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CEPA

Aug 20, 2011 3:22:26 PM - thesundayleader.lk

Pros and cons of the proposed Comprehensive Economic Partnership Agreement (CEPA) with India have been the subject of debate in recent times.
Like any agreement, proposed or otherwise, one gets opponents as well as proponents or supporters for the same.
This reporter has noticed that most of the opponents of CEPA are a cross-section of those running business houses mainly catering to certain categories in the manufacturing sector, where the target market by and large being the local consumer as well as certain professionals, such as those belonging to the engineering, accountancy and medical professions who feel that their jobs will be at stake in the event CEPA comes on board.
Surprisingly this reporter is yet to come across any direct opposition to CEPA from the island’s Agriculture sector, ie the fear that if CEPA becomes a reality that Sri Lanka would be swamped by cheap agriculture produce and products of Indian origin, thereby depriving the local farmer from being able to sell his produce in the local market, thus leading to a loss of income and livelihood.
The “silence” of the island’s Agriculture sector to CEPA may be due to at least one of four reasons; those being the confidence displayed by this sector, that it can face any threat emanating from that theatre and be able to hold its own in the event the agriculture sector is liberalized under CEPA rules; or the knowledge that if this sector is to be opened up that it will be done in stages and not immediately, thereby giving them time to prepare their act; or, possibly the one of two likely factors being that the agriculture sector, especially at the grassroots or at the farmer level, not being  as organized as the others who are vociferous against CEPA and lastly the fact that farmers in Sri Lanka, more often than not, operate at subsistence level, thereby having better or more pressing things to worry about  other than CEPA, which, even if they have had heard, may sound something which is abstract to their ears.
The fertiliser subsidy, droughts, floods, crop disease and the threat of wild animals ravaging their harvests may be of a more immediate concern to them than CEPA.
Most of the fears thus far, overtly expressed against CEPA have been centred round  the possibility of Sri Lanka being swamped by cheap Indian labour; and, at the higher level, the threat to the jobs of local professionals as a result and the question of professional standards being compromised in the event such sectors are opened up to the Indians.
Howbeit, among one of CEPA’s overt supporters has been a key shareholder of a diversified blue chip business conglomerate involved in the agriculture, services and manufacturing sectors and which has gone regional. But in recent times this man has maintained a low profile probably because he feels that he is in a minority for more reasons than one!
One of  CEPA’s “vociferous” supporters is Rohan Masakorala, a shipper and a shipper academician who feels that at the rate India is growing (it grew by 8.5% last year and is expected to keep up this momentum in the coming years), coupled with its vast GDP (the GDP of states such as Maharastra and Tamil Nadu are double that of Sri Lanka’s), that the island’s giant neighbour is an opportunity and not a threat to Sri Lanka (see also last week’s The Sunday Leader issue).
Among some of the others who are pro CEPA as also reported in these columns last week are those involved in the freight forwarding trade like a director at Expolanka (he doesn’t fear that his job would be lost to Indians unlike some other professionals here!), at least one economist and certain professionals in the state owned BoI and in the Commerce Department.
Sri Lanka already has on board a free trade agreement (FTA) with India which ambit is limited to the trade in goods. It also has an FTA with Pakistan. CEPA with India additionally wants to broaden the mandate of the FTA to encompass investments and services as well.
India is Sri Lanka’s largest trading partner, third largest importer and biggest exporter. However much of India’s exports to the island are performed outside the FTA, so there is no added benefit to the Indians because of the FTA.
The question is whether CEPA from the island’s perspective would help it to export more to India, provide greater investment opportunities and would also be a channel to export its labour to India; while at the same time ensuring that local jobs are not lost to the Indians and that “local to local” trade is also not disturbed.
While accepting the fact that no agreement is perfect, what the authorities and the relevant stakeholders (including the local consumer!) need to do is to do an analysis about the strengths and weaknesses of CEPA from a Sri Lanka perspective in the backdrop of the existing FTA between the two countries and try to sort out those “asymmetries” with India.
Opposing for the sake of opposing will not help, negotiations will; India, with its 1.2 billion population (being second in size only to China globally) and growing at 8.5% may be an economic opportunity and not a threat to the island.
FTAs and CEPAs are the name of the game in the 21st century; let not Sri Lanka be left out while the rest of the world move on.