Financial Times

Professional bodies seek mutual recognition under Indo-Lanka CEPA
Professional organizations in India and Sri Lanka are to meet to work out ways for each country to recognise the other’s qualifications and enable cross-border provision of professional services under the Comprehensive Economic Partnership Agreement (CEPA) that is being negotiated.

“The professional services category is extremely sensitive,” said K. J. Weerasinghe, director general of the Commerce Department. ”We can’t open up immediately. Our difficulty is that we don’t have a regulatory framework but India already has a regulatory framework in place.”

India recognises Sri Lanka’s difficulties and the island would be able to liberalise these services such as in medicine, accountancy and architecture once the regulations are in place, Weerasinghe said in an interview. Likewise, one possibility in the tourism industry is for Sri Lankan tourist guides to work in Buddha Gaya to serve Buddhist pilgrim tourists.

Sri Lankan banks and supermarket chains are also keen to open up branches in India and offer their services in the burgeoning market on the sub-continent, he also said. “It is important to have mutual recognition agreements (MRAs) covering professional services so that both countries recognise the other’s qualifications,” said Weerasinghe. “So in the first stage, professional bodies in India and Sri Lanka need to consult each other and have MRAs. We can’t liberalise until they are in place. We have identified the professional organisations.”

Weerasinghe said the CEPA would seek to build on the Indo-Lanka free trade agreement (FTA), correct its shortcomings and broaden and deepen economic relations such as relaxing rules of origin and reviewing existing negative lists.
Since 2000, the FTA, which covers only goods, has succeeded in expanding trade between the two neighbours to $1.7 billion as well as investment and made the trade ratio more favourable to Sri Lanka.

“But while trade and investment has expanded, still we’re concerned about concentration of trade to limited products,” said Weerasinghe.
“We need to integrate into the Indian economy. The whole world is looking at how they can access the Indian market. Sri Lanka already has access through the FTA. If we’re linked to the Indian economy we ourselves will be lifted up.”
The third round of talks on the CEPA was held in New Delhi two weeks and the fifth round is to be held in Colombo during November 3-4 with the aim of wrapping up a deal by end-December.

Weerasinghe said one of the fundamental principles on which the talks were based was that of recognition of the asymmetries between the two economies just like in the FTA which gives Sri Lanka a longer period to phase out tariff reductions and open up her market. “In the FTA the entire agriculture sector is in the negative list as we’re not in a position to compete with India.”

Progressive liberalisation and sequencing of liberalisation were also important principles given the asymmetries between the two nations. “Sri Lanka’s service sector is extremely sensitive because Sri Lanka is still not a large exporter and is not globally competitive although services now account for over 50 percent of GDP. But we recognise the services sector is needed for economic growth and will help the goods trade.”

India has asked Sri Lanka to allow Indian professionals to come and work in the island under mode four delivery under the CEPA that allows the movement of natural persons such as doctors and lawyers to go to the other country and provide services.

But Sri Lanka was insisting on linking this delivery method to mode three under which a commercial presence is necessary such as allowing doctors and nurses to provide their services only if a commercial presence has already been established here as in the case of Apollo hospital.

In the field of education, Sri Lanka will allow only technical or vocational education institutes such as the Indian Institute of Technology and not touch tertiary education such as universities.

“We’re very cautious in how we go about it,” said Werasinghe. “I tell people not to panic as we will open up systematically.”

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