Critical Analysis of the India Sri Lanka Fta

INDIA SRI LANKA BILATERAL FREE mete extinct AGREEMENT Critical summary 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. sagacity OF TRADE UNDER THE ISFTA13 6. LOOKING BEYOND FTA CEPA. 17 7. CONCLUSION19 8.BIBLIOGRAPHY20 INTRODUCTION The growth of regional sof 2od axiss has been one of the athletic field developments in worldwide dealings in re cent geezerhood. During the 1990s, regionalism was c one timeived as a developmental option in itself that would promote hawkishness of flock axis components and help their fast integration into the international economy. As per the institution rely treat on Global Economic Prospects (2005) the number of the Regional affair in balances (RTAs) has mor e than than quadrupled since 1990 rising to around 230 by late 2004 and the change amongst RTA cooperators now constitutes n previous(predicate) 40% of total orbiculate merchandise.Quoting, World swap Organisation (WTO) this report estimates an other 60 agreements at various stages of negotiations. The World Bank report points out that the boom in Regional deal correspondences (RTAs) reflects changes in certain countries raft policy designs, the changing perceptions of the twelve-sided relaxation method process, and the reintegration into the global economy of countries in transition from socialism. Regional agreements vary widely, still all waste the objective of reducing barriers to traffic in the midst of member countries which implies discrimination against shargon with other countries.At their simplest, these agreements merely buy food responsibilitys on intra bloc manage in goods, but many go beyond that to suppress non- responsibility barriers and to ex tend liberalisation to enthronement and other policies. At their deepest, they pick up the terminal of economicalal union and involve the construction of sh bed executive, judicial, and legislative institutions. 1 Among the s reddener member countries of the sec Asiatic Association of Regional Cooperation (SAARC), India and Sri Lanka accounts for the volumedst devil-sided trade current in the region.Thanks to the India-Sri Lanka surrender softwood Agreement (ISFTA) that was sign-language(a) amongst the twain countries in December 1998 and operationalized in demonstrate 2000. However, almost at the same time in 1993 the agreement on South Asiatic 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 with the exchange of concessions. This pushed the agenda for promoting bilaterally symmetric trade in the midst of India and Sri L anka to the background.However, the negotiations infra SAPTA progressed at a very slow pace and became a time down process. The failure of SAPTA brought about the desire for a idle trade agreement with India to the forefront from the Sri Lankan side. It was felt that such an agreement would give the much required commercialise advance to the exporters from Sri Lanka. India was overly keen to acquire the South Asian markets and expressed its leadingness to consider bilateral exhaust trade agreements with its South Asian neighbours.Accordingly, the India-Sri Lanka apologize Trade Agreement (ISFTA) was signed amid the two countries on 28 December, 1998 in New Delhi, India and came into operation on 1 March, 2000. India and Sri Lanka expression upon regional/bilateral FTAs as a complement to the multilateral handicraft system by ensuring the compatibility of the FTAs with the rules laid down by the WTO. Also, two countries atomic number 18 members of the South Asian Asso ciation for Regional Co-operation (SAARC) which envisaged the formation of a South Asian Free Trading Arrangement (SAFTA) through successive rounds of tariff concessions among member countries.However, the efforts of member countries have not yielded the expected results. 2 A Joint Study convention with representatives from two countries was notice up which submitted its report in October 2003 that paved the way for negotiations on the super Economic league Agreement (CEPA). In the present context of Indo-Sri Lanka trade, the serve agreement aims to remove/ precipitate market access and national treatment barriers, and promote co-operation amidst the function firmaments of the two countries. 3 HISTORICAL OVERVIEW Trade relations between Sri Lanka and India era back to pre-colonial times.Under British rule, trade between the two countries was ge bed to perform the needs of the colonial power in the occupying territory, and was dominated by aftermaths and exports in food- related items. After independence in 1947 and 1948 for India and Sri Lanka respectively, both national governments adopted inward-looking policies c autograph on the concepts of self-reliance and import substitution industrialization. Consequentially, a very broken sharpen of trading took place between what became two virtually unlikeable economies. In 1977, Sri Lanka became the first South Asian country to liberalize its economy, scuttle it up to the rest of the world.However, substandard wares from India the result of excessive inward-looking policies were not competitive against