The Island Business | 10 October 2009
Regional politics could lead to damper...
No CEPA with Pakistan before India
Sri Lanka is very likely not pursue a comprehensive economic partnership agreement (CEPA) with Pakistan because a similar agreement with India was put in cold storage last year as Sri Lanka decided not to sign the agreement with India amidst mounting domestic pressure.
"The government is not pursuing a CEPA with Pakistan because the one that was negotiated with India was never concluded," a senior official told the Island Financial Review on condition of anonymity.
As at 2007, Sri Lankan exports to India was ten times as much as exports to Pakistan.
"We would not want to antagonise India just to please Pakistan on this issue," an analyst said.
Minister of Export Development and International Trade, Prof G. L. Peiris was not available for comment in the light of the election campaign in the South while Gomi Senadhira, Director of Commerce, Department of Commerce, was also not available for comment.
Meanwhile, a well informed trade economist told the Island Financial Review that Sri Lanka would not want to antagonise India by signing a CEPA with Pakistan before concluding the CEPA with India which has long being negotiated and haggled-over.
Sri Lanka was supposed to sign the CEPA with India on the sidelines of the 15th SAARC Leaders’ Summit in Colombo in July 2008 but heavy domestic pressure from business fearing they would be overrun prevented President Mahinda Rajapaksa from committing his signature to the document.
But economists highlight the need for Sri Lanka to take advantage of being close to India as India and China are believed to be the two countries that would actually steer the world away from its recession and be growth engines and economic power houses of the post-crisis global economy.
According to Data from the Statistics Division of the Department of Commerce, in 2007, total imports from India amounted to US$ 2.78 billion. Exports amounted to US$ 516.4 million. The trade deficit was US$ 2.26 billion.
Total imports from Pakistan during 2007 amounted to US$ 179 million, exports US$ 55 million and the trade deficit was US$ 123.9 million.
The difficult Indo-Pak relationship has made the regional grouping SAARC, at best, a mere showpiece.
Economic and trade related goals aimed at uplifting living standards of South Asia’s people could never take off the ground because the two biggest countries in the region cannot agree on many of the ‘really’ important SAARC initiatives.
Political issues have precedence over economic issues that can really make a change in people’s lives.
At the Inaugural South Asian Economic Summit in Colombo last year, many economists and technocrats singled out the Indo-Pak relationship as the main spoiler to what SAARC could actually achieve.