The Sunday Leader

ETCA Instead Of CEPA?

by Hasitha Ayeshmantha

Indian Prime Minister Narendra Modi and Sri Lankan Prime Minister Ranil Wickremesinghe

With Prime Minister Ranil Wickremesinghe and President Maithripala Sirisena putting a full stop to the rumours on reinitiating the Comprehensive Economic Partnership Agreement (CEPA) with India, attention has now been shifted to the Indo Sri Lanka Economic and Technology Co-operation Agreement (ETCA). The move has been viewed by some as an attempt to re-introduce CEPA under a different name.

Talks of CEPA came in the limelight soon after the new government was re-elected at the August general election. Many stakeholders of the Sri Lankan economic sector as well as members of the private sector expressed mixed feelings on the topic of economic partnership between Sri Lanka and India.

However, many raised concerns over the matter claiming that entering into an economic partnership with a larger and much more diverse economy will affect Sri Lanka rather than attracting benefits. They warned the Sri Lankan government saying that forming an exclusive economic partnership agreement with India will be ‘unconventional’ as the two economies are not compatible with each other. They stressed that an emerging economy such as Sri Lanka cannot afford to compromise the economy through such an agreement. They asserted that the government should not step into the matter without a proper study.

Meanwhile, talking to The Sunday Leader on grounds of anonymity, a key stakeholder of the private export sector said that if the government intends to initiate an agreement similar to that of CEPA, but under a different alias, it would not serve the purpose of economic development. He said that especially after the Prime Minister and the President themselves announcing that the country would not go for an economic partnership agreement with India.

But, he pointed out that if the aforementioned agreement encourages more Foreign Direct Investments (FDIs), increase export opportunities, encourage local manufacturing sector, and attracts more technological investments towards the local industrial sector, that the need of the hour is a solution which would bring forth the above result. He finally added that if the new ETCA would cater the above result, then there is no actual threat in initiating the above agreement, within the proper mandates.

On a similar note, speaking to The Sunday Leader on a previous occasion, renowned economist Dr. Sirimal Abeyratne said the same.

Prime Minister Ranil Wickremesinghe, during his visit to New Delhi on his first visit abroad since winning the general election, said voters had given his government of national unity a mandate for trade and investment with India.

He said that Sri Lanka is looking at a permanent agreement on cooperation on economic affairs – trade, investment, and technology – which is essential for development, in India, Prime Minister Wickremesinghe had told reporters after meeting Indian Prime Minister Narendra Modi that Sri Lanka seeks better partnerships with India to strengthen bilateral trade and economic ties.

The Prime Minister said he held discussions with Indian Prime Minister Narendra Modi and other leaders on enhancing economic cooperation between the two countries. An agreement on economic and technological cooperation will be signed in Colombo in May or June 2016. It was learnt that Narendra Modi has been invited to visit Sri Lanka for that purpose.

According to Wickremesinghe, Indian Prime Minister had praised Sri Lanka for appointing Tamil Parliamentarian R. Sampanthan as the Opposition Leader of the House. He also expressed his pleasure for Geneva’s response regarding the Sri Lankan issues.

The general election’s win was the second shoe to drop in an electoral cycle that began in January with reformist President Maithripala Sirisena’s defeat of Former President Mahinda Rajapaksa, who had a strong relation with China with the defeat of the LTTE.

Narendra Modi, since gaining power in May 2014, has embarked on an active neighbourhood policy in South Asia, seeking to revive ties that were long clouded by India’s sympathy with Sri Lanka’s Tamil community during the civil war. The Indian Prime Minister addressed fears that India’s $2 trillion economy could dominate that of Sri Lanka, with a gross domestic product of just $75 billion, by saying that he would like bilateral trade to grow and become more balanced.

“We both want deeper economic engagement,” Modi said. He added that Indian businesses were keen to invest in Sri Lanka’s infrastructure, energy, and transport sectors.

Wickremesinghe said he hoped a framework economic cooperation agreement could be agreed in principle by the end of this year and to have final agreements ‘in place’ by mid-2016. Bilateral trade touched US $3.64 billion in 2013, the last year for which figures were available from the government. Of that, India’s exports to the island were $3.09 billion while it imported $543 million worth of goods from Sri Lanka.

Speaking to The Sunday Leader earlier, Janatha Vimukthi Peramuna (JVP) Politburo member and former Parliamentarian K. D. Lalkantha said the JVP was staunchly against the proposed CEPA agreement and that they were ready to take any measures necessary to prevent the government from initiating the proposed agreement.

