Home

News

Politics

Spotlight

Defence

Focus

Economy

Arts

Letters

World Affairs

Serendipity

Thelma

This is Paradise


Business

Review

Sports

 

 Issues

 Danger that looms over GSP+


Ashroff Omar, Niranjan Deva Aditya, Malik Samarawickrema and Sarath Amunugama

By Mandana Ismail Abeywickrema

Amidst mounting concern expressed by the international community over the country's human rights record, the GSP+ duty concession granted to Sri Lanka by the European Union is to be reviewed this year.

The GSP+ concession is granted to countries based on a list of 27 conventions that need to be ratified by the respective countries. (See box) Sri Lanka was initially granted the GSP+ concession scheme for its impressive labour, environmental and human rights standards maintained for a developing country.

However, the country's deteriorating human rights record, an issue raised by the international community and UN agencies, is expected to have an impact on the GSP+ concessions granted by the EU when Sri Lanka's case is taken up for revision in the latter part of 2008.

The existing agreement between Sri Lanka and the EU would come to an end in December this year and the possibility of granting the concession from 2009 would be decided only after the EU conducts its review process based on the 27 eligibility rules.

The GSP+ is a trade concession scheme granted by the EU that allows Sri Lanka to export around 7,200 items to the EU without duty.

The local garment industry was the main beneficiary of this concession scheme and Sri Lanka's competitiveness in the European market is heavily dependent on the concessions offered through GSP+.

GSP+ - the pluses

According to industry experts, local garment exports saw a massive 35% increase with the GSP+ scheme which was granted to Sri Lanka in 2005 in the aftermath of the tsunami.

The garment industry has recorded an 8% growth in 2007 year on year.

Along with the benefits granted through GSP+ the garment industry in 2007 contributed a sum of US$ 3.2 billion to the country's economy, of which 45% was from the EU alone.

Apart from the financial benefits the country gained, the local garment industry is one of the main employment generators in Sri Lanka.

The industry has provided employment to nearly one million people (270,000 direct and 700,000 indirect employment).

A possible cancellation of the GSP+ scheme by the EU would therefore be a heavy blow to the local garment industry and the country's economy as a whole.

The garment industry has expressed concern over securing the GSP+ concession for another three years from 2009, given the speculation that Sri Lanka may stand to lose this facility due to the country's deteriorating human rights record.

Conventions adhered to

Chairman, Joint Apparel Associations Forum (JAAF), Ajith Dias told The Sunday Leader that although there was much speculation being built up on the human rights issue, as far as the garment industry is concerned all the conventions ratified by the government have been adhered to.

"The main criteria is the need to ratify the 27 conventions outlined by the EU and Sri Lanka has done that. So there does not seem to be any issue in securing the concessions once again," he said. As for the human rights issues, it was a matter that has to be dealt with by the government, he said.

Dias noted that the GSP+ scheme played a key role in driving the country's garment exports and the growth recorded in the industry since 2005 has been largely due to the duty concessions granted by the EU.

He also noted that although the country was in a difficult situation at the moment, all parties were working together to secure the GSP+ facility from 2009 for another period of three years.

National importance

CEO, Brandix Lanka, Ashroff Omar said that the country "has to get" the GSP+ scheme as it was of national importance, adding that members of the local garment industry were working closely with all parties in the country in order to achieve it.

"Most of the growth in the garment sector is purely due to the European market and we have to get it. If we don't, it will be a big blow to the country," he said.

Omar said that since 2005, when the country received the GSP+ concession, till the end of 2007, the garment sector has seen a twofold increase in exports from US$ 700 million to US$ 1.5 billion in the EU market.

"There has been a US$ 600-700 million increase in exports in the European market," he said, adding that relatively there has not been much growth where the US was concerned.

Omar said that the apparel industry was working hard with the government, trade union representatives and other relevant parties to secure the concessions from 2009 as well.

"We have spoken to most of the trade union representatives as well and explained to them the importance of GSP+ and they too have agreed to work together to achieve it. Apart from the garment industry, it is the country as a whole that is to gain from the GSP+ concessions. We are all working together to safeguard national interests," he said.

Group Director, MAS Holdings, Dian Gomes also observed that GSP+ was of utmost importance to the country.

"We are competitive in the EU because of it. People need to understand its importance," he said, adding that members from the industry were working on securing the concessions.

Gomes also said that there was considerable concern among members of the garment sector. "While the main players would be affected, the smaller holders will be badly affected if the EU fails to grant GSP+," he said.

Gomes explained that apart from the small holders, the main players too would be affected as most of their exports are also to the EU.

