ETCA (The Agreement Formerly Known As CEPA).

Sri Lanka and India are negotiating a trade agreement which is causing a lot of controversy. Unlike other trade agreements which covers goods, this covers services – specifically IT and shipyards services. This means that people may move back and forth and – given Sri Lanka’s long and sometimes contentious relationship with India – this is causing a lot of controversy.

A lot of this is because the document itself is not (officially) public but we have an un-official copy here, and some quick FAQs. This article won’t tell you whether the agreement is good or bad, but it will try to lay out roughly what it is.

Above: Economist Deshal De Mel talks about ETCA with Indi

Can I read the ETCA document?

You’re not supposed to. It is only for the Illuminati (‘stakeholders’). It isn’t public until both parties agree.

However, the GMOA (Government Medical Officer’s Association) did release scanned versions of the framework document and an annex of services. 

We’re releasing the full text documents here, because, well they’ve already been released:

• Indo-Sri Lanka Economic And Technology Cooperation Framework Agreement (ETCA)
• Services Schedules under the proposed Comprehensive Framework for Cooperation between Sri Lanka and India (Annexure 3)

Note that these are not official documents. The actual documents may be completely different, these are just for reference purposes.

If you want to see some excerpts, we’ve selected a few at the very end of this article.

What is being signed now?

What’s on the table is just an agreement to make an agreement in 6 months. 

There are two documents, a framework and the actual agreement. Only the framework document is up to be signed in the next few weeks. This basically just to open actual negotiations. So still plenty of time to freak out, and change stuff.

What jobs could move?

So far the sectors seem to be limited to IT-enabled services and Colombo dockyards. Within that it seems likely that the negotiations will limit those positions to highly skilled (ie, not entry level programmers). The movement would go both ways.

The annexure linked above actually mentions a range of services, but other statements have said that this first round would be limited to IT and shipyards.

Why are people freaking out?

Unlike goods, services means that people could move across borders. India IT professionals could be working in Sri Lanka and Sri Lankan IT professionals could be working in India. This means they could be competing for jobs, which has many people worried. The secrecy and lack of transparency around the agreement doesn’t help. 

Can’t companies currently hire from abroad if they want to?

Yes, through the BOI, but it’s a bit of a process and gives limited slots. Also, many companies are note covered by the BOI.

Is ETCA basically CEPA by another name?

Officially no, but basically yes. If you’re wondering what they acronyms mean it’s Indo-Lanka Economic and Technology Agreement (ETCA) and Comprehensive Economic Partnership Agreement (CEPA).

What is ‘trade in services’?

If you have time, best to read up about it here – Ceylon Chamber Of Commerce.  In short, countries have worked on free trade agreements for goods, and now they are working on free (or more free) trade in services. These services come in different modes, the controversial one being Mode 4, where a human moves from one country to another. Services account for nearly 60% of Sri Lanka’s GDP and these sort of agreements are becoming more and more common.

What should I think?

We don’t know. This could cost jobs or it could create growth for everyone – the relevant parts haven’t really been negotiated yet. Read and chat around and decide for yourself.

Excerpts (Not Official)

Article 1: Objectives

The objectives of this Agreement are:

1. To strengthen and advance the economic, trade, investment and technology cooperation between the two parties;
2. To promote further liberalization of trade in goods, liberalizing trade in services between the two Parties and gradually establish fair, transparent and facilitative trading, investment and investment protection mechanisms;
3. To expand areas of economic cooperation and establish a cooperation mechanism.

Article 2: Cooperation Measures

The two Parties have agreed, in consideration of their economic conditions, to take measures including but not limited to the following, in order to strengthen economic exchange and cooperation:

1. Gradually reducing or eliminating tariff and non-tariff barriers to trade between the two Parties;
2. Gradually reducing or eliminating restrictions on in trade in services between the two parties;
3. Providing investment protection and promoting two way investment;
4. Promoting trade and investment facilitation and industry exchanges and cooperation;
5. Promoting Technology cooperation and transfer of technology and knowhow.

Chapter 2 

Article 1: Trade In Goods

… skipping cause not controversial

Article 2: Trade In Services

1. The two Parties have agreed to conduct consultations on an agreement on trade in services no later than six months after the entry into force of this Agreement, and expeditiously conclude such consultations.
2. The consultation on the agreement on trade in services shall seek to:
   1. gradually reduce or eliminate restrictions in trade in services between the two Parties;
   2. enhance cooperation in trade in services between the two Parties.
3. Either Party may accelerate the liberalization or elimination of restrictive measures at its discretion on the basis of the commitments to liberalization in the agreement on trade in services.

Article 3: Investment

… skipping

Chapter 3

Article 1: Objectives

Parties shall seek to:

1. Strengthen and enhance economic co-operation between them on the basis of equality and mutual benefit
2. Explore new areas of and develop appropriate measures for closer economic co-operation as a means to greater economic integration between the two countries; and
3. Support and augment economic cooperation in accordance with developmental needs of each other and the welfare of their respective peoples.

Article 2: Scope Of Cooperation

1. To enhance and expand the benefits of this Agreement, the two parties have agreed to strengthen cooperation in areas including, but not limited to, the following:
   1. intellectual property rights protection and cooperation;
   2. financial cooperation;
   3. trade promotion and facilitation;
   4. customs cooperation;
   5. e-commerce cooperation;
   6. discussion on the overall arrangements and key areas for industrial cooperation in major projects, and coordination of the resolution of issues that may arise in the course of industrial cooperation between the two Parties;
   7. promotion of the mutual establishment of offices by economic and trade bodies of the two Parties.
2. The two Parties shall expeditiously conduct consultation on the specific programs and contents of the cooperation matters listed in this Article.

Chapter 4: Technology Cooperation

… This section is missing in the scanned document