View from Colombo: Sri Lanka-India ties get shot in the arm

The fast growing economic and trade ties between Sri Lanka and India were given a shot in the arm when the prime ministers of the two countries formally received in New Delhi last week the first two copies of the reports of the Indo-Lanka Comprehensive Economic Partnership Agreement (CEPA).

A decision was taken in June last year to expand economic ties from the current trade in goods to cover new areas of economic cooperation. The two prime ministers appointed an India-Sri Lanka Joint Study Group in April this year to make recommendations for the establishment of a partnership agreement.

The Indian team was led by Dr Rakesh Mohan, Deputy Governor of Reserve Bank of India, while Sri Lanka's team leader was leading businessman Ken Balendra. Building on the growing political ties, geographic proximity and other such historic factors, the Group held five joint meetings in a very friendly and cordial atmosphere and speedily completed its deliberations early this month. Their comprehensive report with far-reaching recommendations was presented to the two prime ministers.

The report pointed out that entering into a comprehensive partnership agreement would take the two countries to a qualitatively new level of engagement by intensifying bilateral economic ties.

Wide spectrum

Reflecting the keen desire of the two sides to expedite the process aimed at concluding the agreement by next March for early results and mutual benefits, negotiations on the recommendations of the report are expected to commence soon.

The CEPA, which replaces the existing trade agreement which was restricted to a list of goods for trade between the two countries, covers a very wide spectrum of trade and economic areas such as service, aviation, transport, tourism and investment.

In fact, the agreement in general allows the two countries to enter into broad negotiations covering all service sectors and modes of supply within the GATT framework. Besides, it facilitates greater investment flows by addressing identified regulatory and operational constraints and also helps implement measures to enhance economic cooperation, as well as paving the way for trade and investment liberalisation.

Mutual benefits

There is a separate section in the report on trade in goods which will help the two sides deal with topics such as origin verification procedures, customs procedures, transparency of laws and regulations, setting up a road map defining the scope and parameters of mutual recognition of standards, and conclude Mutual Recognition agreements expeditiously.

The forthcoming agreement will also pave the way for removing administrative and regulatory constraints to promote bilateral investment flows that will help maximise the mutual benefits of economic integration. In this regard, Sri Lanka's Board of Investment will have a special cell to facilitate Indian investment on the island, especially for infrastructure projects, besides crosslisting of Indian companies on the Colombo Stock Exchange and Sri Lankan companies on the Indian Stock Exchange through the Depository Receipts mechanism.

Under the agreement, the two sides will engage in joint promotion of tourism, facilitate short-term visas for bona fide third country tourists, make joint bids for international sporting events, promote film and TV programmes, and explore mineral and biological and fishery resources.

Now the new move comes amidst fast improving political ties between the two sides, with India calling for a political solution to the island's two-decades-old devastating ethnic crisis within the framework of a united Sri Lanka, and the two countries planning to follow an open sky policy.

The author is a Sri-Lanka based journalist