On June 10 the European Union Parliament overwhelmingly voted for a resolution calling its 27-member states to temporarily withdraw all the concessions coming under the EU’s Generalised Scheme of Preferences (GSP). The GSP is a trade arrangement that allows developing countries to pay less or no duties on their exports to the EU. But it’s [...]


Euro bells toll the knell of Lanka’s GSP+ status


EUROPEAN UNION PARLIAMENT IN STRASBOURG, FRANCE: Resolution to withdraw GSP status to Lanka is adopted with 628 voting in favour, 15 against and 40 abstaining in this 705 member House

On June 10 the European Union Parliament overwhelmingly voted for a resolution calling its 27-member states to temporarily withdraw all the concessions coming under the EU’s Generalised Scheme of Preferences (GSP).

The GSP is a trade arrangement that allows developing countries to pay less or no duties on their exports to the EU. But it’s no free lunch. It comes with strings attached. But the reciprocal altruism practised within the framework of this scheme is not designed to economically profit the giver while benefiting the receiver but is perched on the lofty plane of human rights. Its purpose is not only to ensure that needy nations emerge from their economic doldrums but that its governments ensure the citizens also rise with dignity and fundamental rights enhanced simultaneously.

To qualify for this ambitious yet rewarding scheme, geared for the benefit of citizens as a form of insurance cover to prevent despotic governments from remaining in power and wallowing in corruption by trampling on their people’s democratic rights, firstly a nation must be in the low middle class ‘vulnerable’ category with a per capita income of not more than US$ 4035, and secondly, its imports into the EU must be heavily concentrated in a few products, with the seven largest sections of its GSP-covered imports to the EU representing more than 75% of the value of its total GSP-covered imports.

Apart from these two basic conditions, the country must ratify and effectively implement 27 international conventions on human and labour rights, environmental protection, and good governance. Finally, the country must comply with the monitoring procedures and requirements imposed by those conventions, as well as with the EU’s monitoring procedure on GSP+ led by the European Commission.

The monitoring process is two pronged. One is the scorecard which updated a country’s progress made in the ‘effective implementation’ of the conventions. The other involves dialogue with the beneficiary country to ‘tackle shortcomings, discuss difficulties and achieve progress.’

Well, these wouldn’t have been impossible terms to adhere to for any civilised country practising democracy and upholding the universally recognised rights of its fellow citizens, now would it? No need for any democratic government abiding by human rights in a living, breathing democracy to raise ‘international conspiracy’ charges and claim it was another bid by western powers to practise neo colonialism.

Certainly the Sri Lankan Government of President Chandrika Bandaranaike Kumaratunga, fighting a ruthless terrorist war against the establishment of a separate state, had no such qualms and readily agreed to the EU’s GSP terms, and signed the trade agreement becoming one of the first countries to do so since the inception of the GSP scheme that very year, in July 2005.

Neither did the new government under the new President Mahinda Rajapaksa, elected that same year in November following President Chandrika’s retirement as per the Constitutional two-term limit. For the next five years the economic benefits to Lanka and to her local exporters were enormous.

Indeed, according to a report the EU had ‘identified Sri Lanka as one of the greatest beneficiaries of GSP. Within the first year of Sri Lanka gaining GSP status, the EU replaced the North American market region as the country’s largest export market. The growing strength of its ties with EU markets proved crucial for Sri Lanka during the financial crisis and the consequent contraction of the US market. While Sri Lanka recorded some losses due to the US crisis, its economy remained resilient.’

But the success of any country under this agreement is not measured by economic benefits alone but also on the advances made on the human rights frontier. And the EU keeps a watchful hawk’s eye for possible transgressions. The aim is not to merely enrich individual local manufactures and producers but to see the masses collectively enjoy the protection of democratic law and order, the prerequisites for any stable and enlightened society. Conflicts, civil wars there may be but the state must war only within the tenets of the universally accepted Geneva Convention.

