The lack of transparency, the unavailability of documentation for public perusal and mere words of assurance from politicians, have led to serious misgivings about the government’s decision to sign a framework agreement on the Comprehensive Economic Partnership (CEPA) with India on the sidelines of the upcoming SAARC Summit.
A press conference was convened last Thursday and several industrialists, who said they were backed by the Ceylon National Chamber of Industries, said that they were in the dark about CEPA.
The Organisation of Professional Associations joined the industrialists to protest the opening of the services sector in CEPA.
Their problem is that policy makers are acting without consulting the industrialists, but this, the Department of Commerce, the Ministry of Export Development and International Trade, the Ceylon Chamber of Commerce (CCC) and Federation of Chambers of Commerce and Industry of Sri Lanka (FCCISL) will deny.
They have maintained that due consultations with all stakeholders had been held and that Sri Lanka’s commitments in CEPA were made giving due consideration to the views of the stakeholders.
However, the industrialists said the government’s decision was hasty and was a result of pressure from Delhi.
"The cause for this concern is the lack of access to the draft or white paper on CEPA," they said.
They compared CEPA to a marriage between a small, helpless damsel to a huge powerful ogre, without the prospect of divorce.
"And since these are two countries we are talking about, even in death do us not part," a statement from the industrialists said.
The CCC and FCCISL had long advocated the need to have a comprehensive economic partnership agreement with India and the Industrialists accused these two organisations of being skewed in their judgment.
The industrialists said that without publishing the framework agreement, that without there being something on paper, the industrialists have no way of knowing what CEPA contains.
And this is where the policy makers have failed. By not being transparent it has stirred up a hornet’s nest. Dissemination of knowledge is lacking, it seems.
"Who do these politicians really represent? Show us what is being done, or at least tell President Rajapakse," Managing Director of Multichemi Group, Samantha Kumarasinghe said, adding that several Cabinet ministers were unaware of CEPA and what it contained.
He pointed out that despite policy makers saying that the FTA had brought benefits to Sri Lanka it had not done so.
"Total exports to India in 2007 amounted to US$ 495 million, of which the export of vanaspathi and copper accounted for 41 percent. The bulk of these exports were carried out by Indian companies in Sri Lanka," he pointed out.
Imports form India amounted to US$ 1,400 million in 2007.
"How can they (the politicians) say that we have benefited from the FTA? CEPA will be bigger than the FTA so we need to be cautious. If we are not careful the damage done to the country will be even greater than what the LTTE caused," he said.
The Multichemi Group is the manufacturer of the successful cosmetic line Nature’s Secret already established here and in Bangladesh.
Kumarasinghe came down hard on India for having created so many non-tariff barriers which prevented Natures’ Secret from taking a firm foothold in India, despite the FTA.
"Industries are finding it difficult to survive in the current economic environment. How will they compete with Indian industrialists who have access to cheaper materials?"
Dr Bandula Perera, Managing Director of Samson Rajarata Tiles (Pvt) Limited and who also served with the Board of Investments, said that growth in GDP should be driven by improving export revenues.
He too questioned the ‘benefits’ of the FTA and said that many of the Indian companies subsequently closed down when India restricted vanaspathi exports, directly violating the FTA.
He said that the Indian companies that were set up on our soil had not even facilitated technology transfers because they brought 18th century industrial processes.
"The Indians are intimidating and unmovable," he said about the non-tariff barriers which prevented Sri Lankan companies making full use of the FTA.
Past Chairman of the Ceylon National Chamber of Industries Ranjith Hettiarachchy said that India’s economy was booming and that India was pushing CEPA through to find employment opportunities for its growing population of professionals.
"We are not expressing anti-Indian sentiments but anonymity in the process adopted by the Ministry of Export Development and International Trade to educate the people on CEPA is a cause for concern," he said.
Vice President of the Organisation of Professional Associations Tudor Munasinghe said that Prof G. L. Peiris had told them that the services sector will not be open for negotiations.
"We have no way of knowing whether this is the case," he said.
The Ceylon Chamber of Commerce (CCC) and Federation of Chambers of Commerce and Industry (FCCISL) had always maintained that CEPA would benefit Sri Lanka and been part of the government’s consultative process.
However, Chairman Ceylon Biscuits Limited, Mineka P. Wickremasinghe, said that they did not consult the industry.
He accused the CCC of having the interests of powerful multinational companies within the chamber at heart and that the FCCISL did not represent the industries sector and refuted statements made by its president that several Sri Lankan industries are doing well in India.
He said they would like to challenge the chambers to make the contents of CEPA public.
Ariyaseela Wickramanayake, Chairman, Mawbima Lanka Padanama, said that political officials could not be trusted and called for the contents of CEPA to be made public. He was also critical of the CCC and said it was controlled by multinational companies who would benefit from CEPA.
"We are not opposing CEPA for the sake of opposing it but because our politicians can never be trusted," he said.
He criticized the current policy of granting tax holidays to foreign investors while local manufacturers were heavily taxed.
"We live in a country where a single mobile telecommunication service provider makes a profit of Rs. 8 billion while charging high call rates when they could easily charge 40 cents a minute," he said.
The Island Financial Review last Monday (14) carried a synopsis of a seminar on CEPA conducted by the Institute of Policy Studies. Probably the need of the hour would be a wider dissemination of the institutes involvement and analysis of CEPA, because much of what was said indicated that the government was careful.
Clearly, it’s a case of fearing the unknown. How will the authorities respond? After all they have what is being asked for—information.
However the solution does not lie in political rhetoric. Show them the document and get it over with, provided there is consensus all around.