Only growth market

Director, Hoodvian and Penguin Company, Malik Samarawickrema said that there would be a major impact on the country's economy if the EU fails to renew the GSP+ concessions.

"If you look at last year, exports to the US have recorded almost a negative growth and the only growth has been recorded from the EU and that too because of GSP+," he said.

Samarawickrema said that if the country lost the GSP+ concessions, it would not only lose on exports but the fall out would have an adverse impact on the whole economy.

He said that GSP+ was important as it paved the way for the country's garment industry's growth.

"If you look at countries like Vietnam and Bangladesh, the garment sector in those countries has recorded annual growth between 25-30% whereas in Sri Lanka it has been quite static. Therefore the only growth opportunity the local industry has is through the GSP+ concessions," he said.

Samarawickrema pointed out that it was now up to the government to get its act together and work to secure the GSP+ concessions for another period of three years, as there were no issues as far as the industry and workers were concerned.

"The government has time to prepare as they know very well when the GSP+ is to be reviewed. At least now it should start to work towards it. I hope, like other members of the industry that the country would be able secure the GSP+ concessions again," he said.

Recall criticised

Meanwhile, the Foreign Ministry's decision to recall Ambassador K.J. Weerasinghe and the trade officer at the Brussels office was met with criticism as it was felt the government was pulling out two skilled representatives at a crucial time.

The government responded by saying that the trade officer would function as an advisor while a career diplomat would replace him. The new ambassador is to be sent to Brussels only by March this year.

The trade officer has been recalled to Sri Lanka and is expected to operate from Colombo from end January.

Formulating strategy

Meanwhile with pressure mounting in a bid to address the GSP+ issue, President Mahinda Rajapakse has appointed a team comprising of four ministers: Export Promotion and International Trade Minister, G. L. Peiris, Enterprise Development and Investment Promotion Minister, Sarath Amunugama, Foreign Affairs Minister, Rohitha Bogollagama and Disaster Management and Human Rights Minister, Mahinda Samarasinghe to look into the issue.

The committee is currently formulating a strategy to keep the GSP+ going for another term.

"We are on track" - Amunugama

Member of the four-member ministerial team appointed by President Mahinda Rajapakse to tackle the GSP+ issue, Enterprise Development and Investment Promotion Minister, Dr. Sarath Amunugama says that the committee was working out a strategy that would address the different aspects that needed attention. He said that the EU review session may be held some time in September or October as the agreement expires end of this year.

Dr. Amunugama told The Sunday Leader as far as the human rights situation was concerned, Sri Lanka has ratified the series of conventions requested by the EU to grant the GSP+ scheme.

"We have ratified all the conventions; the human rights, labour rights, environmental protection and good governance. We are way out in front," he said.

However, he said that since of late there might be some 'individual issues that would have to be looked into.'

According to Dr. Amunugama, the EU has not raised concern over any specific issue as yet.

As for the controversy surrounding the recalling of Sri Lanka's trade representative in Brussels, Dr. Amunugama said that although some believed that the trade officer should have continued to work in Brussels he was recalled as the position was to be filled by a career diplomat.

"The trade officer would now work as an advisor to the Brussels office, so there is no issue there," he said.

He said that one issue Sri Lanka would have to face when requesting for a renewal of the GSP+ scheme is the fact that the country was no longer a Least Developed Country (LDC).

"The GSP+ scheme is offered to LCDs, but Sri Lanka is no longer a LCD as we are now a Middle Income Country recording a US$1,300 per capita income. Therefore we would have to persuade the EU to grant us the GSP+ scheme for a further period," he said. According to him, Sri Lanka was still in the process of consolidating itself as a Middle Income Country and therefore needed the benefits offered through GSP+.

Dr. Amunugama said that along with the government and the private sector, members of the garment industry were working closely on preparing for the GSP+ review process.

"Review due only by end 2008"

Trade Advisor to the European Commission office in Colombo, Roshan Lyman said the EU would review Sri Lanka's position with regard to the GSP+ scheme towards end 2008.

Lyman said that although there is a lot of speculation with regard to Sri Lanka's chances of receiving an extension of the GSP+ scheme for another three years, the issue would only be taken up during the review process.

He said that Sri Lanka has so far signed and ratified the stipulated conventions to secure the GSP+ benefits.

However, he explained that the monitoring process is handled by international organisations like the UN and other such agencies.

"There have been no formal complaints made to the EU by international organisations," he said.

Although UN Human Rights Commissioner Louise Arbour has made several statements on the country's deteriorating human rights situation, the EU is yet to receive a formal complaint from the UN.

"No formal complaint has been made to the EU although Louise Arbour has made several statements on the country's human rights situation," Lyman said. However, there is time as the review process would only be done during the end of the year, he added.

