VZCZCXRO9209
PP RUEHBI RUEHCI RUEHLH
DE RUEHLM #0031/01 0151146
ZNR UUUUU ZZH
P 151146Z JAN 10
FM AMEMBASSY COLOMBO
TO RUEHC/DEPT OF LABOR WASHDC PRIORITY
RUEHC/SECSTATE WASHDC PRIORITY 1117
INFO RUEHKA/AMEMBASSY DHAKA PRIORITY 2261
RUEHIL/AMEMBASSY ISLAMABAD PRIORITY 9283
RUEHKT/AMEMBASSY KATHMANDU PRIORITY 7538
RUEHNE/AMEMBASSY NEW DELHI PRIORITY 3696
RUEHCG/AMCONSUL CHENNAI PRIORITY 9844
RUEHKP/AMCONSUL KARACHI PRIORITY 2640
RUEHCI/AMCONSUL KOLKATA PRIORITY 0500
RUEHLH/AMCONSUL LAHORE PRIORITY 0126
RUEHBI/AMCONSUL MUMBAI PRIORITY 7133
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY

UNCLAS SECTION 01 OF 03 COLOMBO 000031 
 
SENSITIVE 
SIPDIS 
 
PLEASE PASS TO USTR FOR MICHAEL DELANEY 
 
E.O. 12958: N/A 
TAGS: CE ECON ELAB ETRD
SUBJECT: POST RECOMMENDS NOT ACCEPTING SRI LANKA GSP 
PETITION FOR REVIEW 
 
REF: A. A) 2009 COLOMBO 795 
     ¶B. B) 2009 COLOMBO 1037 
 
 
¶1.     (SBU)  Summary.  Post does not support accepting the 
AFL-CIO petition to remove Sri Lanka as an eligible country 
under the GSP program because Sri Lankan labor standards are 
among the best in the region, the apparel industry has a 
program to improve working conditions, and the political 
impact of reviewing GSP eligibility would be 
counterproductive.  Most labor unions have not joined the GSP 
petition, and even union signatories candidly admit that 
their purpose is not to lose GSP but to use the review 
process as leverage to gain additional labor rights.  Labor 
union leaders agree that Sri Lanka's labor laws are strong, 
although they see serious problems in implementation.  The 
local office of the International Labor Organization (ILO) is 
implementing a USG grant to improve labor standards.  Labor 
unions in the public sector and state-owned enterprises are 
primarily tied to political parties, and many of their 
actions are politically motivated.  The apparel industry has 
a 'garments without guilt' program that provides audits of 
apparel factories to improve working conditions.  Finally, 
the timing is not right to review the petition.  Since early 
October, the Government of Sri Lanka (GSL) has made positive 
steps on freedom of movement and facilitated returns for 
internally displaced persons (IDPs), and has begun to make 
progress on human rights.  Accepting the GSP petition for 
review now could diminish our ability to push for additional 
progress on our highest priority objectives:  the continued 
return and resettlement of IDPs; accountability; and progress 
on human rights.  End Summary. 
 
No Support for GSP Removal 
 
¶2.    (SBU)  The GSP petition is supported by few unions in 
Sri Lanka, and even these union supporters acknowledge that 
their purpose is not to remove GSP benefits.  The 
International Labor Organization works with 17 major trade 
unions which it considers representative of unions in the 
country, and only four of the seventeen unions were 
signatories to the GSP petition.  Tine Straermose, director 
of the regional ILO office, thought that Sri Lanka was moving 
toward internationally recognized worker rights, and that the 
GSP petition did not reflect the conditions on the ground 
(see reftel A).  Econoff recently met with Palitha Atukrale, 
President of the Progress Union, which signed the GSP 
petition.  Atukrale candidly told Econoff that no one wants 
the United States to actually remove Sri Lanka as a 
GSP-eligible country, but the unions do not think that the 
GSL is listening to them, so the GSP petition creates 
leverage to force the GSL to provide additional labor 
protections. 
 
Labor Laws Are Good; Problem is Enforcement 
 
¶3.    (SBU)  Labor conditions in Sri Lanka appear to be far 
better than in many countries in the region.  Anton Marcus, 
head of the Free Trade Zones and General Service Employees 
Union and one of the leaders of the GSP petition, thought 
that Sri Lanka had good labor laws, but the problem is 
enforcement.  Econoff has spoken to several NGO officials who 
commented that the working conditions in Sri Lankan factories 
were the best in the region.  Sri Lanka has also avoided 
other problems.  Marcus and Kumari Witharana of the 
Solidarity Center both told Econoff that companies paid the 
earned wages in the Export Processing Zones (EPZs), where the 
GSL Board of Investment supervises the companies, although 
they thought that this could be a problem outside the EPZs. 
Kumar Mirchadani, an apparel industry leader, said that the 
minimum wage was 6,500 Rs per month ($57 USD), but his 
factory (which was representative of apparel factories) paid 
8,500 Rs base pay ($74 USD), and that most of his workers 
received substantial overtime.  In addition, labor and 
industry leaders agreed that there is no child labor in the 
formal sector.  Finally, Witharana of the Solidarity Center 
said that the GSL was not targeting labor leaders now (as 
stated in the petition), although she alleged that private 
 
COLOMBO 00000031  002 OF 003 
 
 
companies are still firing union leaders to keep their shops 
union free. 
 
