Selling ETCA

Recently appointed Indian High Commissioner Taranjit Singh, during his address on Republic Day, said Sri Lanka is free to enter into trade pacts with India at its own pace. This was always the likeliest scenario as it was the Sri Lankan Government that had requested an Economic and Technology Cooperation Agreement (ETCA) with India, in line with its agenda to becoming the hub of South Asia. 

Allowing for a stretched timeframe gives the Government the opportunity to engage transparently on issues linked to ETCA and get valuable support behind the agreement but clearly communicating its advantages and creating a dialogue with critics. 

The second challenge for the Government is to push forward the agreement in a sensitive political background with looming elections and not cave into the temptation of allowing it to languish for years like the Comprehensive Economic Partnership Agreement (CEPA).        

Arguments have been made both for and against the agreement, with opponents going so far as to prophesy the end of quality Sri Lankan ICT as we know it. Those in favour, however, have gone on record saying that it could actually prove beneficial to Sri Lanka given the current global economic realities. The truth probably lies somewhere in between, and it is worth investigating the merits – or lack thereof – of this all-too-important bilateral deal.

Several rounds of discussions have already taken place but very little information is in the public domain. Based on reports and other sources, we know that it seeks to allow Indian as well as Sri Lankan IT companies to invest freely across the border, though under intense pressure the Government has ruled out allowing free-flow of professionals.

What most people opposed to the deal are complaining of is a possibility that, if signed, it will lead local tech companies to hire what they call cheaper Indian labour. This, opponents argue, will result in low salary scales for local IT workers and eventually lead to a decline in quality of the country’s IT industry as a whole. But how much of this is based in reality? Is there any merit to the concerns raised by certain vocal sections of the industry or is it really just a lot of alarmist, anti-Indian rhetoric masquerading as patriotism?

The truth, however, is far less dramatic. ECTA framework seeks to facilitate free trade-in services, which come in several different modes (Mode 4 being the controversial one which involves cross-border transferring of human resources).

Either party can decide which sectors it wishes to open and to which extent. Actual negotiations have barely begun. Additionally, mutual recognition agreements are in place to ensure that both countries agree on the level of qualifications needed for the employment of such human capital.

Whether we like it or not, stronger economic ties with India are crucial for our own economic wellbeing. An agreement of this nature, though controversial, will benefit the country immensely. It is up to the Government to ensure that those negotiating on behalf of Sri Lanka listen to any concerns and legitimate grievances of would-be affected parties and give top priority to the country’s socioeconomic interests.  

With Brexit the Government said it would fast-track negotiations on ETCA in mid-2016 only to let the whole matter drift. Will it change direction now?