Amid shifting US-EU trade dynamics

Speaking to Indian media on April 4, 2025, former President Ranil Wickremesinghe underscored the urgency of finalising the long-debated Economic and Technology Cooperation Agreement (ETCA) between Sri Lanka and India. His remarks came in response to recent U.S. tariffs imposed on Sri Lankan exports and growing uncertainties in Western markets—and the remarks also coincided with Indian Prime Minister Narendra Modi’s arrival at Katunayake International Airport for a three-day visit to Sri Lanka.”

Wickremesinghe stressed that operationalising free trade agreements (FTAs) with Singapore and Thailand, alongside pursuing membership in the Regional Comprehensive Economic Partnership (RCEP), should complement the revival of ETCA. “ETCA needs to be signed. My vision was to complete it by 2025, and we must act now. Previously, we relied heavily on the US and EU, but their trade policies are becoming less predictable, particularly for apparel exports. While maintaining existing partnerships, we need to diversify into new markets and products beyond apparel,” he asserted.

The ETCA, negotiated during Wickremesinghe’s Yaha Palanaya administration, faced vehement opposition since its inception. Critics, including civil society groups and political factions, argued that the pact risked compromising Sri Lanka’s economic sovereignty and job markets to Indian interests. The current government, led by the Janatha Vimukthi Peramuna (JVP), had fuelled those concerns at the time, urging public resistance against the agreement.

JVP leader and President Anura Kumara Dissanayake, a longstanding ETCA critic, previously warned in 2016 that the deal would disproportionately benefit India’s lower-skilled workforce, exacerbating unemployment in Sri Lanka. “Indian IT professionals target Europe or the US—not Sri Lanka. Only India’s underemployed would seek opportunities here, undermining our youth,” he contended.

Reminiscing objections, Wickremesinghe emphasised that diversifying trade alliances is critical as Western protectionism grows. “The global economic landscape is shifting. We cannot afford isolation,” he stated, advocating for a more open approach to partnership with India.

The resurgence of the dialogue on ETCA and the lack of resistance against it reflect current tensions between Sri Lanka’s economic challenges and its social sensitivities, with 2025 poised as a decisive year for the nation’s trade strategy.

By Sanath Nanayakkare