CEPA conundrums

Tuesday, 15 February 2011 00:01 -     - {{hitsCtrl.values.hits}}

NEGOTIATING trade agreements is a slow business. The Comprehensive Economic Partnership Agreement (CEPA) reached a new milestone this week with the appointment of an inter-agency committee that will prepare a new framework for fresh negotiations but the challenges remain significant.   

According to media reports the Inter-agency committee will comprise representatives of the Ministries of Finance, Industry, External Affairs and Economic Development as well as Departments of Immigration, Civil Aviation, Board of Investment and the Attorney General. Cabinet approval has been granted to set up this committee, on a proposal made by Rishad Bathiudeen, Minister of Industry and Commerce.

This is a step forward but there are several points that the committee must take into consideration if its mandate is to become effective. The business community is a noticeable absentee from the membership of the committee. Despite the inclusion of important public bodies it would be constructive to have a consultation process with the private sector. They are the ones who have to deal with the practical implications of CEPA and they would also benefit from a transparent discussion forum.


Many companies do business with India with or without the assistance of the existing Free Trade Agreement (FTA) and many of them are keen to see how the tangles of the previous document can be ironed out in CEPA. Perhaps a consultation session with company engaged in the specific industries included in CEPA can give a better idea of how the committee can proceed. While this may be considered highly unorthodox it would certainly be more practical than having the private sector take to the streets to protest what the diplomats and economists have agreed on, which was what happened last year, thus prolonging the signing yet again.

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.

Establishing a timeline for the negotiations is also important. Time and again pundits have emphasised that Sri Lanka’s post-war window of opportunity will not last forever. Therefore if the country and its people are to gain the most from this chance then policies must also be time aligned. There is also the danger that negotiations will become outdated if they are allowed to languish too long. The original CEPA negotiations began in 2005 and were supposed to be concluded in 2008, yet six years and 13 rounds of negotiations later it still remains a point of controversy.

Trade agreements cannot be hurried into; once signed they can have serious repercussions that could have long-term impact on the economy. However, dragging negotiations on for years is also counter-productive and it is time the CEPA conundrum is laid to rest with the participation of all stakeholders.