By Jehan Perera –

Jehan Perera

The re-opening of the EU fisheries market to Sri Lankan exporters came as a welcome success to the government at a time when it needs to show some tangible progress on the economic front to the people. The main criticism of the government amongst the general population is the absence of economic development and poverty alleviation in their lives. While a relatively small fraction of the population travels in luxury private cars, the general public continues to hang on to the footboards of overcrowded trains for their daily commutes to their workplaces and back with some of the train engines and carriages well past their fortieth year in service. Even those sections of the population who voted for the government at the last two national elections that saw the defeat of the old one are bemoaning the lack of economic progress in the present.

The government leaders spell out a vision of Sri Lanka as an economic hub of the region, but there is a disconnect as the general population’s experience of hubs related to the economy are the village and town markets which is what they are familiar with. The rising cost of living and absence of visible development, and job creation, are the chief observations they have to make about the economy. In this context the lifting of the fisheries ban by the EU which was imposed on the country over a year ago, will indeed imrprove the livelihoods of several thousands of fisher families and those who are at the bottom of the economic pyramid and help to improve the economy in general. The ban was imposed due to the failure of the previous government to comply with international standards and adequate control systems to tackle the problem of illegal fishing.

The lifting of the EU ban was primarily due to the government’s willingness to comply with international standards in the fisheries industry. These were of a technical nature, such as the EU’s observation that highlighted that Sri Lanka was authorizing very large vessels to fish in the Indian Ocean without marine GPS (VMS), rendering control totally impossible. But there was also a political dimension as the previous government preferred to take the risk of losing market by being unprepared to take the necessary actions to meet the EU requirements. The previous government resisted any sort of international pressure as being an affront to Sri Lanka’s national sovereignty. However, the new government has demonstrated that political dialogue and reforms can have beneficial economic consequences to the country’s people.

GSP Conditions 

The government is now moving to obtain the restoration of the GSP Plus concession from the EU. This tariff concession was withdrawn in 2010 on account of the previous government’s inability and unwillingness to show that it was complying with the international human rights agreements that successive Sri Lankan governments had entered into with the UN and other international bodies in earlier periods. The EU is the largest export market and the second largest import source for Sri Lanka, and in 2008, textiles and garments accounted for the bulk of exports from Sri Lanka. The national economy gained about US$ 150 million annually due to preferential tariffs.

In 2010 however, Sri Lanka’s exports suffered a blow when the GSP Plus was suspended due to the Sri Lankan government’s violation of human rights agreements. Many of the smaller factories had to close and thousands of workers lost their jobs. Studies showed that Sri Lanka’s total exports fell 9 percent in 2012 due to the loss. Sri Lanka also lost its share of the market in other products also with consequences to the balance of trade deficit. Executive Director of the Institute of Policy Studies (IPS) Dr. Saman Kelegama has said “Sri Lanka has already lost its competitive edge in the EU market for the past five years. Not necessarily on apparel but the other exports like foodstuff, rubber, gems and jewellery.” These losses have made it harder for the national economy to provide as much as it could have to the poorer sections of the population. Regaining the GSP Plus benefits can therefore contribute significantly to the national economy.

It is reported that the EU has imposed 58 conditions for Sri Lanka to regain the GSP Plus, and among these are to revoke the Prevention of Terrorism Act, to expedite cases of remaining detainees, to introduce a new Human Rights Action Plan, review the status of the Tamil diaspora organisations and individuals on the terrorist list, to devolve power under the new Constitution, return all private lands to owners in the North, adopt a policy of National Reconciliation and on National Resettlement, finalise the re-settlement of all displaced persons, and to ratify the Convention on Enforced Disappearances with accompanying legislation as well as issue certificates of absence. For its part, the government is reported to have committed to many reforms such as to rehabilitate all ex-combatants by 2017 and to expedite the processing of remaining cases referred to by the UN Working Group on Enforced or Involuntary Disappearances; and to establish an office on Missing Persons.

Additional Benefits

The Government has also agreed to “security sector reform”; to put an end to “all surveillance, harassment and reprisals against civil society, human rights defenders and journalists”; propose legislation allowing individuals to submit complaints to the UN Human Rights Committee under the First Optional Protocol to the ICCPR and to the UN Committee against Torture; and to “reconsider the decision to establish the Press Council”. The list also includes an undertaking to propose legislative changes to expedite prosecution of reported cases of torture; to launch wide public consultation and to disseminate information during the various stages of setting up a transitional justice mechanism; and to design a transitional justice architecture consistent with the Human Rights Council resolution and the results of the public consultation.

The value of regaining the GSP Plus is not limited to the economic benefits that will flow directly through reduced tariff rates for Sri Lankan exports to the EU markets. It can also lead to an increase in the level of foreign investments. So far the level of foreign investment in the country has been disappointingly low. It is likely to increase in the longer term once the good governance measures are put into place. Foreign investors need to know that their investments will be secure and they will have the benefit of an independent judiciary in case of disputes. They need to know, just as much as those who voted for this government want to know, that there will be transparency in business transactions and underhand deals which are illegal in many of their countries will be minimized. They also want to be assured that there will be no political violence and rebellions that will create an inhospitable environment for business.

A stable political environment is of utmost importance to attract foreign investment that can develop the economy. The good governance measures that the government is being obliged to put into place will create a stronger system of checks and balances, transparency and rule of law, which is important for enduring peace in the country. The sense that the system of government is just and equitable is the best form of national security in regard to internal insurgencies, such as occurred in Sri Lanka both in the North and South over the past four decades. Therefore the reforms that need to be undertaken to obtain GSP Plus will have longer term benefits that can take Sri Lanka to the status of an economic hub for the South Asian region which is the vision of this government.