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EU says GSP+ win for SL a progressive opportunity
EU says GSP+ win for SL a progressive opportunity Wednesday, 17 May 2017 16:54 Written by  Daily FT
  • Zero duty access for Lankan products in the biggest export market once again from Friday
  • On existing exports basket to Europe, boost is estimated at Euro 300 m or Rs. 51 b per annum
  • Ambassador says benefit higher if diversification of products and new markets pursued
  • Expects FDIs to increase in SL, more jobs and income to people
  • SMEs being supported with Euro 5 million technical assistance project
  • GSP+ benefits for SL until it reaches Upper Middle Income country status
  • EU singles out SL’s achievement as ‘vote of confidence’ that SL Govt. will be progressive in meeting 27 international conventions 
  • No serious failures in SL nor is everything perfect says Ambassador; expects SL Govt. to improve its commitment and delivery
  • Lists reconciliation, delay in Counter Terrorism Act replacing Prevention of Terrorism Act, torture, discrimination and child marriages as key issues
  • SL’s progress will be monitored stringently via biannual review; first one in January 2018

By Nisthar Cassim

The European Union yesterday described Sri Lanka’s achievement of regaining the GSP+ concession as a “progressive opportunity” 03both in terms of improving good governance so far and boosting future exports.

Delivering what he termed “very good news”, EU Ambassador Tung-Laï Margue said in Colombo yesterday that the GSP+ benefit will be effective from Friday after the EU publishes Sri Lanka’s re-entry to the scheme in its Official Journal tomorrow.

He said after several rounds of technical and political discussions and following a transparent and democratic process, GSP+ will be restored to Sri Lanka after the EU suspended it in 2010 on account of serious human rights and other issues then. Incidentally, Sri Lanka was the first country to have suffered the withdrawal of the GSP+ scheme and remained so until the latest decision.

“There are no serious failures in Sri Lanka (at present based on the assessment of the performance with regard to 27 international conventions on which GSP+ is granted to qualifying countries) nor is everything perfect. There are issues which need progress. We are satisfied with the Government’s progress as well as commitment to fully comply with these conventions,” Ambassador Margue told journalists at a briefing along with Counsellor Paul Godfrey.

The duo said as is the case for all countries benefitting from GSP+ there will be close and stringent monitoring of Sri Lanka’s progress with the first biannual review slated for January next year. A roadmap of milestones or the way forward is also expected to be firmed up in the future.

The EU is Sri Lanka’s biggest export market, accounting for over 30% with a value of Euro 2.6 billion (Rs. 442 billion or $ 2.8 billion) while total trade is Euro 4 billion. The restoration of GSP+ means the full removal of 66% of tariff lines or over 6,000 products. Major Lankan exports include apparel, rubber products, fisheries, food including tea and light engineering products.

“The regaining of GSP+ is a huge incentive for Sri Lanka to increase exports as well as diversify into new products and markets within Europe,” Ambassador Margue emphasised, adding that higher exports will help Sri Lanka reduce the ballooning trade deficit.

“The GSP + scheme’s immediate benefit will be over Euro 300 million (around Rs. 51 billion or $ 330 million) a year. The benefit can increase even beyond Euro 1 billion in a few years’ time if Sri Lanka diversifies and taps new markets,” he said.

Within the EU, Britain is the biggest market, accounting for the bulk (over 30%) of Lankan exports. The need to diversify markets was stressed especially in the context of Britain, which will be exiting the EU in two years’ time. However, he emphasised that even an EU without UK would remain an important market for Sri Lanka.

The GSP + scheme will be applicable to Sri Lanka until it graduates to Upper Middle Income country status for three consecutive years from the current Lower Middle Income stage. As per EU estimates, based on current trends, such a graduation is likely to happen by 2021 or a few years later.

The EU Ambassador also expects higher Foreign Direct Investments into Sri Lanka’s manufacturing sector targeting exports to the EU. He also expects greater focus on fisheries and foods, two sectors which will have a direct benefit for the rural poor.

The EU expects Sri Lanka to share the benefits of the return of the GSP+ scheme with society at large through good governance, more jobs, income, a cleaner environment and employee welfare. Special emphasis has been placed on ensuring the benefits are inclusive to cover former conflict areas such as the north and east as well as underdeveloped areas in the south.

Acknowledging that SMEs are key to the economy as well as exports, the EU, together with the UN-WTO’s International Trade Centre and the Government, has launched a Euro 5 million technical support scheme over a five-year period to help smaller exporters to improve standards and compliance and thereby succeed in Europe.

The 27 international conventions which all GSP+ qualifying countries must comply with are the International Covenant on Civil and Political Rights, International Covenant on Economic Social and Cultural Rights, International Convention on the Elimination of All Forms of Racial Discrimination, Convention on the Elimination of All Forms of Discrimination Against Women, Convention Against Torture and other Cruel, Inhuman or Degrading Treatment or Punishment, Convention on the Rights of the Child, Convention on the Prevention and Punishment of the Crime of Genocide, Minimum Age for Admission to Employment, Prohibition and Immediate Action for the Elimination of the Worst Forms of Child Labour, Abolition of Forced Labour Convention, Forced Compulsory Labour Convention, Equal Remuneration of Men and Women Workers for Work of Equal Value Convention, Discrimination in Respect of Employment and Occupation Convention, Freedom of Association and Protection of the Right to Organise Convention, Application of the Principles of the Right to Organise and to Bargain Collectively Convention, International Convention on the Suppression and Punishment of the Crime of Apartheid, Montreal Protocol on Substances that deplete the Ozone Layer, Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and Their Disposal, Stockholm Convention on persistent Organic Pollutants, Convention on International Trade in Endangered Species, Convention on Biological Diversity, Cartagena Protocol on Biosafety, Kyoto Protocol to the UN Framework Convention on Climate Change, UN Single Convention on Narcotic Drugs (1961), UN Convention on Psychotropic Substances (1971), UN Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances (1988) and Mexico UN Convention Against Corruption.

EU officials reiterated that the return of the GSP+ scheme would provide Sri Lanka with an opportunity to make further progress towards the full implementation of these conventions. Some of the concerns include a delay in finalising the Counter Terrorism Act in place of the Prevention of Terrorism Act, continuing incidents of torture, child marriages and laws that discriminate against sections of society, full reconciliation and environment protection and labour rights.

“The EU is encouraged by the fact that since the election of the new Government there has been a recognition of issues and a sustained dialogue to address them. The situation is far from perfect but there has been progress and commitment on address areas where there are shortcomings,” EU Counsellor Godfrey said.

“In that context regaining GSP+ isn’t the end but the beginning for a better Sri Lanka,” he added. Ambassador Margue, who has been in Sri Lanka for the past nine months, also noted that compared to his previous experience in the country three years ago, greater independence and freedom on the part of the media was also progressive.

The EU officials also acknowledged the key role played by member states of the EU in Sri Lanka’s road to regaining GSP+ after the country applied for readmission in July last year.