The Sunday Leader (Sri Lanka) | 29 August 2010
Shrouded in secrecy
By Paneetha Ameresekere - Business Editor
Director General Commerce Department Gomi Senadhira let the cat out of the bag when he told a seminar on the proposed Comprehensive Economic Partnership Agreement (CEPA) last Friday, that it was an agreement which was originally due to have had been signed in 2008 when Indian Premier Manmohan Singh visited the island for the SAARC summit, based on contents already agreed upon.
However, when this reporter asked him what were those contents that had already been agreed upon then, Senadhira refused to answer that question.
CEPA is yet to see the light of day even after the passage of two years since, due to protests led by certain quarters, especially by some sections of the business community, because of its alleged lack of transparency and fears that Sri Lanka would be swamped by Indian labour if the agreement comes to pass, thereby taking away jobs from locals.
The argument put forward by certain sections of the business community as well as professionals at this seminar conducted by the Organisation of Professional Associations was that the proposed CEPA lacked transparency, and Senadhira’s stoic silence appeared to confirm this.
His contention that once it was almost finalized then its contents would be tabled to the public, didn’t satisfy the audience, whose position was that then it would be almost an irrevocable document.
Senadhira said that what was under discussion in CEPA In regard to the movement of natural persons, under Mode 4 of the General Agreement of Trade in Services (GATS) of the World Trade Organisation , were four categories, including IT, Audio-Visual (Cinema) and Maritime services.
Opening up of Mode 4 was a touchy subject among the professionals present, who comprised doctors, engineers, lawyers, architects and even vets.
Opening up of the audio-visual sector was done after talking to the National Film Corporation, said Senadhira.
When this reporter asked Senadhira what categories under Mode 4 that India wanted to open up to Sri Lanka, he ignored that question, while BoI’s Executive Director Research Dr. Nihal Samarappuli said that India wanted to open-up several categories, more than that asked from Sri Lanka, but was not in a position to immediately list those sectors. But in an apparently contradictory statement, Senadhira also said that none of the professional services are out there in the table right now.
He further said that he cannot table what is being discussed as those are between the two countries. Arjuna Herath, partner Ernst & Young, an audit firm, expressed fears of Sri Lanka being swamped by Indian accountants and raised the issue of the quality factor in the accountancy profession in India on the grounds that it was a protected industry there, therewith restricting its exposure to global best practices unlike Sri Lanka, which, because of its liberalized policy, has a number of multinational audit firms practicing here.
However, Senadhira assuaged Herath’s fears by saying that the accountancy sector will not be liberalized under CEPA as per the discussions as of now. Gratian Peiris from the Institute of Engineers raised the point that CEPA was Government driven. He said that professionals and the country, sooner or later will have to get ready for the dawning of CEPA, and also emphasized the need for certain minimum standards.
Describing the bane of engineering standards in the country, he said that one storm was enough to blow away the billboards in the city. Peiris however said that engineering services have had not been opened up as yet.
Ceylon Biscuits Chairman Mineka Wickramasingha , an opponent of CEPA, walked out of the meeting, allegedly on the grounds that Senadhira was hogging the floor and not giving an opportunity for him to raise any questions.
Peiris said that if the Government is unable to provide the CEPA documents under discussion, then to at least provide a consultative paper. He said that what was at stake were their jobs, the future of their firms and its employees.
Engineer Tudor Munasinghe said let not the CEPA be passed through the backdoor like the Ceasefire Agreement.
Senadhira’s point however was that CEPA would attract Indian investments into the country.
His contention was that despite the fact that the war was over 15 months ago, investments were not coming into the country because there were other countries as well available for investments for the investor.
Senadhira said that CEPA which seeks to broaden the current Indo –Lanka Free Trade Agreement ILFTA) to encompass investments and services as well, would be an incentive to attract such investments. He further said that over 40 such bilateral agreements have had been entered into worldwide. Though the trade gap between India and Sri Lanka has widened, it was not because of the ILFTA, but due to other trades taking place between the two countries outside the ILFTA. Under the ILFTA , trade between the two countries was squared.
Samarappuli’s argument was that if Sri Lanka wishes to double its per capita income from the current US$ 2,000 to US$ 4,000 in five years; savings have to be increased from the current 25% of GDP to 30% of GDP, or, in the alternative investments have to increase.
But let not investments take place at the possible expense of other well run industries in the country having had to close up due to dumping, an allegation, which, however requires closer examination before running into any conclusions.
A little more transparency on the part of the Government on CEPA may put these doubts and fears to rest.