Critical Analysis of the India Sri Lanka Fta

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INDIA – SRI LANKA BILATERAL
FREE TRADE AGREEMENT: Critical Analysis

INTERNATIONAL TRADE LAW
PROJECT REPORT
LLB 404

Submitted to:
Asst. Professor MANISH SHARMA

Submitted by:
ADITYA VASHISTH
13510303809
(VIII Semester)

May, 2013
Amity Law School, New Delhi
TABLE OF CONTENTS

1. INTRODUCTION……………………………………………………………….3

2. HISTORICAL OVERVIEW…………………………………………………….5

3. CONCEPTUALIZATION OF THE ISFTA…………………………………….8

4. CHARACHTERESTICS OF THE ISFTA……………………………………..10

5. ASSESSMENT OF TRADE UNDER THE ISFTA……………………………13

6. LOOKING BEYOND FTA: CEPA…………………………………………….17

7. CONCLUSION…………………………………………………………………19

8. BIBLIOGRAPHY………………………………………………………………20

INTRODUCTION

The growth of regional trade blocs has been one of the major developments in international relations in recent years. During the 1990s, regionalism was conceived as a developmental option in itself that would promote competitiveness of trade bloc members and help their fast integration into the international economy. As per the World Bank report on Global Economic Prospects (2005) the number of the Regional Trade Agreements (RTAs) has more than quadrupled since 1990 rising to around 230 by late 2004 and the trade between RTA partners now constitutes nearly 40% of total global trade. Quoting, World Trade Organisation (WTO) this report estimates another 60 agreements at various stages of negotiations. The World Bank report points out that the boom in Regional Trade Agreements (RTAs) reflects changes in certain countries trade policy objectives, the changing perceptions of the multilateral liberalization process, and the reintegration into the global economy of countries in transition from socialism.

Regional agreements vary widely, but all have the objective of reducing barriers to trade between member countries which implies discrimination against trade with other countries. At their simplest, these agreements merely remove tariffs on intra bloc trade in goods, but many go beyond that to cover non-tariff barriers and to extend liberalization to investment and other policies. At their deepest, they have the goal of economic union and involve the construction of shared executive, judicial, and legislative institutions.[1]

Among the seven member countries of the South Asian Association of Regional Cooperation (SAARC), India and Sri Lanka accounts for the largest bilateral trade flow in the region. Thanks to the India-Sri Lanka Free Trade Agreement (ISFTA) that was signed between the two countries in December 1998 and operationalized in March 2000. However, almost at the same time in 1993 the agreement on South Asian Preferential Trading Arrangement (SAPTA) was signed among the seven member countries of SAARC. The objective was to promote and sustain trade and economic cooperation within the SAARC region through the exchange of concessions. This pushed the agenda for promoting bilateral trade between India and Sri Lanka to the background. However, the negotiations under SAPTA progressed at a very slow pace and became a time consuming process. The failure of SAPTA brought about the desire for a free trade agreement with India to the forefront from the Sri Lankan side. It was felt that such an agreement would give the much needed market access to the exporters from Sri Lanka. India was also keen to acquire the South Asian markets and expressed its willingness to consider bilateral free trade agreements with its South Asian neighbours. Accordingly, the India-Sri Lanka Free Trade Agreement (ISFTA) was signed between the two countries on 28 December, 1998 in New Delhi, India and came into operation on 1 March, 2000.

India and Sri Lanka look upon regional/bilateral FTAs as a complement to the multilateral trading system by ensuring the compatibility of the...
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