Wednesday, June 9, 2010

India-Sri Lanka Comprehensive Economic Partnership Agreement

Anura Kumara Dissanayake, Democratic National Alliance parliamentary group leader said in Parliament on 8 June that if the Comprehensive Economic Partnership Agreement (CEPA) between India and Sri Lanka is signed, it would destroy local industries and India would monopolize the Sri Lankan market.

Statement Made in Parliament
Discussions on CEPA were now on and there were reports the agreement that is to be signed shortly covers eight sectors including air traffic, customs service, free travel for professionals and goods and services transactions. According to this agreement, taxes levied on the sale of goods between India and Sri Lanka will be lifted. All obstacles have been removed to permit a free flow of services and traveling of professionals. He urged Parliament to awake to the dangers to the economy inherent in the provisions of CEPA.

The conditions of the agreement have been framed in such a manner that Sri Lanka is made to look like a contiguous geophysical extension of India. The clauses in the agreement make it abundantly clear that growth limitations on both economies have been drastically lifted. What would ultimately happen is that Sri Lanka will metamorphose into a trade colony of India and almost the entire economy of the country will be under Indian control. Currently, India has encroached on 17 percent of Sri Lanka's internal trade market and India's intention seems to be that of expanding on that percentage resulting in the downfall of local production.

Affecting Production Cost
India is a country with a huge market run on state-of-the-art technology. India is a vast country that has a huge manufacturing base because of which the cost of production is low. But since our market is small our cost of production is higher. Another reason is absence of a proper industrial policy that would attract large-scale productions using state-of-the-art tech.

As taxes are imposed on Indian goods imported to Sri Lanka the local producer is protected but through CEPA the taxes imposed on Indian goods are being eliminated. This will result in Indian products being sold at a lesser price in the local market to the detriment of the local producer. With consumers buying more Indian products because of lower prices the Indian monopoly will expand to the detriment of the Lankan market.

Indo-Lanka Bilateral Trade
The argument that Sri Lanka consumers will have the benefit of purchasing goods at lower prices is not true. India after destroying the local producer will exert a price control mechanism in the local market. This will finally result in the crash of the national economy. This will then lead to a control over our political independence via a trade monopoly.

The argument could emerge that this agreement will help us export goods to India but the problem is that our manufacturers do not manufacture goods even to fulfill the local demand. This is underscored by the fact that while Indo-Lanka bilateral trade has increased in recent times, Sri Lanka has not benefited by this quantum increase.

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