Sri Lanka trade negotiations dogged by false criticism

ECONOMYNEXT  – Sri Lanka’s trade negotiations are dogged by false criticism and baseless fears spread by lobby groups, and debunked claims are repeated even when a signed deal is available for anyone to read, officials have said.

A key fear spread by some professional organizations, such as a doctors union, is that foreigners will ‘flood’ Sri Lanka and offer cheaper services to consumers, lowering costs for the poor.

But officials say so-called ‘mode 4’ services freedoms, where an individual (natural person) can move to Sri Lanka to provide services are not involved in any of the trade negotiations now being negotiated.

"The government has said that it will not be opening mode 4 through trade negotiations," Ravi Ratnayake an advisor to the Development Strategies and International Trade Ministry said.

He was speaking at a conference organized by the Institute of Policy Studies in memory the late Saman Kelegama, a top trade economist.

Sri Lanka is planning to leverage its location by setting up a network of trade agreements currently being negotiated with India and China, and one recently signed with Singapore.

More deals are being considered with Bangladesh, South Korea, Thailand and Malaysia.

Ratnayake said most of the criticism levelled against a free trade deal, which has already been signed  with Singapore was baseless.

Central Bank Governor Indrajit Coomaraswamy recently asked critics to show a single section in the Sri Lanka Singapore FTA that allowed foreign professionals to enter the country freely.

Unlike in deals which are yet to be signed, where fears can be spread, the Singapore FTA is already signed.





The deal allows some foreign staff to be brought to work in companies set up by Singapore investments.

SriLanka is still negotiating an Economica nd Technology Cooperation Agreement (ETCA), with India, where much more work remains to be done.

“Even now only 60 percent of ETCA is negotiated," Ratnayake said. "So it will take another one year or even more."
So far, Sri Lanka and India have engaged in eight rounds of negotiations for the ETCA.

"There is fake news that ETCA is going to destroy all industries and jobs," Ratnayake said.  "On industries, I don’t think ETCA will have much of an impact. Because ETCA is an extension of the current FTA."

“The FTA part will remain more or less the same as I understand, but there will be other elements like services and investments.”

He said that the FTA has been in effect for over a decade already but there haven’t been large scale business failures.

The FTA also has a so-called ‘negative’ list. India has anyway liberalized more products than Sri Lanka, though some problems in access remains with non-tariff barriers at some Indian states.

“So basically misinformation and misrepresentation of fact,” Ratnayake said, adding that on the negotiation team is working hard on genuine problems.

And in services, ‘Mode 4’ is not part of the Indian deal, officials have said.

Popular Indian imports such as vehicles do not fall under reduced tariff lines in the FTA.

India was Sri Lanka’s third largest export market in 2017, accounting for 6.1 percent of all exports, or 691 million US dollars. However, India was the biggest source of imports to Sri Lanka, claiming a 21.6 percent share, or 4.5 billion US dollars.

According to the Central Bank, in 2017, only 6 percent of Indian imports to Sri Lanka came through the FTA, while 64 percent of Sri Lanka’s exports to India were under preferential terms. (Colombo/July03/2018)

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