Business Times

Calls for dialogue over GSP+

Trade unions offer to intervene

Trade unions on Friday offered to intervene in the dispute over GSP + trade concessions which reached a critical stage after the European Union (EU) issued a July 1 ‘receive or not’ ultimatum to the Sri Lankan government .

“We are always there to help and intervene through our influential European trade union partners to resolve any dispute,” said Anton Marcus, General Secretary of the Free Trade Zones and General Services Employees' Union, whose member-workers would suffer the most if the zero-duty concessions are not extended.

On Tuesday, the EU told the government that it would extend the concessions for another six months (till December 2010)) if a written undertaking is given by July 1 of implementing a series of measures, much of which are part of the general rules governing the approval of GSP+ concessions for a second round, after the first round ended in December 2008. Sri Lanka ceases to receive this concession from August 15, 2010.

If the government fails to respond by July 1, exporters would have to revert back to reduced duty concessions under the normal GSP. External Affairs Minister Prof. G.L. Peiris and his cabinet colleague, Keheliya Rambukwella told separate news briefings that the government would not bow down to the EU demands which impacts on the country’s sovereignty. The written undertaking includes release of political prisoners, abrogation of the Prevention of Terrorism Act and appointment of independent commissions, all of which Prof Peiris says is unacceptable.

Top apparel industry exporters also agreed that the conditions laid down by the EU were too harsh. “I don’t think this is acceptable and something the government could accept,” said one industrialist, who owns several factories.

Minister Rambukwella told reporters that the government has a fall-back plan in case GSP+ concessions are refused but didn’t give details. However Central Bank Deputy Governor K.G. Dheerasinghe told the Business Times that the loss, if it amounts to that, of these concessions is unlikely to have any adverse reaction. “In recent time, the export sector has enjoyed falling interest rates, a stable exchange rate and lower inflation making our exports very price-competitive against (low cost) competitors like Vietnam or Bangladesh (in garments),” he said, adding that the possible loss of US$150 million is not a very serious issue.

Trade unionist Marcus said both sides (the EU and the government) had unnecessarily got into an ‘attacking’ mode and hoped that a saner counsel will prevail. “There is a need for dialogue instead of fighting. But it is the responsibility of the government, as it promised to do in 2005, to give an undertaking that it would implement the many UN conventions. That was promised and has not been done,” he said.

While the loss of GSP+ could hurt markets and long-term goodwill, it is unlikely to lead to job losses as speculated earlier. The garment industry is particular is short of 10,000 to15,000 workers - in a workforce of around 300,000. Last week the Busines Times reported how recruitment teams from companies were ‘hanging out’ at a bus station at the Katunayake FTZ persuading workers to join their companies.

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