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INFO RUEHNE/AMEMBASSY NEW DELHI 9364
RUEHKA/AMEMBASSY DHAKA 9003
RUEHIL/AMEMBASSY ISLAMABAD 5891
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RUEHCG/AMCONSUL CHENNAI 6435
RUEHLMC/MILLENNIUM CHALLENGE CORP

UNCLAS SECTION 01 OF 02 COLOMBO 000357 
 
SIPDIS 
 
SIPDIS 
 
E.O 12958: N/A 
TAGS: BEXP ETRD KTEX ECON CE
SUBJECT:  SUPPORT FOR TRADE MISSIONS TO SRI LANKA 
 
REF: USDOC 00272 
 
¶1.  Summary:  Post, along with the American Chamber of 
Commerce Sri Lanka (AmCham Sri Lanka) would welcome a trade 
mission described in reftel from the American Chamber of 
Commerce of India (AmCham India).  Post will work closely 
with AmCham Sri Lanka on this project.  Regarding a 
possible separate trade mission of US textile and yarn 
manufacturers described in reftel, Post and the Sri Lankan 
garment industry are also willing to host and meet with 
such a mission.  Sri Lanka imports over USD 1.5 billion in 
textiles annually, and there is an openness and desire on 
the part of Sri Lankan garment manufacturers to purchase US 
products.  But several significant impediments to increased 
US textile and yarn sales exist and need surmounting to 
sell a large quantity of such goods to Sri Lanka.  End 
Summary. 
 
AMCHAM INDIA TRADE MISSION TO SRI LANKA WELCOMED 
 
¶2.  With the ever-increasing flow of trade between India 
and Sri Lanka ($2.4 billion in 2006), as well as the 
presence of the Indo-Lanka Free Trade Agreement, which has 
prompted a significant increase in bilateral trade, 
building on an already strong relationship between AmCham 
India and AmCham Sri Lanka makes sense.  Amcham Sri Lanka 
has commissioned a study to analyze which US business 
sectors could most directly benefit from the Indo-Lanka 
Free Trade Agreement and several US companies in Sri Lanka 
are currently importing US components, adding value, and 
then re-exporting to India, benefiting from duty 
concessions into the enormous Indian market. 
 
¶3.  EconOff approached Gordon Glick, Executive Director of 
AmCham Sri Lanka, about a visit by AmCham India 
representatives.  Glick responded that he would welcome 
such a visit and would work with AmCham India to facilitate 
such a trip.  He had already responded to an inquiry by the 
Sri Lanka Ministry of Foreign Affairs noting that 
anticipated dates for the visit are from October 25 to 
November 3, 2006.  Post will also work with AmCham to 
ensure that this visit will be a success.  (Comment:  Glick 
has served as Executive Director of AmCham Sri Lanka since 
June 2005.  During the time working with him, EconOffs have 
found Glick to be highly organized and mission-oriented, 
with the ability to accomplish what he sets out to do.  End 
Comment.) 
 
US TEXTILE MANUFACTURER TRADE MISSION TO SRI LANKA 
 
¶4.  Sri Lanka currently imports approximately USD 1.5 
billion per year in textiles for its globally competitive 
garment sector.  Imports of textiles will likely grow to 
over USD 2 billion in the next four years.  Post sees 
potential US exports resulting from a US textile and yarn 
manufacturer trade mission to Sri Lanka, and would be 
pleased to work with the Department of Commerce to promote 
and facilitate such a trip.  Such a visit would enable US 
manufacturers to become more familiar with the level of 
sophistication of their potential Sri Lankan clients and to 
more fully understand the issues that they would need to 
resolve with Sri Lanka garment manufacturers before 
realizing increased sales to Sri Lanka. 
 
¶5.  To ensure that Sri Lankan garment manufacturers would 
be sufficiently interested in such a trade mission, EconOff 
met with six leading members of the Joint Apparel 
Association Forum (JAAF), a garment manufacturing interest 
group, and separately with a representative of MAS 
Holdings, the leading garment producer in Sri Lanka and 
manufacturer of well-known high-quality brands such as 
Nike, Gap and Victoria?s Secret.  Unequivocal support for 
the trade mission was given at both meetings, with the 
caution that some difficult issues would need to be 
surmounted:  price, flexibility of manufacturers in meeting 
the scheduling needs of the garment makers, and contract 
terms. 
 