the goods from East Asia that flooded the Sri Lankan market. With exposeial liberalization of the Indian economy during the mid-eighties and further liberalization in 1991, trade began to pick up, particularly in favour of India. Between 1993 and 1996, there was a doubling of two-way trade, and between 1990 and 1996 imports of Indian goods to Sri Lanka grew by 556 per cent. In 1995, India replac ed Japan as the largest source of imports to Sri Lanka, invoice for 8-9 per cent of total imports.For Sri Lanka, it became evident that trade with the SAARC region ultimately amounted to trade with India owing to the sheer size of the latters rapidly emergent economy and expanding middle-class population. Hence, the perceived mutual benefits of free trade between the two countries became increasingly clear. Sri Lankas private sector frustrated by the slow progress of the SAPTA4 to boost regional trade pressurized the government to enter into a free trade agreement (FTA) with the Indian government that would add market access for Sri Lankan exporters. 5Birth of the ISFTA (India Sri Lanka Free Trade Agreement)6 Politics was ultimately the major player in the move towards free trade. Sri Lanka entertained the hope of unclutter away the political tensions of the 1980s and engaging Indias assistance once more in solving the North/East conflict of the country. India was propelled by an immediate need to acquire South Asian markets following economic sanctions imposed on the country for the nuclear tests conducted in May 1998. Among other factors, these political results led to the signing of the Indo-Sri Lanka Bilateral Free Trade Agreement (ILBFTA) on December 28, 1998.The Commerce Secretary of India and Finance Secretary of Sri Lanka transfer letters that operationalise the India-Sri Lanka Free Trade Agreement (ISFTA) between India and Sri Lanka signed in New Delhi on 28 December 1998 by H. E. the President of Sri Lanka and the compu disconcert Prime Minister of India with effect from 1st March 2000. 7 The economic objectives of Sri Lanka were to gain Trade ties with South Asias dominant economic power, to induce the interlingual rendition of Sri Lankas exports from low- abide by added goods to high value-added goods aimed at niche markets, and to hand over low-income groups with cheap consumer imports from India.Moreover, Sri Lanka hoped to commit more export-oriented foreign bring investment (FDI) from third countries by promoting itself as an effective insertion point into the Indian market. With the Board of Investment (BOI) world made a one stop shop in the early 1990s, Sri Lanka has long been a relatively appealing location for foreign investors compared to its more bureaucratized South Asian neighbours. 8 Thus, the agreement with effect from 1st March 2000, aimed to provide traffic free as well as duty perceptiveness access for the goods manufactured in the two countries. both(prenominal) the countries had itemizationed products for immediate duty free ledger entry into severally others territories. India having hold to phase out its tariffs on a large number of items within a period of three years. Sri Lanka, also to do so in eight years. Both the countries had drawn up Negative Lists in respect of which no duty concessions will apply. These Lists would take items on which protection to local industry had be en considered essential. Both the countries intended to reduce the items in the Negative List through periodic consultations. 9 The Agreement sets out the Rules of Origin criteria for eligibility for invidious access.Products having internal value addition of 35% will qualify for preferential market access. Sri Lankas exports with a domestic value addition content of 25% will also qualify for entry to the Indian market if they have a minimum of 10% Indian content. 10 CONCEPTUALIZATION OF THE ISFTA The conceptualization phase of the ISFTA occurred between December 1998 and March 2000, and was ground on several previous studies and recommendations. 11 The agreement was intended to supersede the animated economic partnership downstairs the SAARC, to wit , SAPTA. Bilateral free trade greements are traditionally formulated using the positive incline improvement, whereby individually participating country catalogues the individual commodities for which it would grant choices to the other. No exonerateheless, owing to the time-consuming record of such a method, the ISFTA was formulated on the negative list approach each country extending concessions/ preferences to all commodities except those indicated in its negative list, namely items of a lovesome nature with regard to protecting national interests. The two countries agreed for preferential treatment on 5112 tariff lines (by 6- digit HS Code).An 8-year time table was devised for phasing out tariffs. Non-tariff barriers, such as Indian State taxes and customs- level procedures (e. g. , landing place tax), were to be gradually removed as well. 12 Taking into account the imbalance between the two countries, Sri Lanka was accorded special and differential treatment the immediate duty- free