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The Indo - Lanka Trade Pact

Although the cheer squads have been over-active about the recently concluded trade agreement with India, and the state media has played its accustomed role of blindly praising anything that President Chandrika Kumaratunga or her government does, it is not yet clear whether the pact that has been sealed is going to be good for this country or not. India has always had a massive advantage in its trading arrangements with Sri Lanka and although we have heard various placatory noises over the years, the balance of trade in recent years remains hugely in India's favour.

What is particularly disturbing is that this agreement has been signed "blind.'' The negative lists that will be applicable have not yet been finalised and there is sixty days from the date of signing of this agreement for this task to be completed. Small wonder then that an Asian diplomat in Colombo had remarked that this in other words means that what has been called a ‘landmark' agreement has been signed without the two countries knowing what its final shape is going to be.

No doubt there would have been some understanding between Colombo and New Delhi about what is going to be on the negative lists. In fact, many business leaders here are on public record saying that our main commodity exports like tea, rubber and coconut as well as ready-made garments are not going to benefit from the free trade arrangement. Great play has been made of the fact that India would allow a very large number of items to be allowed into its vast market duty free. But the question is how many of these items do we actually produce? The answer, unfortunately, is "very little.''

Trade arrangements between countries are not matters of philanthropy. It is a hard fact of commerce that any country would like to maximise its exports and minimise its imports for obvious reasons. It can be validly argued that there is good sense in a country importing what it cannot economically produce from somebody who can provide the needed goods or commodities of good quality at a favourable price. Onions and potatoes are a good example of this. Both these essentials can generally be imported from India and perhaps Pakistan at much lower prices than those that prevail here when the market is totally dependent on domestic produce. But there are good arguments on why there must be an effort to produce crops that can be grown here instead of falling back on the easy import option.

This is the continuing ‘war' between Trade Minister Kingsley Wickramaratne and Agriculture Minister D.M. Jayaratne. Mr. Wickramaratne, who like many of his colleagues in the government party is acutely aware of consumer hostility to the administration over the cost of living, wants to give the people the advantages of the cheaper onions and potatoes on the subcontinent by importing these subsidiary foods. Mr. Jayaratne, naturally, is very much on the side of the local producers and does not wish to see them getting a hammering on account of cheap imports. As Prime Minister Dudley Senanayake used to cogently argue during the days of his food drive from 1965 - 70, "why pay foreign farmers money we can pay our own people?''

Those were the days when the ban on potato imports led to the then opposition accusing the government of kicking even the poor man's ala hodda.. There was a time when the pundits said that potatoes could not be grown here due to the climatic conditions that prevail. But an agricultural extension officer named Norman Gunatillake demonstrated that the crop did very nicely in the Welimada area and since then farmers even in arid Jaffna have shown that very good potatoes can, in fact, be grown here. Unfortunately we don't grow them as cheaply as some other countries in the region and even in Europe. We are told that Indian agricultural produce will be on the Sri Lanka negative list for purposes of the free trade arrangement - a salutary measure to protect our farmers. But unless we can produce subsidiary foodstuffs imported from India at competitive prices, the chances are that imports will continue. Where politicians are concerned, the equation will be simple. There are more people who eat onions, chillies and potatoes than those who produce them.

India knows the trade advantages she already enjoys and is very likely to continue to enjoy for many more years. But she may very well be willing to do something tangible to narrow the existing trade gap. President Kumaratunga, like many of her predecessors, would have found that it is easier to get concessions from the Indian political establishment than from the hard nosed bureaucrats. If it is possible to get India to agree to let Sri Lanka export a fair volume of tea and garments duty free, a big victory would have been won. India can be confident that given her many attainments in producing high quality industrial goods much cheaper than in the West, the Sri Lankan market will be wide open for many of her products. She cannot lose by being magnanimous to a country whose greatest contemporary problem is partly of India's creation.

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