"CEPA will destroy 2,500 years of Sri Lankan independence,' proclaimed one red lettered poster carried by a protester Wednesday in front of the residence of Sri Lanka's president Mahinda Rajapaksa.
The interests behind the protest apparently found a sympathetic ear in the country's president.
"The government will not enter into any pact or agreement that is inimical to its people and economic interests," the AFP news agency said quoting a statement from the president's office.
The CEPA was blocked on the brink of signing earlier.
Tied Down
Trade barriers block competition by giving inefficient domestic business interests a free hand to overprice their goods and sell to a helplessly captive consumer base without any incentive to become efficient or keep the prices of their goods down.
They take away liberties of humans by blocking the ability to exchange goods and services with their fellow beings across political borders.
In addition to increasing profits of local businesses, trade barriers also benefit rulers by increasing tax revenues. They mainly work by depriving access to both local and foreign goods and services for the poorer segments of society by keeping prices artificially high.
Trade barriers have little effect against the rich, who have the economic means to beat the bar.
Trade barriers that push the prices of basic goods, such as food and clothing will also push up wages of export sector workers (without raising worker living standards) harming the nation's export competitiveness.
Non Tariff
But in the case of trade with India, an export firm Ceylon Biscuits, has also opposed further liberalization after having been badly hit in trying to do business in India under an existing Indo Lanka free trade deal.
Sri Lankan exporters have complained that while the tariffs are low on paper, non-tariff barriers and state taxes have effectively kept them out of Indian markets.
The protest in Colombo also coincided with a conference on trade liberalization organized by thinks tanks from both countries in the Sri Lankan capital.
Sri Lankan exporters to India have repeatedly complained that India's state taxes raise the cost of selling products there, despite tariffs being lowered or removed under the Indo-Lanka Free Trade Agreement (FTA).
"There is also a perception that India creates new obstacles in the way of free trade such as state taxes, quotas on various items and non-trade restrictions such as on port entry and so on," India's deputy high commissioner (ambassador) to Sri Lanka Vikram Misri acknowledged during the forum.
Misri said a unified value added tax regime was also being planned in India which will replace state taxes.
Sri Lanka has a long history in free trade especially with India, running into centuries. Even when the British arrived in the island in the late 18th century there was brisk trade with what was popularly known as the 'Coromandel Coast of India'.
At the time one of Sri Lanka's key exports to India was arecanut, which grew mainly in the central hills. Sri Lanka imported rice and clothing from southern India.
Sri Lanka also exported high value spices, gems and elephants to the world.
Fascist Profiteering
The world saw an increase in trade barriers during the 'Great Depression' before World War II a practice which was later blamed or worsening and prolonging the crisis.
Fascist-nationalist regimes in Europe also promoted the concept of 'import substitution' which they called 'autarky' getting together with local business interests to exploit the poor.
Trade barriers also rose after the Second World War as persistent 'foreign exchange shortages' were experienced by countries which printed money and tried to maintain 'soft pegged' exchange rates under the Bretton Woods regime.
The US briefly raised trade barriers in 1971, in the so-called 'Nixon shock' as the Federal Reserve printed money and lost gold reserves. Eventually the dollar became a floating currency.
In the 1970s Sri Lanka saw its worst trade barriers and foreign exchange shortages with unemployment reaching towards 20 percent, around the levels seen in the US during the Great Depression.
Price controls which trigger shortages and blackmarkets, as well as long queues, were common during the period.
In 1978 Sri Lanka liberalized trade, adjusted its exchange rate and became an industrial exporter. Unemployment gradually fell.
But macro-economic stability was weak and deficit spending, money printing, inflation and chronic currency depreciation persisted, keeping poverty high.
Sri Lanka went through another phase of trade liberalization in the 1990s and better macro-economic management was brought in reducing currency depreciation and inflation allowing living standards to rise and poverty to fall.
The free trade deal with India was also struck during the period.
The island opened imports in cloth during the period under an initiative of then Board of Investment chief Thilan Wijesinghe, liberating the poor from the clutches of a few inefficient cloth makers and stopping widespread smuggling.
