Wednesday, April 24, 2024
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The ongoing discussions on the Economic and Trade Cooperation Agreement (ETCA) between India and Sri Lanka are poised to move forward, with the next two rounds of bilateral talks scheduled for later this month and in March.

The progress in negotiations marks a significant development for both New Delhi and Colombo, considering that the agreement had previously encountered obstacles, primarily due to opposition from certain worker unions and hardline Sinhala-nationalist politicians in Sri Lanka. Concerns were raised about the perceived dominance of Indian interests in the pact and its potential impact on Sri Lankan labor. Despite holding 11 rounds of discussions between 2016 and 2019 under the Maithripala Sirisena-Ranil Wickremesinghe administration, the agreement remained elusive, facing protests in Sri Lanka.

President Ranil Wickremesinghe, who assumed office in 2022 amidst Sri Lanka’s economic crisis following a mass uprising that ousted his predecessor Gotabaya Rajapaksa, has stressed the importance of trade pacts in facilitating the country’s economic recovery. Earlier this month, Sri Lanka finalized a free trade agreement with Thailand, signaling its intent to enhance agreements with key partners like India and China amid the economic challenges faced by Sri Lankans.

Resuming talks on the ETCA under President Wickremesinghe’s leadership last year marked a significant milestone. The Sri Lankan government views the resumption of negotiations as a step towards strengthening the economic partnership between Sri Lanka and India.

Following the 13th round of discussions held in New Delhi starting January 8, 2024, nine sub-committees focused on various aspects of the agreement, including goods trade, service trade, rules of origin, and customs procedures. Official sources familiar with the negotiations highlighted efforts to link service trade with investments to protect local labor interests. The agreement is not expected to include provisions for the free movement of individual professionals.

President Wickremesinghe briefed the Sri Lankan Cabinet on the progress of the talks, with the 14th round scheduled for the first week of March 2024. India and Sri Lanka initially signed a free trade agreement in 1998, and subsequent attempts to upgrade it have been unsuccessful. Discussions on a Comprehensive Economic Partnership Agreement (CEPA) with former President Mahinda Rajapaksa’s government did not materialize.

With both India and Sri Lanka approaching election years, officials in Colombo and New Delhi are eager to finalize the pact before potential changes in leadership. The ETCA holds promise for deepening economic ties between the two countries, with implications for regional trade and investment.


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