UK and Sri Lanka: Bilateral Trade

Lord Livingston of Parkhead Excerpts

Thursday 11th December 2014 Lords Chamber

[The Minister of State, Department for Business, Innovation and Skills & Foreign and Commonwealth Office (Lord Livingston of Parkhead) (Con)]

My Lords, I thank my noble friend Lord Sheikh for initiating this important debate and for his wider contribution to the relationship between Sri Lanka and the UK. I have to admit that I was concerned this morning when I came in and saw the annunciator saying that the final QSD today was on the subject of trade with Syria. It is a relief for all of us that this was incorrect. I also thank the other noble Lords for their contribution to this debate. We may have been lacking something in quantity, but it has been more than made up for in quality. I wish to ask my noble friend Lord Naseby whether he will give me a copy of his guide to exporting. It would be interesting for our team to see what, if anything, has changed since it was written.

Trade is important not only to the prosperity of the UK but to Sri Lanka and its people. However, the UK’s commitment to free trade goes hand in hand with our commitment to human rights. That point has been made volubly. I appreciate that there are divergent views on this issue. Let me set out the Government’s position. The UK co-sponsored the United Nations Human Rights Council resolution in March this year. This resolution requested that Sri Lanka make progress on human rights and reconciliation. As my noble friend Lord Naseby mentioned, it also mandated the Office of the High Commissioner for Human Rights to undertake an investigation into alleged violations of international law by both sides of Sri Lanka’s conflict.

To echo the comments of the noble Lord, Lord Bach, we continue to urge Sri Lanka to co-operate and ensure the protection of those providing evidence to the investigation, and to implement the recommendation of its own internal commission on resettlement and rehabilitation. Sri Lankan presidential elections have been called for next month. We have encouraged the Government of Sri Lanka to invite international observers so that the elections can be fairly assessed. We understand that Sri Lanka’s Election Commission has invited the Commonwealth and the South Asia Association for Regional Cooperation to observe. We welcome these moves.

I want to pick up on a couple of points made by the noble Lord, Lord Bach. The first was on the subject of arms. As he will know from his history, the British Government have a rigorous policy of assessing all export licences to each country, including Sri Lanka, very much on a case-by-case basis. We seek not to export equipment where we assess that there is a clear risk that it might be used for internal repression, would provoke or prolong conflict within a country, or would be used aggressively against another country. The equipment concerned included antennae for military transport, carbon fibre tows, some software to do with internet access, and things such as sporting cartridges. On these cases, which we reviewed carefully, we decided that export licences could be granted. It is also something that we will keep under review, as we do with all countries.

The noble Lord, Lord Bach, also raised the recommendations of the Foreign Affairs Committee. The UK Government’s position on this is that it is premature to do anything more prior to the UN reporting on the matter, and we are expecting the UN’s report in March 2015. When we receive it, it will be appropriate for the Government to take a view of which, if any, of those recommendations should be taken up.

I turn to the subject of trade. The UK has strong family, historic, and—particularly today, even if I am a Scotsman—sporting ties. Of course, both countries are members of the Commonwealth. We have a strong commercial relationship. In Colombo, the Council for Business with Britain actually boasts 151 members across a wide range of sectors. Britain is Sri Lanka’s largest export market in the EU and the EU is itself the largest market for Sri Lankan goods. In 2013, bilateral trade was more than £1 billion. While my noble friend Lord Sheikh pointed out that this was weighed heavily in Sri Lanka’s favour, we have started to see some change. Last year, Britain saw an increase of 14% in goods and exports to Sri Lanka. Commercial contracts worth $3 billion to Britain were signed in 2013, as a result of the order by Sri Lankan Airlines for 13 Airbus aircraft with—I am delighted to say—Rolls-Royce engines. There are therefore, in a number of areas, positive signs of improved British performance.

We are Sri Lanka’s leading business partner—as was mentioned by a number of noble Lords—in the field of higher education and professional training. Some 28 British universities offer access to their qualifications through local education providers in Sri Lanka. A further two universities are currently considering establishing their first satellite campuses in Sri Lanka. It also hosts—and this hurts me, as a member of the Institute of Chartered Accountants—the largest number of Chartered Institute of Management Accountant members outside of the UK anywhere in the world.

The British Council has been operating in Sri Lanka since 1950. More than 200 staff deliver services across the country, including teaching English to more than 12,000 students a year at the British Council teaching centres. However, there are more opportunities—that has been made very clear by all the speakers in the debate—and more that we can do and are doing to help UK exports. As my noble friends Lord Sheikh and Lord Naseby commented, UKTI held a recent trade mission entitled, “Putting British Business on the Front Foot”. That was just at the end of November. During the three-day event, delegates from 21 British companies met potential Sri Lankan business partners from all parts of the country. They were briefed on new business opportunities and they heard from British companies. It is always very important to hear from British companies actually operating in Sri Lanka so that they understand the position on the ground. UKTI Colombo has already been able to assist with new business worth £15 million as a result of this trade mission and a further £17 million deal is now close to finalisation. In addition, a major British company is now considering entering the Sri Lankan market, and we very much welcome that.

Sri Lanka is actually the highest rated country in south Asia in the World Bank’s ease of doing business index. That is good, but we think that there are opportunities to improve the position still further. It can be done through a number of things. First, there should be a reduction in unnecessary red tape, albeit that that is true across much of the UK and Europe. There could also be improvements to security of contracts, protection from what is apparently arbitrary decision-making, and better transparency and governance. We are encouraging the Government of Sri Lanka to take steps to make it easier for British companies to do business there and to reduce the barriers to foreign investment. We believe that Sri Lanka and Britain can also build further trade relationships through the Commonwealth by utilising the expertise and drive found in organisations such as the new Commonwealth Enterprise and Investment Council, which I am delighted to say is being partially funded by this Government.

The Government will also look to hold further trade missions to Sri Lanka so that companies can understand the scale of the opportunities, as they are indeed immense not only within the country itself, but also as a regional hub. We will encourage exporters to look beyond the standard markets of the EU and the US and try to support them both across the UK through our regional trade advisers and on the ground in Sri Lanka through the high commission and UKTI. Finance and credit insurance are also important issues for exporters, particularly in countries like Sri Lanka. Last year, UK Export Finance provided almost £100 million of support to Sri Lanka. It has the further capacity and desire to support business with Sri Lanka going forward.

My noble friends Lord Sheikh and Lord Naseby raised the perennial issue of visas. While I appreciate that the perception of visas is an issue, some 99% of business visas were issued in under 15 days. For business people coming here, there is also an option for a five-day visa. We will continue to listen as issues arise, but with visas it is always important to separate issues of policy from those of process and perception in order to try to establish what exactly the issue is. However, we absolutely will listen if there are issues on a day-to-day basis going forward.

It is important to make the point that UK companies should not let some of the real difficulties of doing business in Sri Lanka blind them to what are also real opportunities, but they should also not let those opportunities blind them to the difficulties. UKTI is here to help them with both.

In conclusion, the Government want to build an even stronger bilateral trade relationship with Sri Lanka in exports, in imports and in investment. At the same time, we will continue to urge Sri Lanka to make progress on the important matters of human rights and reconciliation. In that way, and together with trade, Sri Lanka can secure long-lasting peace and prosperity for all the people of that country. I know that that is what all noble Lords most definitely wish to see.