By Rajeewa Jayaweera –
Some in the unity government are all gung ho of the recent recommendation by the European Commission for the restoration of GSP+ facility withdrawn in 2010. However, approval by the 751 members in the European Parliament from 28 member states with a majority vote is yet two to four months away.
In 2015, the EU was Sri Lanka’s largest export partner (Euro 2.6 billion) and fourth largest import partner (Euro 2,106 billion). The Year on Year export figures over the last decade are illustrated in chart 1.
Export figures have steadily increased annually since introduction of GSP+ in 2005. As expected, double digit growth was achieved in the first two years. Thereafter, annual growth has varied between 3.8% in 2008 (with GSP+) and 10.1% in 2011 (without GSP+). 2009 suffered a negative growth of 6.2% (with GSP+) and 2013 a negative growth of 9.4% (without GSP+).
Garments (apparels) continue to dominate Sri Lanka’s exports which exceeded Euro 1.7 billion in 2015 representing nearly 66% of total exports to the EU. Other Sri Lankan exports to EU include agrofood products, semi-manufactured products, machinery and transport equipment.
The Year on Year Textile and Apparel imports by EU during years after withdrawal of GSP+ facility from Sri Lanka are illustrated in chart 2.
The Prime Minister, whilst addressing a gathering recently after the opening of Samasaranagama housing complex in Hambantota jubilantly announced the European Commission recommendation as a decision. He further stated, the annual loss to the country as a result of the loss of the facility was USD 500 million. Considering the figures provided, he probably refers to the loss in ‘opportunity cost’ due to the withdrawal of the facility.
The European Commission has no powers to decide but has only made a recommendation to the European Council/Parliament for the restoration of the facility to Sri Lanka. The commission’s recommendation is conditional to a firm commitment from GoSL to ratify and implement 27 international conventions on human rights, labor conditions, protection of the environment and good governance which essentially transforms to 58 conditions.
GSP+ facility is a concession granted to EU importers and not exporters abroad. No doubt, if EU importers are exempted from paying import duty for goods imported from a country, they will be encouraged to increase imports from such a country. Whereas volumes would increase, it will not necessarily increase the unit price of any items paid to Sri Lankan exporters for imports to the EU. Further, import duty is not the only factor governing such decisions. On time delivery is another key factor.
This facility is a one-way agreement. It does not require similar concessions for exports from EU countries to developing countries enjoying the facility. Therefore, it is of immense benefit to recipient countries. However, if the facility comes with strings attached as is the case in this instance, it is indeed necessary to carry out a cost benefit analysis before jumping headlong into it.
GSP+ was originally granted to 16 countries including Sri Lanka. Whereas 4 countries including Sri Lanka applied and obtained GSP+, the facility was granted to remaining 12 countries (mostly South American) without any applications in order to discourage them from growing narcotics. Only 4 of the original 16 countries remain in the GSP+ recipients group today. Two new additions are Pakistan and the Philippines.
The reason for the facility to be withdrawn from Sri Lanka was due EU’s displeasure with the Rajapaksa regime. A key reason could be the turning away empty handed of two of EU’s prima donna Foreign Ministers from UK and France who arrived in Sri Lanka in May 2009 to demand a lifeline for LTTE supremo Velupillai Prabhakaran. The then President of EU (then Foreign Minister of Sweden) who wanted to join the duo was not granted a visa and was politely requested to postpone his visit dates.
The annual USD 500 million benefit referred to by the Prime Minister need be weighed against the cost of having had to conduct the war against LTTE terrorists for another five years, had Prabhakaran and the LTTE hierarchy been spared, in order to carry on the war. However, those who considered the war ‘unwinnable’ will neither understand nor appreciate that narrative.
The cause for concern is not in the announcement of the possibility of restoration of GSP+ facility but the need to ratify 27 conventions comprising of 58 conditions. Whereas most of the 58 conditions are intrusive by nature, some are a direct infringement of Sri Lanka’s sovereignty, its legislature and judiciary. Three of the more serious conditions are;
- The new Constitution must address the issue of devolution of powers to the provinces
- Electoral Reforms to be introduced in the new Constitution based on EU EOM recommendations
- Pass legislation permitting individuals to submit complaints to the UN Human Rights Committee under the First Option Protocol to the ICCPR and to the UN Committee against torture.
