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CEPA draws flak

Daily Mirror, Sri Lanka

CEPA draws flak

Ministers slam “island mentality”

By Kelum Bandara and Yohan Perera

6 August 2008

The political parties debated the pros and cons of the Comprehensive Economic Partnership Agreement (CEPA) in Parliament yesterday with the JVP and its breakaway group which is now called the National Freedom Front (NFF) asking the government to scrap it.

The House took up the issue during an adjournment motion moved by NFF MP Wimal Weerawansa who pointed out that the proposed agreement would spell more economic doom to the country in the future.

MP Weerawansa said, the CEPA if signed, would leave a crippling blow particularly to the service sector of Sri Lanka’s economy, and the local enterprises would also be in doldrums due to the possibility of Indian investors gaining upper hand according to the provisions of the deal.

After the signing of the Free Trade Agreement in 1998, he said, India got more benefits than Sri Lanka despite various facts and figures submitted by the government claming otherwise.

He pointed out that India had agreed to open its market for our medical personnel, veterinary surgeons, management consultancy services, property sales, telecommunication services and wholesale trade.

But he pointed out that Sri Lanka’s professionals and entrepreneurs in these sectors would find it difficult to compete with those in India given their high standard and technological know -how coupled with a sound capital.

“How can we reap benefits in such a context without bringing our entrepreneurs to the level of their Indian counterparts?” he asked.

As a result of the FTA with India, he said, Indian vehicles account for 30 per cent of our entire vehicle imports today.

Weerawansa pointed out that Sri Lanka would virtually be the 27th state of India if this agreement was signed.

Responding to MP Weerawansa, Enterprise Development and Investment Promotion Minister Dr. Sarath Amunugama said the Indian market had been expanded today, and the entire world including Japan, the European Union, the United States and Bangladesh were trying to reach it.

Dr. Amunugama said that they consider the Indian market without confining themselves to the ‘island mentality’, and some Indian leaders also shared similar views with Mr. Weerawansa only around ten years ago in India.

“There were such sentiments reigning in Indian politics 10 or 15 years ago. These leaders also talked about a fortress of economy. If you read Indian papers and magazines published at that time, you can notice it. Ten years back, I also went to Goa for a seminar along with late Minister Lalith Athulathmudali. With regard to the agricultural sector, some experts questioned why India was not importing hand tractors from Japan despite the low cost. But, the Indian leaders stressed the need to cling to their products. They believed in a fortress economy at that time,” he said.

He said that even countries such as France and former East Germany also adhered to such policies in the past.

‘Even the Soviet Union tried these policies. But, the modern world has opted for an economy where capital and human resources flow across geographical borders. This is the reality whether we accept it or not,” he said.

Referring to the CEPA he said that it was the result of discussions held for several years, and India would not force us into it.

Responding to Mr. Weerawansa saying that our entrepreneurs had never been successful in the Indian market under the FTA, the Minister presented a list of companies that had established themselves well in India. Among them is the company ‘Damro’ which manufactures furniture.

“Damro has become a household name in India today,” he said while requesting the NFF MP not to underestimate Sri Lankan entrepreneurs. Similarly, the American IT industry now depends on Indian experts.

Joining the debate, UNP MP Ravi Karunanayake said that the CEPA is a vital matter to be debated in Parliament at least for two days. Citing this agreement as an extension of the CEPA, MP Karunanayake said that the government had brought it in a surreptitious manner.

“The government should not do it stealthily. It is a matter to be vibrantly debated in the House so that the chambers of commerce are given a chance to listen to what we have to say,” he said.

The UNP MP pointed out that the CEPA was an export diversification process, and the government should ensure an ‘evenly playing field’ for Sri Lankan entrepreneurs and professionals to take maximum advantage out of it.

JVP MP Bimal Ratnayake who urged the government to cancel the trade agreement said that this was a part of the ‘Regaining Sri Lanka’ programme introduced during the previous UNP period.

The underground power line to be constructed between India and Sri Lanka, he said, had also been outlined in that programme, yet this government had claimed them as their own projects.

Launching a scathing attack on the FTA, he said that Sri Lankans who manufacture joss sticks had to suffer because of Indian imports under this agreement.

The Tamil National Alliance (TNA) criticised the political elements averse from this agreement and said that the government should go ahead without succumbing to their influence.

TNA leader MP R. Sampanthan said that some elements got xenophobia when it came to anything foreign, and said that it was the fundamental reason for them to build hostility against such moves and make harsh criticism.

Mr. Sampanthan said that India was an economic power house that had made vast strides in the economic growth, and hundreds of millions of people had entered the middle class in India today. He said that these people had affluent life styles as those in the western countries today.

He pointed out that various other countries in the world tried to strike such agreements with India, and Sri Lanka had a great opportunity for it as a country located geographically close to it

“Yet, we are not prepared to accept it,” he said.

He said that this type of narrow mindset when approaching anything foreign was detrimental to Sri Lanka’s progress towards prosperity.

“We should not miss this opportunity,” he said.

Minister of Exports Development and International Trade Prof. G.L.Peiris said that anyone should make comments about these matters in an objective and dispassionate manner, but not emotionally.

Prof. Peiris said that there was a huge fear whipped up in the country regarding an influx of Indian professionals to the country and it was absolutely false.

Commenting on the FTA, he noted that there was a similar fear when the FTA was signed in 1998.

He said that, at that time, India was the 16th largest importer of Sri Lankan goods, but it had now become the third largest importer due to that agreement.

Even regarding the CEPA, he said, the government would educate the public about facts, and there was no compulsion on the part of anyone to implement it.

By entering into CEPA with India, the Minister said that Sri Lanka would get enormous benefits such as enhancing of the market access, the relaxation of the rule of origin and custom regulations.