The ETCA is a bi-lateral trade agreement with India. That is about all that is certain. Although only a few know what the official agreement will entail, fears are already running loose. Therefore it is time for some clarity and discussion on the Indo-Lanka Economic and Technological Cooperation Agreement that has triggered scary rumours.
Shedding light on the agreement
Deputy Minister Eran Wickramaratne explained what the agreement was all about.
Q What exactly does this agreement entail and what is its connection with the CEPA?
“The CEPA was an agreement entered into by the former Rajapaksa government for a more competitive trade with India. The present proposed ECTA is more limited in scope. There are about 150 trade agreements registered with the WTO. Sri Lanka is included in about five such agreements of which the FTA with India is proving to be substantive. A country on average is party to about 10 trade agreements. Sri Lanka has been a slow entrant into trade agreements.”
"A final agreement will be reached within the next few months and implementation is expected by about mid year. Meanwhile a framework of an Indo-Sri Lanka Economic and Technological Cooperation Agreement is available. This document includes many amendments which are the result of stakeholder consultations"
Q Has a document been drafted yet?
“A final agreement will be reached within the next few months and implementation is expected by about mid-year. Meanwhile a framework of an Indo-Sri Lanka Economic and Technological Cooperation Agreement is available. This document includes many amendments which are the result of stakeholder consultations.”
Q What impact will such an agreement have on Sri Lanka especially for sectors such as IT?
“The agreement is to build the on-going trade relations between the two countries. It recognises the present FTA and also agreements in the science and technology signed between the two countries. A special feature of this agreement is that Sri Lanka exports to India could obtain standard and quality certification within Sri Lankan institutions that are mutually recognised. This in turn will avoid delays and additional costs. Another proposal is to remove the quantitative restrictions under the FTA. Sri Lanka has only a few products that it could competitively export to India while India exports many products to Sri Lanka. Therefore it is paramount that we export these limited products without restrictions. For example the quota limit for garment exports to India needs to be removed. The agreement envisages the liberalisation of trade and services while recognising each country’s economic situation and needs. In relation to the IT industry, Indian IT giants could set up operational bases. However we should be mindful that it will be contingent on the availability of human resources for the envisaged operation. We will not be liberalising the movement of professionals under the agreement under GATT rules. The rules permit for restrictions based on educational levels, skill levels, experience etc and can be time-based. So the talk of being swamped with foreign nationals is unfounded. However as it is the case now where technology and knowledge groups export professionals they will be permitted entry on a selective basis.”
Q Why was India selected as the suitable country to have this bilateral agreement and what benefit would India get?
“This agreement with India is because it is a large trading partner. India’s economy grew at about 7.25% PA in this last quarter and when compared to China’s at about 6.8% PA. India is most likely to be the fastest growing economy in the world for the next decade. This is an opportunity for Sri Lanka to understand and make use of that situation. This does not mean that we should limit ourselves. We must pursue other trade agreements too. Sri Lanka is at a new phase of economic development. Doing old things marginally better will not help us. We must boldly pursue opportunities that will give the younger generation jobs and incomes.”
Concerns of stakeholders
IT professionals have raised concerns over the lack of transparency and the outcome of the agreement in the long run. Their main concerns were that there was no effective framework that could ensure the recognition of professionals, and that the qualifications of the professionals can’t be guaranteed. They also raised concerns over work permit allocations and the process of immigration [of the professionals]. Sri Lanka was encouraging Sri Lankans working overseas to return in order to reduce the brain drain. Due to this they want justification in the scaling down of the present salary structure of locals. They also raised concerns over social security.
A protest against the ETCA was held on February 11, 2016. The protesters pointed out that bilateral agreements such as the ETCA were the root cause for the high rate of unemployment within the country, and that it can be solved through the use of local talent to the maximum. They asserted that locals should be given priority when matters of this sort were concerned. They also said if there is no proper government policy that agreements like the ETCA too would be disregarded by the public.
An option with benefits
The Daily Mirror spoke with Professor Rohan Samarajiva, the founding Chair of LIRNEasia, an ICT policy and regulation think tank on his views on the matter. He said that he couldn’t understand why the masses are arguing over a document that doesn’t exist. According to Professor Samarajiva, only a framework agreement exists now.
When further questioned about the impact the agreement may have on Sri Lanka, he said that Sri Lanka was in a position to up its exports. He also mentioned that the legal framework should be liberalised.
According to him, Sri Lanka would then have the chance to offer a million new jobs to locals and that the agreement would create conditions for Sri Lankan firms to join global value chains. He also said that there were many things that needed to be considered when two sovereign nations come into an agreement, the most important factor being the political interest of both countries.
"Sri Lanka would then have the chance to offer a million new jobs to locals and that the agreement would create conditions for Sri Lankan firms to join global value chains"
By Sri Lanka for Sri Lanka
“The earlier Government tried to sign the CEPA which was a comprehensive agreement that included both trade and services. However due to the protest that arose in relation to it, the Government had to step back and is now signing the same agreement under a different name,” said Assistant Secretary of the GMOA, Dr.Nalinda Herath. “The services have been limited to IT and shipbuilding. However IT is a generic term that needs to work in any field. So now there is an opportunity for Indians to invade any sector.”
He felt that any agreement should be after formulating national policy. “There is also a Cabinet referendum of ambulance services in the western and southern parts of the country to be granted to Indian companies.
“The GMOA’s stance is that any ambulance service should be provided by Sri Lanka using a Sri Lankan model. We have enough people to provide that service.”
One thing seen was a lack of communication between the Government and stakeholders leading to fear and the Government being looked at negatively. These cannot be just disregarded especially since past Indian “support” in relation to our civil war hasn’t necessarily been beneficial.
India would also undoubtedly have a higher bargaining power in such agreements. As such is it necessary that all stakeholders are properly included and informed of what this agreement would entail.
"The GMOA’s stance is that any ambulance service should be provided by Sri Lanka using a Sri Lankan model."
Reforms before liberalisation
Professor Sirimal Abeyratne, Professor of Economics, University of Colombo did not dispute the importance of creating competitive markets for Sri Lanka.
However he added: “We are doing something that should be done at the end of the process. We need a process of reform in our business environment, the public sector, in state-owned enterprises, our budget and taxation. There haven’t been reforms since 1989. Things have now got worse over the years and in such an environment suddenly opening up to India is a bad idea.”
The professor went on to say that our economic status was far ahead of South Asian standards and there was no need to “hang on to the fortunes of India to go to heaven.”
“Sri Lanka needs to open up to the rest of the world including India and without these reforms in place such steps would cause adverse consequences.” he said.
"Our economical status was far ahead of South Asian standards and there was no need to “hang on to the fortunes of India to go to heaven.”