Financial Times

EU probe begins on Lanka’s GSP+

By Dilshani Samaraweera

The European Commission (EC) has officially initiated an investigation, on October 18, on Sri Lanka in relation to the GSP+ trade scheme but Sri Lankan manufacturers will continue to enjoy these benefits until the probe is over next February.

The investigation is on the implementation of national laws relating to international human rights conventions, particularly the International Covenant on Civil and Political Rights, the Convention Against Torture and the Convention on the Rights of the Child. Effective implementation of these human rights conventions is a requirement to qualify for the GSP+ scheme, according to an EC announcement.
The EC has also called for interested parties to respond to the investigation over a 4-month period, until February 18, 2009. Over this period, the GSP+ will be available for local industries, because according to the rules governing the GSP+, the scheme will not be terminated during an investigation.

Meanwhile, factories currently using the GSP+ are trying to work out how to channel the government’s US$ 150 million support package into their industries, if the GSP+ is terminated after the investigation. The government announced that the support package would be available for industries using the GSP+, if the GSP+ is terminated next year. But industries and the government still need to work out a mechanism of support that does not violate World Trade Organisation (WTO) rules. According to WTO rules governments cannot hand out direct export subsidies to industries.

The garment sector, the biggest beneficiary of the support package, says it is working on a proposal to present to the government by next Tuesday. “We are trying to work out a simple, transparent mechanism for exporters using the GSP+ but at this point we are still discussing it,” said Deputy Secretary of the Joint Apparel Association Forum, Rohan Masakorala.

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