The EU is also planning to introduce a revised GSP+ scheme in 2009 and Sri Lanka is expected to re-submit its request then.

"Sri Lanka has been asked to re-submit its request for 2009 as the EU plans to introduce a new scheme from January 2009," Lyman said. 

"Trade Unions have been left out"

The trade unions affiliated to the garment industry have expressed their dissatisfaction at the government's delay to consult them to obtain their views on the whole GSP+ issue.

Co-secretary, Free Trade Zone Common Services Union, Anton Marx has said that although the government has claimed it has ratified the stipulated conventions, in reality, workers rights have been violated in some sectors.

He has said that although it has been made law in the country, it does not take its due course.

"There are violations of workers' rights and basic human rights in some sections of the industry. If the government does not pay attention to what we have to say, then we will have to get together with the ILO and make representations to the EU directly," he said.

He also noted that President Mahinda Rajapakse since assuming office has not made any effort to bring in the Labour Charter, which he tried to implement when he was labour minister.

"When he was the Labour Minister he tried to introduce the Labour Charter because he knew very well the issues faced by the workers, but he could not do it then. But now he is in a position to implement it and has so far failed to do so," Marx added.

 

Conventions to be ratified to secure GSP+

Core human and labour rights UN/ILO Conventions:

1. International Covenant On Civil And Political Rights

2. International Covenant On Economic, Social And Cultural Rights

3. International Convention On The Elimination Of All Forms Of Racial Discrimination

4. Convention On The Elimination Of All Forms Of Discrimination Against Women

5. Convention Against Torture And Other Cruel, Inhuman Or Degrading Treatment Or Punishment

6. Convention On The Rights Of The Child

7. Convention On The Prevention And Punishment Of The Crime Of Genocide

8. Convention Concerning Minimum Age For Admission To Employment

9.  Convention Concerning The Prohibition And Immediate Action For The Elimination 
     Of The Worst Forms Of Child Labour

10. Convention Concerning The Abolition Of Forced Labour

11. Convention Concerning Forced Or Compulsory Labour

12. Convention Concerning Equal Remuneration Of Men And Women Workers 
     For Work Of Equal Value

13. Convention Concerning Discrimination In Respect Of Employment And Occupation

14. Convention Concerning Freedom Of Association And Protection Of The Right To Organise

15. Convention Concerning The Application Of The Principles Of The Right To Organise
      And To Bargain Collectively

16. International Convention On The Suppression And Punishment Of The Crime Of Apartheid.
       Conventions Related To The Environment And Good Governance:

17.  Montreal Protocol On Substances That Deplete The Ozone Layer

18.  Basel Convention On The Control Of Trans-boundary Movements Of Hazardous Wastes 
       And Their Disposal

19.  Stockholm Convention On Persistent Organic Pollutants

20.  Convention On International Trade In Endangered Species Of Wild Fauna And Flora

21.  Convention On Biological Diversity

22.  Cartagena Protocol On Biosafety

23.  Kyoto Protocol To The United Nations Framework Convention On Climate Change

24.  United Nations Single Convention On Narcotic Drugs (1961)

25.  United Nations Convention On Psychotropic Substances (1971)

26.  United Nations Convention Against Illicit Traffic In Narcotic Drugs And Psychotropic 
      Substances (1988)

27.  United Nations Convention Against Corruption (Mexico)

Antics of Nirj Deva Aditya over GSP+

Member of the European Parliament, Sri Lankan born Niranjan Deva Aditya was in Colombo a fortnight back attempting to fish in troubled waters over the GSP+ facility for Sri Lanka.

What he was looking for was a trade off on an airline deal in exchange for his support to lobby the GSP+ facility for Sri Lanka. Nirj is the chairman of a budget airline in Sri Lanka awaiting the necessary approvals.

During his visit he met President Mahinda Rajapakse and painted a gloomy picture on the prospect of Sri Lanka getting the GSP+ facility but said he could help. Of course what Nirj was angling for in exchange for his help was to either secure the necessary approvals for the budget airline he represents or strike a deal with SriLankan Airlines with the impending departure of Emirates from the management contract.

 Thus shortly before his scheduled meeting with the President, Nirj was to call a representative of India's Kingfisher budget airline and tell him of his meeting with Rajapakse and propose a deal with regard to the budget airline or SriLankan. With the Kingfisher representative not responding positively, Nirj was to look elsewhere, and prior to his departure also met with Opposition Leader Ranil Wickremesinghe and painted a gloomy picture of the government's prospects of getting the GSP+ concessions

'Hunting with the hounds'

This modus operandi of Nirj Deva is now common knowledge in Sri Lankan political and business circles, and sometime back when Sri Lanka Cricket had a legal dispute with a television network over television rights, he approached then Board President, Thilanga Sumathipala and offered to settle the issue out of court for a broker's fee. Nirj met Sumathipala personally at his residence and mooted the deal but to Sumathipala's credit he turned down the offer.