list (319 items) and 50 per cent preferential duty list (889 items) were receiptsously little than those offered by India (1,351 items and 2,799 items, respectively), while the Sri Lankan negative list (1,180 items) was considerably big than Indias (196 items).Among others, the agricultural sector of Sri Lanka was not pillowcase to liberalization and was include in the negative list. The majority of Indian exports were initially granted lonesome(prenominal) a 35 per cent duty concession with an 8-year tariff decrement period, while Sri Lankan exports were granted a 50 per cent concession with a 3-year tariff reduction period. Moreover, Sri Lanka was granted the freedom to reduce its negative list at her comfort level, instead of a pre-determined formula. Rules of origin (ROO) criteria were also relaxed in Sri Lankas favour.Preferential treatment requires a minimum of 35 per cent domestic value addition, or 25 per cent when Indian inputs comprise 10 per cent. In addition, although the agreement does not feature revenue compensation, Sri Lanka brinytained that tariff concessions would not be granted for high-duty imports such as automobiles import duties are an important source of government revenue and comprise 2 per cent of Sri Lankan GDP. Some aspects of the agreement were deferred for subsequent negotiation these include the number of entry ports, Indian state-level taxes, customs procedures, and the specifics of phasing out non-tariff barriers. 13 The agreement include mechanisms for review and consultation, as well as settlement of disputes above and beyond the protection afforded to both countries nether the safeguards clause. CHARACHTERESTICS OF THE ISFTA The ILFTA between India and Sri Lanka is a landmark in the bilateral relations between the two countries. It is expected to bring about enhanced trade between the two countries as well as to expanded and alter cooperation in a range of economic spheres, including investments. This is the first such Agreement in the South Asian region which could serve as a model for similar bilateral Agreements in the region.It has an institutional framework in the form of the Indo-Lanka Joint Commission, a dispute settlemen t mechanism, and so forth. Its logical implication further lies in that it shtup be implemented more efficiently and also more flexibly, unlike the protracted nature of negotiations generally associated with multilateral arrangements. 14 These following features characterize Indo-Sri Lanka Free Trade Agreement Elimination of Tariffs 1. By India Zero duty on items upon entering into force of the Agreement the list is to be finalized within 60 days of signing of the Agreement. E) 1351 products. Concessions on material items restricted to 25% on Chapters 51-56, 58-60, &038 63. Four Chapters infra the Textile sector retained in the negative list (Chapters 50, 57, 61 and 62) (TEX) 528 products. Garments covering Chapters 61&03862 while remaining in the negative list, will be given 50% tariff concessions on a fixed basis, subject to an annual restriction of eight one one thousand jillion million million pieces, of which six million shall be extended the concession only if made of Indian fabric, provided that no mob of garments shall exceed one and half million ieces per annum (GAM). 50% tariff preference on five tea items, subject to a quota of 15 million Kg. Per year (TEA) 5 products. 50% margin of preference upon coming into force of this Agreement on all items, except for those on the negative list. To be phased out to zero duty in three years (IR) 2799 products. A negative list of 429 items to be retained (D I) 429 products 2. By Sri Lanka Zero duty on about 319 items upon entering into force of the Agreement (F I) 319 products. Phasing out of tariffs on items with 50% margin of preference on 889 products upon coming into force of the Agreement, with up to 70% at the end of the 1st year, up to 90% at the end of the 2nd year and 100% at the end of tertiary year (F II) 889 products. For the remaining items, (except for those on the negative list), which is the Residual List, preference would be not less than 35% before the destruction of three years, 70% before the expiry of six years and 100% before the expiry of eighth year. (SLR) 2724 products. A negative list of 1180 items (DII) 1180 products. OBJECTIVES The Objectives adopted are go bad how much of the bilateral trade both imports and exports are covered under different categories of concessions offered and received by India and Sri Lanka over the past five years, viz. 1996-97 to 2000-01. To analyze, in terms of 21 HS Sections, the distribution of trade under each category. To analyze the top products in terms of 8-digit HS Classification for India and 6-digit classification for Sri Lanka under each category to identify the success stories. To ascertain the trade potential between the two countries and assess the same in terms of products offered concessions under different categories. This exercise is based on the last year of entropy availability. The concessions offered by the Contracting States have been at 