EU hints possible changes to GSP+

• New labour rights, human rights, Paris convention to be included
• Plans to introduce mandatory due diligence to scrutinise supply chains entering EU market
• Conventions on rights of persons with disabilities and children in armed conflict to be added 
• Eligibility conditions for LDCs to apply for GSP+ will be amended
• Proposes to shorten process of the withdrawal of the preferences
• Says unimaginable on future trade policies without reference to basic sustainable development principles
• Expresses concerns on SL only exploiting 60% of the program 
• Legal stability and long-term approach to the program will help to fully exploit the full potential of GSP+
• Calls on to diversify products and to industrialise 
• Underscores importance of creating awareness among SMEs about GSP+

By Charumini de Silva 

Nikoloas Zaimis

A top European Commission official yesterday highlighted areas of possible changes underway in the generation of European Union (EU) GSP+ preference by introducing more scrutiny to supply chains and sustainable

development principles, whilst underscoring the benefits and optimal utilisation for economic growth.

“GSP+ is an incentive, it is not a reward. We are assessing countries that are making a huge effort to meet these obligations. There will be modifications to the proposal. There will be additions and removals.

The trajectory of the beneficiary States will be assessed, and a decision will be made,” European Commission Directorate General for Trade Senior Advisor on Sustainable Development Nikoloas Zaimis said yesterday.

He made these remarks at a webinar titled ‘The future of EU GSP+ and its benefits’ organised by the European Chamber of Commerce of Sri Lanka (ECCSL) and the European Union (EU).

“We want economic operators to have time to adjust to any changes that we may be making to the program. We will be expanding the list of conventions, which will also include a few more human rights, labour rights conventions and the Paris convention,” he said.

“Paris convention and labour conventions on inspections and on tripartite consultations will be added to the list,” he said, reading out that these new conventions will also introduce necessary tools to establish in the beneficiary countries the ability to respect the fundamental principles.

“In terms of labour rights, the inspection system and tripartite consultations are very important. If the Government doesn’t speak to the employees and to the trade unions, then there can be no social peace, and if there is no social peace there is no economic growth,” he explained. 

In addition, mandatory due diligence on businesses or for any economic operator who wants to be active on the European market will be introduced towards the end of this year or early next year. 

“This will ensure that there are no risks for violating human rights, labour rights, damaging the environment, and this will be at all levels of the supply chain. It will be an obligation of the European buyer. Companies that will not be able to do this due diligence or choose to ignore their products will be blocked at the border of the EU,” he said.

Zaimis also said eligibility conditions will be adjusted for least developed countries (LCD) wanting to apply for GSP+ status. 

Amendments will also be made to shorten the process of the withdrawal of the preferences from the current lengthy procedure, especially in cases of serious systemic violations of human rights and labour rights. 

The EU also plans to introduce a number of new conventions on rights of persons with disabilities and children in armed conflict. 

“We cannot imagine future trade policy in the absence of reference to these sustainable development principles,” he said.

Noting that the proposal has been presented two weeks ago to renew the program for another 10 years, from 2024 to 2034, he said the proposal will be discussed with the political institutions that are responsible for legislating in the EU. 

“Next year, there will be discussions on the program, and hopefully by the end of next year, we will see the new program in a legislative publication," he said. 

Describing GSP+ as the flagship unilateral preferences instrument, he said the program is considered successful with the responses and growth they have seen in the beneficiary economies over the years. 

Although Sri Lanka has shown a significant growth in its exports to the EU with over Euro 2.3 billion, Zaimis said the full potential of the program was not exploited.

“The competitive advantage offered by the GSP+ to access the EU market is remarkable. But we notice that Sri Lanka is only using 60% of it. It is a pity because other beneficiaries have fully exploited the program to over 90% of the potential and eligible exports,” he said.

He said they are looking into the reasons to see if this is due to rules of origin, technical standards or lack of productive capacity.

Zaimis said legal stability and long-term approach to the program will help Sri Lanka to fully exploit the full potential of the program, whilst diversifying and moving up the industrialisation.

“We don’t want beneficiaries to be locked in as commodities exporters. Companies’ due diligence across their supply chain and production facilities is very important. Industrialise and move into new areas, whilst the long-term commitment to respect the international conventions,” he said.

He also pointed out that being eligible to the EU GSP+ gives a direct impression to potential investors keen on investment opportunities in Sri Lanka. 

“The GSP+ really established a relationship of trust. Beneficiary countries commit to respect certain basic norms in protection of the labour, human and environmental laws. By investing in a country that has access to the EU market, they too get the competitive advantage for a long period of 10 years,” he added,

Zaimis also highlighted the importance of raising awareness of the GSP+ program locally, particularly within the SMEs.