But good times do not last forever and the boom time garment manufacturers and those in other industries had enjoyed for an uninterrupted 5 years with a near price monopoly for their goods in the EU’s affluent market, showed signs of ending abruptly when the EU threatened in 2010 to withdraw the GSP privileged status for Lanka unless the Rajapaksa Government cleaned up its rights track record. The value of Sri Lanka’s exports to the EU in 2004, the year before the GSP was granted was US$1.8 billion. In 2009, the year before it was withdrawn, it was US$2.9 billion.

But freshly crowned with war victory and soon to be reinvigorated with reelection in November that year, Mahinda Rajapaksa was in no mood to be dictated to by the EU on how he should run his country.

On July 5, 2010, the EU announced it was withdrawing Sri Lanka’s preferential trade access to EU markets as the Lankan Government failed to improve its human rights record. The concessions were stopped on August 15 after the Government refused to implement human rights conventions.

The Government position was that to fulfil the conditions to qualify for GSP could cause permanent damage to a country’s political, legal and institutional framework.  Its stance was that it could not agree to the political demands the EU made for the continuation of GSP+ such as instituting war crimes inquiries against the armed forces and greater devolution of power. It also expressed with disdain that the economic benefits were only temporary and the GSP would cease the moment the country exceeded the per capita income of US$4035 which it expected to reach soon.

Today, 11 years after, Lanka’s per capita income is still stuck at US$ 3,682.

The EU expressed regret at the silence of the Lankan Government. It stated that despite its offer to delay withdrawal for a further six months for the Government to implement the UN human rights conventions, the Government had chosen not to respond. A Vice President of the EU Commission said, “We very much regret the choice of Sri Lanka not to take up an offer made in good faith and in line with the EU commitment to a global human rights agenda. We will however keep the door open for Sri Lanka to return to talk.”

It took the Sirisena-Wickremesinghe administration of 2015 to avail themselves of the open door and return to talk with the EU to regain favoured status and the GSP concession. It was a painstaking process to earn the GSP and regain lost credibility of Lanka’s commitment to democracy and its institutions. Even after the enactment of the much hailed 19th amendment as well as the Right to Information Act, and various other acts to strengthen the democratic institutions and maintain the independence of the judiciary, it still took two years more for the EU to relent and finally restore GSP status in March 2017.

With the new reiteration by the Sirisena–Wickremesinghe administration of its commitment to implement 27 international human rights conventions, labour laws, environmental protection and good governance, the EU approved the restoration of the valued GSP status to Lanka, and local exporters were once more in the saddle having a competitive edge in the lucrative EU market with import duties on their goods effectively removed at EU ports of entry. Monitoring was, however, enhanced by mandating reports every 2 years instead of every 3 years with scrutiny to be carried out not only by the Council of the EU, but also by the European Parliament.

When the matter came up for review this year, the present Government was found wanting in meeting the commitments made to the EU as promised by its predecessor. The main focal point of the EU’s concern seemed to concentrate on Lanka’s Prevention of terrorism Act and the manner in which it had been used, even citing the UN High Commissioner for Human Rights who had reiterated, in her most recent report on Lanka, the call for a moratorium on the use of the PTA for new arrests until it is replaced by legislation that adheres to international best practices.

The resolution thus proposed and adopted by the European Parliament, among others, stressed the disproportionate use of the PTA — often targeting ethnic and religious minorities — resulting in arbitrarily detaining suspects for months and often years without charge or trial. It made specific reference to the use of the PTA pointing to the arrest of lawyer Hejaaz Hizbullah and poet Ahnaf Jazeem, among others, who have been in ‘arbitrary’ detention for over a year.

It urged the Sri Lankan authorities to immediately take measures to ensure internationally recognised guarantees to the PTA detainees, and to be promptly brought before a fair trial on recognizable charges; and called on the Government to withdraw the counterterrorism regulations that permit arbitrary detention for long periods without trial; it also called for the repeal of the PTA and replace it with anti-terror regulations in line with the countries’ international obligations and commitments.

