Proposed US-Sri Lanka Free Trade Agreement

The proposed Free Trade Agreement between the United States and Sri Lanka (the proposed US-Sri Lanka FTA), the negotiations of which started on the eve of the enactment of the Intellectual Property Act 2003, is another reason for the

TRIPS copyright model 2003-2020 195 stringent and unbalanced manner in which copyright owners’ translation rights are protected in the TRIPS model of copyright law.

5.3.3.1. Background to the proposed US-SRI Lanka

Free Trade Agreement

Kelegama observed that ‘[s]ince the beginning of 2002, a possible US-Sri Lanka FTA has been discussed’.^[1] The reason for this was Sri Lanka’s trade concerns. On the one hand, Sri Lanka needed to gain more benefits from international trade to recover from the economic crisis which it faced during the early 2000s. On the other hand, Sri Lanka needed a preferential trade arrangement with the United States to offer support to its garment industry, which was predicted to be affected by the expiry of the Multi Fibre Agreement 1974 (MFA) on 1 January 2005. To achieve these ends, it was important for Sri Lanka to enter into a FTA with the United States.

An important reason for the negotiation of the proposed US-Sri Lanka FTA was Sri Lanka’s economic crisis in the early 2000s. At the dawn of the twenty-first century, Sri Lanka was ‘in the thick of an economic crisis’ resulting from ‘deep indebtedness’. For the first time in its history, Sri Lanka also reported negative economic growth in 2001.^2,7 To overcome this economic crisis, Sri Lanka implemented a new economic policy which sought to further integrate its economy to the global economy, particularly through trade relations at the ‘regional and bilateral level’. In fact, as one of the priority actions of this policy, Sri Lanka needed to ‘pursue an aggressive program to explore bilateral trade opportunities . . . and develop and implement bilateral and regional free trade agreements that offer improved market access for Sri Lankan exports’. To this end, Sri Lanka took several actions in 2002. As the 2002 Annual Report of the Central Bank of Sri Lanka stated:

One of the main strategies during 2002 was to identify countries of significance to Sri Lanka’s bilateral trade relations. Ministerial level trade promotion missions were undertaken by the Ministry of Trade and Consumer Affairs to consolidate existing trade relations and to explore trade potential and new opportunities for mutual cooperation with countries such as India,

Pakistan, USA, Thailand, China, Vietnam, Japan, Egypt, and Saudi Arabia, Iraq, UAE, Belgium, and UK.^[2]

Accordingly, Sri Lanka was able to conclude two bilateral trade agreements, with Pakistan and the United States in 2002, namely, the Pakistan-Sri Lanka Free Trade Agreement (PSLFTA) signed on 1 August 2002 and the United States-Sri Lanka Trade and Investment Framework Agreement ( USSLTIFA) signed on 25 July 2002.

The USSLTIFA is the first Trade and Investment Framework Agreement (TIFA) that the United States signed with a country in the South Asian region. More importantly, the signing of the USSLTIFA was a precursor towards the creation of a FTA between the United States and Sri Lanka. Given that the United States has been the largest single buyer of Sri Lanka’s exports since 1979, a possible FTA between the United States and Sri Lanka was believed to offer improved market access for Sri Lankan exports.

Another important reason for Sri Lanka to negotiate the proposed US-Sri Lanka FTA was the potential impact of the expiry of the MFA on its garment industry. In the early 2000s, the garment industry was the largest net foreign exchange earner to Sri Lanka and recruited ‘close to 330 000 people directly’. Given that the MFA was to expire on 1 January 2005, the future of the garment industry was of ‘particular concern to both the government and the industry’. In particular, the Central Bank of Sri Lanka warned that ‘Sri Lanka may face reduced demand for textile and garments with the proposed phasing out of the MFA in 2005 unless strong corrective measures are taken in advance’. In addition, it was predicted that ‘post-2004 restructuring of [the] garment industry would lead to a number of job losses’. Moreover, it was also projected that ‘the phase-out of MFA will result in approximately 50,000 Sri Lankan workers in garment industries in Middle East, Mauritius, Madagascar, and other countries coming back to Sri Lanka’.

Given that the United States was Sri Lanka’s largest export market for garments, the signing of a FTA with the United States was very important for Sri Lanka to shape the future of its garment industry. In particular, in 2001, 64 percent of Sri Lankan garment exports were destined for the United States market.

Of the total Sri Lankan exports to the United States market, garments amounted to 78 percent (S 1.5 billion).^[3]

However, despite the importance of the United States to Sri Lanka as a prime export market for its garments, the United States did not make certain benefits which other countries, such as the European Union, made available to Sri Lankan garment exports. For instance, 47 percent of Sri Lankan garments for the United States market were ‘quota-based and subject to a tariff rate of 15-20 percent for cotton garments’. In contrast, in the European Union market, ‘not only ... Sri Lanka enjoy[ed] a quota free regime since early 2001 but also benefitfted] from [the] Generalized System of Preferences’. Sri Lanka needed similar benefits from the United States to protect the future of its garment industry. This was particularly important in light of projected adverse impacts of the expiry of MFA on the industry. As Kelegama observed:

It [was] believed that an FTA with USA will give some support to the garment industry to maintain a significant level of employment and also to absorb the trained garment workers returning to the country. In other words, it [was] believed that an FTA will facilitate the garment industry to absorb the post-2004 shock with some ease.

