Edited by Pierre Sauvé and Anirudh Shingal
Chapter 8: Services trade in South Asia: the India-Sri Lanka CEPA
The India-Sri Lanka Comprehensive Economic Partnership Agreement (CEPA) is the first trade agreement negotiated by Sri Lanka to include services. Although the signing of the agreement was postponed at the last minute due to political sensitivities, the architecture and content of the India-Sri Lanka CEPA will be a model for Sri Lanka's future agreements. Further, this agreement, together with the South Asian Association for Regional Cooperation (SAARC) Agreement on Trade in Services, will be the basis of future services agreements in South Asia. This chapter analyses the architecture and content of the draft India-Sri Lanka CEPA to assess how far it goes beyond the General Agreement on Trade in Services (GATS) in promoting transparency, credibility and liberalisation of services. It also compares CEPA with the other services agreements in the region to identify key features that will determine the future regional trade policy of Sri Lanka on services. The chapter finds that the India-Sri Lanka CEPA has made little progress beyond GATS in terms of its architecture. In terms of the extent of liberalisation, although both countries have moved beyond GATS, this still largely reflects the status quo and at times even falls short of the status quo. The same is true of other services agreements in the region. The chapter concludes that liberalisation of the services sector and expansion of services trade is likely to flow from regional dynamics and unilateral liberalisation and not to result from reciprocal liberalisation in the region. The best that reciprocal liberalisation can achieve is to enhance transparency and credibility by locking in autonomous liberalisation and by compelling countries to share information on non-conforming measures; yet given the flexibility of GATS type regional agreements (absent political will), even this cannot be guaranteed.
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