SL Govt. to revive CEPA amidst Indian pressure
The Sri Lankan Government, throwing caution to the winds amidst expected local industry protests, is bringing back the Comprehensive Economic Partnership Agreement (CEPA) to the negotiating table following Indian Premier Narendra Modi’s ‘gentle persuasion’.
Highly-placed official sources said a high powered bilateral committee will be set up to prepare a new draft framework for the fresh negotiations between the two countries with cabinet approval to be sought for this purpose.
The committee will comprise representatives of the Ministries of Finance, Industry and Commerce, External Affairs and Departments of Immigration, Civil Aviation, Board of Investment and the Attorney General.
These surprising moves come despite President Maithripala Sirisena’s assurance to entrepreneurs at the recent meeting of Chamber of Young Lankan Entrepreneurs that he will not go ahead with CEPA or any agreement (with a foreign country) that is detrimental to the domestic industry.
When asked to clarify the government’s stance on the prospects of reviving the CEPA, Deputy Minister of Policy Planning, Economic Affairs, Harsha de Silva said “We must push for such agreements. However we must not blindly enter into such agreements. We must study in detail our own experiences and that of other similar countries in order to negotiate the best deal for us”.
He said any bilateral or multilateral trade agreement that benefits Sri Lanka must be pursued – it can be with India or China.
Director General of Commerce R.D.S. Kumararatne told the Business Times that removing non-tariff barriers and enhancing trade and investment are the priorities of Sri Lanka with India and such issues could be addressed via the strengthening of existing Free Trade Agreement (FTA).
He noted that the Finance Ministry officials are currently working on bilateral trade agreements with India and China, and officials of the Ministry of Commerce are participating only in official level discussions.
Meanwhile a senior official of the finance ministry disclosed that if the government goes ahead with the CEPA, India is expected to reduce its negative lists by another 114 items while Sri Lanka would agree to reduce only 32 items,
Under the Indo-Sri Lanka FTA Sri Lanka was allowed to have a larger negative list (1,180 tariff lines) than India (429 tariff lines), he added.
India has also offered additional concessions on the garment quota of eight million pieces that was granted under the FTA.
In the services sector, India has agreed to provide more access than Sri Lanka. India will open far more sectors upfront (about 80 sub-sectors) and grant many concessions in each of these areas.
In return, Sri Lanka will have to open only selected areas (about 20 sub-sectors), and restrict openings in these sectors considering its impact on the country’s service sector, he pointed out.