January 11, 2006	Wednesday	Zilhaj 10, 1426

COLOMBO, Jan 10: The United States on Tuesday 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 might 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 per cent 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.

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.—AFP