CEPA is yet another step in Indian Expansionism

The Sunday Leader | 13 June 2010

CEPA is Yet Another Step in Indian Expansionism

By Mandana Ismail Abeywickrema

The proposed Comprehensive Economic Partnership Agreement (CEPA) between Sri Lanka and India would give the opportunity for India to take charge of the Sri Lankan economy, says JVP General Secretary Tilvin Silva.

In an interview on the CEPA and India’s stance on Sri Lanka, Silva told The Sunday Leader that the agreement is part of India’s expansionist and dictatorial attitude towards Sri Lanka. “The CEPA cannot be looked at as an isolated issue. India’s policy towards Sri Lanka needs to be considered,” he said.

Expressing doubts on the benefits Sri Lanka would gain through CEPA, Silva said, “The government has so far remained silent on the contents and has only said it would be beneficial to the country. The CEPA in fact is not beneficial to the country. Otherwise the government would not have to hide it.” Excerpts:

Q: Are you aware of what the document pertaining to CEPA contains?
A: The government has not spoken of or presented the complete contents of the agreement. Therefore, the full content is not known by anyone. However, there have been several documents related to the CEPA that have been put forward by both parties, that have indicated the contents and the intentions of the agreement. It is very clear that the Sri Lankan government has agreed to sign the CEPA, which is aimed at creating a free trade policy between India and Sri Lanka by removing taxes and other Customs barriers for goods and services. According to the agreement, even Indian manpower can come in to the country, creating problems to local manpower as well as manufacturers.

Q: If you have not seen it how can you criticise it?
A: It is the responsibility of the government to make known the contents of the agreement. The CEPA cannot be looked at as an isolated issue. India’s policy towards Sri Lanka needs to be considered. Also, the World Trade Organization (WTO) has been trying to enforce these kinds of agreements and at the Cancun Summit tried to create a tax-free policy in trade among countries. However, it could not be implemented due to heavy opposition that was raised by many countries. The WTO then started to encourage bi-lateral trade agreements between countries, and the CEPA also originated as part of this movement. Strong economies try to encroach on smaller economies through these bi-lateral agreements.

Q: Should not this document be made public?
A: The contents and the intentions of CEPA need to be presented to the public and parliament before signing it. The government has so far remained silent on the contents and has only said it would be beneficial to the country. The CEPA in fact is not beneficial to the country. Otherwise the government would not have to hide it. The argument put forward is that Sri Lankan products could be taken to the Indian market and vice versa without taxes through the agreement. India is a strong economy and a large manufacturer. Already 40% of the local market is filled with Indian products and that is after paying taxes.
Sri Lanka is not a large-scale manufacturer and does not possess products that can capture the Indian market. According to the Central Bank report, Sri Lanka imports many items, as we do not manufacture most of them. Therefore, while Sri Lanka would not have many exports to the Indian market, the Indian products will take hold of the Sri Lankan market.

Q: Has the government taken a decision to sign the CEPA?
A: The government has decided to sign the CEPA. Minister Keheliya Rambukwella has confirmed this through statements made by him on the CEPA. The date of signing the agreement has not been publicised due to the public opposition that has taken place. The President had already signed seven agreements during his Indian visit. CEPA was also to be signed during his Indian visit, but was delayed due to the opposition. However, the government has arrived at a policy decision to sign the CEPA.

Q: How many goods are exempted from tax by CEPA and what are they?
A: We learn that the CEPA has three lists that include a total of 1,861 goods and services that are to be exempted from taxes. Any country slaps taxes to protect local manufacturers even while enforcing free trade agreements. For example, Japan has imposed heavy taxes on rice imports and India on milk. All this is to protect the local manufacturer. The CEPA removes these taxes. All we know is that a large number of Indian goods and services would benefit from this agreement while the benefit for local manufacturers is not yet clear.

Q: What are the service areas whose exchange barriers are to be removed by the agreement?
A: The exact number of services is not known. However, if the agreement is signed, Indian workers can enter Sri Lanka and gain employment. Sri Lanka already has an unemployment problem. India has a large population and a large number of the Indian work force would definitely enter Sri Lanka. This would cause many problems to the Sri Lankan workforce. When Indians come and work in Sri Lanka, the country’s money would also flow to India.

