VZCZCXRO7404
RR RUEHLMC
DE RUEHLM #1606/01 2760329
ZNR UUUUU ZZH
R 030329Z OCT 06
FM AMEMBASSY COLOMBO
TO RUEHC/SECSTATE WASHDC 4375
INFO RUCPDOC/USDOC WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUEHNE/AMEMBASSY NEW DELHI 0003
RUEHKA/AMEMBASSY DHAKA 9462
RUEHIL/AMEMBASSY ISLAMABAD 6362
RUEHKT/AMEMBASSY KATHMANDU 4407
RUEHKP/AMCONSUL KARACHI 2033
RUEHCG/AMCONSUL CHENNAI 6919
RUEHLMC/MILLENNIUM CHALLENGE CORP

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