National Chamber of Exporters on proposed ETCA with India

Member exporters of the National Chamber of Exporters of Sri Lanka (NCE), have expressed concerns regarding the proposed Framework ETCA to be signed by India and Sri Lanka within the next two weeks and the ETCA Agreement proper proposed to be signed mid this year. 

In this regard the Chamber has written to Minister of Strategy Development and International Trade Malik Samarawickrema outlining the concerns related to some issues and enquiring specific benefits that will accrue to Sri Lankan exporters through the ETCA. 

The issues that have been outlined are as follows: 

1.The well-known non-Tariff Barriers (NTBs) under the current FTA have hindered access of Sri Lankan Exports to the Indian market: Although  this impediment was expected to be resolved at least to a certain extent before entering into the now ‘abandoned’ Comprehensive Economic Partnership Agreement (CEPA), the solution to the issue is addressed in the framework ETCA, in regard to Trade in Goods as an ‘early harvest’ to be implemented within six months after entry into force of this agreement, through negotiations, covering a ‘Scheme of Mutual Recognition of Conformity Assessment Procedures’, for a pre identified list of products of each country. However there is no certainty that negotiations will be successfully completed within the six months period to address the barriers to Sri Lankan Exports. 

2.The complexities under the current FTA for Export of Goods (and services in the future under the ETCA) to the different states of India, due to the imposition of various State Taxes:  the ETCA does not appear to provide a solution to overcome this issue which mainly affects Sri Lanka, since there is provision for states of both countries to impose taxes and such other levies.  In this regard it is pertinent to note that the FTA between Switzerland and China has National Provisions which supercedes provisions at State or Regional levels. 

3.Regards the Services sector: available information suggests that the Sri Lankan Services sector will be opened to India only in regard to IT/BPO services, and Ship building / Ship repair services, and no provision will be included for the free movement of natural persons particularly professionals including Indian doctors to work in Sri Lanka.  However, there is no clarity as to the manner in which Sri Lankan exports of services will be able to access the Indian market sans barriers.  

In regard to: 

(a) Ship Building and Ship Repair Services: Concerns have been expressed that other than specialised skills related to Naval Architects and Welders who are not available in Sri Lanka, other common skills such as Electrical, Civil, and Mechanical Engineers etc. are available in Sri Lanka to serve the existing ship building and ship repair services. Therefore the safeguards that are included in the agreement to prevent the entry of Indian workers related to available skills should been made clear.  

(b) Concerning IT and BPO Services: It is presumed entry of Indian professionals will be prioritised and limited to skills required by Sri Lanka, and these will be negotiated and clearly spelt out in the ETCA Agreement proper, since fears have been expressed that the agreement will enable low wage demanding Indians to enter Sri Lanka threatening the job opportunities of Sri Lankans.  Another issue raised by the members is that there is no proper mechanism to evaluate the professional qualification of IT personal that may lead to entry of unsuitable professionals. 

In view of the foregoing, and several other related issues, many member exporters of the Chamber have requested for elucidation as to the benefits Sri Lankan Exporters will get from the ETCA. 

As such the Chamber has requested the attention of the Minister to the above issues, and response to enable the Chamber to advice its members. While appreciating the consultations being carried out with the private sector and relevant stake holders at present the Chamber has requested further detailed consultations with the Stakeholders of all relevant sectors be carried out pertaining to the negotiations before signing of the ETCA proper to clear remaining doubts.