The move to send an official delegation to the European Union to discuss and deliberate on the suspension of the GSP Plus was a relief to the business community and indeed a relief to all concerned with the future of the country’s economy. It took some time for the government to realize that the removal of the GSP plus status was a blow to industrial development. The arrogance and complacency with which it faced the possible suspension lacked economic realism. The change in heart, though late, is better than not relenting at all. Once again there is hope that the concession would be continued.
At the time of writing the Sri Lankan government and the European Union (EU) have agreed to meet again for further discussions following preliminary talks held in Brussels. It appears that the confrontational attitude has softened. The European Union spokesman John Clancy is reported to have said "The Commission remains committed to work with Sri Lanka to see whether the conditions for a reversal of such a decision are in place as a result of significant improvements on the effective implementation of the human rights conventions at issue.
The Sri Lankans and EU counterparts agreed to meet again,"
The drastic change in the government’s attitude from one of confrontation to that of discussion and reconciliation is indeed a most hopeful sign. International economic diplomacy was at a nadir when the government took a position that it did not care and would not compromise as they had other plans to meet with the dangers of the GSP Plus status withdrawal. In an earlier column we discussed how the alternatives thought of were costly and burdensome.
Wiser counsels and sober second thoughts have prevailed. Providentially, the team that went to Brussels comprised some of the most diplomatic and sober minds rather than vociferous non diplomatic politicos who maintained that the GSP concession did not matter much.
The government’s position that the European Union was being hostile to Sri Lanka has also been dispelled. In the statement of the EU on the eve of the talks with the four-member Sri Lankan delegation in Brussels, Mr. Savage said the EU was conscious of the importance of the trade concession for Sri Lanka’s economy and had no intention of causing it any harm. He stressed that the EU had stood with Sri Lanka in good times and in bad.
He said the EU was mindful of the possible loss of employment if Sri Lanka lost the GSP plus facility. He went further to stress the EU’s good intentions when he said “The officials in Brussels will take every effort to reduce or avoid the negative impact on Sri Lanka in the event the trade concession is suspended.” Mr. Savage added that EU’s economic, technical, educational and social assistance programmes would continue un-interrupted.
This statement indicates very clearly the good intent of the EU not to suspend the concession and to continue to assist Sri Lanka’s economy. It is therefore vital that the country makes its moves adroitly to achieve the intended result of a continuation of the GSP plus concession. It would however be wrong to think that the EU would continue the concession without adhering to the conditions required to be complied with. As Mr Savage himself pointed out “One must not hasten to think there will be an immediate change in the EU stance following this week’s talks.
The talks will lay the groundwork for a positive development on the extension of the GSP plus and other issues. The two sides will discuss the Commission report issued on Sri Lanka in December last year and see what needs to be done and where the two sides can reach a mutual agreement on the issues.” Further, Mr. Savage emphasized,
“The EU looks forward to further improvement in three main areas in Sri Lanka’s domestic affairs such as the complete and total application of international conventions agreed to by Sri Lanka on civil rights, labour rights and children’s rights.” He said the extension of the GSP plus was inter-connected with these issues and the EU and Sri Lanka would focus on the measures that should be taken by both sides to pave the way forward for the extension of the trade concession.
The EU statement gives hope to Sri Lanka but the condition is firm and unrelenting. The discussions must recognize this and be based on a realization that the economic interests of the country requires a reconciliatory stance on the human rights issues. Compliance with international agreements that the country has signed are obligations it must meet. There may be some space for negotiations on the basis of the special circumstances faced by the country during the war with the terrorists. Assurances about the future and remedial actions may be the way forward.
The economic interests of the country should be foremost in the negotiations with the EU. The loss of the GSP plus status would be a blow to the country’s economic development as the EU countries account for about 60 percent of the country’s export market. The American and European markets are the main buyers with the latter superseding the former in recent years. We are currently witnessing a downturn in our industrial exports. Last year industrial exports declined by as much as 14 percent. This was due to bad economic management that led to a loss of competitiveness in our industrial exports. In January this year industrial exports dipped by 60 percent. In this context we cannot afford to lose the EU market.
Being a small country we need to produce industrial goods for export in order to generate employment, as agriculture alone cannot absorb our increasing labour force. The magnitude of the population increases are such that the country has to mount a rapid programme of industrialization. Owing to the small size of the country and the limited resource base, industrialization would have to depend on export markets. This implies quality production and a need to continuously change its industrial output to cope with international demand. The loss of the European market at this stage would be a huge blow to industrialization and economic growth, employment generation and living standards of the poor. These are considerations that must be kept in mind during these vital negotiations.
The hope and expectation are that the Sri Lankan government would give certain assurances that would enable the EU to continue with the GSP plus concession without compromising the conditions that are laid down by the EU. May be guarantees of future compliance is the way forward for the Sri Lankan government. Economic interests of the country must be foremost in the country’s international relations and international diplomacy. |
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