Trade agreements facilitate investments - Samarajeewa

ECTA to be finalised by year’s end:

By Sanjeevi Jayasuriya

Trade agreements are not all about increasing trade, but creating a trade framework and facilitating investments. Imports are needed to ensure export volumes are healthy as this is a two-way process. “We cannot export without importing,” Prof. Rohan Samarajeewa told the Business Observer.

When asked whether trade surpluses are a good thing, Prof. Samarajeewa said that it is not the case always. “We cannot have trade surpluses when there is no mass production and when we deal with huge markets,” he said.

“The trade agreements are for certainty. It lowers risk when doing business. A country knows the rules of trade before entering into a contract and it is not possible to change...

...in midterm,” the Professor said.

The proposed Economic Technical Cooperation Agreement (ETCA) is the most advanced trade agreement the country is entering into so far and it will be finalized by the end of this year. “India is a very important trade partner for Sri Lanka and entering into a trade agreement with India is useful for our country,” Prof. Samarajeewa said.

The ETCA is an agreement for not only goods, but services, investment and technical cooperation. In this global value chain, both goods and services are combined and it is the trend to have both incorporated in an agreement. Trade agreements help to overcome short supply. “When we do not have enough supply and in order to increase supply we need to increase investments.

For this, a trade agreement which gives an investment assurance, is necessary and that is why modern trade agreements involve all the components,” he said.

The Free Trade Agreement between India and Sri Lanka was implemented in 2000 does not have a proper dispute resolution mechanism. There is a basic difference between goods and services agreements. In a goods agreement there is a negative list whereas in a service agreement there is a positive list approach.

The ETCA consists of a controversial clause about the movement of natural persons.

There is a charge that this will allow low-skilled people to come to Sri Lanka. “The basic misconception is we will lose control. It is unfortunate that there are a lot of misconceptions and misinterpretations regarding ETCA,” he said.

“We should realize that the high growth economies are in Asia. We have to develop new markets which are necessary for economic development by joining in global value chain and giving certainty. I endorsed having ETCA with India and the upcoming FTA with China,” Prof. Samarajeewa said.