¶4.    (SBU)  Labor union leaders thought that labor 
conditions had remained the same since post's comprehensive 
description last August (see reftel A).  The GSL has plans to 
increased the labor fines for violations of the Industrial 
Disputes Act from 20,000 Rs (approximately $175 USD) to 
100,000 Rs ($887 USD), but the draft regulation has not been 
implemented.  Similarly, the unions report that it is still 
difficult to gain access to the EPZs to organize the workers 
(although this is disputed by the employers).  The Solidarity 
Center tried to overcome these restrictions by setting up 
'welfare centers' with televisions and books right outside 
the EPZs to meet the workers.  Similarly, labor tribunals 
have not sped up, nor has the GSL changed the requirement 
that 40% of the workers must support the union before the 
union can apply to represent the workers. 
 
¶5.    (U)  The International Labor Organization is preparing 
work plans to implement new projects based on a $400,000 USD 
USG grant.  The work plans will focus on:  1) creating 
stronger worker and employer organizations and other capacity 
building; 2) revising labor laws to address any shortcomings 
and bring them into full compliance with international labor 
standards; 3) establishing mechanisms for labor and 
management cooperation, including on health and safety 
concerns; and 4) strengthening the labor inspection  system 
and improve dispute resolution capacity.  The ILO will 
implement these work plans over the next eighteen months. 
Post will follow the progress of these work plans closely. 
 
 
Politicized Unions in Government and State-Owned Enterprise 
Sector 
 
¶6.    (SBU)  The unions representing government and 
state-owned enterprise workers are very different than the 
private sector unions.  In the public sector, unions are 
controlled by political parties and several unions represent 
workers at the same work place.  In November, as described in 
reftel B, the unions associated with the opposition UNP and 
JVP parties engaged in a 'work to rule' labor action at four 
utilities, but workers in the government-affiliated unions 
continued to work and even protested against the labor 
action.  Econoff met with Leslie Devendra, Secretary General 
of the government-affiliated SLNSS union, with 88,000 
members, who said that the claims of the GSP petition were 
'completely blown out of proportion.'  The November work to 
rule labor action did have some economic aims, but most 
observers believe that their primary goals were political. 
 
Garments Without Guilt Program 
 
¶7.    (U)  Sri Lanka manufacturers are working to improve 
their image and working conditions through the 'Garments 
Without Guilt' program.  This program advances the principles 
of:  1) ethical working conditions; 2) no child labor; 3) no 
forced labor; 4) no discrimination on any grounds; and 5) 
freedom from sweatshop practices.  The Joint Apparel 
Association Forum (JAAF) has hired an international audit 
company to conduct audits of their members; 130 audits have 
been completed so far.  The audits have overwhelmingly found 
only fairly minor issues, and these companies have three 
months to implement a correction plan.  According to JAAF, 
some companies have failed the audit, making it credible. 
The Garments Without Guilt program particularly focuses on 
ensuring payment of overtime.  The Sri Lankan apparel 
association has marketed the Garments without Guilt program 
to buyers in order to establish Sri Lanka as a niche producer 
of ethical manufacturing.  Labor leaders such as Anton Marcus 
dismiss the Garments Without Guilt program as an attempt to 
avoid labor unions, and he claims that the monitors are not 
independent.  Nevertheless, the Garments Without Guilt 
program appears to be a genuine effort by employers to police 
the working conditions of their members.  The local office of 
the International Labor Organization thought that although 
Garments Without Guilt was a marketing tool, workers in 
 
COLOMBO 00000031  003.4 OF 003 
 
 
participating companies had much better working conditions 
than in some other factories. 
 
Comment:  The Time is Not Ripe to Accept the GSP Petition 
 
¶8.    (SBU)  Comment.  In post's view, there are five good 
reasons for the USG not to accept the GSP petition at this 
time.  First, labor conditions in Sri Lanka appear to be 
good, with ethical working conditions and strong 
environmental standards in place and manufacturers working to 
police and improve working conditions.  Second, Sri Lanka 
will hold a Presidential election on January 26, and any USG 
announcement on GSP will immediately become a campaign issue. 
 The USG is neutral in the election, and is determined not to 
be seen by Sri Lankans as supporting one candidate.  Third, 
after months of prodding, the GSL began in early October to 
make positive steps on freedom of movement and facilitated 
returns for internally displaced persons (IDPs), and has 
begun to make progress on human rights.  If the USG accepts 
the GSP petition, this decision will be negatively received 
by the GSL and would likely affect our effectiveness in 
pushing for progress on IPD returns and resettlement, human 
rights, political reconciliation and accountability for war 
time incidents.  Fourth, the European Commission is moving to 
revoke Sri Lanka's GSP plus trade benefits (on human rights 
grounds, not due to labor rights), and the public will likely 
conflate the United States' GSP program with the EU's GSP 
plus program.  Fifth, the U.S. Department of Labor plans to 
send a team to Sri Lanka and the Maldives in February to 
evaluate progress on labor rights.  Following the Department 
of Labor visit, the USG will have more information upon which 
to base the decision whether to accept the GSP petition for 
review.  End Comment. 
BUTENIS