With the election process ending in Sri Lanka and the Rajapaksa government settling
into its second term, Indiais trying to revive the comprehensive economic partnership agreement (Cepa)
with Sri Lanka.
The two countries already have a working free-trade
agreement (FTA) and had negotiated a Cepa that was ready to be signed in 2008.
But the agreement got entangled in Lankan politics and ultimately forgotten in
the run up to the defeat of the Liberation Tigers of Tamil Eelam (LTTE).
Now, with the election process long over in Lanka, Indiawants to revive the Cepa. Sources said foreign secretary Nirupama Rao had
raised the issue of reviving the Cepa in her interaction with the Lankan
leadership during her recent visit to Colombo.
The issue is likely to figure in discussions when Sri Lankan President Mahinda
Rajapaksa visits Indialater this month.
Before that visit, the Indian side has been quite vocal in
encouraging Colomboto revive the agreement. Ms Rao warned against “protectionist voices” saying
the Cepa would be beneficial for Sri Lanka. “I don’t see why the
success of the FTA can’t be replicated through CEPA... It should work wonders
in trade and services. It is time that Sri Lanka looked at these issues
carefully,” she said.
The Indian side has continued to highlight the success of
the FTA as an indicator of how the Cepa would benefit Sri Lanka. The
Lankan lobby against the Cepa — which also includes businesses — had earlier
argued that it would hurt the Lankan economy.
Under the negotiated Cepa, Sri Lanka was supposed open 32 new tariff lines,
while Indiawould open 114 items. In the area of services, Indiawill open around 80 sub-sectors, while Sri Lanka will open sectors in a
‘more gradual approach’ with about 20 sub-sectors. Indiawill also allow unlimited number of visas to executives, managers and
specialists to work in India.
At present, India’s range of
commitment far outweighs Sri
Lanka’s. Following 13 round of negotiations
between the two sides, the Cepa details were revealed to stakeholders. But
given the time lag, it remains to be seen if there is a call to revisit the
agreement.
The Sri Lankan Central Bank’s Annual Report 2009 supported
the economic partnership with India,
according to a report in the Lankan media. “Given the better investment climate
in Sri Lanka, it can lure
investments using the trade agreements as a platform to capture the vast
markets of India and Pakistan. The
proposed Cepa with Indiaaddresses issues with the free-trade agreement such as conformity assessment
procedures and product standards,” the report said.
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