United States - Sri-Lanka Relations: Economic and Cultural Ties

Vibrant trade relations between the two countries has made the United States the largest trading partner of Sri Lanka, accounting for over thirty percent of Sri Lanka's total exports, and thus, creating a strengthened economy in both nations since the liberalization of its economy two decades ago. Sri Lanka's economy recorded considerable expansion in 1997 with the Gross Domestic Product growth reaching 6.4 percent, compared to the average 5.0 percent increase in earlier years. The manufacturing output increased by 10.3 percent and the unemployment rate declined to 10.4 percent. Total exports grew by 13 percent, and the current account deficit declined to 2.5 percent of the Gross Domestic Product. While the U.S. program of assistance has gradually become less pronounced, the bilateral trade and U.S. investment in Sri Lanka has rapidly increased during the 1990s and the first years of the 20^th century. Textile and apparel have become main export from Sri Lanka to the United States, totally 81.8% of the nation's total exports to the U.S. The amount of trading conducted with the U.S. is governed by a quota system negotiated with the United States on the basis of the Multi-Fiber Agreement, which may be abandoned in 2005 following the global agreement under the World Trade Organization. Presently the other major exports of Sri Lanka are the industrial products (13.3%), ceramic products (1.5%), food products (1.3%), and mineral products (1.0%). Imported into Sri Lanka from the U.S. are mainly industrial goods and wheat. Sri Lanka is the largest exporter of Black Tea, accounting for 24.5 percent of the world tea exports, and the largest producer of cinnamon, accounting for 90 percent of the world exports. (Isaac, 2-7). With the bilateral trade agreements in place between the United States and Sri Lanka, the Sri Lankan economy is undoubtedly rapidly expanding.

Clear Constitutional guarantees against the expropriation of investment, a literate and well trained work force, and an environment that is hospitable to visitors and investors has provided the necessary incentives to attract foreign investment into Sri Lanka, namely that of the United States. The safety of foreign investment is guaranteed through the acceptance by a two-thirds majority of Parliament of the Constitutional Guarantee of Investment Protection Agreement. Under Article 157 of the country's constitution, the agreement enjoys the force of law and no legislative, executive, or administrative action can be taken to breach it. The Greater Colombo Economic Commission, now known as the Board of Investment of Sri Lanka, was established in 1978 to promote foreign investment. "The Board acts as a 'One-Stop-Shop' service center for the investor, providing advice and assistance at every stage of the investment process." (Sri Lanka, 46). There are four Free Trade Zones, Katunayake, Biyagama, Koggala, and Kandy, all providing a wide range of incentives and concessions such as concessionaire rates of taxation, duty free import of project related items, free transferability of shares, freedom to repatriate profits and capital proceeds, and the right to one hundred percent foreign ownership. The AMCHAM, the American Chamber of Commerce of Sri Lanka, is an association of approximately one hundred Sri Lankan and U.S. business companies with the intentions of stimulating and strengthening economic and business relations between Sri Lanka and the United States. The AMCHAM serves to (1) promote and foster commercial industrial economic and business activities, (2) promote American investment in Sri Lanka and further develop trade, (3) maintain an atmosphere of cordial and harmonious relationships both in the public and private sectors, and (4) provide a forum to discuss and act on issues that affect the American and Sri Lankan business and industrial activities. Until recently the main U.S. investors in Sri Lanka were the Singer Sewing Machine Company, Pfizer Pharmaceutical, Union Carbide and Inter-Continental Hotels. Currently, however, there are over eighty-five United States based companies operating in Sri Lanka. These companies include industries in 6 food processing, animal feed mills, manufacture of pharmaceutical products, ceramic titles, garments, lingerie, essential oils, computer parts, telecommunication systems, electrical power systems, chemical products, batteries, and service oriented actives such as financial services, pay phone services, hotels management, trading activities, insurance, courier services, and computer software. AT&T, NCR, Hewlett Packard, Citibank, American Express, UPS, Motorola, Pepsi, Coca Cola, Pizza Hut, Kentucky Fried Chicken are all U.S. companies that have liaison offices and franchise operations in Sri Lanka. (Sri Lanka, 46-49). A strong economic base built upon by U.S. company investments has allowed for significant growth in both Sri Lanka's economy and the output production of American companies.

