Daily News Editorial

Another victory for Sri Lanka

29 April 2017

Sri Lanka secured a major victory in the international arena on Thursday as a motion to deny the Generalized Scheme of Preferences Plus (GSP+) to Sri Lanka was defeated at the European Parliament. The motion to deny the trade concession put forward by the European United Left/Nordic Green Left, was voted down, as 436 Members of the European Parliament (MEPs) voted against it. There were 119 votes for the resolution, while 22 abstained.

The proposal to deny Sri Lanka the GSP Plus status was tabled by 52 MEPs from the European United Left/Nordic Green Left group, who argued that the country’s labour laws are insufficient to protect workers, while there had not been enough progress in the field of human rights. This initiative was led by MEPs Anne-Marie Mineur and Lola Sanchez Caldentey, who visited Sri Lanka from April 10 to 12 and sent a letter to European Commissioner on Trade Cecilia Malmström arguing that the trade concession should not be restored unless Sri Lanka kept its promise to improve labour rights.

However, the majority of MEPs clearly had not agreed with this view, acknowledging the vast progress made in the fields of labour rights and human rights since January 2015. There is a general consensus in the European Union (EU) that even though improvements could be made in the above sectors, the present achievements can justify Sri Lanka’s efforts to regain GSP Plus.

This is yet another major victory for Sri Lanka at the EU, following the restoration of fish exports to the bloc a few months back. The final decision with regard to granting GSP Plus to Sri Lanka will be taken as soon as next month by the EU, but judging by this vote Sri Lanka will not experience any problems.

The granting of GSP Plus will make Sri Lankan exports to the European Union market cheaper and lead to export growth. GSP allows developing countries to pay fewer duties on their exports to the EU. This gives them vital access to EU markets. The “GSP+” enhanced preferences mean full removal of tariffs on essentially the same product categories as those covered by the general arrangement. Sri Lanka still does enjoy the normal GSP, but Plus status gives additional advantages.

The main beneficiary will be the apparel and textiles sector, which accounts for nearly 62 percent of all experts to the EU (2016 figures of European Commission). The EU is also the country’s second biggest trading partner after India, absorbing 32 percent of all exports, which amounts to around Euro 2,225 million (2016). Garments are one of the country’s top export items and any losses on that front affect the economy adversely.

Sri Lanka lost the Plus facility in 2010, after an HR investigation by the European Commission. The investigation relied on reports by UN Special Rapporteurs and Representatives, other UN bodies and by human rights NGOs that identified significant shortcomings in Sri Lanka's implementation of three UN human rights conventions: the International Covenant on Civil and Political Rights, the Convention against Torture and the Convention on the Rights of the Child. This was partly due to the belligerent attitude by the Mahinda Rajapaksa administration towards human rights in general. They argued that conforming to these conventions would amount betraying the country’s sovereignty, whereas they would actually have strengthened sovereignty.

The loss of GSP Plus was a massive blow to the economy, as we could not compete with the other countries in the region including Bhutan, Pakistan, Nepal and Laos which were enjoying the additional zero duty benefits of Plus. Thousands lost their jobs as many garment factories closed around Sri Lanka. The garment industry did find some new markets, but that could not offset the losses incurred from the loss of GSP Plus.

This Government promised to get the ban reversed. Now Sri Lanka is on the cusp of receiving GSP Plus again. The new Government’s pragmatic foreign policy has won over the International Community, especially the West, that was once very hostile towards Sri Lanka as a result of human rights concerns. If the Rajapaksa administration continued, many countries would have blacklisted Sri Lanka and imposed economic sanctions. Fortunately, the January 8 transformation saw an end to such designs. In fact, the Government was able to secure a two-year extension for its accountability and truth-seeking endeavours at the UN Human Rights Council recently.

As Sri Lanka moves higher up the development ladder, it will lose most aid packages granted by Western countries. It will have to rely mostly on external trade and Foreign Direct Investment (FDI). Hence it is vital to rely more on trade, according to the mantra “trade not aid”. Efforts should thus be made to increase exports other than garments to the EU and other countries. This is why the Government is keen to have more FTAs with leading economies in our region, which will give duty-free access for our goods. Trade and investment are the keys to a prosperous future and the GSP Plus will be an immense boon to our economy.