Despite the removal of ten varieties of Indian goods from the negative list under the Indo-Sri Lanka Free Trade Agreement (ISLFTA) enabling unrestricted access to the local market, Investment Promotion Minister Lakshman Yapa Abeywardana yesterday said discussions had been started to add more products to the negative list of the ISLFTA to protect the local industry.

While admitting that the ISLFTA had done more harm to Sri Lanka’s local industry than good, Minister Abeywardana responding to Daily Mirror at yesterday’s news briefing at the Information Department said there were many shortcomings in the ISLFTA but Sri Lanka was helpless under the prevailing situation.

“We want to protect the local industry but without the Indian government’s consent we cannot enter items bilaterally to the negative list. Therefore, we have already started a dialogue with Indian authorities to add more domestically produced goods to the negative list to prevent the dumping of Indian goods in Sri Lanka’s local market,” Minister Abeywardana stressed. Removal from or inclusion of goods to the negative list must be on the agreement of both parties, he added.

The Government has allowed tariff-free imports on ten categories of Indian goods soon after the budget speech 2014 on November 21, which had hitherto remained in the negative list under the ISLFTA, which affect Sri Lanka’s industry.

Asked as to what was the rationale behind the lifting of the tax on items like pet food, dental floss used for manufacturing toothbrushes, trade advertising material and commercial catalogues, corrugated sheets, panels and tiles, hard rubber or plastics and combs and hair slides which are local products, Minister Abeywardana said “We are helpless. That is why a discussion has begun to include these items in the negative list”.The ISLFTA was signed in 1998 and became effective in March 2000. After almost ten years of operation, the Law & Society Trust (LST) undertook an evaluation of the ISLFTA over the course of 2009; made more urgent and relevant in view of the strong lobby on both sides of the Palk Strait for its expansion and deepening into a Comprehensive Partnership (CEPA).

There are 1,220 items in the negative list that prohibit the countries importing from each other tariff free.

Minister Abeywardana added that a dialogue between China and Sri Lanka has been launched to sign a similar Free Trade Agreement that is progressing smoothly.

Commenting on the taxes imposed from budget 2014 on certain essential food items such as sprite, sugar, dhal, chickpeas etc, he said the government must impose tax on these items to increase government revenue and added that being a middle income country; Sri Lanka was not in a position to draw foreign loans on concessionary terms. Therefore, the government has no option but to obtain loans from the domestic sector for capital expenditure.

However, Minister Abeywardana maintained that the Foreign Direct Investments (FDI) to Sri Lanka had been increased by 41% by third quarter of this year in comparison to the same period of 2012 from US$ 615 million to US$ 870 million.

Source: Daily Mirror - Sri Lanka