6-digit HS classification. In order to give the aforementioned objectives, the bilateral trade data15 is analyzed at the highest level of integrating for India, viz. 8-digit HS classification by disaggregating all concessions at 6-digit classification to 8-digit levels. ASSESSMENT OF TRADE UNDER THE ISFTAThe India Sri Lanka FTA was signed in 1998 and became operational in March 2000. Mutual phased tariff concessions on different products on 6 digit Harmonized Classification (HS Code) basis have been granted by both the partners. Each side is having its negative lists16 (no concessions), positive list (immediate full concessions) and a residual list5 (phased tariff reductions) as per the framework of ISLFTA. The preferential trade under the FTA is governed by Rules of Origin, which specify the criteria for a product to qualify for tariff concessions from the importation member.After signing of ISFTA, trade between India and Sri Lanka has increased manifold. Indias import from Sri Lanka was US$ 45 million (0. 10% of total imports ) in 1999, which increased to US$ 499 million (0. 29%) in 2006 Indias export to Sri Lanka was US$ 482 million (1. 4% of total exports), which became US$ 2110 (1. 74%) in 2006. Similarly, Sri Lankas import form India in 1998 was 538 million (9. 49%), which increased to US$ 1804 million (18. 46% out-and-out(a) 1) in 2006. Sri Lankas exports to India has grown from US$ 35 million (0. 5%) in 1998 to US$ 490 million (7. 26%, rank 3) in the year 2006. In this way India became the major trading partner for Sri Lanka after the signing of the Agreement. The number of Sri Lankas export items to India increased from 505 in 1996 to 1,062 in 2006 items on 6 digits of HS classification. There is a visible teddy in Sri Lankas exports from agricultural products to manufacturing goods The major products exported by Sri Lanka to India in 2006 include Fats and Oils (22. 3%), Copper and Articles of Copper (8. 6%), Electrical Machinery (8. %) and Spices, Coffee, Tea (6. 2%). Similarly, India exported Mineral Fuel, Oil (22. 44%), Vehicles (18. 08%), Iron and Steel (4. 54%), Machinery, Reactors, Boilers (4. 22%) and Pharmaceutical Products (4. 13%) to Sri Lanka. There has been an increase in total parcel of land of import of Sri Lankan goods from 0. 10% in 1999 to 0. 29% in 2006. The import from Sri Lanka has also increased in the items on the residual list from 0. 2% in 1996 to 0. 47% in 2006. It is berthworthy that there has been an increase in the imports even in the negative list items from 0. % in 2001 to 1. 19 % in 2006. This could be mainly due to the increased awareness to partners market, smoo thening of customs issues and improved access to ports of entry due to the increased engagement of partner countries on products having preferential tariffs on residual list, the so called border effects. By 2008, the ISFTA entered into full force. Both governments were pleased with the results achieved through the Free Trade Agreement and proclaim that it had facilitated the en largement of two-way trade between India and Sri Lanka.India, which was once the second largest exporter to Sri Lanka pre-ISLFTA, has now blend in the islands largest source of imports. Meanwhile India has become the third largest export savoir-faire for Sri Lankan products (after the United States of America and the European Union). The argument is that, given the asymmetrical proportions of the economies of the two countries, if not for the ISLFTA, Sri Lankan exports would not have been able to achieve their current level of market penetration. The bilateral import-export ratio that had been 10. 1 in 2000 had improved in Sri Lankas favour to 5. 31 by 2007. According to the then Indian High Commissioner to Colombo, the ratio may have been as skewed as 401 (in Indias advantage, of course) had the ISLFTA not been in operation. 17 everywhere the ten years in which the ISLFTA has been in operation, Indian foreign direct investment in Sri Lanka has also expanded exponentially, most recently in telecommunications (Bharti Airtel) and glass-manufacturing (Piramal Glass), and biscuits and sweets (Britannia).In 2009, India was the islands third largest foreign investor (after China and the United Kingdom) with inflows of US$78 million and largely attracted to the telecommunications, energy and power sectors (Central Bank of Sri Lanka 2010 114). The Institute of constitution Studies (2008 47-48) has estimated that Indian foreign direct investment has expanded from a accumulative total of LKR165 million in 1998 (1. 3 percent of total FDI) to LKR19. 5 billion in 2005 (8. 3 percent of total FDI). However, the causal participation between the commencement of the ISLFTA and the spiral in inward foreign direct nvestment from India is asserted rather than demonstrated, and may have more to do with pugnacious Indian investment strategies since that countrys economic boom, than the existence of the Free Trade Agreement. 