Last week Nirj was one angry man after The Sunday Leader exposed his antics with regard to the GSP+ and was to telephone and complain to the Opposition Leader. When The Sunday Leader last week sought a response from Nirj on his wheeler dealing, he attempted to deflect it by telling the newspaper to ask the UNP leader before making any publication. When the newspaper informed Nirj that Ranil Wickremesinghe was neither the editor of the newspaper nor its publisher, he went into silence mode.

After the publication however he was to complain bitterly to Wickremesinghe the criticism levelled at him by the newspaper despite 'all the assistance' he was trying to render to the UNP only to be told that as much as no newspaper can control him, he too cannot control any newspaper. 

No choice

Taken aback, Nirj was to then telephone UNP MP Ravi Karunanayake and ask whether he had leaked the information about the attempted Kingfisher deal only to receive a reply in the negative. Quite agitated, Nirj told Karunanayake he was going to block the GSP+ but since the story leaked to The Sunday Leader he will make sure the government gets it.

Well, at least The Sunday Leader would have helped keep the garment industry afloat and over a million garment workers in employment - a task the entire state machinery obviously was not able to achieve because they did not know the right way to rub Nirj Deva. No doubt that will earn us a big bouquet from President Rajapakse!Antics of Nirj Deva Aditya over GSP+

Member of the European Parliament, Sri Lankan born Niranjan Deva Aditya was in Colombo a fortnight back attempting to fish in troubled waters over the GSP+ facility for Sri Lanka.

What he was looking for was a trade off on an airline deal in exchange for his support to lobby the GSP+ facility for Sri Lanka. Nirj is the chairman of a budget airline in Sri Lanka awaiting the necessary approvals.

During his visit he met President Mahinda Rajapakse and painted a gloomy picture on the prospect of Sri Lanka getting the GSP+ facility but said he could help. Of course what Nirj was angling for in exchange for his help was to either secure the necessary approvals for the budget airline he represents or strike a deal with SriLankan Airlines with the impending departure of Emirates from the management contract.

 Thus shortly before his scheduled meeting with the President, Nirj was to call a representative of India's Kingfisher budget airline and tell him of his meeting with Rajapakse and propose a deal with regard to the budget airline or SriLankan. With the Kingfisher representative not responding positively, Nirj was to look elsewhere, and prior to his departure also met with Opposition Leader Ranil Wickremesinghe and painted a gloomy picture of the government's prospects of getting the GSP+ concessions

'Hunting with the hounds'

This modus operandi of Nirj Deva is now common knowledge in Sri Lankan political and business circles, and sometime back when Sri Lanka Cricket had a legal dispute with a television network over television rights, he approached then Board President, Thilanga Sumathipala and offered to settle the issue out of court for a broker's fee. Nirj met Sumathipala personally at his residence and mooted the deal but to Sumathipala's credit he turned down the offer.

Last week Nirj was one angry man after The Sunday Leader exposed his antics with regard to the GSP+ and was to telephone and complain to the Opposition Leader. When The Sunday Leader last week sought a response from Nirj on his wheeler dealing, he attempted to deflect it by telling the newspaper to ask the UNP leader before making any publication. When the newspaper informed Nirj that Ranil Wickremesinghe was neither the editor of the newspaper nor its publisher, he went into silence mode.

After the publication however he was to complain bitterly to Wickremesinghe the criticism levelled at him by the newspaper despite 'all the assistance' he was trying to render to the UNP only to be told that as much as no newspaper can control him, he too cannot control any newspaper. 

No choice

Taken aback, Nirj was to then telephone UNP MP Ravi Karunanayake and ask whether he had leaked the information about the attempted Kingfisher deal only to receive a reply in the negative. Quite agitated, Nirj told Karunanayake he was going to block the GSP+ but since the story leaked to The Sunday Leader he will make sure the government gets it.

Well, at least The Sunday Leader would have helped keep the garment industry afloat and over a million garment workers in employment - a task the entire state machinery obviously was not able to achieve because they did not know the right way to rub Nirj Deva. No doubt that will earn us a big bouquet from President Rajapakse!


©Leader Publications (Pvt) Ltd.
24, Katukurunduwatte Road, Ratmalana Sri Lanka
Tel : +94-75-365891,2 Fax : +94-75-365891
email :
editor@thesundayleader.lk