Sri Lanka's poor now dress better and are no longer forced to buy kerosene-smelling locally made cloth issued on a ration card from co-operatives and from which colours run when washed.
However in recent years import tariffs especially on food, have increased and the voices of protectionists have been growing more strident with a rise in economic nationalism.
Sri Lanka now has price controls and shortages in poultry.
If CEPA contributes to this access then it is fine.
India can export all it likes to Sri Lanka but we can export many times more to India because the Indian Market is larger.
All we need to do is increase the quality of goods produced here and more importantly increase our productivity.
If we do not import from India, we will import from Japan or some other country at a higher cost and from further away. That makes no sense. Or we will not import at all. That may tickle the cockles of fascist freedom restrictors but it will not help the ordinary people. In that case the benefit and the increase in living standards that results from the import will be lost.
If it is a Bajaj we will not be able to travel somewhere. As it is three wheelers are popular because cars have been taxed out of existence. And there is no night bus transport because there are no night fares here. Three wheelers help, especially in rural areas. Mobility is an important freedom of the people and a key input for economic growth and efficiency.
Nations are about people: flesh, blood and aspirations, not just political borders and aggressive nationalism.
Import duties are fascist and undemocratic in nature. In addition to reducing a basic liberty people have enjoyed for thousands of years, an import duty will confer a priviledge to one section of society (rich businessmen) and take away the freedom of another section (particularly poor consumers). Therefore import duties are fundamentally unequal, discriminatory and represents an undermining of rule of law.
Advanced free societies are moving towards value added tax due to that reason. In terms of governance flat value added taxes are fundamentally equal and represents a simple rule of law. The proliferation of free trade agreements are also a result of this fundamental understanding. Remember that as late as a century ago most states including Sri Lanka earned money out of export taxes.
The 20th century saw the rise of fascism, paper central banking and deficit spending. The single biggest obstacle to free trade was the undermining of the gold standard by European central banks to support state deficit spending during the first and second world wars (and the post-war Fed until 1971-73) which created what people now call 'foreign exchange shortages'.
But all the people cannot be conned for ever. Hitler's ideology was rejected by even the German people. But Chavez and some others live on. And floating rates in 1971-73 put an end to 'foreign exchange shortages', at least in countries that learned the exchange rate lesson about contradictory monetary policy (i.e interest rates and exchange rates).
In the same way it is difficult to phase out import duties because those who lose the priviledge scream. In order to do that, various pounds of flesh have to be given to domestic-producer Shylocks. In Sri Lankan terms we can liken it to the dola-pideni that has to be given to a pretha spirit.
One of the most complex and interesting such dola-pideni was the multi-fibre agreement devised by free traders as a sop to the domestic apparel/textile industries of developed nations, particularly the US. The 'negative lists' in the ILFTA are dola-pideni.
If people go around in three-wheelers we should be happy. If more people drink milk because it is cheaply imported and they pay for it with their hard earned money, we should be happy. If a child eats well, the normal reaction of a parent would be to be happy not to be jealous.
But in Sri Lanka when the supply and sale of food, or any other good increases due to imports there is jealousy and anger as well as false concern about the loss of the 'foreign exchange' god. The minds of ordinarily compassionate people have been twisted by those who are unjustly enriched. That is why this whole import substitution autarky is fascist and dehumanizing. Its nothing very complicated about economics, its about con jobs and basic human freedoms.
Germany in fact became the world's biggest exporter slightly ahead of the US (but now second to China) after it abandoned Hitler's import substitution autarky (and aggressive nationalism and militarism). Bundesbank's inflation control, and the German government's fiscal probity became an example to the world.
other thing is Indian lab our relatively very cheap and productive than ours.it has a anti trade union impact also.but what happened to our unemployed youth .
only India need this agreement.
In fact it is markets that are bringing these deficit spending countries' governments to heel. If Greece could force its debt down the throat of provident funds in a fascist-style financial repression it will not have any 'debt problems'.