18 IMPACT OF THE FTA Despite its importance in the S outh Asian region, not many empirical studies have been conducted to access the impact of ISFTA. maven study that attempted to analyze the impact of this FTA was conducted by Kelegema and Mukherjee in February 200719. Their study is based on the bilateral trade flows under different categories of products.Sector sensible imports and exports figures are compared before and after the FTA. They have cogitate that the two countries have displayed political will to forge ahead towards economic integration and the immense size disparity between the two economies does not hinder bilateral free trade when appropriate special and differential treatment is accorded to the smaller country. Some naked as a jaybird goods from Sri Lanka have found entry into the Indian market following the exchange of preferences.Finally, they have concluded that the economic benefits of free trade can and do override political problems. 20 Another report on evaluating economic performance of the FTA is ? Jo int Study Group on India Sri Lanka encyclopaedic Economic fusion Agreement constituted by the partner Governments (JSG report, 2003)21. JSG (2003) has concluded that ISLFTA promoted a 48% increase in bilateral trade between 2001 and 2002, and at present India is the largest source of imports into Sri Lanka, accounting for 14% of Sri Lankas global imports.India is the fifth largest export destination for Sri Lankan goods accounting for 3. 6% of Sri Lankas global exports. 22 Based on the success of ISFTA, the JSG has recommended that the two countries enter into a Comprehensive Economic partnership Agreement (CEPA) covering trade in services and investment and to build upon the ISLFTA by deepening and widening the coverage and covering of trade in goods. LOOKING BEYOND FTA CEPA The decision to work towards a Comprehensive Economic Partnership Agreement (CEPA) was taken in June 2002.During the yap away of the Sri Lankan Prime Minister to India in June 2002, the Prime Ministers of India and Sri Lanka discussed the profound changes in the international economic and political arena that have been generated by the process of globalization, on the one hand, and emergence of closer regional economic associations, on the other. They agreed on the need to widen the ambit of the ISLFTA to go beyond trade in goods to include services and to facilitate greater investment flow between the two countries.Accordingly, a Joint Study Group (JSG) was set up to make recommendations on how to take the two economies beyond trade towards greater integration and to impart renewed impetus and synergy to the bilateral economic interaction, through the conclusion of a Comprehensive Economic Partnership Agreement (CEPA). 23 Both sides have committed to an agreement consistent with the rules of the WTO. maculation the numerous shortcomings of the existing FTA must be remedied, its evident achievements can be built upon with relative ease to formulate the new agreement.The required ins titutional support is already in place with the Federation of Indian house of Commerce and Industry (FICCI) and the Ceylon Chamber Commerce, which function as the focal points for economic cooperation, as well as the Indo-Lanka Joint Commission and the FTAs running(a) Group on Customs. The first round of technical-level negotiations (TLNs) on the CEPA commenced in February 2005, sensibly delayed after changes in government in both countries. heptad rounds of negotiations have been faultless by 2006. The CEPA is to cover trade in goods and services, investment liberalization, and economic cooperation.The negotiations on goods focus primarily on reducing the ISFTAs negative lists, relaxing ROO criteria, signing mutual recognition agreements (MRAs) on product standards and certification procedures, and concluding the Memorandum of Understanding (MOU) on consumer protection and levelheaded metrology. Particular attention will be given to developing the tack on side of the Sri Lan kan economy. The CEPA will be notified under the GATTs Article XXIV24, which covers real trade instead of under the Enabling Clause which provides more flexibleness to etermine the trade coverage between developing countries. In a nutshell, the main objectives of the CEPA are to 1. Deepen existing preferential trade between the two countries 2. Reduce the negative lists of the ILBFTA 3. Relax ROO criteria 4. Liberalize the services sector beyond the coverage of the General Agreement on Trade in function (GATS) 5. Liberalize investment 6. Facilitate economic cooperation as an impetus for liberalization of the services and investment sectors, with the Indian product line of Credit to play a crucial role. 25 CONCLUSIONThe operationalisation of the ISFTA in 2000 was an important step taken by the two countries to harness the economic complementarities between them. As expected, post ISFTA bilateral trade performance between India and Sri Lanka indicates that exports and imports have grown considerably, accompanied by real product diversification. Despite the fact that the ISFTA was confined to trade in goods, increases in trade links between India and Sri Lanka have been further triggered by large investment flows as well as services