ETCA needs broad-based consultation with private sector

by Rohana Jayalal

Agreements with neighbouring countries are essential for a country to progress economically. Singapore developed its economy after expanding trade with major countries. However, agreements such as ETCA are not a zero sum game, economic analyst, tax consultant and businessman, Dr. Madunath Perera said.

India is a major industrial country in the region and Sri Lanka must enter into an agreement with India to develop the country, but not an agreement such as ETCA, to develop exports, Perera said adding that Sri Lanka will not benefit from this agreement.

Many professionals said the proposed Economic and Technical Cooperation Agreement (ETCA) will affect the local services sector.

Indian workers could seek employment in banks, services, businesses, the retail trade and engage in fishing in the deep seas under ETCA. The danger of such an agreement should be realised. The government may try to sign the agreement saying that some sectors have been dropped.

“ETCA is a continuation of the Indo-Sri Lanka Comprehensive Economic Partnership Agreement (CEPA),” he said. As the information technology sector is undefined it could be related to any profession or sector. It could include any profession from data entry clerk to an engineer.

India’s economy is huge. However, the most poverty-stricken people and the unemployed in the world live in India. Ninety-four percent of the labour force is not properly employed.

Agreements should be signed with other countries. But, before signing agreements like this with India, the government should consider the unemployment rate in India.

Recently, applications were called for 368 office assistant vacancies and over 2.3 million had responded. Among them 150,000 were graduates while 24,969 were postgraduates. Two hundred and fifty held doctorates.

“The minimum qualification was having studied in a school and the ability to ride a bicycle.

According to another website 85% of the graduates in India are unemployed.

Seventeen percent of those qualified in Information technology are unemployed. This is the situation in India. The government should consider this before signing agreements such as ETCA. As businessmen we are not happy with the proposed agreement,” Dr. Perera said.

He said according to a recent statement in Parliament by the government, the two countries were getting ready to sign the framework agreement of ETCA soon.

It has been said Sri Lanka has already presented its framework agreement to India. It was not made public or presented in Parliament.

Sri Lanka should not lose its economic independence when signing such agreements.

The Ceylon Chamber of Commerce in a media release said the Chamber has consistently supported the expansion of Sri Lanka’s trade interests through signing mutually beneficial and well-designed trade agreements, and this has been clearly articulated in the ‘10 Principles’ on the economy.

“The Chamber believes that agreements are an important tool in deepening trade and investment opportunities for our businesses, within a rules-based framework.

The Chamber has urged the authorities involved in the ETCA to build on this by adopting a systematic consultative and information sharing process with the private sector.

Any bilateral or regional agreement that Sri Lanka forges, must be supportive of the country’s holistic economic interests (rather than cater to individual business interests); must recognise size asymmetry of the economy; and must take a phased approach to liberalisation where domestic regulatory systems need updating.The Chamber notes with concern the level of misinformed opposition proliferating in the media regarding the proposed ETCA.

While we recognise that the final text of an agreement cannot be made public due to the nature of bilateral trade negotiations, the government can consider publishing a ‘White Paper’ on ‘Expanding trade in services, investment and economic cooperation with India’, which captures the government’s thinking on the issue.

There are valid concerns of an uneven playing field faced by Sri Lankan business in India.

The Chamber understands that the Framework agreement includes a chapter on ‘Early Harvest’ of barriers to trade in goods (including quota issues and NTBs).

The opposition to ETCA and further overall liberalisation of trade in goods and services citing ‘national interest concerns’ must be carefully examined alongside the potential gains to consumers and firms in Sri Lanka.

The latter too is a matter of national interest. The Chamber urges the government to not entertain protectionism that may come under the guise of national interest concerns. It is important that the government looks beyond the narrow commercial interests of a few and instead focus on the broader economic imperatives of exports, investments, and job creation to set a course for the future prosperity of the economy.

Over the past decade and a half, the Sri Lankan economy has become more closed and more inward looking than before, resulting in a falling share of global exports. As a small economy with a limited domestic market, trading more with the world and welcoming more business and investment partnerships from abroad is our only path to prosperity.

Services liberalisation needs to be pursued, within a mutually-beneficial framework. While it is governments that sign trade agreements, they ultimately impact – positively and negatively – on consumers and businesses.”