5.3.3.2. Impact of the proposed US-SRI Lanka Free Trade Agreement

The proposed US-Sri Lanka FTA had an important impact on the TRIPS model of copyright law, adopting high standards of copyright protection. This can be explained with reference to the TRIPS-plus copyright protection standards in the Intellectual Property Act 2003.

Ruse-Khan has stated that ‘[s]ince the mid-nineties, countries interested in higher IP standards have successfully shifted IP negotiations away from WIPO and WTO towards Free Trade Agreements (FTAs)’. FTAs are used as primary means by the United States to promote protection of intellectual property in other countries. More specifically, provisions in FTAs which the United States has entered into with other countries oblige them to adhere to standards of intellectual property rights protection beyond those in the TRIPS Agreement (TRIPS-plus standards). The Chile-United States Free Trade Agreement 2003, the United States-Singapore Free Trade Agreement 2003, the Dominican Republic-Central America Free Trade Agreement 2004 and the United States-Australia Free Trade Agreement 2004 are some examples. All these FTAs require copyright owners’

exclusive rights, including translation rights, to be protected stringently and for an extended period.^[4]

As Kelegama said, at the time the proposed US-Sri Lanka FTA was negotiated the anticipation was that 'it will be modelled on the Singapore and Chile [FTAs]— these being the most recently concluded and the most comprehensive.’ As mentioned earlier, both these FTAs require TRIPS-plus standards of copyright protection, in particular, copyright owners’ exclusive rights, including translation rights, to be protected stringently and for a period of the life of the author and 70 years. As such, strengthening of the national copyright regime by introducing higher standards was important for Sri Lanka if it were to enter into a FTA with the United States. This was also important because copyright piracy of American works was a major concern of the United States.

• [1] Saman Kelegama, ‘A Possible US-Sri Lanka Free Trade Agreement to Support the Garment Industry?’ in Saman Kelegama (ed), Ready-Made Garment Industry in Sri Lanka: Facing the Global Challenge (Institute of Policy Studies, 2004) 215, 215; JB Kelegama, ‘Proposed FTA between Lanka and US’ The Island (online), 18 August 2004 . 2 Government of Sri Lanka, Regaining Sri Lanka: Vision and Strategy for Accelerated Development (Government of Sri Lanka, 2002) 1. 3 Central Bank of Sri Lanka, Annual Report 2001 (2002) 1. 4 Government ofSri Lanka, above n 216, 1, 12, 15. 5 Ibid., 15.
• [2] Central Bank of Sri Lanka, Annual Report 2002 (2003) 229. 2 Ibid. 3 Ibid. 4 Kelegama, above n 215, 217. 5 Central Bank of Sri Lanka, Annual Report 2003 (2004) 195; Central Bank of Sri Lanka, Annual Report 2002 (2003) 213. 6 Kelegama, above n 215, 216. 7 Ibid. 8 Central Bank of Sri Lanka, Annual Report 2002 (2003) 207. 9 Kelegama, above n 215, 216. 10 Ibid. 11 Ibid.
• [3] Ibid., 215. 2 Ibid., 216. 3 Ibid. 4 Ibid., 217. 5 Henning Grosse Ruse-Khan, ‘The International Law Relation Between TRIPS and Sub-sequent TRIPS-Plus Free Trade Agreements: Towards Safeguarding TRIPS Flexibilities?’ (2011) 18(2) Journal of Intellectual Property Lan’ 1, 3.
• [4] Chile-United States Free Trade Agreement 2003, art 17.5; United States-Singapore Free Trade Agreement 2003, art 16.4; Dominican Republic-Central America Free Trade Agreement 2004, art 15.5; United States-Anstralia Free Trade Agreement 2004, art 17.4. 2 Kelegama, above n 215, 223. 3 See Office of the USTR, 2012 National Trade Estimate Report on Foreign Trade Barriers (2012) 353-354. Also see Siva Vaidhyanathan, Copyrights and Copywrongs: The Rise of Intellectual Property and How It Threatens Creativity (New York University Press, 2001)2. 4 Sri Lanka, Parliamentary Debates, 25 May 1979, col 507. 5 DM Karunaratna, ‘Issues Related to the Enforcement of IP Rights: National Efforts to Improve Awareness of Decision Makers and Education of Consumers’ (Document presented to the WIPO Advisory Committee on Enforcement WIPO/ACE/3/5, Third Session, Geneva, 15-17 May 2006) 4.