Business Times

Indo-Lanka CEPA deadlock ends

By Bandula Sirimannna

The Sri Lankan government has broken an impasse over the Comprehensive Economic Partnership Agreement (CEPA) which has been dragging for several years, and decided to renegotiate some sections of the proposed agreement with India.

An inter agency committee will be set up to prepare a new draft framework for the negotiations. "The Inter Agency Committee will comprise representatives of the Ministries of Finance, Industry, External Affairs and Economic Development and Departments of Immigration, Civil Aviation, Board of Investment and the Attorney General," an official source said. Cabinet approval has been granted to set up this committee, on a proposal made by Rishad Bathiudeen, Minister of Industry and Commerce, the government announced this week.

There have been fears and even protests in some quarters in Sri Lanka that the proposed CEPA will give India more advantage in terms of getting professional jobs in the island besides imbalances (in favour of India) in investment opportunities between the two countries.

An agreement might be reached only towards the end of the year, a senior official of the Minister of Industry and Commerce told the Business Times. If and when the CEPA is finally inked, India is expected to reduce its negative lists by another 114 items while Sri Lanka would be reducing only 32 items. This is despite the fact that under the Indo-Sri Lanka FTA Sri Lanka was allowed to have a larger negative list (1,180 tariff lines) than India (429 tariff lines), he added.

India has also offered additional concessions on garment quota of eight million pieces that was granted under the FTA. In the services sector, too, India has agreed to provide more access than Sri Lanka. India will open far more sectors upfront (about 80 sub-sectors) and grant deeper concessions in each of these areas. In return, Sri Lanka will open only selected areas (about 20 sub-sectors), and to restrict openings in these sectors to levels it is comfortable with.

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