¶6.  PRICE AND LACK OF TRADE CONCESSIONS FOR US CONTENT: 
JAAF members said that while many US textiles and yarns may 
not be price competitive, there were some possibilities, 
especially in US gray cloth, standard cloth, some yarns, 
and high-tech textiles and yarns.  In addition to the 
standard issue of higher US costs, JAAF members emphasized 
that the lack of US trade concessions for US content in Sri 
 
COLOMBO 00000357  002 OF 002 
 
 
Lankan garments damages US competitiveness in the market. 
They contrasted this with some other major buying nations 
where tariffs for Sri Lankan garments were reduced in 
proportion to the garment?s content sourced from the buying 
nation.  (Comment:  Although garment industry 
representatives do not anticipate that this trade mission 
would directly lead to establishment of such trade 
concessions, they recognize that the textile and yarn 
manufacturers could become their strongest US advocates for 
such concessions.  End Comment.) 
 
¶7.  SCHEDULING:  Some textile and yarn buyers expressed 
concern about the time required for shipping goods from the 
US to Sri Lanka in comparison to some of their regional 
sources.  Several said that the timelines could be 
workable, but may require greater flexibility or customer 
service on the part of US manufacturers.  One 
representative who has tried to source some products from 
the US described situations where US manufacturers were 
perceived to dictate delivery times, and showed no interest 
in seeing whether their pro forma timelines could be 
slightly reduced.  (Comment:  In light of the extra time 
required to ship products from the US instead of China or 
other nearer producers, a demonstrated interest on the part 
of US manufacturers to work with their potential Sri Lankan 
buyers would be highly encouraged.  End Comment.) 
 
¶8.  CONTRACT TERMS AND TREATMENT AS VALUED CUSTOMERS:  In 
2004, a delegation of Sri Lankan garment manufacturers 
traveled to Georgia and South Carolina to meet with US 
textile manufacturers and yarn spinners.  At both meetings 
conducted in preparation of this cable, garment 
manufacturers lamented the visit?s disappointing results. 
One manufacturer returning from the visit resolved to test 
the functionality of sourcing from the US.  He requested 
that a container of goods be shipped to Sri Lanka.  He was 
surprised to receive the US company?s response, including 
stringent shipping terms, in light of the garment 
manufacturer?s global reputation.  The terms were far 
stricter than those imposed by other suppliers.   The Sri 
Lankan manufacturer requested that the shipping terms be 
renegotiated, but the US vendor refused.  The sale never 
occurred.  (Comment:  Unfortunately, this US company missed 
an opportunity.  Sri Lankan manufacturers partner with 
their garment buyers at almost all stages of the garment 
production process ? including the design level for some 
brands.  They know that their US garment buyers expect a 
high level of service, flexibility and respect, and Sri 
Lankan companies will expect the same from their suppliers. 
End Comment.) 
 
¶9.  ADDITIONAL WAYS OF GRABBING THE SRI LANKA MARKET: 
Industry members also articulated several methodologies for 
US investment/sales to Sri Lanka beyond shipping from a US 
mill.  These included the warehousing of basic textiles in 
Sri Lanka to drastically reduce shipping times, as well as 
setting up textile manufacturing operations on this island. 
 
¶10.  COMMENT:  Both AmCham India and the US textile and 
yarn trade mission to Sri Lanka could provide a substantial 
increase in exports by US companies to Sri Lanka.  We 
anticipate that the AmCham India delegation will have 
already been sufficiently exposed to the capabilities of 
garment manufacturers in Sri Lanka.  We urge that US 
manufacturers of textiles and yarn be recruited for a 
mission to Sri Lanka if they truly want to remain globally 
competitive and source to an increasingly dominant garment 
producing nation. 
 
¶11.  Comment, cont:  We note that the Office of Textile and 
Apparel in the US Import Administration believes that such 
a trade mission would be unlikely to attract interested 
participants, given the perception of a poor cost-benefit 
equation.  As described above, well-funded, growing, high- 
end manufacturers in Sri Lanka have already visited the US 
and observed minimal interest on the part of US 
manufacturers in supplying a portion of Sri Lanka?s $1.5 
billion textile demand.  Until US manufacturers display 
some interest (perhaps traveling to potential customers in 
Sri Lanka would be a start) the Sri Lanka garment industry 
will continue to look elsewhere for its textile and yarn 
needs. 
 
LUNSTEAD