US, EU tell exporters to look to HR record to improve trade

Sri Lanka’s two largest export partners told the country’s biggest export industry last week to consider the country’s human rights, to increase exports.

The US, the single biggest buyer of Sri Lankan goods and the EU, the biggest collective export destination for Sri Lankan goods, told the garment industry that human rights counted towards improving trade.

Sri Lanka is trying to convince US policy makers to give preferential trade treatment for the island, on grounds of being a vulnerable economy and on the basis of ethical manufacturing standards. However, the American Ambassador Robert Blake, told garment exporters that Sri Lanka’s negative human rights image ‘eclipsed’ everything else right now.

“You will also have to work quietly with our friends in government to urge an improvement in the human rights situation in Sri Lanka,” he said, speaking at the Garment Buying Offices Association’s AGM, last week.

“Right now, the negative human rights developments here eclipse in the US Congress and the American public, the positive message you have on your high ethical, environmental and labour standards,” said Blake. The EU is also tying trade with human rights and other standards.

Although Sri Lanka lost market share in the US last year, overall garment exports grew because of the EU’s GSP+ scheme that allows duty free exports into the EU. The GSP+ allows duty free exports of not just garments but 7,200 items into the EU.

The preferential trade scheme will face a review this year that would decide whether Sri Lanka continues to benefit from it. EU ambassador, Julian Wilson, who also attended the same event, said he “loved” Sri Lanka but that the extension of the GSP+ scheme depended on implementing 27 international conventions on human rights, labour rights and environmental standards.
US slowdown not a worry Meanwhile, the current slowdown of the US economy is not expected to drastically hurt Sri Lankan garment exports into the US. “The OECD and many economic experts expect any downturn to be relatively mild and probably short-lived,” said Blake.“I think you will find that U.S. consumers will not stop buying goods from Sri Lanka. The economy would have to get a lot worse to really stop American shoppers from going to Gap or Victoria's Secret,” he said.

Chinese threat
On top of possible short term impacts due to the US economic slowdown, the garment industry was also warned to prepare for a longer term threat in US markets – that of increased competition from China, starting next year.

“Safeguards, which now cap certain Chinese garment exports to the US, are scheduled to expire at the end of 2008. This will mean opportunities for US buyers to source more garments from China, perhaps at the expense of Sri Lanka,” said Blake.The US government extending restrictions on China is seen as unlikely, which means local garment manufacturers will have no choice but to compete with lower cost Chinese output. “While some, both within the US and in third countries, are hoping for an extension of the safeguards, that is not something you can count on,” said Blake “In all likelihood, Sri Lankan garment producers will increasingly need to compete head to head with Chinese producers,” he said.

Sell the ethics
The US ambassador told the garment industry to market the industry’s ethical manufacturing standards in the US, to generate greater consumer preference for made-in-Sri Lanka clothes.

“The industry as a whole must aggressively highlight Sri Lanka’s superior labour and environmental practices. You will have to help your head offices understand the benefits of buying goods that are produced ethically. You will have to get that message through to consumers too,” said Blake.