The labour market or Indian workers visiting Sri Lanka is completely outside the scope of the proposed Sri Lanka- India Economic and Technology Cooperation Agreement (ETCA) with such issues being dealt independently under the Immigration Act, the Ministry of Development Strategies and International Trade said this week. In a statement to the Business Times, on [...]

Business Times

No Indian workers under ETCA but entry possible through SL immigration rules


The labour market or Indian workers visiting Sri Lanka is completely outside the scope of the proposed Sri Lanka- India Economic and Technology Cooperation Agreement (ETCA) with such issues being dealt independently under the Immigration Act, the Ministry of Development Strategies and International Trade said this week.

In a statement to the Business Times, on services liberalisation, the Ministry said it has maintained a consistent policy and informed trade chambers and stakeholders that movement of natural persons (under Mode 4) particularly, movement of independent professionals will not be allowed.

Sri Lanka also not undertake any commitment to open professional service categories such as medical, dental, nurses, engineers, architects, accountants, legal profession, etc. Sri Lanka continues to maintain this position. “However, a certain number of managers, specialists, executives who have experience with minimum number of years may be allowed linked to Mode 3 or investment under corporate transferees, subject to maximum number of years of stay. Hereto, it will be limited in number and linked to employment being provided to Sri Lankan nationals of the same category, on an agreed ratio.”

On services liberalisation in respect of construction, IT, maritime and other sectors, the Ministry said its consultations with stakeholders will continue during the negotiation process and their views will be taken into account before undertaking specific commitments.

It said as an integral part of new trade policy, while sustaining and ensuring growth in the traditional two major markets – the US and the EU-, Sri Lanka is negotiating Free Trade Agreements (FTAs) with emerging South Asia and Far Eastern countries, thus linking to the global production and value chains.

Sri Lanka has embarked on negotiations on FTAs with India, China and Singapore with the last-named, signed on January 23.

Referring to the ETCA process, the Ministry said that the 8th round of negotiations was held on February 21-23 in New Delhi during which special attention was made, to address implementation related issues arising out of the current Indo-Sri Lanka Free Trade Agreement (ISLFTA).

A dossier on Non-Tariff Barriers (NTBs) based on submissions made by exporting companies will be taken for resolution, and these issues include delays in clearance of cargo, in particular perishable goods at Indian ports, varying state taxes, issues on certificates of origin issued, etc.

Consequent to these issues being taken up, perishable cargos are now expeditiously cleared at Indian ports and a number of company specific issues were resolved. This devoted session to address ISLFTA related issues has become a useful mechanism in the negotiation process, the statement said.

The NTB dossier is not limited to issues that were taken up at the previous rounds of negotiations but are being updated with new issues which exporters bring to the attention of the Export Development Board, Department of Commerce and to this ministry.

The statement said that while NTB issues in the dossier are being addressed in the negotiation process itself, as a long term solution, the ETCA will bring forth an effective permanent mechanism titled “Structured Institutional Mechanism”(SIM) to address issues related to clearance of goods in the entry ports of both the countries. If a consignment of cargo is held up, the affected importer and exporter can bring it to the notice of “Nodal Officers” who will identify reasons for delays, if any, and arrange expeditious redressal. “In other words, cargo clearance related issues under FTA/ETCA will be addressed in time bound and transparent manner.

This is a significant achievement as far as resolution of implementation related issues of the existing bilateral Free Trade Agreement ISLFTA through the ETCA process is concerned. The draft annex on this mechanism, which will form an integral part of ETCA is at the final stages and expected to be finalised soon,” the statement added.

Parallel to the FTA negotiations track, Sri Lanka has started discussions with the Food Safety and Standard Agency of India (FSSAI) to recognise a few Sri Lankan conformity assessment laboratories to test Sri Lankan food products and issue test reports confirming that they meet Indian food safety standards. The FSSAI has agreed to accredit at least five Sri Lankan labs and has already arranged a field visit to audit the identified labs in March 2018. This mechanism is expected to address many barriers faced by Sri Lankan exporters and increase exports to India.

The statement said the issue on exporters having to pay varying taxes and additional levies imposed by state governments was raised. With the introduction of the all-inclusive Goods and Services tax (GST) by India where all taxes have been consolidated will also now be applicable at state level as well. “Thus, this issue is resolved.

However, in order to provide information to Sri Lankan exporters and to clarify issues on exemptions, thresholds, calculation of GST, etc. India has agreed to hold a seminar on GST in the month of March for the benefit of Sri Lankan exporters,” the Ministry said.

One of the most important issues that are being taken up for discussion was the removal of quotas on apparel and pepper. The current eight million pieces of quota is inadequate for large exporters to undertake a proper marketing plan to penetrate the Indian market. Furthermore, Sri Lanka imported US$630 million worth of fabric, yarn and apparel from India in 2017 compared to Sri Lankan apparel exports of less than $30 million, the Ministry noted.

On Rules of Origin, under ETCA, Sri Lanka is seeking flexible origin criteria. The originating materials from India incorporated in the production of an item in Sri Lanka will be considered to be originating in Sri Lanka, provided that such good has undergone sufficient working or processing in Sri Lanka. Contrary to the requirement of a minimum domestic value addition of 25 per cent of FOB value in the final exporting country in terms of existing FTA, the new rule does not specify a minimum domestic value addition. “We believe that this relaxation will be a greater boon to source inputs from each other without resorting to third country inputs. As far as Sri Lanka is concerned this flexibility is set to create enhanced opportunities to further boost Sri Lanka’s exports in the large Indian market considering the country’s limited resource endowments. The general Rule of Origin criteria under ETCA is likely to set at 35% domestic value addition and Change of Tariff Sub-Heading as against the 35% domestic value addition and Change of Tariff Heading under the existing bilateral FTA,” the statement added.

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