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US says no quick free trade deal with Sri Lanka

Agence France Presse

US says no quick free trade deal with Sri Lanka

Tue Jan 10, 2006

COLOMBO (AFP) - The United States warned Sri lanka against banking on a quick free trade deal to fix its economic woes and urged the island to restore peace and open its markets.

US ambassador to Sri Lanka Jeffrey Lunstead told a meeting of business leaders here that peace in the ethnically divided island was the key to economic prosperity.

"The peace process is paramount," he said referring to efforts of peace broker Norway to salvage a fragile truce between the Colombo government and Tamil Tiger rebels.

"As we look at peace and prosperity, we are at a point in the cycle when the furtherance of peace is perhaps the single most important thing that can push Sri Lanka along the path to further prosperity," he said.

However, he said Sri Lanka’s push for trade concessions and a free trade deal with Washington may not occur because of US domestic concerns.

"The emphasis in Sri Lanka should not be on seeking special trade deals. Firstly I think the chances are slim given the realities of the US Congress," Lunstead said.

"That is also not the way to go. Sri Lanka should also have an open and dynamic trade regime in all directions. That is the long range solution to compete in the global market," he said.

Since the 2004 tsunami, Sri Lanka has been trying to get a foothold on the US "Least Developed Country Bill" that could give local apparel exports duty breaks into its biggest market until 2014.

The US currently accounts for about 55 percent of Sri Lanka’s 2.4 billion- dollar garment industry, with the
European Union a close second.

Sri Lanka has also been talking to the US for nearly a year to sign a Free Trade Agreement (FTA).

"Instead of looking at market access for Sri Lankan products as a type of development assistance, Sri Lanka should look at the major benefits that accrue by opening its markets, opening markets in other countries and spurring a broader, more diverse set of trading partnerships," Lunstead said.

"Sri Lanka is at a tricky point in its history. It’s not clear if it is at a crossroads, or a cliff’s edge," he said referring to a deadlock in the island’s peace efforts and failure to revive talks between the government and Tamil rebels.

Three decades of fighting between the two sides has claimed the lives of over 60,000 people and dented economic progress.

Lunstead said a quick free trade pact with the US was unlikely.

"I wouldn’t bank on the FTA as a solution. Right now, the US has a full platter of trade negotiations going on," he said.

The US is part of a donor quartet known as "co-chairs" that is trying to bring the government and the Tamil Tigers back to the negotiating table.

In a strong warning to the Liberation Tigers of Tamil Eelam (LTTE), he said the consequences of resuming the ethnic conflict could be costly.

"If the LTTE chooses to abandon peace, however, we want it to be clear, they will face a stronger, more capable and more determined Sri Lankan military," he said. "We want the cost of a return to war to be high."

 source: AFP