Q: What are the reasons for the government to change the stance it took in 2006 and 2007 regarding CEPA?
A: We see that Sri Lanka’s foreign policy, especially in relation to India, is based more on adhering to other nations than creating a friendly policy. It is evident when you look at the past deals. Look at the Indo-Lanka Accord that was forced on Sri Lanka by India in 1987, their actions during the war and how they have taken charge of several key sectors in the country. India has managed to take over a large extent of land in Sampur in the East to set up a power plant. That land has now become Indian property.
When there was a death that had taken place in that area in Sampur, the Sri Lankan Magistrate could not enter the area without receiving permission from the Indian authorities. India has also been given 68,000 acres of land to set up a free trade zone. The CEPA is yet another step in Indian expansionism. The President during his visit to India signed seven agreements. Two of those agreements are based on the economy. One agreement is to permit India to build a rail track between Thalaimannar and Madhu. The government earlier gave India’s Rite Company leave to construct the coastal rail track.
The other is a pact to exchange electricity. India earlier proposed to sell electricity to the northern parts of Sri Lanka through South India. This is a threat to national security. When you take the country’s petroleum distribution, India’s IOC has taken charge of 50% of it. The power and energy sector is an important part of any country. India getting a stronghold of it is a threat to Sri Lanka. India will be able to cripple Sri Lanka’s economy with one move. Key sectors of Sri Lanka’s economy are being taken over by the Indians.

Q: Do you think there are intentions of signing such agreements with other countries as well?
A: Not to our knowledge. However, the JVP is not against bi-lateral or multi-lateral agreements. However, the benefits must be equally distributed among all parties and it needs to be carried out in a transparent manner. It is very important that agreements address issues of all concerned parties and enjoy mutual benefits.

Q: The JVP is insisting CEPA will deal a crippling blow to our economy. Can you explain how?
A: As I said, India is a large-scale manufacturer and gives relief to its manufacturers. Their product cost is low and such products will be cheap in the Sri Lankan market. This will affect the local products, as the local manufacturer would not be able to provide products that are cheap due to high manufacturing costs. For example, if Sri Lanka imports potatoes from India, the local potato grower will be in dire straits. Even when you take manpower, it would be the same. India will gain, while Sri Lanka would lose out. On the whole, Sri Lanka will be badly affected.

Q: Do you think it has the potential to knock out local enterprises because of the possibility of big Indian investors gaining the upper hand, according to the provisions of the deal?
A: Indian investors could come in, but there needs to be legislation in place to safeguard the rights of the local enterprises. That is what many countries have done. When Honda from Japan decided to commence operations in India, they had to amalgamate with the Hero Company in India and form Hero Honda. It was the same for UK’s Leyland Company when they entered India and joined Ashok Company to form Ashok Leyland. India managed to get the technological benefits as well as part of the profits from the foreign companies through such a move. We must also get the technical know-how and be profited if we are going to allow Indian investors to enter in to the local businesses. However, in this case, the Indians will leave us with nothing taking all the benefits and profits.

Q: Have local industrialists been consulted?
A: No one knows the details about the CEPA, but local industrialists have objected to the agreement. We have also discussed about the issues and have voiced our objections, but the full content of the agreement needs to be known.

Q: Are you saying that CEPA would mean one-way traffic for Indian entrepreneurs?
A: Yes, it would be so if it were signed. Sri Lanka has been part of Indian expansionism for a while. India has tried to force its political, economic and cultural intentions on us. President Mahinda Rajapaksa and his government should consider India as a friendly country. However, in a recent interview with the Indian media, the President has said Sri Lanka is India’s little sister. Thereby voluntarily accepting that Sri Lanka would be an obedient little sister to big brother India.

Q: What exactly would be the economic benefits to the country as a result of this agreement?
A: Cannot consider the benefits. It is all about the economic strengths of the countries. When you consider economies of various countries, the strong economies always destroy the weak ones. Regardless of various arguments put forward about equality, in reality, the strong always destroy the weak.

Q: How successful has the Free Trade Agreement (FTA) between India and Sri Lanka been?
A: The success rate cannot be seen, as the government has been unable to show any benefits reaped by the country through the FTA. Apart from Indian goods and services taking over the local market there are no other benefits. Look at the advantage taken by IOC when selling oil in Sri Lanka. They can get oil from India and sell it without having to pay a large amount of taxes.

Q: Is it correct that India has granted a lot of duty free concessions to Sri Lanka and we are aiming to widen and deepen the market access to India by this agreement?
A: The government is trying to say that the CEPA will be beneficial to the country. However, it is not so in reality. We do not have strong goods and services to take over the Indian market.

Q: What do you think is India’s agenda on Sri Lanka?
A: India has a dictatorial and expansionist attitude towards Sri Lanka. They believe we need to be obedient. India wants to subject Sri Lanka to its political, economic and cultural expansionism. There are countries with strong economies in the region and India has the strongest economy in South Asia. India needs a market for its products and it cannot encroach in to the other strong markets in Asia like China or Japan. They cannot encroach markets in strong Western countries as well. Therefore, India needs to look at weak economies to take hold of for their products. India has now set its eyes on Sri Lanka and is trying to take charge of the country’s economy.

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