India, Lanka services pact soon

Both countries had entered into a free trade agreement (FTA) covering goods that became operational since March 2000. The FTA will be upgraded to a Comprehensive Economic Partnership Agreement (CEPA), covering services and investments.

"We hope to conclude negotiations by the end of this month. If that happens, the deal could be signed by August," said a government official.

However, the provisions in the proposed agreement may be toned down, as Sri Lanka is currently not comfortable in opening up its services sector.

Sources said Sri Lanka wants to adopt a gradual opening of its services sector.

"They want to give access to mode 4 services covering movement of professionals, only when mode 3 services covering firms opening affiliates abroad are allowed," the official said.

This implies that Sri Lanka is not open to giving access to Indian professionals like doctors or architects. However, if an Indian firm opens a branch in Sri Lanka, Indian professionals can join it.

India is hopeful that Sri Lanka will allow more market access to its services sector. "We will try to convince them that the Indian professionals will not be a threat to the country, but complement their Sri Lankan colleagues," officials said.

The negotiations on the CEPA had hit a roadblock last year, as India felt that the Sri Lankan offer was not adequate.

"In bilateral deals related to services, the market access offers are in excess of the commitments in the General Agreement on Trade in Services (GATS) under the WTO. The Sri Lankan offer was lower than that. Informal discussions recently have indicated that the new offer could be marginally in excess of GATS," the official said.