Plusses of GSP Plus | Daily News

Plusses of GSP Plus

President Maithripala Sirisena announced the ‘Era of Sustainability’ together with a programme for poverty alleviation at the commencement of the third year of his government.

To attain success in these objectives, the country needs to increase production, increase exports and solve the issue of unemployment. Furthermore, all these will have to be done while facing the issues such as the uncertainty in weather patterns, meeting external debt interests and service charges.

At one time 33% of the foreign trade accounted for exports. Now it has dropped to 14.5%. While the exports continue to drop, the government is making efforts to attract foreign investments to boost production and exports.

President Sirisena announced on January 9 that Sri Lanka would receive the Generalised System of Preference Plus (GSP +) trade concession from the European Union shortly. He has every reason to be overjoyed about the decision by the European Commission (EC) to restore the concessions to Sri Lanka under the GSP System, as he campaigned at every meeting with the leaders of the EC, either at bilateral meetings or collective meetings at international forums to get the GSP Plus concession.

European Commission

However, the opposition came up with allegations that the government has acceded to 58 conditions laid down by EC to get the GSP Plus. Fortunately, within hours of the opposition’s charge, the record was set straight by the Head of the Political, Trade and Communication Section of the Delegation of the European Union in Sri Lanka, Paul Godfrey. He clarified that the European Commission in Brussels recommended granting GSP+ preferences for Sri Lanka to support the progress of the country’s commitment to ratify and effectively implement 27 international conventions on human rights, labour conditions, protection of the environment and good governance.

There EU criterion for GSP Plus concession is very much similar to the policies outlined in the Common Candidate Sirisena’s election manifesto. He promised the nation that he would strengthen democracy and human rights, improve labour conditions, protect the environment and usher in good governance.

GSP Plus concessions will be of immense use to boost exports and it would also be an incentive to foreign investors as they could easily export the goods manufactured in Sri Lanka making use of the tax relief offered by the EU. State Minister of Finance Lakshman Yapa Abeywardena says the Generalised Scheme of Preferences Plus or GSP+ tax concession will provide relief to 7,200 types of goods. As he explained the garment industry which incurred losses of US$ 782 million will largely benefit from the tax concession.

Currently, Sri Lanka exports up to 2.6 million Euros worth of goods to Europe and this could be multiplied by several times over the years, making use of the GSP Plus duty reduction.

International human rights conventions

It is true that the EU decision pertaining to granting GSP+ to Sri Lanka was made on January 11 noting Sri Lanka has more work to do. What the EU proposed was an action plan and it is wrong to interpret them as conditions. Minister Lakshman Yapa said that the decision was made to entirely remove about half a dozen points in the plan. He reiterated among the points in the action plan only what was agreed to would be activated. The Minister said such matters which negatively affect the country’s culture, society and emergency law such as the powers the President wields in a situation will be avoided.

As EU Delegate, Paul Godfrey said there is no truth in the allegation that the government had agreed to comply with some 58 conditions laid down by the European Commission, which are said to be disadvantageous to Sri Lanka as regards its proposal to restore the GSP + tariff facility to Sri Lanka.

The media quoted the European Trade Commissioner Cecilia Malmström as stating, “GSP+ preferences can make a significant contribution to Sri Lanka’s economic development by increasing exports to the EU market. But, this also reflects the way in which we want to support Sri Lanka in implementing human rights, rule of law and good governance reforms.

“I am confident of seeing timely and substantial further progress in these areas and the GSP+ dialogue and monitoring features will support this reform process. This should include making Sri Lankan counter-terrorism legislation fully compatible with international human rights conventions,” Malmström said.

An EU report said: “Sri Lanka had already benefited from GSP+ in the past. In 2010 the EU decided however to stop the preferential treatment for Sri Lankan imports due to the failure to address reported human rights violations in the country.

“In 2015, the government set out a path of major reforms aiming for national reconciliation, respect of human rights, the rule of law and good governance principles, as well as sustainable economic development.”

“The Sri Lankan government applied for GSP+ in July 2016 and the Commission’s assessment has concluded that it met the GSP+ entry criteria set out in the EU regulation”.

Developing countries

The GSP system was introduced in 1968 by the General Agreement on Tariffs and Trade (GATT) on its initiative to encourage industrialized countries or developed countries to grant Autonomous Trade Preferences to all developing countries in accordance with the recommendation of the United Nations Conference on Trade and Development (UNCTAD), of which, the eminent Sri Lankan economist Dr Gamini Corea held the top post of Secretary General for two consecutive terms.

GSP Plus currently covers 13 beneficiaries. They are Armenia, Bolivia, Cape Verde, Costa Rica, El Salvador, Georgia, Guatemala, Mongolia, Pakistan, Panama, Paraguay, Peru, and the Philippines. Trade concessions under the GSP Plus for Sri Lanka, was revoked by the European Union in 2010. The reason given by the EU was that no satisfactory progress was shown by Sri Lanka in the implementation of the three UN human rights conventions such as Civil and Political Rights, Convention against Torture and Rights of the Children which were related to the grant of benefits.

Sri Lanka formally submitted the application for restoration of the GSP Plus concessions in December 2015 and after examining the issue during the year 2016, the EU came to its decision as Sri Lanka met all the criteria required by the EU for the GSP Plus. 



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