Tackling ETCA

In response to Brexit, the Sri Lankan Government has fast tracked negotiations with India on the proposed Economic and Technology Cooperation Agreement (ETCA) with International Trade Minister Malik Samarawickrama, currently in India for preliminary talks. But it will also have to pick up stronger engagement with stakeholders back home to bridge a significant trust deficit between the public and State.

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.

Unfortunately, the actual agreement is not publicly available at the moment, so it’s impossible to arrive at a concrete conclusion just yet. However, 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?

IT professionals have pointed out that cheap labour will inevitably result in cheap products and services; and, given that Sri Lanka has its own issues of unemployment to deal with, creating a culture of hiring cheap labour from abroad is only going to make matters worse. Brain drain, they warn darkly, will become a far greater problem than it currently is if the agreement is signed.

The truth, however, is far less dramatic. ECTA framework, which is reportedly to be signed before the end of the year, 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 don’t begin for a few more weeks so there is plenty of time to change things if required. 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.  It is only by being transparent that the Government can hope to get significant backing for the trade deal while also sidelining opposition political and professional forces that will seek to derail ETCA.