India, Sri Lanka to revise negative lists

For the upcoming round of discussion on the India-Sri Lanka Comprehensive Economic Partnership Agreement...

For the upcoming round of discussion on the India-Sri Lanka Comprehensive Economic Partnership Agreement CEPA to be held in Colombo from July 9 to July 12, India has offered to reduce the number of items on its negative list 8212; items excepted from tariff reduction commitments under the agreement 8212; by about 80 items, Rajeev Kher, joint secretary in the Ministry of Commerce and Industry and officer-in-charge for India8217;s trade agreements in the SAARC region, told The Indian Express. Sri Lanka, on the other hand, has offered to remove a little more than 50 items from its negative list. Currently, there are 429 items on India8217;s negative list whereas Sri Lanka has barred 1180 items from being traded at zero per cent duty. Sri Lanka8217;s negative list includes agricultural and livestock items, rubber products, iron and steel, machinery and electrical goods. The Indian negative list includes textiles, plastic goods and rubber products.

Though the upcoming round is to be the concluding round of talks for the CEPA, there are still certain issues pertaining to the terms of trade that are yet to be resolved.

There has been much debate in the previous rounds between the countries over their respective negative lists. Sri Lanka had originally suggested a list of 118 items to India to consider for removal from its negative list while India had suggested a similar list of 139 items that it wanted removed from Sri Lanka8217;s negative list. 8220;India has been asking Sri Lanka to remove certain oil and auto items from its negative list which comprise about 35 of India8217;s exports to Sri Lanka, but Sri Lanka refuses to compromise claiming these items are important revenue earners for them,8221; said Kher. The 429 items on India8217;s negative list account for about 9-10 of India8217;s total market whereas the 1,180 items on Sri Lanka8217;s list account for 40 of its market, he added.

But Sri Lanka claims that the additional 598 textile items which are not included in India8217;s negative list, but are instead given a 25 margin of preference or duty concession, are equivalent to the items on the negative list. India8217;s effective negative list therefore works out to 1,127 items.

Another contentious issue that the two countries aim to sort out in the next round is that of trading in services. Right since beginning, Sri Lanka has been apprehensive about opening up its services sector to Indian competition as most of its professional services sectors are unorganised and stand the risk of being swamped by Indian services, said Kher. The major unresolved issue as regards services, however, is that of allowing the Indian financial services sector to enter Sri Lanka, said Kher.