Indophobia or Lankaphilia ?

Sri Lankans are slowly but surely realising that the Indo-Lanka Fast Trade Agreement, which is being hailed by the Sri Lankan and Indian governments as being mutually beneficial and a harbinger in South Asian trade relations, does hold much potential dangers to Sri Lanka.

The Island takes credit in breaking the news about this agreement, which had not been heard of by the Sri Lankan public and editorially warning Sri Lankans about the potential dangers. We saw the danger signs not as expert economists or experts on international trade but as journalists from our experience and gut feelings. When a free trade fast track agreement was announced, our thoughts went out immediately to the Sri Lankan potato and chillie farmers who had been ruined by Indian exports and the potential dangers that lay ahead to our ‘ goviyas’ engaged in rice cultivation as their ancestors did for centuries. Our continued surveillance on the developments of this agreement has been interpreted by simpletons in the state media as ‘Indophobia’. This accusation was levelled against this newspaper even when we opposed the Indo-Lanka Agreement which Sri Lanka had to sign under the threat of an Indian intervention.. We wish to assure all concerned that we do not suffer from not any such phobia but it is because we as a national newspaper have a duty to protect our national interests. It is not Indiaphobia but Lankaphilia. Our editorials and the lucid analysis of well known economist Dr.J.B. Kelegama sent alarm bells ringing in the corridors of the holiest of holies, and we are informed that even the day before the agreement was signed there were sharp differences of opinion among top players of the Sri Lankan team on whether we should go through with the agreement or not. But President Kumaratunga did finally sign the agreement.

Government propagandists thought that the assurances given by the architect of the agreement, Dr. Lal Jayawardena at a talk to the Chamber of Commerce and a statement of the Indian High Commission in Colombo had done away with all fears and suspicions. Not so the economists and those engaged in business, industry and commerce. A newspaper pundit pontificated: ‘Trade is something which knows no barriers and its a pity that these sections have been so small minded as to seek to gain political advantage even from a trade agreement between two countries ‘. This statement in this age when politics have become so intricately interwoven with trade, we hope will be noted by economists and political analysts as one of the oustanding lustrous ‘gems’ of wisdom of the cheer leaders of the government.

The Ceylon National Chamber of Industries however has a different view. In a statement issue issued yesterday ( See Page 13), expressing grave concern, it specifically

pin pointed seven objectionable features in the agreement. Questioning the criteria for

‘negative lists’ in the agreement, the Chamber has stated that by no means had the Sri Lankan producers been assured that the products that need to be protected had been taken into account. Industrialists were thereby in a quandary and the lack of transparency has caused much heartbreak and even despair, the statement said.

The statement pointed out to the Indian Government’s practice of subsidising industrial products. This could be interpreted as a form of dumping of goods .Whereas India had anti- dumping laws, we did not have such a barriers. A level playing field did not exist at present and was unlikely to exist in the near future, the Chamber noted.

The statement also pointed out at the impact of zero duties on finished products; non tariff barriers in India in addition to customs duties such as auxiliary barriers and inter state levies which were absent in Sri Lanka; Indian Customs codes of classification that could create the illusion that India is granting more concessions among others.

A Sunday Island economics correspondent, ‘Kanes’, commenting on the agreement pointed out that it had been signed, leaving out the lists of exports to be identified in 60 days, was tantamount to a blank cheque being signed. These goods were to be decided on presumably by officials and the final lists may not correspond with what the signatories originally had in mind as they were subject to negotiations, it has been pointed out

The corespondent also makes the very valid point that this agreement may undermine the South Asian Preference Trade Agreement (SAPTA) which SAARC countries have been trying hard top push through. Why only a bi- lateral fast track agreement and not a SAPTA fast track agreement ? he questions and says that the argument that this bi- lateral agreement strengthened SAPTA will not be accepted by other members as it could benefit only two countries. The agreement would therefore erode the mutual trust built up in recent years and weaken the cohesiveness of SAPTA while lowering the prestige of Sri Lanka in the eyes of other members, he has said.

A very salient point made by the correspondent is that since this agreement is based on reciprocity—- India eliminating import duties and Sri Lanka reciprocating in the same way—- it is a departure from the former Indian policy of India’s relation with its neighbors, known as the Gujral Doctrine. The former Indian Prime Minister, Inder Kumar Gujral enunciated the policy that India as the giant of the South Asian nations should do more for its neighbours than what these small countries could do for India.Our correspondent points out that that Gujral undertook to remove quantitative restrictions and reductions on 70 to 80 items unilaterally— without any reciprocity from Sri Lanka. The present Indian Prime Minister Vajpayee too followed that policy when he lifted import restrictions on 2000 products with no reciprocity . But the fast track agreement demands reciprocity, he points out.

Sri Lanka’s national interests may be at stake and it is essential that all concerned should be on the alert and once the export lists are made public, a long hard look be taken at the entire agreement.