue in the House. But what matters was not the person who raised the issue, but why members from both the government and the Opposition failed to attend to such an important debate.  
The same thing happened with respect to the Local Government Elections as well. 
The head of the delimitation review committee on Local Government election Asoka Peiris had told during a newspaper interview that both the Government and the Opposition pressurized him to delay the delimitation process.  
If one goes through the approach by the UNP-led Government’s attitude towards the Local Government and Provincial Council Elections, it would be very clear that the Government has not only been evasive with elections but also has deliberately taken action to delay those elections.  
It was during President Mahinda Rajapaksa’s tenure, in 2012 that the Local Government Elections Amendment Bill, which provided for the elections under the mixed electoral system, was passed.  

Although the Rajapaksa Government had appointed a Delimitation Committee, its report was handed over to the Local Government Minister in 2015, only after the so-called Yahapalana Government assumed office.  
Since there had been shortcomings in the delimitation report, the new Provincial Councils and Local Government Minister Faiszer Musthapha appointed a Delimitation Review Committee under the chairmanship of Asoka Peiris, which had to hand over its report in January 2016.  
However, the new committee dragged on till January 2017 and Chairman Peiris attributed the delay to the Government’s failure to provide the necessary support such as the translators.  

It was during this delay that he alleged that both the government and the Opposition wanted him to delay the elections. 
Ridiculously, it was only after another 13 months that the Government was able to hold the Local Government Elections.  
The delay had cost the ruling UNP and the Sri Lanka Freedom Party (SLFP) dearly. Both parties were handed a humiliating defeat. The Sri Lanka Podujana Peramuna (SLPP) unofficially led by former President Mahinda Rajapaksa swept the electorate by capturing more than 230 out of 340 Local Government bodies.   
The Government even before that defeat had taken action to delay the Provincial Council Elections as well. 
In September 2017 the Government was to adopt a Bill called the 20th Amendment to the Constitution, which provided for the elections for all nine Provincial Councils to be held on the same day, instead of holding them on a staggered basis.  
However, the Supreme Court said that the Bill would delay elections for some Provincial Councils which the court ruled illegal.  
Then the government abandoned the Bill. 

•  Asoka Peiris says that both the Government and the Opposition pressurized him to delay the process

•  Very clear the Government has not only been evasive but also deliberately delays elections

• Govt achieved what it failed to achieve through the 20th Amendment

However, the Government in the same month presented another Bill, Provincial Councils Elections Amendment Bill in Parliament to make 30 per cent of female representation mandatory.  
While the Committee Stage debate on the Bill was on, the Government sneaked in an Amendment to the Bill, which provided for the mixed electoral system for the Provincial Councils.  
In a practical sense, the amendment needed postponement of Provincial Council Elections for want of a delimitation process.  
Thus, the Government achieved what it failed to achieve through the 20th Amendment -the postponement of provincial council elections. 
On the 27th of the same month, the term of office of the Sabaragamuwa Provincial Council lapsed and that of Eastern and North Central Provincial Councils ended on October 1 and 2 in the same year respectively.  

The terms of another three councils, namely Central, North Western and the Northern Councils expired on October 9,10 and 25 last year and thus elections for six councils are due now but cannot be held since the delimitation process has not been completed. 
Meanwhile, the terms of the Western and Southern Provincial Councils are to end on April 22 this year and the tenure of the Uva PC will expire on October 19.  
A Delimitation Commission for provincial councils was appointed under the Chairmanship of K. Thavalingam, the former Surveyor General which handed over its report to Minister Mustapha in August last year.  
However, since Parliament failed to ratify it with a two-thirds majority vote, a review committee headed by Prime Minister Ranil Wickremesinghe was appointed as per the law.  

But the committee has failed to hand over its report to the President in two months provided by the law. Thus, the elections for the six councils the terms of which have lapsed are being dragged on.  
Even before the Thavalingam Report was handed over, in the light of the experience gained at the Local Government Elections held on February 10, last year, political parties started to demand that the Provincial Council elections should be held under the old Proportional Representation (PR) system.  
An all-party discussion was also held on August 1, last year at the Temple Trees, the official residence of the Prime Minister on the matter. Now, there seems to be unanimity among political parties on holding the provincial council elections under the PR system. 
Yet, there are two theories on holding elections under the old system. Some parties are of the view that the law has to be changed for it while some others opine that it can be done right away as the new system comes to operation only after the delimitation process is completed.