The resolution also noted the importance of the GSP scheme offered to Lanka. It stated that exports to the EU have increased to reach €2.3 billion making the EU Sri Lanka’s second largest export market.

And with so much at stake for local exporters and much to gain for its citizens in terms of their human rights, what was the response of the Government?

The Foreign Ministry’s answer to the claims made was to express regret over the resolution’s adoption. It counter-claimed that resolution “contains factual inaccuracies and does not take into cognizance of the multifaceted progress made by Sri Lanka in reconciliation and development.’’ It rejected claims the PTA is systematically used to detain people. It pointed out the PTA has been “invoked to address heinous acts of terrorism committed on its people”, recalling that the Easter Sunday terrorist attacks of 2019 resulted in significant loss of life, including of several EU nationals.

Instead it said that in the midst of a COVID pandemic having a devastating global impact, the country should be supported in safeguarding the rights of its people. Expanding on this, the Foreign Ministry statement said: “In this backdrop, the Government appreciates the commitment of global multilateral institutions and UN agencies to uphold the economic, social and cultural rights of all peoples, which are intrinsically linked to civil and political rights. Sri Lanka’s commitment to upholding human rights continues in tandem with its current priorities of inoculating its targeted population, providing healthcare and economic revival.”

Perhaps, in making this long winded observation and round about appeal for continued GSP status, on the basis of a supposed obligation on the part of UN aid agencies and other multilateral institutions to uphold multifaceted rights of all people; and asserting that the Government is upholding human rights of its people while simultaneously vaccinating them, the mandarins at the Foreign Office have failed to realise not only the inanity of this specious argument but have failed to grasp, too, the purpose and aim of the EU’s GSP scheme.

The GSP charter is not to lend money at a low interest rate to rid third world nations of poverty nor to fund cultural or COVID vaccination programmes. The GSP scheme is limited by its declared singular object: to provide duty concessions on exports to approved applicants as an incentive to protect and enhance the human rights of the applicant nation’s citizens. The EU itself has no power to stray beyond this limited ambit.

If a low middle class country with a low per capita income of less than US$ 4035 does not wish to avail itself of this human rights oriented facility, it need not apply. If it is only aid it is seeking, then it’s quite welcome to come with begging bowl in hand and knock on some other door.

Thus if that was all the Foreign Office could muster as answer to the objections raised in the EU resolution and show the government’s continued commitment to human rights and good governance with a view to persuade EU Commissioners not to deny Lanka favoured GSP status, then the message delivered to the local exporters and general public by the State Minister of Finance, Capital Markets and State Enterprise Reforms, Nivard Cabraal, was even worse.

On Monday, 14 June, the same day the Foreign Minister delivered the official response to hard boiled EU diplomats, seasoned to smell a whopper a mile away, Cabraal told the media that ‘the government is working out strategies to position itself to export Sri Lankan products in a competitive business environment rather than depending on trade concessions such as GSP’. If that was indeed the case, good for Lanka, though it did smack of sour grapes. With a touch of wishful thinking, perhaps.

Furthermore, he denounced the EU resolution’s call for the repeal of the PTA and the enactment of a new counter terrorism law to replace it.            He also condemned as ‘obnoxious’ the conditions listed to qualify for GSP favoured status, failing to realise that Lanka was under no compulsion to accept this EU boon if it did not wish to so do; and that neither was the EU under any binding obligation to Lanka to offer her largess on any other terms than the ones it wished and ordained. But, in true chauvinistic style which recalled the halcyon days of yore when Lanka could sincerely cherish its sovereignty, he gave the heady lion roar: ’We shall not surrender to such demands.’’

Even with the nation’s economy tottering precariously at the edge of the precipice with only the slightest effort needed to nudge it down the staring abyss, if this is the quality of thought that governs this nation, is it any wonder that the country seems hell bent on dashing headlong to rendezvous with certain doom?


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