Dr. Harsha de Silva on CEPA:

‘Exports vital to achieve double digit growth’

by Lalin Fernandopulle

“Sri Lanka will not go ahead with the Comprehensive Economic Partnership Agreement (CEPA) with India if it is of no help to the country”, Economic Affairs Deputy Minister, Dr. Harsha de Silva said, he was addressing a public debate on CEPA and its implications on Sri Lanka. It was organised by the National Chamber of Commerce of Sri Lanka (NCCSL) last week.

He said that passing the 19th Amendment (19A) is a great achievement and that now we should be optimistic and work together to achieve economic goals. Reaching a consensus on the 19A was not easy and is a milestone, upholding democracy and justice to all citizens in the country.

“I have a key role to play as entrusted by Prime Minister Ranil Wickremesinghe on what has to be done with regard to the CEPA, Free Trade agreement with China, USA and restoring the GSP Plus concessions to Sri Lanka.

Despite certain concerns regarding the GSP Plus, we need to consider strengthening trade relations with rich countries. We are hopeful the GSP Plus concessions will be restored by the end of this year or early next year”, Dr. De Silva said.

Sri Lanka lost the concessions in 2010, following the then government’s failure to comply with the United Nations conventions.Opponents of CEPA said that prior to engaging in negotiations with India on the proposed partnership agreement, Sri Lanka should make full use of the Free Trade Agreement(FTA) with India which was signed in 1998. On the contrary, proponents of CEPA said the notion that the agreement will open the floodgates for Indian corporates to take over Sri Lankan enterprises and get away, leaving peanuts for Sri Lanka is a myth and that we should be optimistic about the benefits that will accrue to the country. Sri Lanka and India commenced negotiations on CEPA in 2005 which include trade, investment and technology transfer. Negotiations concluded in July 2008 following thirteen rounds of discussions.

The objectives of the agreement are widening the current FTA, setting up an agreement on trade, services and, measures to promote investment in both countries and enhance economic cooperation.

“As in the case of the 19A, any negotiation has plenty of criticisms. There has to be give and take. If we open to a foreign investor to set up business in the country, he or she should in turn provide an opportunity for investment in his or her country. Our Government will take up negotiations on CEPA with all stakeholders, give it time and be pragmatic and not emotional in reaching a consensus “, Dr. De Silva said.

He said that the Government was in favour of trade but it does not mean opening up for any and everyone.”We want to create a strong, equitable and wealthy Sri Lanka. Our aim is to make Sri Lanka the most competitive country in the region.

We will formulate policies to improve competitiveness through a vibrant work force and enhancing productivity. We cannot achieve double digit growth without exporting services”, Dr. De Silva said.

Nature’s Beauty Creation Chairman, Samantha Kumarasinghe said that Sri Lanka should enter into trade or service agreements with countries that have a better per capita income and employment rate. India’s per capita income and employment rate is low. “CEPA is a bilateral agreement which is binding and commitments cannot be withdrawn.

We need to look beyond India and consider trade agreements with China, Brazil and Malaysia which have a larger per capita and employment rate. Sri Lanka has a better per capita income than India. CEPA must be debated in Parliament”, Kumarasinghe said.

DSI Samson Group Managing Director, Kulatunga Rajapaksa questioned as to whether we needed the CEPA Agreement when even the Indo-Sri Lanka Free Trade Agreement (ISFTA) performance is not satisfactory. We need to be extra careful with bilateral agreements. We need to ask whether ISFTA has been of any good to Sri Lanka. Exports to India is unsatisfactory. The ISFTA was signed in a hurry and as a result it has failed to benefit Sri Lanka..

“Can we be happy with the exports of a large quantity of arecanuts and animal feed to India. The eight million quota for apparels to Sri Lanka is peanuts. How can we develop exports if the potential is restricted”, Rajapaksa queried.

LIRNE Asia, Chairman Prof. Rohan Samarajiva said that the imagination of fear mongers was running riot. “We need to be hopeful.

A services strategy is vital and a legal framework is essential for regulation. There should be arbitration panels for dispute resolution. Trade liberalisation is not exporting more and importing less. It is about improving productivity and when productivity improves exports grow. If services are the future, we should focus on this sector”, Prof Samarajiva said.

Critics of CEPA said that they have not set eyes on the document and that it was absurd to discuss without anything in writing”, he said.