"The head of the delimitation review committee on Local Government election Asoka Peiris had told during a newspaper interview that both the Government and the Opposition pressurized him to delay the delimitation process"

An idea similar to the second theory had been expressed by the former Minister Musthapha as well in 2017, in respect of Local Government Elections.  
Replying to Joint Opposition Parliamentarian Udaya Gammanpila’s allegation on the Local Government elections delay, Minister Musthapha in a statement said:  
 “In terms of the Law, at the enactment of the said Acts, the then Local Government minister could opt to continue to have the old electoral system in place until the conclusion of the delimitation process or to fully implement the said Acts. However, prior to the conclusion of the aforesaid delimitation process, on January 1, 2013, the then Local Government Minister A. L. M Athaulla promulgated a Gazette Notification whereby the provisions of the aforesaid amending Acts have fully come into operation and the previous electoral system has become defunct.”  
Here, Minister Musthapha says Local Government Minister could have opted “to continue to have the old electoral system in place until the conclusion of the Local Government delimitation process.”  

And no political party or individual countered that argument then.  
Therefore, the Provincial Councils Minister too should be able to opt “to continue to have the old electoral system in place until the conclusion of the provincial delimitation process.”  
But, who is going to implement it, if the Government is not interested in holding elections at all?  

"Ukraine government said they never sold any MiG 27s to Sri Lanka

Iqbal Athas reveals shocking details about MIG Deal:

February 2, 2019, 12:00 pm 

The following is the speech made by senior journalist Iqbal Athas at the inauguration of the Sri Lanka Center for Investigative journalism. He detailed his travails over the exposure of the MiG purchase deal for the SLAF.

"I am proud to be associated with today’s inauguration of the Sri Lanka Centre for Investigative Journalism. I thank your Board of Governors for honouring me by inviting me to deliver the keynote address.

I take delight for many reasons. I am the only Sri Lanka member of the Washington based International Consortium of Investigative Journalists (ICIJ). The membership is peer recommended. They are the first global organisation to use the cyber space to collaborate in investigative projects. You will recall one of the widely publicised recent projects known as Panama Papers.

Years earlier, as a member from their beginning I colloborated in their project titled "The Business of War." Now in the form of a book, it deals with mercenary groups and how some of them gained legitimacy in battle zones. It included a part on Sri Lanka.

Your parent organisation in Washington DC, the Global Investigative Journalists Network (GIJN) is an offshoot of the ICIJ. I count as a good friend David Kaplan, the Executive Director. He held the same position earlier with the ICIJ.

Like a good recipe for a particular dish, there are different definitions about investigative journalism. To use his own words, Kaplan says there is – In-depth reporting, enterprise reporting or project reporting. "All these," he says, "are loosely grouped under investigative journalism." He identifies five different characteristics:

1. Systematic Inquiry. This means you are taking your time and going in a systematic way to analyse what is going on. The work you are doing is original and in-depth. Original reporting is investigative journalism.

2. Forming a hypothesis about what is going on. To form a theory, find the facts that will support it. If it does not, you have to abandon it.

3. Using public records and public data. Investigative Reporting is following people, money, paper and data trails, collect public records, documents leaked and analyse them.

4. Making public matters that are secrets that remain hidden. Investigative Reporters are often dealing with secret information. The people in power does not want it brought out. It is embarrassing for them.

5. Focus on social justice and accountability.

I am not a teacher in investigative journalism. I will not, therefore, deal with the different technical aspects. Instead, I believe, it may be useful for those of you, who want to pursue investigative journalism, if I share some of my personal experience in this field.

Before I do that, please permit me to strike a personal note. Fifty years ago, straight out of school, I walked into the office of now-defunct SUN / WEEKEND in Hulftsdorp. It was then one of the largest groups. I did not realise it was going to be the turning point in my life.

I was offered a job as a Reporter and requested to work the very next day. I asked for time. I had to wind up a course in Sales Management. A week later, when I joined to cover Tamil political parties due to my fluency in Sinhala and Tamil languages.

