CEPA: hush-hush not helping
By Namini Wijedasa
It is more than two years since Indian and Sri Lankan officials that negotiated the Comprehensive Economic Partnership Agreement (CEPA) last met. In 2008, Indian Premier Manmohan Singh came to Colombo for the SAARC summit hoping to witness a signing of the CEPA but went away empty-handed. For a while, it had seemed as if the deal was properly in cold storage.
Suddenly, however, the Indians have started pushing for the two countries to sign the document. The topic is on the agenda for discussion during President Mahinda Rajapaksa's forthcoming state visit to India during which the Indians are expected to intensify pressure on the Sri Lankans to activate the agreement.
This eagerness is being countered in Sri Lanka-seemingly with tacit government approval-by various interest groups protesting against the CEPA. Among them are local businessmen who are thought to have close links with the ruling party. It has already been pointed out in local media that a group of high profile businessmen which recently marched to Temple Trees to demonstrate against CEPA was not chased away with batons and water canons but welcomed into a discussion with the president.
These businessmen were sent away by the president with the promise that he would not sign any agreement that would "harm Sri Lanka's interests". But what does this mean? The contents of CEPA remain "secret" except for some selective leaks by the privileged few who have read the document.
There are several questions in this regard that beg answering. For instance, what is the government's own position on the CEPA? Negotiations started as far back as 2005 (although initial work on the agreement predates to 2003, when Ranil Wickremesinghe was prime minister) so President Mahinda Rajapaksa's regime had sufficient time to ensure that what emerged from Indo-Lanka discussions on the top would not "harm Sri Lanka's interests". Nevertheless, there is silence from the palace about whether or not the government supports and is willing to sign CEPA.
Also, what does the document contain and why is there reluctance to release it for public scrutiny? This kind of over-protectiveness only breeds suspicion and promotes suspicion that those who wish to keep it secret know something we won't like about it.
Thirdly, why are people who know nothing about it protesting against CEPA while some discerning Sri Lankans that are privy to the details-like Director General of Commerce Gomi Senadheera - support it as being vastly beneficial to the country? Senadheera, who declined to comment in detail about CEPA, felt strongly that it was "a fear of the unknown" that was fuelling protests.
LAKBIMAnEWS confidentially learns that the secretary to the ministry commerce has now applied for permission from the secretary to the cabinet to release the CEPA for public consumption. It is not known if this will be approved since the agreement is a bilateral document. As such, it must be bilaterally agreed upon between India and Sri Lanka to make the agreement public. Such negotiations are certainly not taking place at ministerial or official level and it is uncertain whether President Rajapaksa will broach the subject on his visit.
Whatever the decision of the two governments, it would serve the interests of CEPA to publicise its details because speculation is raging in Sri Lanka about yet another "invasion" by India.
There is talk of Indian barbers flocking to Sri Lanka under the CEPA to put our hairdressers out of business. There are rumours of Sri Lanka transforming into another Middle East, awash with Indians depriving locals of employment and business opportunities. There are fears that Sri Lanka will become an extension of India, overrun by Indians exploiting the CEPA to their advantage.
Indian diplomatic sources interviewed last week maintained that it is a handful of Sri Lankans that oppose CEPA and that the vast majority are aware of the benefits this agreement can bring them. If this is true, why is the "vast majority" silent?
Sri Lanka's relationship with India remains a strange paradox. In the same breath that we declare India our friend, we also quake that India will take us over one way or the other-whether or not the Indians have such an interest.
"India gets concessions only in two sectors"
One thing is now clear in relation to the CEPA agreement: India is exceptionally eager to push it through. This keenness, coupled with India's recent interest in increasing diplomatic presence here, is not surprisingly being interpreted as part of her desire to balance out Chinese involvement in Sri Lanka. Whichever the case, India has stirred up a furious debate here, not helped by the fact that the CEPA remains a classified document.
Asked why CEPA was not being released to the public, Indian diplomatic sources maintained last week that the document that was finalised in 2008 was a framework agreement which is usually the earliest form of such a deal.
"The details are in the schedules and annexures which are hammered out after you reach broad agreement on what to do," a diplomat said, speaking on condition of anonymity. His contention, therefore, was that the document was not final enough to release.
Questioned why the CEPA had become such a "monster" here, this diplomat replied: "I don't think that categorisation reflects the breadth of Sri Lankan opinion. I, too, speak to a fair sample of Sri Lankan businesspersons and I am certain that a vast majority would not agree with your categorisation. This is a clear case of a vocal minority taking over."
This diplomat pointed out that goods and services being available at lower cost will bring advantages to the vast majority of Sri Lankans on the median line although it will admittedly hurt the bottom lines of a handful of producers if they are not able to adjust. But this, he said, is the story anywhere in the world.
