Why proposed ETCA ‘framework’ should never be signed
Posted on March 20th, 2016

By C. A. Chandraprema

The UNP’s rally at Lipton Circus last Tuesday was supposed to be a public show of strength in favour of the proposed ETCA with India. The Prime Minister announced that they would be bringing people onto the streets on 15 March to counter those who had been opposing ETCA and this was the show he promised. The UNP even took the unusual step of having the rally at Lipton Circus without having it at Hyde Park. This may have been the first time in the UNP’s history that they took over Lipton Circus which had always been the exclusive preserve of radicals. It was a good show as far as the attendance went though it was certainly not a Nugegoda-like event. We know that the UNP is not a party like the JVP which can get the better part of its membership to turn up for rallies. It also took the form not really of a rally of the UNP proper, but a youth rally against efforts to scuttle ETCA. However we did not see any banners or slogans explicitly promoting ETCA.

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Instead what we saw were slogans demanding that plans for a ‘new Sri Lanka’ should not be blocked by anyone and that no one should oppose the plan to create ‘one million jobs’. The message was far from explicit. We did not hear any of the speakers at the Lipton Circus saying that the ETCA with India would be signed and that this was the way forward for Sri Lanka. Instead we heard Minister Akila Viraj Kariyawasam saying that there was a conspiracy to deprive the UNP of its hard won victory and Minister Harin Fernando saying that the Rajapaksas were somehow responsible for the blackouts affecting the country. What is the message they were supposed to convey to the public? Even after that rally nobody is any the wiser about ETCA.

If the Joint Opposition is opposing ETCA, there are some very cogent reasons to back up that stand. Foremost among the figures in the Joint Opposition opposing ETCA is Prof. G.L.Peiris a one-time minister of export development and international trade in the Rajapaksa government. The stand that he has been advocating is that before signing any pact to take the trade relationship between India and Sri Lanka to a higher level, the outstanding issues in the existing free trade agreement with India should be ironed out. Among the issues that stand against Sri Lanka’s inability to derive the due benefit from the FTA with India are issues such as the ports of entry into India assigned for Sri Lankan exports, the non acceptance of product certifications and standards between the two nations, the limits imposed on the importation into India of some of Sri Lanka’s key exports, the licensing arrangements for Indian importers of Sri Lankan goods, and various taxes imposed by Indian states on imported goods all of which have prevented Sri Lanka from achieving its full potential in exports to India.

After 15 years of the operation of an FTA with India, the total Sri Lankan exports to India stood at 645 million USD in 2015 as against over four billion USD worth of Indian exports to Sri Lanka. Prof. Peiris points out that Sri Lanka is awash with Indian produced vehicles of every description, yet less than 1% of Sri Lankan tea and apparel exports goes to India under the FTA. The rest of Sri Lanka’s exports of tea and apparel goes to the rest of the world on normal trade arrangements – which brings into question the value of the existing FTA with India. After 15 years of operation, our main export to India is arecanut said Peiris, pointing out that we export 67 million USD worth of arecanut to India. Adding insult to injury, we exported only 34 million USD worth of apparel to India while importing 94 million worth of apparel related products from India! Exports of tea to India is just 17 million USD. Even though there has been much hype about the expanding middle class in India, Sri Lanka’s main exports have not been reaching that middle class.

Getting the Indians to open up these sectors is just one part of the problem. Even if Sri Lankan goods are allowed to be exported to India without limit on paper, what actually happens on the ground in India is that there are various non-tariff impediments to exporting goods from Sri Lanka. Many Sri Lankan exporters say that the existing FTA is ‘free’ only for the Indian side not the Sri Lankan side. Prof Peiris says that at the level of bilateral discussions, the Indian side fully recognises the ‘asymmetries’ between Sri Lanka and India and are more than happy to agree that the agreements should be structured in such a way as to be fair by Sri Lanka. However nothing has happened to change things at the ground level.

Peiris says that that there must be some clarity in what the government intends signing with India. The proposed Economic and Technological Cooperation Agreement ETCA is being negotiated behind everyone’s back while at the same time they are surreptitiously implementing some very critical features of the proposed agreement. At one level they are trying to allay fears among the public and in particular among professionals by saying that nothing has been decided yet and that we are still negotiating a framework agreement and that everyone will be fully consulted. They say that they will be opening up the services sector to India only in two sectors – shipbuilding and IT.

But they are implementing on the ground agreements in other sectors such as the health sector. Take for instance the proposed Indian ambulance service which has been introduced to Sri Lanka through a cabinet paper and is already in the process of implementation. As far as the opening of the Sri Lankan services sector is concerned, the people are going to be presented with a fait accompli and the actual ETCA agreement will largely be irrelevant – they will be able to do everything they want under cover of the ‘framework’ of the ETCA which they now intend signing.

In introducing this Indian ambulance service the prime Minister’s cabinet paper on the subject does not explain why there is a need to give an Indian company the right to operate these ambulances instead of giving that opportunity to one of the private companies operating ambulances in Sri Lanka or even setting up a separate unit under Sri Lanka’s own health service. Each Indian ambulance will have a paramedical team and a right to establish health centres for which the Sri Lankan government will provide land and buildings. Furthermore, there is no regulation of the number of health centres that the Indians will be encouraged to establish in Sri Lanka.

The advertisement that has been published in the local press by this Indian company for ambulance drivers offers Rs. 25,000 per month for drivers for a 12 hour shift. Obviously there are not going to be that many Sri Lankan applicants. If Indians are recruited to these positions, Sri Lankan job opportunities will be taken away. An agreement for the trade in goods is more straightforward than an agreement for the trade in services. By opening up the IT sector you are essentially opening up every sector in which IT is used to a greater or lesser extent. In allowing an Indian ambulance and pre-hospitalisation care service to set up operations in Sri Lanka, you are essentially opening up the Sri Lankan health sector to Indian paramedics, nurses and indeed even doctors as what is going to be offered is a pre-hospitalisation service with medical centres and the like.

The intimidatory tactics adopted by the Prime Minister to push through this proposal clearly indicates that none of this is really going to be of benefit to Sri Lanka and the government knows it. The Prime Minister says the GMOA does not have any business to get involved in the debate about ETCA and he threatens journalists who write negatively about ETCA. If this proposed economic cooperation pact is really going to benefit Sri Lanka, the government has been extraordinarily unsuccessful in showing the public how this country will benefit from such an arrangement. Where the Sri Lankan government failed, the Indian High Commissioner in Sri Lanka stepped in to see whether he could do a better job at a recent workshop for exporters to Sri Lanka. He seemed to suggest that we should be satisfied with our less than 650 million worth of exports of Sri Lanka, and that Prof G.L.Peiris who has been leading the charge on behalf of the Joint Opposition against ETCA should have stuck to law instead of getting into politics.

None of this has helped the Sri Lankan public to feel that there would be some advantage for Sri Lanka to be derived from this proposed ETCA with India. So long as the outstanding problems in the existing FTA with India remains, there will be no question of being able to convince the Sri Lankan public that the ETCA will be beneficial to Sri Lanka. Hence the most rational course of action would be that suggested by former president Mahinda Rajapaksa – you first iron out the issue of various bureaucratic impediments that prevent Sri Lankan exports from entering the Indian market in the agreed quantitities, and ensure the proper functioning of the FTA to the extent that Sri Lankan stakeholders feel that everything that can practically be exported to India is moving smoothly without any impediments. After operating the FTA in that manner for some years, you then go onto the next step of working out the details of an ETCA with India.

 

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