By Chandeepa Wettasinghe
A committee has been appointed to look into the hurriedly conceptualized ‘Broader Economic Technology Partnership’ with India.
“Now with India, the Prime Minister had discussions, and we have a small committee that will look into perhaps a Broader Economic Technology Partnership of some sort,” Foreign Affairs Deputy Minister Dr. Harsha de Silva said at the latest LBR/LBO forum themed on economic diplomacy.
During his visit to India last month, Prime Minister Ranil Wickremesinghe said that negotiations on an ‘economic pact’ would be finalized by the end of this year and signed by mid-2016.
However, criticism has been levelled that economic pacts cannot be negotiated within 4 months, when advanced economies typically spend nearly or over a decade in negotiations to ascertain long-term economic and social impacts of such partnerships.
Sources close to the new regime divulged last month itself that the framework of the new partnership would revolve around Sri Lanka and India exchanging professionals in certain economic sectors based on the urgent needs of each country, with the exchanges limited by quotas.
The new pact was hastily conceptualized during the Premier’s three day trip, as intense public pressure rose on the days leading up to Wickremesinghe’s departure against a notion that the new regime intends to renegotiate the Comprehensive Economic Partnership Agreement (CEPA).
CEPA—an expansion of the existing Indo Lanka Free Trade Agreement which deals with goods—was not signed due to protectionist business elements mounting a similar opposition in 2008.
When Indian Prime Minister Narendra Modi visited Sri Lanka early this year, he said that signing CEPA should be an immediate priority of the two countries.
CEPA was to address the free movement of people, investments and services. However, general consensus was that the past regime conducted negotiations without any transparency, going so far as to arbitrarily change some elements in the final draft. The document has not surfaced since 2008.
The agreement may have been an attempted political balancing act of the past regime, which was building close relationships with China and facilitating a greater Chinese control in the Indian Ocean.
Protectionist elements said that CEPA would have opened Sri Lanka to Indians ranging across the economic and social spectrums, displacing Sri Lankans in their own country.
However, officials engaged in the negotiations, as well as Dr. de Silva have continuously said that there were extensive safeguards to open up the economy in a sector-by-sector basis, similar to the new Broader Economic Technology Partnership.
The new regime may run into the same problems as its predecessor if it does not proceed in a transparent manner with wide stakeholder engagement.
Dr. de Silva said that Sri Lankans must become open minded and engage with the outer world competitively instead of cocooning themselves in the domestic market.
“We must get out of this prison that we are different from other people. Look at Vietnam, they have done great... Why don’t we want to have a better trade agreement with India?” he asked.
Exploring how to join TPP
Dr. de Silva said that Sri Lanka will explore the possibility of joining the recently finalized Trans Pacific Partnership when he visits Washington D. C. next week.
“I plan to restart some of the discussions that stopped 10 years ago. For instance, what happened to the discussion on a possible free trade agreement with the United States? What about the Trans Pacific Partnership? Why is no one talking about it?” he asked.
Finance Minister Ravi Karunanayake this week claimed that the seeds to joining the TPP were sown when he and Foreign Minister Mangala Samaraweera visited the US capital earlier this year, as discussions had taken place regarding the subject.
Dr. de Silva acknowledged the far flung effects Sri Lanka will face—especially in the number one export in the form of apparel—if not included in a free trade agreement with the US.
“People in the TPP club will purchase in the club, because it is easier,” he said.
The Vietnam government expects the TPP to boost Vietnam exports to the US by 13-20 percent annually till 2017, and expects US investments into the already large apparel sector of the country.
Sri Lanka’s exports to the US in 2014 were valued at US$2.99 billion or 24 percent of the country’s exports. US$1.99 billion of the exports to the US were in the form of apparel.
“We must determine our priorities—what sort of trade agreements we want to make,” Dr. de Silva said, and added that the Chinese FTA process was rushed by the previous government.
The TPP negotiations were finalized earlier this month. One potential obstacle to the process could be a lack of approval for the pact in the US Congress. However, the federal government had been positively disposed towards it earlier this year.
Dr. de Silva is currently on a world tour. He will visit Jakarta, and after arriving back on the island on Sunday morning, and in the same evening leave to visit Mexico, the US and Russia.
“My subject will be economic diplomacy,” he said proudly.