Sri Lanka plans to seal economic pact with India by June
ECONOMYNEXT – Sri Lanka plans to seal and economic pact with India by June International Trade and Development Minister Malik Samarawickrama said.
"We hope to sign a framework agreement before the end of next month," Samarawickrama said.
"We hope to sign the agreement in June. We are now consulting and seeking views of business and also opposition members."
Though Sri Lanka hoped to sign a Comprehensive Economic Partnership Agreement with India for almost ten year, crony protectionist businesses close to the political establishment had blocked the deal for years.
The new administration says it is signing a re-worked Economic and Technical Co-operation Agreement.
Samarawickrema said there were no plans to free the movement of doctors between Sri Lanka and India.
The planned deal will liberalize technology and maritime services he said.
Protectionist businesses try to gouge customers by keeping prices artificially high with the help of import duties imposed by the state.
Most of the so-called trade deficit with India is made up of vehicles including Indian made cars and trucks, which are cheaper to import than from other countries. Such imports also do not come under an existing free trade deal, but are heavily taxed.
Free trade empowers the least affluent in society, including families of Middle East workers and export factory workers ensuring that businesses cannot overprice goods with the help of import duties.
Individual customers lose small amounts of money from each high priced goods and they generally do not have the economic incentive to lobby politicians or newspapers.
But protected businesses get large profits running into millions of rupees from import taxes and can deploy resources and lobby politicians and the media, delaying freer trade.
Samarawickrama said India had a large customer base and investors from third countries could set up factories in Sri Lanka to reach India.
East Asian countries belonging to the ASEAN had expanded trade, reduced poverty and enhanced living standards with free trade, but nations in South Asia had generally done the opposite, keeping people poor.