integration between two countries over time.Nevertheless, investment flows have been mostly one sided as would be expected, flowing from India to Sri Lanka, where the bulk of Indian investment in manufacturing in the post ISFTA phase has come from Indian investors keen to take advantage of preferential duty access to the Indian market in describe sectors such as Vanaspathi and copper. Nevertheless, the potential for greater linkages in investment and services has been fairly obvious based on recent performance, and in part has encouraged both countries to further deepen integration in these areas under the CEPA framework.It is evident from detailed analysis of postISFTA trade flows that Sri Lankas exports to India have expanded significantly. However, it is also clear that the overwhelming share of the increase has originated in a few commodities, raising concerns about the sustainability of the growth momentum in the long term. The bulk of the exports have been concentrated in two items, namely the vegetable fats and oils and copper and articles of copper, which are not considered to be sustainable in the long run.It is by resolving these issues that the movement towards CEPA could be put on fast track to make it a reality. CEPA has the potential to break new ground in South Asias forward movement towards economic prosperity. BIBLIOGRAPHY 1. Mukherjee, I. N. , T. Jayawardena and S. Kelegama (2002), India-Sri Lanka Free Trade Agreement An Assessment of Potential and Impact, SANEI completed study (www. saneinetwork. net ). 2. The Graduate Institute Geneva, HEID Working Paper No 04/2010 An Econometric Analysis of the India-Sri Lanka Free Trade Agreement. 3. Kelegama, S. nd Mukherji I. N. (2007), India-Sri La nka Bilateral Free Trade Agreement Six Years Performance and Beyond, RIS DP 119, February 2007, look into and Information System for Developing Countries, New Delhi. 4. JSG (2003), India-Sri Lanka Comprehensive Economic Partnership Agreement, Joint Study Group, October 2003, http//www. ips. lk/publications/etc/cepa_reprot/islcepa. pdf 5. Jayawardena, L. et al. (1993), Indo-Sri Lanka Economic Cooperation Facilitating Trade Expansion through a Reciprocal Preference Scheme, The United Nations University, WIDER, Helsinki. 6. An Act of creed? ten years of the India-Sri Lanka FTA, Law &038 Society Trust, Sri Lanka, March 2010 (PDF File) 7. India Sri Lanka FTA Lessons for SAFTA, CUTS International, Dushni Weerakoon, Jayanthi Thennakoon. (PDF File) 8. Panchamukhi, V. R. et al. (1992), Indo-Sri Lanka Economic Cooperation An Operational Programme, the United Nations University, WIDER, Helsinki. 9. Taneja, N. , A. Mukherjee, S. Jayanetti, and T. Jayawardena (2004), Indo-Sri Lanka Trade in Services FTA II and Beyond, SANEI completed study (www. saneinetwork. net ). &8212&8212&8212&8212&8212&8212&8212 1 An Econometric Analysis of India-Sri Lanka Free Trade Agreement, HEID Working Paper No 04/2010 2 represent Shome (2001) Harilal and Joseph (1999) Taneja (2001). 3 Several Free Trade Agreements related to goods trade are more of Preferential Trade Agreements rather than Free Trade Agreements. In the case of Indo-Sri Lanka, the terms CEPA and FTA are interchangeable. 4 The SAARC Preferential Trading Agreement (SAPTA) was signed in April 1993 and came into operation in December 1995. 5 RIS-DP 119 India-Sri Lanka Bilateral Free trade Agreement, Saman Kelegama &038 Indra Nath Mukherjee. 6 Available on the Board of Investment of Sri Lanka website, http//www. boi. lk 7 above, melody 5. 8 Supra honor 5. 9 Indo-Sri Lanka FTA An Assessment of Potential and Impact, Saman Kelegama &038 Indra Nath Mukherjee. 10 Supra note 9. 11 See Jayawardena, L. et al. (1993) and Panchamukhi, V. R. et al. (1992). 12 Supra note 5. 13 India had committed to the WTO that it would remove non-tariff barriers by 2004. 14 Supra note 9. 15 The data has been obtained from the Ministry of Commerce (India) electronic database over the period of 1996-97 to 2000-01. 16 Items, which are considered sensitive to the domestic industry by each partner to FTA, are included in the respective negative list. The items in negative list of Sri Lanka are not entitled for any duty concessions for imports from India. The same rule applies in case of Indias negative list for Sri Lan kan products. 17 An Act of Faith? ten years of the India-Sri Lanka FTA, Law &038 Society Trust, Sri Lanka, March 2010. 18 Supra note 17. 19 Supra note 9. 20 Supra note 1. 21 Joint Study Group Report on India-Sri Lanka Comprehensive Economic Partnership Agreement (JSG, 2003), can be found at http//www. ps. lk/news/newsarchive/2003/20102003_islcepa_final/islcepa. pdfsearch=India%20Sri%20Lanka%20Trade%20Study 22 Supra n ote 1. 23 Supra note 21. 24 GATT General Agreement on Tariffs and Trade. 25 The Indian Line of Credit is a credit facility granted by India to other developing countries to purchase goods and services from India, usually with a long re-payment period. Since January 2001, Sri Lanka has borrowed a total of US $281 million for the purchase of food, petroleum, buses, roofing sheets, and consulting services.