Sirisena’s efforts may regain GSP+

The efforts of President Maithripala Sirisena to bring back the lost GSP Plus benefits to the Sri Lankan exporters appears to be bearing fruit.

The Ambassador and Head of Delegation of the European Union to Sri Lanka and Maldives, David Daly in an address at Colombo University last Thursday (28) said that President Sirisena’s commitment towards uplifting the standard of human rights has made it more propitious to renegotiate the GSP Plus.

In 2010, the EU had decided to shut off the GSP facility to Sri Lanka following various allegations of human rights violations in the country. The once all important GSP, which encouraged trading between the European Union (EU) and Sri Lanka, had become a forgotten topic overtime. Now the EU has indicated that Sri Lanka once again stands a chance of qualifying for the facility.

What is GSP Plus?

Members of the World Trade Organization (WTO) were encouraged to reduce tariffs on imports from lower income earning members of the WTO. It seeks to provide for a more formal system of exemption from the general rules. In adherence to this policy of the WTO, the EU formed the facility known as Generalized System of Preferences (GSP). Through this facility, the EU enabled developing country exporters to pay little or zero duty on their exports to the EU.

In 2011, the EU sought to revise that facility in line with global realities. The revision was sought by the EU to bring in more transparency and better results. For this to happen, the EU withdrew all High and upper middle income earning countries from the list of countries receiving the GSP facility. The idea was to consolidate the preferences among poorer countries that were still on the list. The changes resulted in the birth of GSP Plus. As a result, there were three prime variant schemes adopted by the EU, referred to as GSP, GSP Plus and EBA.

The GSP structure offers generous tariff reductions to member countries and seeks to remove tariffs partially or entirely on two-thirds of product categories. The GSP Plus category removes tariffs completely for the same two-third of products. The EBA (Everything but Arms) applies only to the least developed countries but seeks to remove tariffs completely on all products except armory. The revisions were adopted in the fourth quarter of 2012.

Eligibility criteria

Sri Lanka had been a beneficiary of the GSP facility until 2010 before it was withdrawn due to ineffective implementation of certain human rights conventions. Sri Lanka at the time had debated the decision of the EU at the time on the grounds of transitional justice, but the pleas were not heeded to. As such, Sri Lanka has only received the standard GSP preferential treatment since then and no additional benefits.

David Daly described the GSP Plus facility as an incentive based mechanism where countries seeking to benefit would have to prove its eligibility based on a stipulated criteria.There are three prime criterions to be met in order to be eligible for GSP Plus:

Firstly, a country should be categorized as a low income or lower middle income earning country. To fit into this category, an interested nation should not be classified by the World Bank as a high income earning country for at least three years. Their exports would be concentrated on a few products and they would have a significantly lower level of exports to the EU.

Secondly, the country seeking GSP Plus would have to prove that they have ratified and effectively implemented 27 specified international conventions. These include the core conventions of the United Nations (UN) and the International Labour Organization (ILO) and other conventions on the environment and good governance.

Thirdly, the country must undertake the task of upholding the ratified conventions and permit regular monitoring and review of the implementation record. This is the toughest task of a country seeking GSP Plus.

David Daly went on to explain that the tough part only arose after signing the GSP Plus agreement. The constant monitoring of the reports of monitoring bodies on the respective conventions was pivotal to the perpetuity of the facility provided to the country.

Sri Lankan eligibility

The most important part of entering into a GSP Plus agreement, Daly says, is to prove that Sri Lanka has been compliant with the 27 specified conventions. In 2010, when Sri Lanka lost the facility, it had been primarily due to an increase in the suppression of human rights as was indicated in the UN rapporteur’s report.

Sri Lanka had first received its GSP status in June 2005, but the benefits were revoked in August 2010. Sri Lanka was found to have violated the International Convention on Civil and Political Rights (ICCPR), Convention against Torture and other Cruel, Inhumane and Degrading Treatment of Punishment (CAT) and the Convention on the Rights of Child (CRC). The Corporate Europe Observatory in May 2010 also found that Sri Lanka was one of several other countries with serious human rights issues.

This was also due to various allegations of war crimes, missing persons, restrictions on the freedom of movement, the constant militarization of the North among other things. Draconian laws such as the Prevention of Terrorism Act (PTA) among others too had led to the revocation of the facility, David Daly had said.

Sri Lanka’s appeal on the grounds of attaining transitional justice had failed, and further talks to regain the GSP facility were ruled out. The animosity between Sri Lanka and the West only grew from there.

However, Ambassador Daly commended the efforts of President Sirisena, and stated that the time had arrived to revive discussions on re-initiating the GSP Plus facility. Talks had already begun at a meeting of high ranking delegates from Sri Lanka and the EU in Colombo in late March on the re-initiation of the GSP Plus facility. During the meeting, the primary topics that were discussed were good governance, rule of law and the state of human rights, Daly said.

Daly also pointed out that the President Sirisena led regime had taken positive measures towards the attainment of the criteria. Daly said that President Sirisena had been evaluated from the day he had announced his candidacy to be President.

“He had a very clean election campaign and his election manifesto had been quite clear on what he wished to achieve. He has made several positive efforts towards achieving good governance and rule of law, and now there is the freedom of press and the restrictions on travelling to the North too had been lifted. The issue of NGOs and INGOs falling under the Ministry of Defence too had been eased, and have been allowed to function normally”, he said.

Sri Lanka also satisfied one of the criteria by being a lower middle income earning country. Therefore, Daly claimed that Sri Lanka once again stood a chance of obtaining the facility. However, he also claimed that Sri Lanka would have to continue its hard work towards the attainment of civil liberties before making a formal application.

The Challenge

Explaining the circumstances of obtaining the GSP Plus, Daly said that a country would have to make a formal application to the EU in order to obtain the facility. Such an application would require a comprehensive report of its compliance of the 27 Conventions.

The report would have to be accurate as it would be evaluated thoroughly by the EU. “The EU requires a maximum of six months before making a formal response to the application. However, if the application was not accurate and contained numerous fallacies, the application would be rejected as soon as the truth emerges. If rejected due to a mala fide application, there would be repercussions and reviving the GSP Plus would be an arduous task from there” he said.

In reference to Sri Lanka, Daly said that Sri Lanka would have to play a waiting game. “If an application is made now, the EU would not need six months to refuse the application on the same grounds it revoked the facility in 2010”, he said. This, he claimed, is because the last UN report on civil and political rights released in October proved to be very negative.

“Sri Lanka would have to show sufficient indicators of sustainable development and prolonged sustenance of human rights and obtain positive reviews from the UN Rapporteur. Then would be the best time to make a formal application to the EU”, he said.

However, he affirmed that discussions had already begun and were heading in the right direction. Sri Lanka just has to wait for the opportune moment before applying and reclaiming the GSP Plus, he said.