My work then took me to different parts of the North and East of Sri Lanka, which were to later become the battleground for a deadly separatist insurgency. I became familiar with the terrain. At that juncture, there were only two major Tamil political parties. I covered their annual sessions and other events of importance in these two provinces.

By mid-1970s, moderate politics was transcending to militancy. Tamil political parties and groups united through what is known as the Vaddukottai resolution to go beyond democratic pursuits. Over a period of time, this saw the birth of a plethora of militant groups. During the early phases of what is euphemistically called Eelam

War I, they functioned separately but were unified in their objective of confronting the Security Forces and the Police.

The subsequent phases of what was dubbed Eelam War II and III became fierce in character. The Liberation Tigers of Tamil Eelam (LTTE), often known as Tamil Tigers, literally eliminated their rival groups in some of the crudest and bloodiest battles. New military hardware was inducted by both the militants and the military. In May 2009, the LTTE was militarily defeated. Thus, I was fortunate in being able to cover the birth, growth and death of separatist insurgency in Sri Lanka. Military procurements were becoming controversial. Both those in and outside uniform were profiting hugely. I began exposing some of the controversial deals. The travails I faced are far too many to list here. I can only say I have lived to tell the story.

In September 2006, a source in the Sri Lanka Air Force (SLAF) gave me a bulky document – a so-called contract for the procurement of four MiG 27 fighter jets. Each was to cost US $ 3,462,000 or over Rs 265 million. These were for aircraft manufactured between 1980 and 1983. The contract claimed they were Government to Government deals. I investigated the matter for many weeks, talking to my sources as well as diplomats who specialised in defence and security. A clear picture emerged.

After the break up of the Soviet Union in 1991, as you are aware, Ukraine became another state. A fleet of MiG 27s lay in a parking lot exposed to snow, sun and rain. A company based in Singapore was among those were wanting to sell these aircraft to the Sri Lanka Air Force and there appeared to be many irregularities.

The Sunday Times bared the details in an expose in December 2006. A few highlights of the report: I quote "A contract between the Air Force on behalf of the Government of Sri Lanka and the Ukranian Government-owned firm Ukrinmarsh is touted as a Government-to-Government deal. Such deals are made to obviate the need to call for tenders to pick the lowest bidder. The widely accepted principle in these deals, referred to as G to G, is the elimination of third parties who make fat commissions and become billionaires overnight…" unquote

Now, this so-called contract was signed on July 2006 – just a day before Lanka Logistics and Technologies Limited came into being. This wholly state-owned concern was set up to procure all military equipment and related items to the armed services and Police. It was shocking to learn that the MiG 27s in question were those left over from two different purchases which Air Force teams that went to Ukraine had carefully selected.

These purchases, my report in the Sunday Times said: I quote "This was on two different occasions. That was six years ago and the prices were much lower. And now they have been contracted for higher prices. The first purchase was on May 25 2000 when four MiG 27 jets were purchased for US $ 1.75 million each. They were manufactured between 1982 and 1985. The second purchase was on October 24 2000. In this deal, two MiG – 27s were purchased at a cost of at $ 1.6 million each.One was manufactured in 1981 and the other in 1984,"

You will observe from what I said that the last purchase was made from MiG 27s remaining after the better ones were chosen. If the two earlier purchases were for ones manufactured before 1985, the last was for those made between 1980 and 1983. I continued my investigations. When more reports began to appear, those at the highest levels of the Government were incensed. Powerful persons with a bottomless reservoir of arrogance, vengeance and vendetta unleashed a campaign of terror on me. Unfortunately, those travails had to be borne even by my wife and daughter. I must confess that after studies abroad, this was the reason why my daughter chose to work outside Sri Lanka. That was not the only heavy price I paid in the name of investigative journalism.

The continued exposure in the Sunday Times saw a vicious campaign by the state-run media. Together with them, the Ministry of Defence gave me a dubious title in their website – Traitor. I must single out the Sirasa television network during this troubled time for standing up to the truth. They even broadcast a letter from Senator Joe Biden, who was to later become US Vice President to then Sri Lanka President on my behalf. Crowds carrying placards calling me traitor, backed by a local councillor, demonstrated near my house. Some of those taking part demanded my arrest. I came under close surveillance and an effort was being made to locate my sources. Leave alone being arrested, if indeed I was considered a traitor, no state agency questioned me. I was making the news daily. Not one. I knew that someone somewhere was deeply hurt by my embarrassing disclosures.

