Catching CEPA

Sri Lanka’s response to the Comprehensive Economic Partnership Agreement (CEPA) is to be finalised at the end of this month. This deadline has provoked controversy, with heads of several top companies requesting the Commerce and Industry Ministry Secretary that the Director General of Commerce be removed and another person appointed to continue discussions.

The group point out that they were representatives of the Sri Lankan industrialists and business chambers at the first consultative meeting with business chambers by the Inter Agency Committee (IAC) on CEPA, held at the department on 4 April presided over by Commerce Department Director General Gomi Senadhira. The letter charges that the minutes of this meeting have been changed to suit the objectives of the Director General and ignores the concerns made by the business community.

MultiChemi Group of Companies Managing Director Samantha Kumarasinghe, Chamber of Young Lankan Entrepreneurs Secretary General Gamini Sarath, Ceylon Biscuits Chairman M.P. Wickramasinghe, DSI Samson Group Managing Director D.K Rajapaksa, KIK Lanka Chairman Lalith Kahatapitiya, DPJ Holdings Chairman Prasantha Jayamanna and Sri Lanka Chamber of Small and Medium Industries Vice President K. Chandrasekara have signed the letter calling for the dismissal.

Leaving aside their protests against Senadhira, it is prudent to consider the relevant issues delaying CEPA. Most people are against the CEPA on the basis that the Indo-Lanka FTA is full of loopholes and has not garnered the economic returns that it promised. However, the world has moved on since then and recently ASEAN countries inked a CEPA with India showing that Sri Lanka’s fear is exaggerated. If countries with economies smaller than Sri Lanka can sign a CEPA, then there is no reason why Sri Lanka should take a back step.

With the right negotiations in place, there can be a clear benefit to Sri Lanka by obtaining preferential access to one of the biggest markets in the world. Not only would this be a positive point to local industries, but it would give a boost to attracting foreign direct investment as well.   

One of the biggest grievances that the private sector players had against the CEPA was that it was not made public. This lack of transparency while being strongly upheld by the diplomatic group also heightened the sense of distrust, resulting in the signing of the CEPA being scrapped. Worries of home-grown industries suffering, cultural mutation, job losses to migrant Indians and limited market access can be addressed with more transparency if the document is made public. If the business community is aware of what the challenges ahead are, then they can be better prepared. Closer interaction between the committee and the private sector would also build understanding about what trade benefits would be most effective for Sri Lanka.

On the side of the private sector they need to be more open-minded and inclusive regarding CEPA discussions. Perhaps companies that have already broken into the Indian market such as MAS and Damro can lead the way with more room for the mistakes of the FTA to be rectified. The completely negative stance adopted against the CEPA could end up becoming a ‘throwing the baby out with the bath water’ sort of situation where Sri Lanka stands to lose the benefits of the agreement by focusing entirely on the negatives.