INTERNATIONAL

India, Sri Lanka finalise trade agreement

B. Muralidhar Reddy

COLOMBO: India and Sri Lanka on Wednesday finalised the long-pending draft Comprehensive Economic Partnership Agreement (CEPA) that would boost not only trade but also open up services and investment sectors.

The contours of CEPA were concluded during the two-day talks between the Indian team led by Commerce Secretary G.K. Pillai and his counterparts in the island nation.

The formal agreement is expected to be signed on the sidelines of the SAARC Summit, scheduled to be held here on August 1 and 2 and to be attended by Prime Minister Manmohan Singh. Wednesday’s conclusion of CEPA marks the culmination of 12 rounds of talks at the level of Joint Secretaries and Secretaries of the two countries.

Mr. Pillai told reporters at the end of the CEPA talks: “It is a good overall agreement in tune with the Indian policy of constructive economic engagement with its neighbours”.

The first country with which India entered into a CEPA was Singapore. New Delhi is in the process of negotiating such trade agreements with Japan, South Korea, ASEAN and the European Union (EU).

India and Sri Lanka expect the volume of trade in goods and services to rise from $516 million to $1.5 billion by the time CEPA is fully operationalised in 2012.

The CEPA is a take-off from the 1999 Free Trade Agreement (FTA). While the scope of the FTA was confined essentially to trading in goods, CEPA would cover whole range of services and investment sector. Since the two countries signed FTA nine years ago, the volume of trade has jumped from $46 million to $516 million.

With the operationalisation of CEPA, India would have a negative list of only 345 goods and services in a basket of 5,211. Sri Lanka, on the other hand, would remove 32 more items from its negative list of 1,180 for exporters from India.

The bulk of Indian export to Sri Lanka includes petroleum products and transport equipment (almost 50 per cent of the total), while primary and semi-finished iron and steel is also a fast-growing export item. Among the significant import items are coffee, tea, edible oil, non-ferrous metal imports, spices and electrical machinery.

The CEPA envisages a review at the level of Commerce Secretaries every six months and at the ministerial level every year.

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