'FTA not mutually beneficial'

Expert : Issues should be ironed out

By Sanjeevi Jayasuriya

There are serious issues in the Indo-Lanka Free Trade Agreement (FTA) that India and Sri Lanka should iron out before phasing into other trade agreements. The FTA should be of mutual benefit to both countries which is not the case at present, Vice President SAARC Chamber of Commerce, Past President Federation of Chambers of Commerce and Industry of Sri Lanka and Past Chairman, International Chamber of Commerce, Tissa Jayaweera said.

India has many advantages over Sri Lanka in the current FTA and there should be a close dialogue to make the FTA reciprocal, he said.

“There are benefits in having trade agreements. However, they should work towards enhancing trade opportunities while creating a level playing field. This is where socio-economic benefits will seep down to the grassroots level," he said.

Jayaweera said, “Sri Lanka accepts the Certificate of Origin (CO) issued by the Export Council of India. By contrast, India accepts the CO at the whims and fancies of the officer-in-charge at the Customs which causes delay in the clearance of goods.

To avoid such delays both countries must have mutually recognised accreditation.Harmonisation of standards for perishable commodities will make the trade process faster as it reduces dual checking of the same commodities at port of origin and destination.

The trade for pharmaceutical products is dominated by agents in Sri Lanka, which gives monopoly power to the agents to discriminate against the exporters.

Evidence shows that some agents have breached their trust with Indian exporters and import duplicate medicine from some other supplier in the name of their exporter.

This could lead to adulteration of medicine and may be life threatening. Sri Lanka must take action to make this market competitive to reduce the monopoly power of the agents.

Good governance will ensure competitiveness among exporters and importers, he said.

Neither Sri Lanka nor India use the US dollar as their currency in the domestic economy, but trade takes place through the US dollar which causes dual payment of exchange cost, transaction cost and bank charges which again raises the invoice value of the product.

Allowing one currency (Sri Lankan rupee or Indian rupee) would help reduce the transaction cost and the price of the dollar will also be under control in the global market.