Business Times

New US GSP term amidst labour rights row

By Natasha Gunaratne

The US GSP in which Sri Lankan exports excluding garments are entitled to a set of concessions has been approved for another 12-month period from January 2010 amidst a labour rights row. The Free Trade Zone and General Services Employees Union said representatives from the US State Department will be in Colombo next week for discussions on a labour violations complaint the union made against Sri Lanka in the context of the US Generalized System of Preferences (GSP) programme.

Unlike the EU GSP which was suspended last month over Colombo’s failure to implement UN conventions on human and labour rights, the US GSP is particular about labour rights. Joint Secretary of the Union Anton Marcus told the Business Times that the complaint was originally filed in 2008 and updated in 2009. The US programme which Sri Lanka makes use of has been extended for 2010 by Congress. Mr. Marcus said the US GSP progamme is mainly focused on labour rights and the union’s complaint has highlighted those violations.

The complaint was submitted by the American Federation of Labor and Congress of Industrial Organizations (AFLCIO), a national trade union centre and the largest federation of unions in the US, on behalf of the local union. Mr. Marcus said negotiations at the US level are on-going between the AFLCIO and the State Department. “This is the third time State Department officials are meeting with us,” he said. “Previous delegations came in 2009 and early 2010 because they have to verify the complaints and clarify any issues before reaching a decision.” He added that the AFLCIO has also previously visited Colombo and met with trade unions, the Department of Labour and the Joint Apparel Association Forum (JAAF) prior to submitting the union’s complaint.

A US embassy spokesman in Colombo told the Business Times that while a complaint has been filed regarding Sri Lankan labour practices, the US government has yet to make a final decision about the case. As such, he said exports from Sri Lanka are still GSP eligible. Should the GSP petition be accepted, he said the two countries would discuss the issues in the petition during which GSP benefits will continue. “In general, the goal is to improve the labour rights situation and not cut off GSP.” He also said the US embassy frequently has officials from the US visiting the region on a number of issues.
The spokesman added that while Sri Lanka does make use of the US GSP programme, there is always room for improvement. Missed opportunities are generally because either the exporter or the importer is unaware that the product falls under the GSP programme.

In an October 2009 story, the Business Times quoted a US trade official as saying that in 2008 Sri Lankan exporters paid nearly US$ 20 million in duties to the US when these were duty free under the US GSP scheme. Under the US GSP scheme 3,400 items get duty free entry into the US, but so far Sri Lanka is using the scheme to export about 253 products.

“The duty saving, because of the GSP, makes your product less expensive than goods from countries that do not have the GSP. So it is very important for you to inform your buyer in the US that your product comes under the GSP,” Executive Director of the US GSP Programme from the office of the US Trade Representative, Marideth Sandler, was quoted as saying at an awareness seminar on the US GSP scheme in Colombo.

Most types of textile and apparel items, Sri Lanka’s biggest export to the US, cannot use the US GSP scheme. Most footwear, handbags and luggage also do not qualify. However, many products, such as jewellery, skins, carpets and certain agricultural products, do qualify, adding up to 3,400 items.

The rules of the US GSP scheme are also seen as more flexible than the EU GSP+ scheme. The US scheme requires 35% domestic value addition of products, to qualify for duty free entry into the US, and also allows South Asian countries to collaborate, the nwspaper report said.

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