No CEPA with Lanka till export surges curbed
Financial Express | Saturday, August 05, 2006
No CEPA with Lanka till export surges curbed
HUMA SIDDIQUI
NEW DELHI, AUG 4: India has warned Sri Lanka that it will not proceed with the comprehensive economic partnership agreement (CEPA) until Sri Lanka puts a check on its copper, pepper and vanaspati exports to the country.
The Indian market has been flooded with the three commodities, which are duty free under the bilateral free trade agreement.
According to an official, India has asked Sri Lanka to impose voluntary restrictions on these exports but Sri Lanka is unwilling to oblige.
“In our recent meeting with Sri Lankan officials in New Delhi, we took up the issue of checking import surges. The Sri Lankans did not look keen to abide by our suggestion of imposing voluntary restrictions,” he said.
The official added that India has firmly told Sri Lanka that a solution has to be found before India could proceed with the CEPA negotiations.
Earlier this year, haggling over the negative list had pushed back trade talks between India and Sri Lanka on liberalising its service sectors.
Senior officials pointed out, “There are a few nagging issues like exports of vansapati oil that we are unable to iron out at the trade level. They have to be taken up at the political level before CEPA talks can make headway.”
India is currently Sri Lanka’s third largest export market, with $1.45 billion in bilateral trade. India is also the island’s fourth largest investor, with investments of over $450 million. But a surge in duty free exports of sensitive products has both the sides riled. Sri Lankan exports of Vanaspati has doubled to 2,00,000 metric tonnes in 2005, from less than 1.00,000 metric tonnes the year before.
India wants vanaspati exports capped at 1,00,000 metric tonne, which Sri Lanka says it cannot do. Sri Lanka had voluntarily agreed to cap exports at 2,50,000 metric tonnes in 2003, and recently imposed a $30 a tonne levy on raw material imported into the island for processing and re-export as vansapati.
However, according to officials, they have not respected the export cap.
“We need to have quantitative restrictions, but there are huge investments that have already been made in this sector on the basis of what was agreed.”
