Do the utmost to retain GSP plus

A delegation of the European Union (EU) is due to visit next week in order to review the Generalised System of Preferences Plus (GSP +) trade concessions granted to Sri Lanka.

The Government has welcomed the upcoming visit with the Secretary to the Ministry of Foreign Affairs Jayanath Colombage reportedly saying: “We have nothing to hide. Don’t be judgmental and make decisions by sitting at a desk in Europe.” 

This is indeed a welcome development and a smart change of policy from the position a year ago when the same official and many others in the administration expressed a more cavalier attitude towards international sanctions and loss of trade concessions such as GSP +. It seems there is at least a change in ‘tone’ among those who handle international relations after Prof. G.L Peiris took over as Foreign Minister. Words however will now have to be matched with deeds.

GSP + is granted to the least developed and lower middle-income countries, and is tied to human rights and democracy indicators in these exporting states. The trade concessions were initially granted to Sri Lanka in 2006, and withdrawn in 2011 during the previous Rajapaksa administration.

After significant efforts and comprehensive negotiations, the EU reinstated the concession in 2017 after the ‘Yahapalanaya’ Government showed progress in democratic reform with the 19th Amendment to the Constitution and vigorous pursuit of justice for human rights crimes at least in its first two years in office. 

Under the scheme, the EU has become Sri Lanka’s second-largest export market with a value of over EUR 2.3 billion. This translates to hundreds of thousands of jobs that depend on manufacturing and support services associated with these exports.  The concessions allow over 7,500 products to enter the vast EU market under favourable tariffs.

With many competitive economies such as Pakistan and the Philippines retaining the GSP + scheme and lesser developed direct competitors such as Bangladesh and Cambodia having access to even more favourable concessions under the EU’s ‘Everything but Arms’ category, Sri Lanka cannot afford to lose this concession, particularly at this point in time.

While Sri Lanka should look at remaining competitive without preferential trade concessions in the long-term, losing GSP + at a time when the economy is faltering in multiple spheres will no doubt be a devastating shock that would have severe repercussions.  

Compounding the situation, in June this year, Sri Lanka suffered yet another diplomatic setback in Brussels when the European Parliament adopted a resolution, by a whopping majority of 628 to 15, calling on the European Commission to consider a temporary suspension of GSP+.

The visit next week by the EU delegation will be significant in the Commission’s decision going forward.  With a deteriorating human rights record, and a near farcical law and order situation as most recently demonstrated by the Lohan Ratwatte saga, the local interlocutors of the EU delegation will no doubt have their work cut out to prove that our country is capable of addressing the criteria required to retain GSP +. It will take more than grandstanding, wishful thinking and political rhetoric aimed at the local electorate to preserve this valuable trade concession.

The time has long passed since the Government addressed its human rights obligations to its own people. Ideally, these should have been done irrespective of international pressure and consequences.