India, Lanka sign free trade pact
Tribune News Service

NEW DELHI, Dec 28 — India and Sri Lanka today signed a historic free trade agreement (FTA), setting the pace for economic cooperation in the South Asian region.

The agreement, which was signed at Rashtrapati Bhavan this evening, became a reality after a decisive go ahead by the Prime Minister, Mr Atal Behari Vajpayee, who held a one-to-one 30-minute discussion with the visiting Sri Lankan President, Mrs Chandrika Kumaratunga, at Hyderabad House.

A memorandum of understanding for setting up a India- Sri Lanka foundation was also signed.

The agreement, which had been worked out during the recent visit of the Sri Lankan Foreign Minister, Mr Lakshman Kadirgamar for a joint commission meeting, had run into last-minute problems.

Senior External Affairs Ministry officials said till this morning there was no indication whether the trade agreement would be signed today. Even a handwritten entry on signing of a trade agreement in the typed official programme was included later.

It was only after the 30-minute one-to-one meeting between Mrs Kumaratunga and Mr Vajpayee that a decision on the matter was taken.

Differences reportedly cropped up between the two sides on the issue on value-addition to third-country goods by Sri Lanka which may find their way to India and adversely affect smaller Indian business establishments.

The agreement would pave the way for reduction in tariff which would give a decisive push to bilateral economic cooperation. The fast-track bilateral trade agreement would help diversify two-way trade. Sri Lanka is the first country in the SAARC region to accept India’s offer. However, Bhutan and Nepal have traditionally had free trade arrangements with this country.

At the SAARC summit Mr Vajpayee had unilaterally announced reduction of quantitative restrictions on imports from SAARC countries and offered removal of all barriers.

During their half-an-hour talk, the two leaders discussed bilateral and regional issues and reaffirmed convergence of views on these, a Ministry of External Affairs spokesman said, adding that talks were held in a cordial atmosphere based on trust and friendship.

Both Mrs Kumaratunga and Mr Vajpayee agreed that efforts should be increased to accelerate economic cooperation in the region.

Asked whether Sri Lanka had sought India’s mediation in resolving the LTTE problem in the island-nation, the spokesman said New Delhi had already clarified that the issue had to be resolved by Colombo.

Mrs Kumaratunga, who arrived here yesterday on a three-day visit, was accorded a warm ceremonial welcome at the forecourt of Rashtrapati Bhavan where she was received by the President, Mr K.R. Narayanan, the Prime Minister and his senior cabinet colleagues.

The Sri Lankan President held parleys with Mr Vajpayee and the External Affairs Minister, Mr Jaswant Singh. Later, Mrs Kumaratunga held separate meetings with the Vice-President, Mr Krishan Kant and the Home Minister, Mr L.K. Advani.

Earlier, both Mrs Kumaratunga and Mr Vajpayee laid the foundation stone for the expansion of the Sri Lanka pilgrims rest house in New Delhi for which land was gifted to Sri Lanka by India’s first Prime Minister Jawaharlal Nehru.

Speaking on the occasion, the Sri Lankan President said that pilgrims rest house "will stand tall as a monument to the abiding friendship between the people of India and Sri Lanka, as well as a beacon of tolerance and peace".

"It will also be a landmark that will signal traditional hospitality extended by the government and people of India towards Buddhist and other pilgrims who come to India from distant lands", she said.

The Prime Minister said: "A centre of this kind will provide opportunity to travellers from Sri Lanka, India and perhaps elsewhere to rest a while, to interact and share their thoughts and experiences and draw sustenance from one another so that they can move on, refreshed in body, mind and spirit."

The President, Mr K.R. Narayanan held a banquet in honour of the visiting Sri Lankan President. In his speech on the occasion, he said Indo-Sri Lankan cooperation would help the region rise to its full stature in the world.

The President said Mrs Kumaratunga’s visit had provided an opportunity for a purposeful review of bilateral cooperation and for updating strategies and initiatives for the future. "Of fundamental importance among these is the proposal for a bilateral free trade area which is now being actively pursued. This is an imaginative concept with great promise for growth and diversification of trade, investment and other economic exchanges. India is committed to the realisation of this proposal which we believe, can initiate a pattern for the South Asian region", Mr Narayanan said.

Expressing satisfaction over the visit, he said India and Sri Lanka had established a tradition of collaboration beyond SAARC. He said that these interactions in the international field which encompassed a wide range of crucial and complex issues, relating in particular to reform and restructuring of the United Nations Security Council, the questions on world economic development, as well as disarmament and international terrorism reinforced "our capabilities in dealing with the challenges of the present-day world."

The President said India could look forward to a new era of active and dynamic cooperation on friendship and mutual trust that existed between the two countries.