Introduction
The ETCA has been at the forefront of political and economic discussions in Sri Lanka since its inception. It was conceptualized as a successor to the Indo-Sri Lanka Free Trade Agreement (ISFTA) of 1998, aimed at expanding bilateral cooperation into the services and technology sectors. However, progress has been hindered by opposition due to concerns over its potential impact on local industries and employment opportunities in Sri Lanka.
Indo-Sri Lanka Free Trade Agreement (ISFTA)
From CEPA to ETCA
The CEPA aimed to broaden the scope of economic cooperation by including services and investments. However, it faced strong resistance from Sri Lankan professionals, business chambers, and political parties, ultimately leading to its shelving. In 2015, the Yahapalana government introduced the ETCA as a scaled-down version of CEPA. This new agreement sought to address the gaps in the ISFTA by incorporating technology and services while excluding contentious investment provisions.
Advantages and Challenges of ETCA
Perceived Advantages
The ETCA is believed to have the potential to boost bilateral trade in services, particularly in the IT and knowledge-based sectors. It is expected to promote technology transfer, enhance skill development, and foster stronger economic ties between India and Sri Lanka.
Criticisms and Concerns
Despite its perceived benefits, ETCA has faced criticism. Many Sri Lankans fear job losses in sectors such as IT and healthcare due to competition from India’s larger and more competitive workforce. There is also apprehension that Indian companies could dominate Sri Lanka's local market, reducing opportunities for domestic businesses. Additionally, the lack of transparency in ETCA negotiations has created mistrust among stakeholders, further fueling opposition. Critics argue that the agreement could undermine Sri Lanka's economic sovereignty and make the country overly dependent on India.
ETCA in the Political Landscape
Proponents and Critics
Successive Sri Lankan governments have supported ETCA, arguing that it could enhance the country’s economic competitiveness and attract much-needed foreign investment. However, opposition parties, including the National People’s Power (NPP), have consistently opposed the agreement, citing its potential to harm local industries and its lack of transparency.
NPP Policy Framework
The Role of AKD's 2024 Visit
The 2024 visit to India by Anura Kumara Dissanayake (AKD), the leader of the NPP, is a critical moment in the ongoing debate over ETCA. AKD’s discussions with Indian officials are expected to focus on balancing economic cooperation with national interests. He is likely to advocate for renegotiating contentious provisions and ensuring greater transparency in the agreement. Rather than solely focusing on ETCA, AKD may explore alternative frameworks for bilateral cooperation, such as technology-sharing initiatives or sector-specific partnerships. Given the high levels of public skepticism surrounding ETCA, AKD must prioritize stakeholder engagement and foster trust through public consultations.
The Way Forward
For ETCA to succeed, several steps must be taken. Transparency in negotiations is crucial, with the involvement of industry experts and other stakeholders to build trust and consensus. A sector-specific focus should be adopted to identify areas of cooperation that provide mutual benefits without threatening local industries. Implementation mechanisms should be established to monitor and address any negative impacts of the agreement. Public consultations must also be conducted to ensure that the agreement aligns with the broader interests of Sri Lanka.
Conclusion
ETCA represents both an opportunity and a challenge for Sri Lanka. While it promises to enhance economic interaction with India and accelerate technological development, its provisions have raised valid concerns about the survival of local industries and professionals. As AKD’s visit rekindles the debate, a balanced, transparent, and inclusive approach to ETCA negotiations is essential to ensure sustainable economic cooperation between Sri Lanka and its closest neighbor.
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