'CEPAs, the way forward'

by Lalin Fernandopulle

Sri Lanka should go for comprehensive economic partnership agreements to be in line with modern global business trends else we would be isolated from the rest of the world which is going for comprehensive economic partnerships, Director General of Commerce R.D.S. Kumararatne said.

He said if Sri Lanka is to survive in the modern business world we need to go beyond trade in commodities and focus on services, investments and cooperation in technology.

"We should not confine comprehensive partnerships to a single country. Sri Lanka should focus on more countries and develop trade in services and investments for which there has to be sound strategies with private sector input," Kumararatne said.

He said over 400 Free Trade Agreements (FTAs) are active worldwide and each country is party to at least one FTA.

Sri Lanka has FTAs with India and Pakistan. While a FTA with BIMSTEC is in the pipeline, two rounds of negotiations for a FTA with China have been held.

Sri Lanka has held 13 rounds of negotiations on the comprehensive economic partnership with India. Scepticism on India being the major beneficiary leaving fragments to Sri Lanka from the partnership has kept discussions in the slow burner.The discussion on CEPA with India came to a halt during the former regime which was not keen to pursue negotiations due to negative perceptions of industrialists and political parties.

Proponents and optimists of the comprehensive economic partnership with India have been advocating for the implementation of the agreement seeing the brighter side of it and the need to move beyond trade in goods to services and investments. At a recent business Chamber meeting, Economic Affairs Deputy Minister Dr. Harsha de Silva said, "We need to be optimistic and forge ahead with broader consultation."However, he said that the Government will not be party to any agreement if it is not in the best interests of the country.

Chairman and Managing Director, KIK Group of Companies, Lalith Kahatapitiya said that before going for a comprehensive economic partnership with any country we should first put our house in order with proper regulations to control foreign professionals operating in the country without registration from an authorised institute and also protect local industries. He said there should be anti-dumping laws and an authorised organisation to regulate movement of people from foreign countries. There are plenty of foreign professionals calling themselves engineers and architects working in Sri Lanka.

There are no measures to check the practice."We should go for partnerships with other countries only after proper rules and regulations are in place to safeguard local industries," Kahatapitiya said. Kumararatne said, "Sri Lanka has all the trappings for successful trade with healthy international relations, geographic position and skilled workforce which the country should capitalise on to boost trade.

We need to develop the confidence of exporters on engaging in trade with other countries. Sri Lankan exporters should build trust with Indian counterparts, understand trade limitations and rules of origin should be relaxed.”

He said that over 100 private sector stakeholders had been consulted and added that it is not correct to say that there were no consultations.

Trade negotiations are held on a government-to-government basis. Private sector inputs are obtained for negotiations through a continuous consultation process.

It was pointed out at a recent Chamber meeting on CEPA with India, that there is nothing in black and white about the agreement for public study.

Kumararatne said that local businesses should see the trend in the world, where economic integration is taking place covering areas such as trade in services and investments.

He said that while we need to focus on the FTA with India and make maximum use of it, sorting out issues such as non-tariff barriers, we need to go beyond trade in commodities to services not only with India but with other countries as well.

Kumararatne said Sri Lankan exports have increased 10-fold since 2000 following the FTA with India. Sri Lanka exports around 60 percent of its products to India under the FTA.

However, he said that Sri Lanka has not fully exploited its potential due to trade impediments such as non-tariff barriers which has led to loss of confidence among exporters who prefer to trade with Europe or USA.

The EU and USA account for a large share of Sri Lanka’s exports.

“With regard to CEPA with India we need our closest neighbour to invest to develop backward links for domestic industries and diversify exports.

There has to be further negotiations and consultation with India and the wider spectrum of the business community in Sri Lanka before implementing CEPA or for that matter any bilateral agreement,” Kumararatne said.