He said that there are many factors that should be taken into consideration before establishing a partnership agreement or economic relation with India. Highlighting some facts which were overlooked by many when conversing on the controversial CEPA agreement, the former parliamentarian said that opening up the Sri Lankan industries and bringing in unemployed Indian workers to work in local industries for a lesser salary will not answer the unemployment issue in Sri Lanka but deteriorate it further.

The next concern raised by the former parliamentarian was that forceful synchronization of the two industrial sectors of Sri Lanka and India will create much more challenges than providing solutions for the already existing issues in the local industrial sector. He added that in addition to competition.

India-Sri Lanka signed Free Trade Agreement (FTA) in 1998. Looking at the results of the agreement both the countries engaged themselves in negotiating a CEPA, which include trade, investment, and technology transfer etc. The CEPA negotiation was initiated in 2005 and concluded in July 2008, after 13 rounds of negotiations.

CEPA comprise of four objectives; widening and deepening of the existing FTA, establishing an agreement on trade in services, including measures for promotion of investment in each other’s countries and enhancing economic cooperation. Both parties decided to sign CEPA during the 15th SAARC Summit held in Colombo, but due to reservations expressed by the Sri Lankan government, the signing of the agreement was halted indefinitely.

The aforementioned reservations were based on two broad concerns: about the nature of CEPA itself and that the drawbacks in the FTA being needed to be dealt with the first, prior to embarking on a CEPA.

Meanwhile, expressing views on the economic partnership between the two countries from an industrial point of view, Secretary of the Lanka Confectionary Manufacturers Association (LCMA) Adrian Fonseka told The Sunday Leader that they do not believe that CEPA nor any agreement that carries the same gist would be able to deliver the goods that Sri Lanka requires and that it would not be a wise decision for the government to initiate the agreement. The other side of the coin is that India has always been on the positive side of CEPA and now with the new agreement stepping into the spotlight and with Indian Prime Minister’s remarks on the benefits available to Sri Lanka through a partnership with India; it further strengthens the arguments made by the opposing parties.

3 Comments for “ETCA Instead Of CEPA?”

  1. Just Society

    “… were long clouded by India’s sympathy with Sri Lanka’s Tamil community during the civil war.” All Sinhalese knew well that that clouded cleared in 1986! Tamils understood same in 2009. That’s how the events unfolded.

    Tamil Nadu power brokers’ sentiment is just that, Sarath Fonseka said, to paraphrase just noise boxes.

    Tamil Nadu can speak for India no more than Nuwara can speak for Sri Lanka.

  2. tika

    Sri lankan attitudes are classic like the Portuguese PIGS of Europe.
    The common market gave everyone in EU prosperity but the PIGS decided to take it for granted and stopped paying tax.
    Lanka is dogged with the muslim mulla saying no to Hindia because it likes only caliphate
    Sure Hindia is not the best as it has no hardware but it has lots of software and pharmaceuticals which even the Chinese are begging for.
    Bullying Lankans are guilty facing Hindia because contaminated DNA.

    But Hindia does not think like Lankan- it has bad English logic too and are confident. Nabob’s `loot` came into the Cambridge dictionary like curry.
    Bengali’s are regretting but no one trust them when they write` Indian restaurant` only stupid tourist from USA visit them at London and most are shutting down with the competition.
    Sure Hindia returns would not be the same as Englishman’s returns.
    Leave alone China but ASEAN nations would not `adopt` Lanka .

    Exporters are screaming because they are used to playing with foreign exchange and money laundering. We know this game inside out.
    Till 48 administration came from across the pond and then weren’t we wealthy and peaceful. These are the new breed of stupid exporters who have no idea of industry except garments. The monks destroyed any form of automobile industry because there was better money in spares and the Sinhalese were into the spares market.
    Businessman and politicians can never be trusted because they are good to buy and sell even the country for their commissions.
    Ideally have as many common markets and be like Swiss which has the 2nd largest container yard in the world but is landlocked.
    The good thing about external agreements is it gives transparency and accountability a face than Lanka’s alone handling. (honestly fed up of sri lankans a disgrace, low salaries)
    Salaries are low there will always be corruption so this is one way of walking forward for a better future with safety and fairplay.
    No president of lanka could be trusted to do away with the president.
    Sobitha is sick after the high jacking of common candidate.

  3. mr modi well you can speak about srilanka prime minister appointed the opposition leader mr sammathan you were happy. mr Rani fail to cooperate with the opposition demand regarding tamils problem. Geneva meeting srilanka killed 40 thousand people in Jaffna tamils. what india was supported srilanka mr Rajapaska government the most undemocratic to interfere in srilanka mr modi you are not a positive person . the man for the hour.

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