Attached to me was a security contingent from the Army. I am sure you will agree that for a journalist, working with bodyguards around, is anathema. Their presence will discourage of dry up source. I had no choice. It came on the recommendation of intelligence agencies who said there were threats. They were withdrawn.

One day, I had a telephone call from the leader of a left-leaning political party who had close connections with those at the Defence Ministry. He was on visiting terms. He met me at home and did not lose time in asking me how I got details of he MiG-27 deal. I had to open a Pilot’s briefcase to pull out the documents and prove a point to him – why not punish those involved. He asked me for a copy of the contract but I said it was difficult at that point in time.

What I heard days later from my sources in the military was distressing. Plans were afoot to raid my house. They were after the Pilot’s briefcase. A sinister plan had already been set in motion. Loud hailers fixed with speakers were going around the area where I live warning residents that LTTE cadres were hiding in homes. Hence, the announcement said, a house to house search was under way. The idea was to raid my house. My source who was very familiar with the plans and asked me to get out of the house with my family. The advice was because I had some cause to protest that my house was raided in my absence.

There was a problem. A religious event in Colombo that had drawn members of the Bohra community from world over. All hotels in Colombo were full. My friend Amal Jayasinghe was kind enough to arrange for a hotel in Kalutara. Two others who are common friends, including a staffer in a diplomatic mission, drove me there. He also took charge of the Pilot’s Brief case.

There was more disturbing news just two weeks before Lasantha Wickremetunga was murdered. A very highly placed source asked me to get out of the house that very night. I flew to Thailand. I had spent long stints there living in an apartment cooking food, washing clothes and working online. The next morning, my driver who was alerted, saw a man with an oversized bush shirt moving outside my house in a motorcycle. When there was strong blowing, the bottom part of the shirt went up. There was a pistol on his waist. The driver noted the registration number. I checked it on a secure phone from Bangkok. The registration plate belonged to a lorry.

When the so-called Yahapalanaya government came to power, they set up the Financial Crimes Investgation Division (FCID). I made a statement to them in early 2015 and investigations began.

I have learnt that a FCID team went to Ukraine. On April 25 2016 at 10 a.m. they met top Ukranian government officials including the Proscutor General. When told about the purchase of the last four MiG-27s, their response was shocking. The answer was "we never sold any MiG 27s to Sri Lanka."

Here are some of the findings: The so-called contract which the Sri Lanka Air Force signed with Ukrinmarsh does not exist.

The Zimbabwe Defence Industries did not have stocks at the time the order was placed. Since the Army was in a hurry, a corrupt official at ZDI had approached an Israeli arms dealer. The latter arranged for the stock of 32,400 mortars from surplus stocks from the Bosnian war. They were loaded into a ship that was to first travel to Zimbabwe. I have not been able to establish the link from there until I found that it had been loaded into an LTTE cargo ship. That brought the stocks to the waters off Mullaitivu.

This was why, the ship that remained anchored for weeks, was later destroyed by the LTTE. It did not sail away. The advance paid by the Army remains in Singapore and the story ended there. There were pressure moves then to prevent a detailed probe.

I chose to mention these instances purely to underscore the fact that investigative journalism is not an easy task. There is someone somewhere who wants to hide the secrets of wrong doing so the public may not know. For those of you who aspire to become investigative journalists, it would be good to bear in mind the words Briitish playright Christopher Hampton. With apologies to him, I have modified it to say "asking what an investigative journalist what he thinks is about critics is like asking a lampost how it feels about dogs."

In all the trials and tribulations, I must record the fact that I owe my great gratitude to my Publisher Ranjit Wijewardene, Editor in Chief Sinha Ratnatunga. They have not only stood by me but have been a tower of strength. I also owe a great thank you to my wife and daughter who had to bear all that I went through for no fault of theirs.

Once again, all my best wishes to the Sri Lanka Centre for Investigative Journalism. I think when you have to look at my work, like what a onetime US President said, "I ask you to judge me by the enemies I have made."

Thank you."