For quite some time Sir Lanka and the United States of America have maintained mutually rewarding cultural ties, a strengthened social relationship, bringing in artists and intellectuals. Many Americans work or live in Sri Lanka, and many more Sri Lankans have migrated to the U.S. and have become residents or citizens. The Serendipity Group, an association of U.S. friends of Sri Lanka, mainly comprising of U.S. officials who have served or have had connections with Sri Lanka, is active in nurturing U.S.-Sri Lankan friendship. (Zimmermann, 38). Several prominent artists from Sri Lanka have studied in the United States and vice versa, celebrating similar creative movements. U.S. drama groups have lead workshops for aspiring Sri Lankan actors and modern theatrical works have been adapted for this Asian country's stage. The world renowned Ceylon National Dance Company toured the United States in 1959 and received much press from the New York Times on an excellent performance. Works from the portfolios of Sri Lankan artists George Keyt, Manjusri, and Senaka Senanayake have been displayed in American museums and some of Senanayake's paintings have used in a National Geographic Society exhibit entitled "Ceylon's Cultural Heritage." (Rodgers, 82-90). Educational exchanges have occurred between to the United States and Sri Lanka, often government financed or privately funded for the mutual benefit of both countries. The Educational Exchange Agreement has been in place since 1964, allowing professors, farmers, businessmen, teachers, civil servants, and students to come to the United States to study. Sri Lanka has also used the United States model for education, requiring compulsory 7 attendance from age five to fourteen years and maintaining eleven universities offering degrees in humanities, natural science, business management, commerce, mass communication, medicine, dentistry, engineering, agriculture, law, veterinary science, architecture, and computer studies. (GOSL Home Page). Many universities in the U.S. have cultivated close ties with the universities in Sri Lanka with several joint research programs between Sri Lankan Universities and the United States. Linguistic studies of the Sinhala language comprise a portion of the curriculum at Cornell University as part of the U.S. College's partnership with similar universities in Sri Lanka. (Sri Lanka, 18-21). A series of cultural exchanges have created close social connections between the United States and Sri Lanka through education, research, and artistic movements.

Political, cultural, economic, and investment relations between the United States and Sri Lanka has brought great prosperity to both countries along bilateral lines. As the Sri Lankan economy continues to evolve in the twenty first century, its educated labor force, developing lands, and taxation incentives will continue to lure investment from U.S. companies as political and cultural ties are strengthened.

Works Cited

GOSL Home Page. 18 April 2002. 11 May 2002 .

Ludowyk, E. F. C. The Modern History of Ceylon. New York: Frederick A. Praeger, 1966.

Ludowyk, E. F. C. The Story of Ceylon. New York: Roy Publishers, 1962.

Rodgers, Mary, ed. Sri Lanka. Minneapolis: Lerner, 1989.

Isaac, S. D., ed. "Budget Proposals - 2001: Impact on the Export Sector" Business Lanka 19.1 (March 2001): 2-7.

Ross, Russel, ed. Sri Lanka: A Country Study. Washington: US Government, 1990.

Sri Lanka. Embassy of Sri Lanka. 50^th Anniversary of Independence Sri Lanka 1948-

1998: Golden Jubilee Commemorative Volume on Sri Lanka - US Relations. Washington, 1998.

Tesidder, Argus John. Ceylon: An Introduction to the Resplendent Land. Princeton: D.

Nostrad Company, 1960.

Wanasundera, Nanda. Cultures of the World: Sri Lanka. New York: Marshall Cavendish,

1994.

Zimmermann, Robert. Enchantment of the World: Sri Lanka. Chicago: Childrens

Press, 1992.