Abeysinghe, A.P.C. Subhashini --- "Services trade in South Asia: the India-Sri Lanka CEPA" [2014] ELECD 339; in Sauvé, Pierre; Shingal, Anirudh (eds), "The Preferential Liberalization of Trade in Services" (Edward Elgar Publishing, 2014) 294

Book Title: The Preferential Liberalization of Trade in Services

Editor(s): Sauvé, Pierre; Shingal, Anirudh

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781782548959

Section: Chapter 8

Section Title: Services trade in South Asia: the India-Sri Lanka CEPA

Author(s): Abeysinghe, A.P.C. Subhashini

Number of pages: 43

Abstract/Description:

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.Regional agreements on trade in services are different from those on trade in goods. Agreements on liberalisation of trade in services mainly deal with "behind the border" regulatory barriers, whereas those on liberalisation of trade in goods deal mainly with "at the border barriers" such as tariffs. Another key difference is that the definition of trade in services is much broader than that of goods. Given the importance of proximity of services suppliers (be they juridical persons or natural persons) and consumers, the definition of trade in services encompasses both investments (commercial presence) and movement of people. Hence, the architecture and content of regional agreements in trade in services is significantly different from that of trade in goods. The architecture of an agreement refers to rules and disciplines and the method of liberalisation of trade in services. The content refers to the actual liberalisation commitments made. The architecture and content of existing regional agreements show significant variations. The two fundamental approaches towards regional services agreements have been the GATS-type/hybrid list approach and the NAFTA-type/negative list approach. The Asian countries have generally tended to adopt the GATS-type approach, while countries in the Western hemisphere have adopted the NAFTA-type approach. Nevertheless the two approaches have not been mutually exclusive, with each agreement showing variations and certain features of both approaches.