{"id":172911,"date":"2017-01-22T00:50:25","date_gmt":"2017-01-21T19:20:25","guid":{"rendered":"https:\/\/www.colombotelegraph.com\/?p=172911"},"modified":"2017-01-29T02:31:52","modified_gmt":"2017-01-28T21:01:52","slug":"regaining-gsp-or-squandering-sovereignty","status":"publish","type":"post","link":"https:\/\/www.colombotelegraph.com\/index.php\/regaining-gsp-or-squandering-sovereignty\/","title":{"rendered":"Regaining GSP+ Or Squandering Sovereignty?"},"content":{"rendered":"

By\u00a0Rajeewa Jayaweera<\/a><\/span> –<\/strong><\/p>\n

\"Rajeewa<\/a>

Rajeewa Jayaweera<\/p><\/div>\n

Some in the unity government are all gung ho of the recent recommendation by the European Commission for the restoration of GSP+<\/span><\/a> facility withdrawn in 2010.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.<\/p>\n

In 2015, the EU was Sri Lanka\u2019s 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.<\/p>\n

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+).<\/p>\n

Garments (apparels) continue to dominate Sri Lanka\u2019s 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.<\/p>\n

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.<\/p>\n

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 \u2018opportunity cost\u2019 due to the withdrawal of the facility. \"Total<\/a><\/p>\n

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\u2019s 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.<\/p>\n

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.\"Textiles<\/a><\/p>\n

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.<\/p>\n

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.<\/p>\n

The reason for the facility to be withdrawn from Sri Lanka was due EU\u2019s displeasure with the Rajapaksa regime. A key reason could be the turning away empty handed of two of EU\u2019s 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.<\/p>\n

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 \u2018unwinnable\u2019 will neither understand nor appreciate that narrative.
\nThe 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\u2019s sovereignty, its legislature and judiciary. Three of the more serious conditions are;<\/p>\n