Pointing to the Indo-Lanka Free Trade Agreement (ILFTA), he said there was enough literature and study by Sri Lankan scholars on the benefits of this agreement. "If Sri Lanka is worried about an invasion of Indian products here, Sri Lanka should have withdrawn from the Free Trade Agreement," he said, pointing out that such an invasion had never happened.
The diplomat said that under CEPA-as far as the goods sector was concerned-Sri Lanka will open up a fraction of the market (a further two products) to India. In return, India will liberalise access to a further 114 product categories from Sri Lanka, leaving just 80 items in her negative list. Sri Lanka would still have 12,000 items left in her negative list (items from India not given preferential duty access).
"You can see how asymmetrical this agreement is, was and will remain into the future," the diplomat pointed out. He scoffed at fears of Indian barbers putting local hairdressers out of business saying that under CEPA-as far as the services sector was concerned-Sri Lanka has given India access to 20 services sectors in Sri Lanka while India has opened up 80 sectors. "Twenty may be opened up but actually India gets concessions only in two sectors-those of ship repair and ship building and computer maintenance and repair, he said. "And it is not as if every underpaid or jobless computer repairer will head to Sri Lanka. Also, for every one Indian employee to come to Sri Lankan, the Indian company must make an investment of USD 100,000. The educational qualifications defined are of such a high level that you would be hard pressed to find a few people of that category to come work in Sri Lanka."
"So, the bar has been set so high that many people are knocked out," he continued. "To bring ten people to Sri Lanka under this agreement, the Indian company must make a one million dollar investment!"
The diplomat portrayed CEPA as an advantage to Sri Lanka in terms of India's vast market-1.2 billion people. "That itself is an absolute advantage and offer, considering that the offer itself is asymmetric. And mark you, Indian businessman don't go to sleep every night thinking 'when will Sri Lanka open up its market?'"
He warned that the officer in the services sector made by India is identical to the offer on the table at the World Trade Organisation. While it is not known when this will come through-and when the rest of the world will be able to take advantage of it-Sri Lanka is free to clinch the deal now, before a number of other players enter the Indian market. India is in trade negotiations with Sinagpore, ASEAN, Malaysia, South Korea and Japan, among other countries. "Five years hence, you decide to spread your wings and find that there is no space anymore," he said.
"We don't want what we have"
Ariyaseela Wickramanayake, a leading Sri Lankan businessman whose posts include chairman and managing director of Master Divers Pvt Ltd and Managing Director of Pelwatte Sugar Industries Ltd, is among the local entrepreneurs opposing the CEPA. LAKBIMAnEWS sought his views on the subject last week:
"We don't need any agreement to do business with India," he said. "We didn't have an agreement with India for 3000 odd years. They brought Buddhism here and we protected it. Whenever our kings wanted to get married, they went to India and brought a queen. Our relationship has been so close, unlike any two countries anywhere else in the world. It is like father and son. You don't have agreements between father and son, only with outsiders."
"Some irresponsible people are trying to push forward this agreement," he said. "We don't need an agreement when we buy everything from India even now. They didn't have cars 20 years ago so we bought from Japan. Now that they have cars, we are importing from them. Our motorcycles are almost 100 per cent from India. It makes business sense because the freight is less than if you import from anywhere else. There is no commercial value in buying everything that is available in India from any other country. You don't need CEPA or whatever. It is just commercially viable to buy from India."
"On the other hand, we are exporting old newspaper to India," he said. "We can't export potatoes or Mysore dhal or Bombay onions. They don't need it. At the same time, we don't want milk from India because our people must have employment here. 500,000 children sit for exams and only 20,000 get into university. Others must get involved in industry such as producing food. We must not import food. We need food security and employment. India levies a 160 per cent tax on milk. They don't allow any country to export milk to India. You can't take rice to India. Japan has an 800 per cent tax on rice. As chairman of National Livestock Development Board, I went to the Indian high commissioner and asked to buy cows. He refused to give us cows because they want to sell us milk powder. But we want to produce milk powder here. I am having a milk powder plant installed now by Indians. They will test it and go back but I can't employ them here. If I do, what are Sri Lankans to do?"
"India is our closest friend and I have nothing against them," Wickramanayake explained. "We will buy from them everything we don't have. We don't want what we have. We signed an agreement in 1815 with the British in Kandy. We wouldn't do it again if we had the chance to go back. Under the PL480 agreement, we agreed to purchase wheat and transformed this country into a nation of wheat eaters even though we don't grow wheat here. If given the chance, we wouldn't sign it today. With these kinds of bad experiences, we should not sign such agreement with anybody."
Wickramanayake said he hadn't read the agreement and was not interested to "even look at it".
resident Mahinda Rajapaksa-led ruling alliance in Sri Lanka, the United People's Freedom Alliance (UPFA), has recorded an emphatic victory in the parliamentary elections held on Thursday.