Monetary union in fact has made it impossible for Greece to depreciate and inflate away its debt (which this country has been doing for 3 decades without much protest from the victims).
Arguments against suppression of market forces and free interaction of ordinary people - free trade - etc are made by interests that are unjustly enriched from it. These control freaks are free to propagate their profitable religion but ordinary people need not take it lying down and allow their freedoms to be appropriated.
Our own experience shows that unemployment here was highest when free trade was suppressed the most in the 70s. Dubai imports labour - employment is about 900 percent of the domestic population I believe, give or take a couple hundred percent - and it has no import duties to speak of.
Trade barriers and deficit spending is not 'economics'. They are simple scams dressed up in high faluting economic terms or garnished with nationalism.
Trade barriers are a scam perpetrated on the people -especially low income people - by some profiteering businessmen. Deficit spending is also a scam - a fiscal ponzi to give it the proper 'economic' term. The Fed (and most central banks) is running a sophisticated counterfeit operation, the result of which is a massive bubble and collapse.
The fact that we - ordinary people - who are victims of both process are arguing in their favour speaks for the efficacy of the skill of those who propagate and benefit from these scams.
Personally - hats off. You really have to admire these guys, they take away our liberties and find defenders among the victims.
It includes dispute resolution provisions that were absent in FTA. Therefore it is even more absurd to object to it.
It introduces a services chapter. This does not automatically and fully liberalize all service sectors. We need rule-governed services trade with India, if for example the transportation hubs (shipping and aviation) are to succeed. See: http://www.dailymirror.lk/print/index.php/opinion1/9040-india-matters-the-need-for-cepa.html.
Economic ruin facing the EU countries should serve as a prime example to those who are screaming for removal of trade barriers. Monetary union to facilitate FREE trade across borders without proper Fiscal Policy or Fiscal union has brought EU on its knees. Hardworking and thrifty Germans are finding out that their EU colleagues in Greece have taken them for a ride.
De-regulation of banks as suggested by economists like Alan Greenspan in US has been responsible for the near collapse of US and the world economy. Private Banks( or other private institutions), like the ones in US cannot be relied upon to act in the best interest of a country. Now the governments in US and UK are introducing measures similar to Sri Lanka in taxing banks heavily and increasing tier 1 capital reserves.
We are not living in a ideal world and one size does not fit all. Each country is unique in history, geography, culture, work ethic and ideals. Management techniques taught US Management schools may not work here. Economists as always are two steps behind the likes of Goldman Sachs and Lehmans. The proof is there for all to see.
Of course CGE should be given credit for increasing the poultry consumption of ordinary people and making chicken more widely available from its previous status as a luxury good.
Just like Dr Kelegama is getting attacked today Thilan Wijesinghe was also attacked for breaking the CGE monopoly and promoting a competitor feed mill. That was his greatest crime.
So Wijesinghe can take credit for breaking two monopolies (or oligopolies) that is clothes and also poultry.
Trade barriers should be lowered unilaterally across the board with all countries, not just India.
There is no point in continuing to penalize the poor just so some rich businessmen can get access to India.
Certainly it is economists who will liberalize trade. Even in India it is economists and bureaucrats who are liberalizing trade and opening up - not its business community who will want to preserve the status quo.
When you have an independent public service they will try to mete out justice.
I am sure Sri Lankan economists such as Dr Kelegama would not mind being insulted for acting on behalf of the poor, but instead bear such insults proudly as war wounds for taking forward a just war on behalf of people who cannot fight for their own rights.
Vested business interests will always oppose liberalization to protect their profits. Profits are needed but artificial profits with constrained competition should not be tolerated.
India should take serious note of current criticism because it is not just Sri Lankan import substitutors who are complaining but exporters. Exporters who already sell to other countries are efficient, and are not just out to make unfair profits.
But India needs to cut trade barriers too, not simply because Sri Lankan exporters say so but because it will help reduce poverty at home, by restoring the ancient trade ties that the peoples of two countries enjoyed for millenia.
