Government in talks with India to amend FTA

11 December 2013 07:29 am Views - 5045

The Sri Lankan government has started fresh talks with India, in a bid to bring changes to the existing Indo-Lanka Free Trade Agreement (FTA), as the controversial Comprehensive Economic Partnership Agreement (CEPA) has not come to fruition due to protest from various quarters, a top bureaucrat disclosed.

Investment Promotion Ministry Secretary M.M.C. Ferdinando said the objective of these discussions was to look at how the FTA could be re-structured to make it more favorable to Sri Lanka.

“Now discussions are taking place to change the FTA and to go for a new (trade) arrangement with India,” he said.

The government has taken a lot of flak trying to promote a CEPA with India, but despite the successful bi-lateral discussions, a pact could never be signed due to protest from local businessmen, nationalistic forces and public alike due to fears of cheap Indian goods flooding local markets.

“Because there were a lot of objections against CEPA, the Ministry of Industry and Commerce is currently in (other) discussions with India in order to see the possibility of eliminating unfavorable provisions and conditions in the FTA,” Ferdinando explained.

Meanwhile Minister Lakshman Yapa Abeywardena said that the government had included more items in to the sensitive list (negative list) affecting imports from India as the Mahinda Rakapaksa regime has been promoting import substitution despite autarky has failed in many countries in the past.

“We have included so many items in to the negative list in order to discourage products that can be produced here. We have included Pingan Gadol (tiles), electrical wires, conduit pipes and certain types of tiles which cannot be produced locally,” he said adding that more items would be added in the future.

According to a recent study carried out by Colombo University Professor in Economics Sirimal Abeyratne, the IndoLanka FTA covered only 56.3 percent of imports from India, indicating that the non-FTA imports also remained significant.

Under the Indo-Lanka FTA, Sri Lanka’s negative list covered 1,220 products compared to India’s negative list of 431 products, affecting Sri Lanka’s exports to India.

Despite Sri Lanka’s lengthy sensitive list affecting imports from India, the expansion of non-FTA imports was greater than the FTA imports during the decade up to 2010s.

As Sri Lanka Customs reported, 91.8 percent of total imports from India (6,522 products) and 85.7 percent of total exports to India (1,765 products) were covered by the Indo-Lanka FTA.

In value terms in 2010, 56.3 percent or US $ 1.4 billion of the total imports from India and 88.2 percent or US $ 423 million of the total exports to India provides ample testimony to this. (DK)