Lanka asks India to play key role
Tribune News Service and agencies

NEW DELHI, Dec 29 — The visiting Sri Lankan President, Ms Chandrika Bandaranaike Kumaratunga, today said India held the key to cementing the SAARC arrangement and hoped that the Indo-Lanka free trade pact would trigger similar arrangements between other countries in the region.

Ms Kumaratunga, who was scheduled to fly back to Colombo this evening, delayed her departure till tomorrow. During the day, she addressed captains of Indian industry at a meeting organised by the Federation of Indian Chambers of Commerce and Industry and called on the Congress president, Mrs Sonia Gandhi, at her residence. She also met former Prime Minister Inder Kumar Gujral.

Addressing members of Indian industry, Ms Kumaratunga said India had to play a lead role in cementing the SAARC arrangement due to the peculiar situation in South Asia.

In other regional arrangements, member-countries had more or less similar geographic, economic and demographic profiles but in South- Asia it was heavily focused on India, she said. "Therefore, great responsibility is cast on India to see through the development process in SAARC and to bring the process to the logical end".

Elaborating, she said the South Asian region had a combined national income of 500 billion dollars. Of this, Sri Lanka’s share was 3 per cent, Pakistan 14 per cent, Bangladesh 7 per cent, Nepal 1 per cent and the rest was accounted by India.

The Sri Lankan President, who Chairperson of SAARC, was confident that by 2001, a regulatory framework for SAFTA would be in place. She said along with economic institutions, there had to be social and cultural outfits to forge a meaningful cooperation.

Referring to the Indo-Sri Lankan trade, Ms Kumaratunga said from $ 23 million in 1987, India’s trade had reached over 500 million dollars in 1997. However, Sri Lankan exports had grown from one million dollars to 44 million dollars during the same period. This imbalance in trade had to be corrected. She hoped that the new agreement would give a critical push to bilateral trade. She said details were being worked out on various arrangements by both governments. She hoped that by March 1, 1999, these things would be put in place.

Under the agreement, details of which were available today, India would bring the duty on 1000 items to zero upon entering into force of the agreement. The list is to be finalised within 60 days of signing the agreement.

India would also provide 50 per cent margin of preference upon coming into force of the agreement on all items, except for those in the negative list.

Tariff would be brought down to zero over a period of three years and concessions on textiles items had been restricted to 25 per cent.

Sri Lanka on its part would bring down the duty to zero on 300 items and it would provide 50 per cent margin of preference for 600 items. The preference would be deepened to 100 per cent subsequently. For the remaining items, except for those in the negative list, preferences would be deepened to 100 per cent within eight years.

India has retained less than 400 items in its negative list while Sri Lanka is yet to provide its negative list. Items in the negative list will not be subject to tariff concessions.

Regarding rules of origin, domestic value addition requirements have been kept at 35 per cent and if the material or inputs are sourced from each other’s country, this would be reduced to 25 per cent within the overall limit of 35 per cent. The criterion of substantial transformation has been provided in the rules.

Replying to a question as to what were the bureaucratic hurdles which held back the signing of the free trade agreement, Ms Kumaratunga said: "Now all these things are things of the past. We should look forward".

Stressing on the evolution of a social identity of South Asia, she said a South Asian cultural institute would be set up in one of the SAARC countries. This was primarily to promote dance, drama and theatre and to people-to-people contact.

Calling for a common and coordinated approach to development, Ms Kumaratunga said despite a huge population and an ancient and veritable culture, South Asia was the poorest region. In this regard, she said high levels of human development and advanced policy framework for poverty alleviation with an inbuilt matrix in "give and take" was critical among the South Asian nations.

The Sri Lankan President called for shunning caste-based ethnic extremism and called upon intellectuals and social organisations to work towards easing such tensions. She laid emphasis on education as a harbinger of awakening and said that SAARC has to lay considerable importance to nurturing schools and universities of class and quality.

During her meetings with Mrs Sonia Gandhi and Mr Gujral, the Sri Lankan President is understood to have discussed matters of mutual interest and bilateral ties between the two countries.

There was no official comment on the reason for Ms Kumaratunga’s delayed departure.