A Bilateral Committee is to prepare a new draft framework between India and Sri Lanka and bring life back to stalled negotiations related to the Comprehensive Economic Partnership Agreement (CEPA). Trading partners usually graduate from a Free Trade Agreement (FTA) to CEPA based on positive experiences to consolidate trade benefits. However, several issues – non-tariff barriers, national protectionism, and others – remain unresolved 15 years after the implementation of the Indo-Sri Lanka FTA. 

FTAs are usually a good approach to promote and expand trade because they provide a rules-based and orderly environment. The original objective of CEPA was also to deepen the existing FTA between India and Sri Lanka, including in the areas of services and investments. However, India’s population (over 1 billion to Sri Lanka’s 20 million) and size among others, led Sri Lankan businessmen to express concern about issues that still require resolution. These include

• Mutual recognition agreements related to testing of products and standards;
• Frequent revision of rules and regulations related to classification of products by Indian Customs, including labeling requirements and quarantine regulations;
• Difficulty in obtaining relevant trade information from designated trade points;
• Revision of rules of origin criteria of minimum value addition;
• Identification of non-tariff barriers that hinder trade; and
• Implementation of effective dispute resolution mechanisms that facilitate trade.

The Bilateral Committee will be composed of representatives of the ministries of Finance, Industry and Commerce, and External Affairs, including the departments of Immigration, Civil Aviation, Board of Investment, and the Office of the Attorney General. In order to achieve the CEPA objective, it is recommended that representatives from relevant trade chambers, particularly the National Chamber of Exporters (NCE) and the Department of Commerce (DoC) be included. NCE will give voice to Sri Lankan exporters while DoC will provide knowledge and experience to the operational aspects of FTAs.

Related Links:

Indo-Lanka FTA bottlenecks should be eased before CEPA:  Chamber
National Chamber of Exports Speaks Up on Indo-Sri Lanka CEPA
Indo-Lanka FTA/CEPA