Proceed cautiously on the proposed pact with India – Mahinda
Posted on March 6th, 2016

Courtesy Adaderana

Former President Mahinda Rajapaksa asserts that the Government should proceed cautiously on the proposed Economic and Technological Cooperation Agreement with India.

I urge the government to table in parliament the agreement they intend signing with India and seek the views of trade chambers, professional associations and the general public before making any decision to enter into this agreement,” Rajapaksa said issuing a statement today.

Full Statement:

The government has indicated that they intend signing an Economic and Technological Cooperation Agreement with India this month. Neither the Parliament, nor the general public have been officially informed about the contents of this proposed agreement. From the draft that has been unofficially released to professional associations by Minister Malik Samarawickrema, we gather that the proposed ETCA is not a detailed document but only a framework agreement which would leave the specific details on the trade in goods, trade in services and investment to be worked out later.

It is important that Sri Lanka should have a robust trade relationship with India. A trade agreement should be entered into only after a proper study of the possible problems and impediments that could arise. We must learn from our experiences with the 1998 Free Trade Agreement with India which ran into many problems in implementation. Issues such as ports of entry, product certification, mutual recognition of standards, Indian state laws governing trade and the caps imposed on certain export items from Sri Lanka all became issues that prevented Sri Lanka from achieving its full export potential to the Indian market.

Apart from thwarting the objectives of the FTA with India, this situation has given rise to a whole narrative about Indian attitudes towards Sri Lanka. The proposed Economic and Technological Cooperation Agreement with India should specify in detail the manner in which economic and technological cooperation between the two countries will take place. Our experience with the Indian FTA shows that what was needed was more detail, and more specificity – not less. Hence the government should not rush into signing open ended agreements leaving the specific details to be worked out later.

The Trans Pacific Partnership which was signed by 12 Pacific-rim countries last month and of which our government speaks so highly, was negotiated for seven years and has 30 chapters detailing the manner in which trade in goods and services between the partners will take place. India has signed agreements similar to the proposed ETCA or the earlier CEPA with, South Korea, Singapore and other countries but these are very detailed agreements formulated with adequate economic and national security safeguards. In opening up the services sector, we ought to know clear boundaries of such opening.

I urge the government to take a phased approach to entering to an ETCA with India. In the first phase, impediments to the implementation of the existing FTA with India should be ironed out. The problem of Indian fishermen poaching in Sri Lankan waters which has now reached crisis proportions should also be sorted out at this stage, to create an atmosphere of trust between the people of the two countries. After a few years of operating the FTA to the satisfaction of Sri Lankan stakeholders, we can then go onto the next phase and work out the specific details to broaden the relationship through an ETCA.

At present, we provide a market of USD 4,000 million for Indian goods. The value of exports from India to Sri Lanka and vice versa need not reach a perfect balance under the FTA. However it is vital that Sri Lankans feel that we are achieving our full potential in exports to India without being impeded by various non-tariff barriers and bureaucratic stonewalling. Our focus should be to get India to open up without restrictions on Sri Lanka’s main exports like apparel, tea etc. Trying to broaden the trade relationship with India without sorting out existing problems, will naturally give rise to public opposition.

I urge the government to table in parliament the agreement they intend signing with India and seek the views of trade chambers, professional associations and the general public before making any decision to enter into this agreement. The arrogant attitude the government has taken in this matter may end up ruining our chances of forging a mutually beneficial trade partnership with our neighbour.

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