Sri Lanka and India need to now move boldly towards the Comprehensive Economic Partnership Agreement (CEPA), said Indian Prime Minister while addressing the Business Forum organized by a group of Indian business leaders led by the Confederation of Indian Industry this evening (13 March) at the Taj Samudra Hotel in Colombo.

Meanwhile, Chairman of the Ceylon Chamber of Commerce, Suresh Shah who is also Director/CEO of The Lion Brewery Ceylon while referring to the already existing Free Trade Agreement between Sri Lanka and India said, “We have given our fullest support to the ground-breaking Indo-Lanka Free Trade Agreement which we understand was the first such agreement for both countries, we have argued in favour of the principle of a Comprehensive Economic Partnership Agreement (CEPA) subject of course to the fine print. As may be aware, CEPA has been on the backburner in Sri Lanka. This is partly due to politics and partly due to concerns on the part of some sections of the Lankan business community who perceive a playing field tilted in favour of their Indian counterparts.

“The complex regulatory environment in India may have contributed to the latter concern,” Shah added.

Meanwhile, the CEPA begun initially in 2003 is yet to be implemented by Sri Lanka and India. The majority of the Sri Lankan business community and professional bodies were not convinced about the benefits from a CEPA. They were of the opinion that a bilateral agreement between a small country and a large country is bad news for the small country.

As reported by the Indian media, Sri Lanka’s President Maithripala Sirisena had deliberately avoided talking about the Comprehensive Economic Partnership Agreement (CEPA) with Indian Prime Minister Narendra Modi when they met in New Delhi last month.

What is CEPA?

The India-Sri Lanka Comprehensive Economic Partnership Agreement (CEPA)

Joint Study Group (JSG) was set up in April, 2003 to widen the ambit of Indo-Lanka Free Trade Agreement to go beyond Trade in Goods to include Services and to facilitate greater investment flows between the two countries.

Report of the JSG was submitted in October, 2003. Based on the recommendation and conclusion of the JSG, CEPA negotiations were started in February, 2005 and concluded in July 2008, after Thirteen Rounds of Negotiations.

Both sides had decided to sign the CEPA during the 15th SAARC Summit held in Colombobut due to reservations expressed by Government of Sri Lanka, both sides have still not signed the Agreement. The Government of Sri Lanka can be asked the reasons of such delays and future course of actions.

Both sides after 13 Rounds of Negotiations have agreed to enter into Comprehensive Economic Partnership Agreement, the last round being concluded in July, 2008.

Salient features of CEPA:

Trade in Goods:

·    Reduction in Negative List by each country would provide additional market access.

·    The Agreement provides for review of Negative Lists together with TLP within (60) days of signing of CEPA.

·     Both India and Sri Lanka have agreed to reduce tariff to zero percentage for items removed from Negative List within 3 years.

Trade in Services:

·     Both sides had agreed as a base level to offer their schedule of commitments at the WTO level – India at its Revised Offer to the WTO and Sri Lanka at its Initial Offer to the WTO.

Economic Cooperation:

·     Both countries have also agreed to promote economic cooperation in mutually identified sectors like fish, energy, drugs & pharmaceuticals, textiles, financial, infrastructure, tourism etc. for greater economic integration.

Investment:

·    The Investment Agreement will provide an institutional framework to create an enabling environment for greater flow of investments between the two countries.

CEPA also has the following agreements:

·     MRA on standards - The Agreement on Mutual Recognition/equivalence will facilitate recognition of each other’s standards, assessment procedures, equivalence arrangements etc.

·     MOU on Harmonisation of Ayurvedic medicines will enable both countries to cooperate in traditional system of medicines.

·     Custom Cooperation Agreement – The Agreement aims at simplifying custom procedures and expediting custom clearance.

·     Agreement on Consumer Protection and Legal Meteorology aimed at protecting the interest of consumers and creating awareness amongst consumers in both countries.

·     CEPA has been negotiated but it has not been signed yet. – (Source: Govt. of India Department of Commerce)