GSP+ loss could hurt $580m Sri Lankan exports to EU
Sri Lanka is likely to lose its competitive edge and risks US$580 million worth of exports within one year should the GSP+ concessions be withdrawn following the adoption of the resolution in the EU Parliament on June 10.
Joint Apparel Association Forum (JAAF) General Secretary Tuli Cooray told the Business Times that within one year the apparel industry could risk losing $580 million worth of exports if Sri Lanka loses the preferential concessions from the EU bloc under the Generalised Scheme of Preferences (GSP)+.
He explained that goods are exported on landed cost and when this is increased by about 10 per cent then Sri Lanka will not be competitive with other countries and the entirety of the business can be lost.
He noted that they will engage with the Sri Lankan government directly in this respect and pointed out that they were uncertain whether the same fate could happen what befell Sri Lanka in 2010 when the country lost the same GSP+ concessions. Sri Lanka regained these trade concessions in 2017.
If a withdrawal of these concessions is activated the “impact can be huge,” Mr. Cooray said but noted, “we don’t believe it will happen since the Foreign Minister has already issued a statement”.
The key sectors of the Sri Lankan economy likely to be directly impacted by the trade concessions from the EU are garments, fish, rubber and ceramics.
Sri Lanka’s exports to the EU without the UK are worth $1.198 billion and that includes the GSP+ facility for $586 million worth of exports i.e with zero duty.
Acting Ambassador of the Delegation of the European Union to Sri Lanka and the Maldives Thorsten Bargfrede in an emailed interview with the Business Times this week stated that the monitoring of the EU’s GSP+ is an ongoing process leading to a formal report planned for early 2022 from the European Commission to the European Parliament and the European Council.
Responding to China’s growing influence on Sri Lanka it was stated that as a champion of multilateralism and a rules–based international order, the EU’s relations with Sri Lanka are focused on the full respect for values and international standards and the importance of upholding human rights, inclusion and reconciliation.
The EU resolution highlighted the impact of the COVID-19 pandemic on the deteriorating labour rights situation in the country and urged Sri Lanka to cooperate fully with the International Labour Organisation (ILO) to strengthen the rights of factory workers; including health and safety conditions for garment workers in special trade zones. It also called on the government to “effectively implement and strengthen the National Policy on Elimination of Child Labour; to adapt the Board of Investment of Sri Lanka Labour Standard and Employment Relation Manual in order to bring it in line with international standards, notably the ILO Convention Nos 87 and 98 relating to Freedom of Association and the protection of the Right to Organise and the Right to Organise and Collective Bargaining respectively”.
In this respect, the acting EU Ambassador explained that the “preferential market access enjoyed by the Sri Lankan apparel sector is conditioned to the implementation of these conventions.”
Mr. Bargfrede stated that the ILO’s International Labour Conventions have been ratified by Sri Lanka and that it is therefore for “Sri Lankan authorities to implement them according to their own international commitments. In addition, these conventions are part of the ongoing GSP+ monitoring process.”
Meanwhile, JAAF is currently in discussion with five trade unions – Commercial and Industrial Workers Union, Ceylon Mercantile and Industrial Workers Union, Free Trade Zones and General Services Employees Union, National Union of Migrant and Metal Workers and the Sri Lanka Nidahas Sevaka Sangamaya for a proposed MOU.
The understanding reached was that the trade unions will offer the draft of the MOU and the JAAF is yet to receive the draft of this said MOU, it was noted.
Free Trade Zones Trade Union General Secretary Anton Marcus told the Business Times that if the EU GSP+ concessions are withdrawn then the sole responsibility will have to be taken by the government and as trade unions they have to fight together to ensure job security of the employees and improve their living standards.
He also noted that during this week’s National Labour Advisory Council (NLAC) meeting on Monday a majority of the unions had opposed the continuation of the wage scheme of half of the salary or Rs.14, 500 for those not reporting to work since unions claimed that the factories were using workers to full capacity.