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ETCA negotiations with India after Avurudu

2 years ago

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  • Last negotiation was in Oct 2018

  • Gunawardana opposed ETCA in 2016

  Negotiations pertaining to Sri Lanka’s proposed controversial Economic and Technology Co-operation Agreement (ETCA) with India is expected to resume after the upcoming Sinhala and Tamil New Year following a standstill of over two years, The Sunday Morning Business reliably learns.  Minister of Trade Dr. Bandula Gunawardana, under whose purview Sri Lanka’s free trade agreements (FTAs) fall, told us that negotiations would begin soon after the New Year and expressed his plans to appoint a special committee to look into economic benefits of the proposed agreement with India.  “Not only for the ETCA, but also for other pending FTAs of Sri Lanka, I am planning to appoint special committees to review each FTA. Sri Lanka should economically benefit from these agreements,” Dr. Gunawardana added.  Meanwhile, Department of Commerce Acting Director General Ananda Dharmapriya too confirmed to The Sunday Morning Business that the 12th round of discussions would begin this year.  “We are preparing for the ETCA negotiations, indicating our position on certain areas including the tariff liberalisation,” Dharmapriya added.  In January 2021, Dr. Gunawardana stated that the Sri Lankan Government is formulating a national trade policy, until the completion of which, the country’s FTAs are unlikely to be signed.  He stated that a committee is in the process of preparing a national trade policy, the first of its kind in Sri Lanka, and that it is expected to be completed within the next three months. “We do not have a national trade policy while many other countries have one. It is imperative to have trade policy when we are dealing with other countries. We have identified the need and we are in the process of formulating it,” Dr. Gunawardana told The Sunday Morning Business at that point.  The last and 11th round of negotiations between Sri Lanka and India were held in October 2018 prior to the constitutional crisis. It was also the last time internal discussions on the matter took place. After almost a year, the 12th round of negotiations on the agreement were scheduled to be held in September 2019. However, it was postponed pending Cabinet approval, as a new regulation was introduced by the then Ministry of Development Strategies and International Trade (MoDSIT), which stated that Cabinet approval is required to conduct negotiations for any trade agreement. Cabinet approval was also necessitated by the long gap of over one year since the last round of negotiations held in October 2018. The negotiations have been on hold since October 2018 due to a number of unexpected developments in Sri Lanka such as the constitutional crisis in October 2018, the Easter Sunday attacks, and also due to the elections in November 2019 and August 2020. External factors such as the 2019 general elections in India, which was held over seven phases from 11 April to 23 May, also contributed to the delay. Following the Sri Lankan presidential election in November 2019, well-placed sources told The Sunday Morning Business that the ETCA negotiations were unlikely to be restarted until the general election in August 2020, due to possible changes in management of relevant authorities after the election. As predicted, no discussions pertaining to the agreement were held between the two parties during the interim period from the local presidential election to the general election. The ETCA faced heavy opposition from professional bodies, particularly in the IT and healthcare sectors, over the past few years on the grounds that Sri Lanka’s skilled labour force would be relegated to a second choice with preference given to Indian workers. Furthermore, in 2016, the Joint Opposition (JO), which is currently the Government, vehemently opposed Sri Lanka’s move to enter into the ETCA with India, as they believed it would lead to “foreignisation” of the Sri Lankan economy. However, several economists have pointed out its benefits, which include its potential to address Sri Lanka’s skills shortage.  

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