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Nirmala Sitharaman Says There’s No Time Frame For Signing Economic and Technical Cooperation Agreement With Sri Lanka

Stresses need for detailed discussions on issues raised by both sides.

Published: 27th September 2016 10:28 PM  |   Last Updated: 27th September 2016 10:28 PM   |  A+A-

Nirmala Sitharaman

COLOMBO: India’s Commerce Minister Nirmala Sitharaman said here on Tuesday, that India has not given any time frame for negotiating an Economic and Technical Cooperation Agreement (ETCA) with Sri Lanka, although the Sri Lankan government would like it to be signed by December this year.

The visiting Minister told the media after talks with Prime Minister Ranil Wickremesinghe, the Minister for International Trade and Strategic Development Malik Samarawickrama and other ministers, that ETCA will have to be negotiated in great detail, addressing all issues of concern to each of the two parties to the satisfaction of both.

India would like ETCA to be signed, but will not give it a time frame, she said. She placed emphasis on the need for an agreement which is based on the full trust of the two parties.  

Bilateral talks on ETCA have just begun with the two sides having met only twice so far. The next round of talks will take place in New Delhi during the visit of the Sri Lankan Minister Samarawickrama.

The Indian Minister addressed certain concerns in the minds of Sri Lankans about the ETCA and the India-Sri Lanka Free Trade Agreement (ISLFTA) which became operational in 2000.

On ETCA, the main concern was the possibility of cheap Indian labor flooding the Sri Lankan labor market. Seetharaman asked Sri Lankans to look at the positive side of things and said that the inexpensiveness of Indian labor should actually enthuse Sri Lankan entrepreneurs to set up manufacturing facilities in India taking advantage of cheap labor.

On the exchange of services, she said ETCA will not allow Mode 4  involving movement of natural persons across borders. And others issues are being discussed. No pact will be signed without the two  parties agreeing to it  wholeheartedly, she said.

In his comment, Sri Lankan Minister Samarawickrama said that Sri Lankan entrepreneurs are asking for the import of labor in sectors such as construction, ship building and IT services. The government will put in a system to regulate the use of imported labor he added.

Addressing the issue of the existing Free Trade Agreement, Sitharaman corrected the impression the ISLFTA has worked to the exclusive advantage of India and to the detriment of Sri Lanka. She said that statistics show that India has  gained only minimally from the ISLFTA, while Sri Lanka has gained hugely. While Sri Lanka’s exports to India depend heavily on the ISLFTA, India’s exports to Sri Lanka do not. The bulk of its exports to Sri Lanka do not come under the ISLFTA but enter the island after paying the regular duties

The Indian Minister however agreed that Non Tariff Barriers (NBT) have been a problem for Si Lankan exporters to India. But she said that these are not exclusive to Sri Lanka. They apply to imports from all counties. Among the NTBs faced by Sri Lanka, are rules regarding standards and the differences in taxes across Indian States. While issues such as standards are being discussed, the problem of variation in taxes has already been addressed by the introduction of the National General Sales Tax which has turned India into a single entity for taxes.

Asked if ETCA will lead to the dumping of Indian goods in the Sri Lankan market because of the difference in the size of the Sri Lankan and Indian economies, Sitharaman said that both countries have to abide by WTO rules as regards dumping and they  will have to effective laws. Sri Lankan Minister Samarawickrama said that Sri Lanka will soon be having an anti-dumping law.

On-going and future Indian projects were also discussed at the talks in Colombo. Sitharaman said that India is discussing the modalities of changing the fuel in the Sampur power plant from coal to LNG as per the request of the Sri Lankan government. She denied that India is “bitter” about Sri Lanka’s sudden decision to switch from coal to LNG. But she added that a country has to reconcile its commitment to national interest with its international obligations.

The Indian Minister said that contrary to the doubts voiced in the Sri Lankan media ,Sri Lankan entrepreneurs are keen on ETCA and ISLFTA because these offer opportunities to enter the 1.2 billion Indian market.

Sri Lankan Minister Samarawickrama said that the island nation is interested in attracting Indian investment in construction, ship and harbor building, infrastructure development and energy.

Sitharaman, who has come with a large Indian business delegation, added that Indians are keen on investing Sri Lanka and their aim is to being in an investment of US$ 2 billion in the next three to four years.

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