The plus side of ‘losing’ GSP +

Charity is the privilege of the affluent, this we know. In the global political economy, however, it is not necessarily a mechanism to secure feel-goodness. ‘Aid’ is a misnomer; it should in fact be read as ‘investment’. It is well known that for every dollar of ‘aid’ that comes into countries such as ours, several dollars go out through numerous avenues of extraction.

We must keep in mind that not all aid flows happily into the lives of intended beneficiaries. Aid is also about ensuring policy change that favours donors and, to be more specific, multinational capital interests.

It is a license to interfere, to change laws and even amend Constitution. It fosters dependency, sometimes of the most demeaning kind. It is often used as an instrument of punishment and frequently waved over our heads as a threat: ‘do this or that or else....’ In short, it is not innocent.

It is against this backdrop that one has to discuss the GSP Plus facility that the European Union is threatening to withdraw, as per recommendations from an ‘independent’ commission’s report on Sri Lanka’s performance (or lack thereof) on 27 international conventions in the fields of human and labour rights, sustainable development and good governance.

When it is a matter where someone is judge, jury and witness, there is very little that anyone can do except tell that someone that he/she has got his/her organs mis-arranged (need I elaborate). After all, we have nothing to gain by genuflecting before moronic thugs.

The report of the ‘experts’ is for the most part predicated on ‘evidence’ offered by people who were hopelessly compromised in the Eelam Project, men and women with absolutely no integrity.

It was, in short, to be expected. If our institutional and legal arrangements are flawed they should be adjusted, but at our own pace and certainly not because some idiot in Europe has a bad temper and is mentally challenged.

As has been pointed out, there is no ‘friendship’ as such in the sphere of international relations, there are only ‘interests’. Sometimes these converge and agreements result, as always skewed in favour of the relatively more powerful of the agreeing parties. Whatever the horse-deals contained in the 27 international conventions, the bottom line remains ‘we signed and therefore we compromised.’ We are in the beggars-can’t-be-choosers situation. What do we do now?

Let’s go back to GSP+. What is it? “GSP+” is common shorthand for the “special incentive arrangement for sustainable development and good governance” which is one of three non-reciprocal, preferential import regimes for developing countries under the EU’s Generalized System of Preferences (GSP).

Under GSP+ the EU provides additional preferences - beyond standard GSP treatment - to economically vulnerable developing countries which have ratified and effectively implemented 27 international conventions in the fields of human and labour rights, sustainable development and good governance and which voluntarily apply for GSP+ benefits and accept the associated conditions. It is primarily a facility that helped Sri Lanka’s garment industry.

Previously, Sri Lanka had benefited by the quota system associated with the Multi-Fibre Agreement. When that lapsed in 2005, the industry naturally suffered. Small operations closed shop or were swallowed by the big boys.

Overall however the garment industry survived. GSP+ came at the end of 2006 and gave another boost to the industry. And here we must not forget that it helped the big-name garment retailers in Europe as well, since they could sell panties, bras and other garments cheaper and thereby maintain profit margins through the sheer volume of sales. Talk of withdrawing GSP+ has more than agitated these shop-owners, we must not forget.

Sri Lanka, for a long time, has depended on the success of the garment trade. The garment boom in this country was a result of a political climate that was extremely unfriendly to investment. ‘Garments’ was a relatively risk-free sphere of operation and successive government bent over backwards to support the industry.

Naturally, those in the business, grew to be a powerful behind-the-scenes lobby group that could almost dictate terms to successive regimes. When things got bad, they could extract concessions, obtain permission to defer EPF payments and so on, just to tide things over until happier days arrived (such as those heralded by GSP+).

Today, things are looking bleak for the garment industry. My sense is that the EU just wants to enjoy the sight of Sri Lanka squirming because at the end of the day it will have to listen to the garment importers headquartered in Europe. I believe we should not give them the pleasure.

There will be serious consequences, true. Industries will have to cut costs and this would mean around 200,000 people losing jobs. The national economy will suffer. Together, this constitutes a political threat to the political stability currently enjoyed by the Government.

It will not result in the regime change that pro-Eelam elements here and abroad are currently anticipating, but will nevertheless constitute pressure that Mahinda Rajapaksa can very well do without.

In the short term, the garment industry will have to look for new markets to compensate for the drop in profits that this situation would no doubt cause. On the other hand, this situation can be read as an excellent opportunity to jolt ourselves out of complacency and one-product dependency.

If the war constrained us for several decades, the comprehensive defeat of the LTTE has given us much-needed breathing space. We can now look towards developing and expanding our industrial base, moving out of garment-dependency. The Government has of course promised to look after the garment industry as best it can and there’s nothing wrong in this. It is not enough, though.

In the long-term, Government thinking should go beyond appeasing whiners who wave a cheque-book called ‘jobs for the poor’ frequent in the faces of politicians and other decision-makers.

Removing GSP+ will make Sri Lankan products less-competitive in European markets and it is possible that creative adjustment alone will not do the trick. There will be tough times ahead but then again we’ve had tough times before and have proved to be a very resilient nation, all things considered. We triumphed over terrorism. We survived two bloody and extremely destructive insurrections. We are burdened by an anti-citizen constitution that inhibits good governance, compromises efficiency and promotes political violence, but we are still breathing. We were hit by a tsunami and suffered untold damage and suffering. We have recovered in ways that the victims of Hurricane Katrina in the USA have not.

This is the time for enlightened leadership. This is the time for politician to graduate into statesman. This is the time to tell the EU, ‘We understand where you are coming from, it’s ok.’ This is not the time to canvass diplomats of EU member states. They should all be invited for a gala dinner in the event that the EU executes its threat and given gift packs containing Victoria’s Secret lingerie embroidered with the words ‘Thank you’.

This is the time for the true patriot within each of us to wake up to the challenges ahead, to get a good sense of the limits of ‘friendship,’ to distinguish truth from rhetoric, and to treat these new threats with the skill, creativity and unrelenting determination with which we as a people faced and defeated the LTTE, the world’s most ruthless terrorist outfit. We have to understand that ruthlessness sometimes comes dressed in coat and tie and speaks the ‘civilized’ language of diplomacy but that underneath all the frills is a naked creature not very pretty to behold.

There will be tough times ahead. Sure. Let’s call it ‘opportunity’.

malinsene@gmail.com