Top exporter urges govt. to resolve FTA issues before ETCA

A leading exporter has urged the government to resolve the prolonged issues with the existing free trade agreement (FTA) with India prior to signing the controversial trade and services pact which will open up market access to both goods & investments and services.  

Sarada De Silva, who is also the outgoing President of the National Chamber of Exporters of Sri Lanka (NCE) said compared the much touted Economic and Technical Cooperation Agreement (ETCA) between Sri Lanka and India is like putting a coat to hide the patches of a worn-out shirt without stitching these patches. 

“What we ask from the government is to solve these existing issues with the FTA first because our exporters go through much stringent and challenging non-tariff barriers (NTBs) when they send their goods to India,” De Silva told at a media gathering organized by the NCE last week.  In fact the trade balance between Sri Lanka and India has over the years expanded exponentially where Sri Lanka in 2015 imported US $ 4.3 billion worth of goods from India as the country’s largest import destination but exported only US $ 643 million to India in return.  

This demonstrates that there is a large trade imbalance between the two countries and any deeper trade and services integration could well make the matters worse if Sri Lanka fails to create capacity and scale domestically. 

The ruling administration and a section of economists appear to believe that proposed ETCA as the panacea for all economic ills in Sri Lanka while accepting that NTBs are a key issue when trading with India. 

De Silva, who was instrumental in positioning Ceylon Cinnamon in the global map, therefore said it is of paramount important for Sri Lanka to create scale before any deeper integration with any country.  
Apart from ETCA, Sri Lanka plans to sign free trade agreements with China and Singapore in a bid to attain preferential access to a market of 3.0 billion people. 

The ETCA frees up the Sri Lanka’s services sector enabling Indian professionals to enter the Sri Lankan labour market. But the government maintains that the movement of people will only be permitted on limited sectors such as IT and shipbuilding. 

Meanwhile, De Silva who is also the founder and a former Chairman of the Spice Council of Sri Lanka, said he is opposed to allocating industrial zones for specific nationalities or countries but in favour of product-specific industrial zones. He made these remarks in reference to the recent plans to allocate 15,000 hectares of land to the Chinese to set up industrial zones. China said they would invest up to US $ 5 billion to set up industrial zones in Matara, Embilipitiya and Monaragala where 2,600 factories are to be built. These firms are expected to generate up to 90,000 direct employment opportunities and another 310,000 indirect employment opportunities.