Business Times

US GSP for over 130 countries expires, likely to re-start in next few months

The US Generalized System of Preferences (GSP) programme which applies to exports from about 130 countries including Sri Lanka expired on December 31, 2010 and raised some concerns in Colombo but industry sources here said this week that the programme is likely to be approved or authorized by the new US Congress in the next few months.

A US Embassy communiqué which was communicated by the Ceylon Chamber of Commerce to its exporter-members on December 29 said the US Congress did not reauthorize the Generalized System of Preferences (GSP) programme before its conclusion of business and therefore GSP will expire on December 31. It said it hoped the new U.S Congress which will be in session might retroactively reconsider extending the grant of such GSP facilities in 2011 though that would be a process that will take several months.

GSP duty-concessions are enjoyed by several Sri Lankan exporters excluding the garments trade. Currently the US Trade Department is conducting a public probe on claims by trade unions that worker rights are being violated in Sri Lanka and the latter are urging that any future GSP programme should be conditional to the rights of workers - as decided by the International Labour Organisation (ILO) - is ensured.

Sources at the embassy said this situation (where a programme expires and the Congress has to re-approve it) has happened in the past too and it is hoped this would be the case this time too. "It is also hoped that the benefits would be approved with retrospective effect (ie - from January 2011 if the approval comes some months after that)," one source said. A report by news agency, Reuters said last week that approval by Congress was held up due to a Republican senator's objection to duty-free treatment for sleeping bags from Bangladesh.

"With Congress hoping to finish its work this week, Alabama Senator Jeff Sessions is blocking a vote on a bill to renew the Generalized System of Preferences programme, or GSP, already approved by the House of Representatives," the December 20 report said. The U.S. GSP programme, which began in 1976, grants duty free treatment to more than 4,800 tariff lines (defined at the eight digit level in the Harmonized Tariff Schedule of the United States) that are imported from 131 designated developing countries and territories.

Meanwhile AFL-CIO (American Federation of Labour and Congress of Industrial Organisations) has denied accusations that appeared in the media some time back that it was funding Sri Lankan trade unions to criticise the government over GSP issues relating to workers.
In a statement, it said the organisation have never funded any trade union leader or organisation to file action regarding labour claims in the US GSP.

Last year the US Trade Representative (USTR) accepted the GSP petition for review recognising that there were internationally recognised workers rights in Sri Lanka. The US trade union body said a hearing on the petition was held in September 2010 but upto date the USTR has not made any decision to limit, suspend or withdraw these concessions.

AFL-CIO said the motive to file the petition was and is to urge the Sri Lankan Government to pursue a 'high road' development strategy based on improved wages and working conditions rather than a 'low road' strategy based on repression of workers rights.

"It is not now or never has been our motive to remove trade benefits as an end in and of itself," the statement said, adding, "Further we are not urging the Government of Sri Lanka to do any more than what it has already committed to do so as a member of the International Labour Organisation (ILO) namely to respect, protect and realise the ILO fundamental labour rights."

The statement by Cathy Feingold, Director-International Department at AFL-CIO which was also sent to President Mahinda Rajapaksa, the Sri Lankan Ambassador in the US and the US Ambassador in Colombo, said from the beginning the AFL-CIO has engaged with workers, employer organisations and the Government to discuss the importance of the respect for internationally recognised workers rights.

"The petition process is a continuation of that dialogue and we stand ready to work with all stakeholders to help Sri Lanka comply with its GSP obligations. Doing so we believe will bring better wages and working conditions for workers, greater orders for employers and continue investment in Sri Lanka," the December 23, 2010 letter said.

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