Financial Times

Sri Lanka will not submit to an investigation by another country - Minister of International Trade

By Dilshani Samaraweera

The Minister of Export Development and International Trade, G L Peiris said the government of Sri Lanka will not submit to an investigation by another country. "The government will not submit to an investigation by another country. This is not acceptable. The Sri Lankan embassy in Brussels is monitoring the situation and is conveying the government's position to the EU," said the Minister at a press conference held at the Export Development Board this week, to announce a leather products exhibition.

The Minister acknowledged that the European Commission (EC) had submitted an adverse report to the government on its investigation findings, but said "The EU has not made a decision yet. A final decision will only be in December."

The EC investigated Sri Lanka's implementation of 3 international conventions on human rights. This is out of 27 conventions that need to be implemented, to qualify for the GSP+ duty free export scheme.
The government did not allow investigators from the EC to visit Sri Lanka for their investigation on grounds of upholding national sovereignty. As a result the EC report, sent to the government in August, was based on inputs from various 'interested parties' and other reports. The government has the right of reply to the investigation findings. But up to this point the government has not said that it has replied to the EC report.

The Minister of International Trade however, said "the government is very confident of fully vindicating our reputation on all human rights matters." Nevertheless, government officials and exporters are expecting the worst. The GSP+ has also now mutated from a simple trade scheme, into something more complicated.

Officials and businessmen are in an emotional quandary over the GSP+ - trying to reconcile the conflicting values of love-of-money with love-of-country. For instance, while saying the government could have handled the EC investigation better, many also supported the government position of upholding national sovereignty.

Businesses and officials are also cautious of the GSP+ being manipulated as a political tool in an election year. At this point exporters are bracing for various levels of damages based on their individual exposure to the EU. Exporters are looking at the space to manipulate pricing, while factoring in EU customs duties, if the GSP+ is removed. A few are looking at developing alternative, regional markets.
For many, the termination of the scheme will come as a major blow at a time of already depressed demand due to recession in major western markets.

The EU bloc is now the biggest destination for Sri Lankan exports, followed by the US. Many businesses felt the EU should be fair-minded in its final decision, given the direct contributions the GSP+ can make towards rebuilding war affected lives, poverty reduction and overall social improvements.

Ceramic exporters for instance, pointed out that withdrawing the GSP+ will defeat the very purpose of the GSP+. "If the EU removes the GSP+ from Sri Lanka, it will defeat the whole purpose of having the GSP+ to begin with. Removing the GSP+ will also not help to achieve the Millennium Development Goals that the EU has also agreed to uphold," said the Chairman of Dnkotuwa Porcelain, Sunil Wijesinha, at a press conference organised by the Sri Lanka Ceramic Council on the GSP+, on Tuesday.

The primary objective of the GSP scheme, as stated by the EU, is to contribute to poverty reduction and to promote of sustainable development and good governance.

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