Ordinary people trade because they want to and benefit each other. And one country's exporter is another country's importer. India's importers also should take a greater role in trade liberalization. But in many countries importers are labeled as unpatriotic or western oriented or some other convenient label to keep their voices down. And patriotism is the last refuge of the scoundrel.
so,who is providing jobs for them u or me.that's y DSI/Natures Secret/Maliban and Master diverse against this.
any way bitter truth is soon "Sri Lanka will be the colony of india.not a Hong kong of india."
other thing is every responsible citizen knows Thilan wijesinhe's track record during his BOI chairmanship.i also still have bunch of corrupt files against him.
So for anyone to say that the Government backed this protest against CEPA should get their heads examined, as then how come Dr. Kelagama who works for the president organizes a PRO FTA CEPA conference to lobby for it?
The present FTA, is not a Fair Trade Agreement but a Foul Trade Agreement. Is India playing double trade standards when negotiating with several nations? India as a big market player is pushing for bilateral Free Trade Agreements and Multilateral Agreements bcos it ALWAYS favor the nation that has more advanced state of industrial and service industry development, including scalable industries that currently serve large markets capable of producing products cheaply, especially by those nations that have locally sourced raw materials and CHEAP energy. Sri Lanka suffer as a consequence under bilateral trade agreements signed with large market trading partners, as the necessary investment capital is also not available to local industrialists to compete with the larger market based players.
In the case of SIFTA, rightly the indian industries have successfully lobbied and protected their local industries, by making market entry of Sri Lankan exporters cumbersome, and frustrated attempts of several Sri Lankan exporters to break into the Indian market. India has tactically selectively blocked SL products enjoying FTA benefits through INDIRECT trade barriers to frustrate SriLankan expoters by demanding Samples to be sent from goods detained in Ports in South Indian states to laboratories in the Northern States of India, incurring expensive demurages and other costs to the exporter.
Several perishable exporters have had the entire consignment gone bad due to delays at the entry points to India. The spirit of the FTA agreement has not been met by India, and almost all the trade figures touted by proponents of a comprehensive economic partnership have used figures of exports and imports that fall under the NORMAL regime , and not FTA, and therefore, in the final analysis from a Sri Lankan perspective, the SI FTA has been a failure, and none of the issues raised have been rectified, and India keeps proclaiming that the SI FTA is a success, but that is a one sided description, and fails to take into account the complaints made by the Sri Lankan side exporters. India must be serious about wanting trade or preferably FAIR Trade, and must show its neighbors that it is willing to rectify the mistakes and the Protectionist attitudes of its multiple entry point guardians (customs) and act as a true trading partner, instead of pretending to be a trading partner, but when in actual fact, use gullible bureaucrats and policy analysts on the opposite side to champion trade agreements that do not ensure a LEVEL PLAYING FIELD and FAIRNESS principles.
Instead of rectifying the mistakes and anomalies in the SI FTA, India keeps pushing for CEPA with Sri Lanka, and promising to rectify all past mistakes in that new expanded agreement, and this is not acceptable to the FAIR TRADE lobby of Sri Lanka, as it shows that India does not even honor an existing SI FTA agreement, and thus how can it be trusted to honor a new agreement? Fix the FTA first, before talking about CEPA . India needs to realize that a new world order leadership position that it wants to have cannot be attained by practicing old world order policies.
In this age of Climate Change, Sustainability, Corporate Social Responsibility, BRICS, and dismantling of the western axis, the new emerging super powers must lead the way by demonstrating new ethics, values, and spirit of international trade diplomacy, instead of refining and further sharpening the cunning knife of international trade agreements that nations like the US and others have pushed and profited from. India wake up, your neighbors love you, but don't follow the bullying tactics, and sly tactics of the west to gain trade advantages, as most of us can see through it all, and wish for the day that enlightened leadership emerges that would practice the true ancient diplomatic practices that bound our nations together, based on mutual respect, give and let live, and fairness above all.
All Rights Reserved.