The first two conditions are a direct intervention in the Constitution making of the country and the functioning of the legislature. The third condition will effectively subordinate Sri Lanka’s Supreme Court to the UNHRC.
The EU, in a media statement released on January 18 states “The European Union wishes to reiterate that the ratification and implementation of 27 international conventions signed by a succession of Sri Lankan governments, are the only criteria on which the Government of Sri Lanka’s application to rejoin the Generalized Scheme of Preferences Plus (GSP+) is assessed.” If that be the case, it behooves the EU to confirm it has not stipulated any conditions on Sri Lanka’s constitution making process and electoral reforms as well as permitting Sri Lankans to submit complaints based on the First Option Protocol. Would the EU also be able to confirm all current GSP+ recipients have been granted the facility based on the same criteria?
Yet another condition is Sri Lanka continue the current moratorium on death penalty. It may be noted, US, India, Pakistan and Bangladesh have in the recent past been regularly executing those convicted and condemned with the death penalty with not as much as a whimper from the EU. Capital punishment is still legal in some states in US. It is only the former EU Chief Delegate / Ambassador to Sri Lanka who strutted around Colombo threatening dire consequences when the Justice Minister announced the resumption of the death penalty in early 2015. EU Ambassadors to US, India, Pakistan and Bangladesh remain silent as they should, whenever death sentences are carried out in those countries.
Sri Lanka’s sovereignty started waning commencing in 1987 with the Indians violating its air space, forcible food drop in the Northern Province, the coerced invitation for the Indian Peace Keeping Force and the forced fed Indo – Sri Lanka Accord resulting in the 13th amendment. In more recent times, the decision to co-sponsor the American led resolution at the UNHRC in Geneva has left the government with its hands tied. The EU demands could be the first ‘tranche’ of repercussions of this ill advised decision. The passive acceptance of the violation of Sri Lankan waters by South Indian fishermen without raising the issue at appropriate international forums is yet another case in point. We recently heard of some CPC officials visiting the Trincomalee oil tank farm to carry out a feasibility study and being detained by Lanka Indian Oil Corporation (LIOC) security staff. The LIOC Managing Director is on record stating any construction has to be jointly agreed between the Governments of India and Sri Lanka. Nothing more has been heard on the matter and it would appear GoSL has accepted status quo. Would this be the case with Colombo Port City and Industrial Zone in Hambantota?
One wonders if we are now back in pre-independence era when our own officials could not visit certain parts of the island without permission from foreign governments.
Assuming Sri Lanka is to be granted GSP+ facility, based on current trends, it cannot enjoy the benefits of the facility beyond 2022 which is four years after Sri Lanka is expected to achieve upper middle income status.
In as much as an additional USD 500 million annually has its advantages, does it warrant acceding to the said 27 international conventions with 58 conditions by the EU, surrendering the independence of the country’s legislature and judiciary? What would prevent EU from withdrawing the facility once again sometime within the next six years on some pretext or other such as diaspora pressure? Would such a surrender of the nation’s sovereignty in return for USD 500 million annually cause large scale domestic upheavals and instability?
It is not to state Sri Lanka as a nation should not uphold human rights, labor conditions, protection of the environment and good governance. As a civilized nation, they must be upheld and implemented on Sri Lanka’s own volition but not in return for a mess of pottage offered by a foreign nation or a group of nations.
It was just six months ago, senior EU member UK opted to leave EU. The main reason for the referendum which resulted in UK exiting EU was the British were fed up of being dictated to from Brussels (EU Head Quarters), especially on judicial and fiscal matters. Therefore, they opted to regain their sovereignty despite losses in Trade and Commerce. They decided to be their own masters.
The government need to take heed of what is happening around the world. The silent majority in UK decided to take back their right to decide their own affairs. The silent majority in US voted Donald Trump to the Presidency, having had enough of being marginalized and ignored by the Obama Presidency and the neo liberals. There is no silent majority in this country but a noisy majority who take to the streets at the drop of a hat. It was such a group that laid siege to the South Korean capital Seoul recently, till President Park Geun-hye was forced to step down. Such a situation must not be permitted to develop in Sri Lanka. Despite the drawbacks of the current leadership, the alternative is simply horrifying.