Sri Lanka’s bilateral free trade agreements (FTAs) that are currently being considered have no liberalization of professionals, a senior official confirmed.
Sri Lanka is currently negotiating with India to deepen the existing Indo-Lanka FTA via the Economic and Technology Cooperative Agreement (ETCA) and is in talks with China and Singapore to sign bilateral FTAs to improve trade and investments.
Institute of Policy Studies Executive Director Dr. Saman Kelegama, who advises the government on these FTAs, reiterated that the ‘Mode 4’ liberalization will not be implemented.
Mode 4 or movement of natural persons refers to one of the four ways through which services can be supplied internationally. It covers natural persons who are either service suppliers (such as independent professionals) or who work for a service supplier and are present in another World Trade Organisation (WTO) member country.
The GATS distinguishes between four modes of supplying services namely cross-border trade, consumption abroad, commercial presence and presence of natural persons.
The first three modes are already practiced in Sri Lanka through various institutions including the Board of Investment (BOI), which provides access under a case-by-case basis. “There will be no liberalization of professionals under all three FTAs that the government is considering,” Kelegama said.
“Even the much debated IT industry and shipbuilding industry will not be included in the ETCA until a request comes from those sectors with one voice.”
Kelegama highlighted that the formation of a national trade policy, which was initiated in October last year, is now in its final stage. He said the implementing issues should be addressed in parallel to the FTA negotiations.
“Trade policy will only be guidance; practical issues of FTAs should be addressed in parallel,” Kelegama said.
Kelegama hit back at certain professionals and unions that currently insist on a national trade policy before signing a bilateral agreement.
“Those who insist on trade policy are not bothered about a foreign policy or an agriculture policy; only when it comes to FTAs, do they ask for a policy.”
Kelegama said the FTA negotiations are also vital as they trigger the need for regulatory reforms in Sri Lanka.
“The moment CEPA talks came to an end, all discussions with regard to regulatory reforms came to a standstill; no one is talking about putting the domestic house in order.
So at least the ETCA and China-Lanka FTA initiatives have triggered the regulatory reforms in this country.”
Kelegama further said even though Vietnam lacks most of the legislative framework they signed the Trans-Pacific Partnership (TPP) as it wants to be at the frontiers of global trading.
“Why have they done that, because this is how the world is moving. Do you think Vietnam got all required acts such as regulatory issues, intellectual property laws and immigration issues together to join the TPP? No.”
He pointed out that Sri Lanka is in an advantageous position than Vietnam with regard to the legislative framework inherited from the British.
“Vietnam has a long way to do that. But they are doing it in parallel on an accelerated basis because they want to be at the frontiers of global trading, value chains and production networks.” -LBO