Leading industrialists call for closer scrutiny of ILCEPA

By Gamini Warushamana

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Discussions on the India Sri Lanka Comprehensive Economic Partnership Agreement (ILCEPA) took a new turn after some leading industrialists who do business with India challenged the agreement as a great threat to the country and warned that the consequences could be fatal to the country’s economy.

Ironically, most of the industrialists who were referred to last week as the main beneficiaries by a key figure in the Sri Lankan negotiation team Dr. Saman Kelegama, met in Colombo to protest against the ILCEPA. They told the media that the negotiations were not transparent and the content of the agreement was a secret.

“The little we know is not encouraging. We know that it is irreversible, which means once it is entered into there is no way of getting out”, they said

Chairman, Ceylon Biscuits Ltd, Mineka Wickramasingha said that nobody in Sri Lanka had requested for this kind of agreement. Why should we enter into such an agreement with a huge economy like India? Who wanted such an agreement?

Some pundits have pointed out the benefits but we have to look at the ground situation. We already have a Free Trade Agreement (FTA) with India, which was signed hurriedly by politicians and what benefits have we achieved? he questioned.

He said that after the FTA, the trade balance changed drastically in favour of India and the Indians were allowed to enter the country without a visa but the reciprocity was not allowed, he said.

India benefits

Wickramasingha said that the Indian authorities do not respect what has been agreed upon in the FTA and there is no free trade between the two countries. Non-Tariff Barriers (NTB), state government regulations and customs regulations mitigate the free trade to India. There is no level playing field and only India benefits from these agreements, he said.

The Managing Director of Multichemi Group Samantha Kumarasinghe said that officials who were involved in the negotiations had told President Mahinda Rajapaksa that CEPA is only a simple extension of the FTA.

Kumarasinghe who took part in the CEPA negotiations during 2002-2005 representing the Industrial Development Board (IDB) said that during the negotiations they proposed to study the benefits of the FTA and revise it before starting negotiations on CEPA.

He pointed out that the Indian companies do not bring investments or technology into Sri Lanka but are merely grabbing our resources. For instance, we sold 30% of our petroleum business to the Indian Oil Company (IOC) for Rs. 700 million.

Later IOC raised Rs. 1,200 million in Sri Lanka with an IPO. Land and other infrastructure acquired by IOC is over Rs 1 billion. Today over 20,000 Indians are working in Sri Lanka without work permits.

When we question the adverse impact on the country’s economy, the officials who took these decisions say that it is not their responsibility. He said that the officials are Indian agents and they do not consider the interests of the country.

Great threat

Kumarasinghe who has made investments in India looking for benefits under the FTA said that the FTA was not practical because India was not honest in implementing it. He left India after one year.

“However, I have been doing business without any FTA with Bangladesh where I have factories for over ten years. CEPA is a great threat to the country and Indian agents have designed it,” he said.

Managing Director of Samson Rajarata Tiles (Pvt) Ltd, Dr. Bandula Perera said that CEPA was conceived in the Joint Commission Report of 2003. Ken Balendran represented Sri Lanka at the Commission and the objective of the Commission was to review the NTB effect on the FTA. However, the Commission came up with CEPA to open the service sector and investment liberalisation.

Dr. Perera who represented the Board of Investment (BOI) at the CEPA negotiations said that the Indian negotiation team is strong and did not change till the end of the negotiations. But we did not have any plan.

After the FTA, Indian investors opened 16 Vanaspathi and 12 copper factories in Sri Lanka. These industries were primitive and they brought 18th century technology and unskilled labourers to the country.

There were several explosions in these factories and in some factories even toilet facilities were not provided for the workers. Therefore, the BOI had to order them to close the factories.

When these exports to India affected their local industries in 2006 India unilaterally restricted Sri Lankan exports and the industries collapsed. It was the same with our pepper exports. When people in Kerala opposed Sri Lankan pepper imports, India unilaterally restricted our exports. This should not be so in a Free Trade Agreement, he said.

Loopholes

Dr. Perera said that due to the loopholes in our regulations we failed to mitigate the adverse impact of the FTA. There were radioactive substances in some imported inputs for the Vanaspathy industries. All these radioactive substances should have been re-exported but they didn’t import even a single Kilogram. These aspects have not been considered in the FTA.

Vice President of the Organisation of Professionals Association (OPA) Tudor Munasinghe said that there is much pressure from India to sign the CEPA. He said that Sri Lankan professionals will gain in service sector liberalisation only if there is a level playing field.

As Sri Lankan professionals have various limitations to exploit the Indian market, the government should help professionals as Chinese and South Korean governments helped their professionals to exploit the Middle East market.

The certification mechanism for Indian professionals to practise in Sri Lanka is a must. They should comply with our standards. The agreement has not been published and professionals or industrialists are not acquainted with the content of the agreement. Therefore, it should be published and open for public debate, before it is signed, he said.

Ranjith Hettiarachchi of the Samson Group said that there should be a proper plan before opening the service sector. After identifying the shortage of professionals in the country work permits should be issued for a limited time period. There should be a registration procedure to ensure that professionals maintain our standards.

There are millions of unemployed graduates in India. India attempted to export these skills to Singapore under the FTA with Singapore but failed.

The sole objective of India is to export these unemployed people and therefore we have our reservations over CEPA which may do damage to the country, he said. Our industrialists said that they are not anti Indian as all of them already do business with India.