Sri Lanka to face EU trade loss; ready to discuss
Reuters – By Shihar Aneez
Sri Lanka is prepared to face a European Union withdrawal of its preferential trade benefits that helped to boost the island nation’s garment export to the region, a top official said on Tuesday.
The EU on Monday said it planned to withdraw preferential trade benefits to Sri Lanka because of concerns about the south Asian island’s human rights record. [ID:nLDE61E1W0]
“We have been prepared for this for a long time,” said Ajitth Nivard Cabraal, the central bank governor who is also an adviser to President Mahinda Rajapaksa’s government on economic affairs. “We have to deal with this risk at some stage or another.”
The European Commission, which oversees the 27-nation bloc’s trade policy, said an investigation had revealed significant shortcomings in Sri Lanka’s implementation of three U.N. human rights conventions linked to preferential trade tariffs.
Sri Lanka has come under pressure from Western nations over civilian deaths in the final phase of the 25-year war against Tamil Tigers last year, police violence, torture and delays in resettling Tamil refugees kept in camps after the conflict ended.
The trade benefits, worth about 100 million euros ($136 million) a year to Sri Lanka, will be withdrawn in six months’ time unless EU concerns are addressed, the Commission said.
Cabraal said the government was ready to engage with the EU and discuss how the island nation could continue the facilities.
A foreign ministry statement said talks would be more productive if both sides acted with “sincerity” and avoided setting “unattainable targets”. In 2008, the government said it would not allow EU investigators into the island nation. Sri Lanka benefits from concession in the EU’s Generalised System of Preferences Plus (GSP+), an incentive scheme tied to the improvement of human rights and good governance.
Exporters to the EU, mainly clothes manufacturers, said the move would make their goods less competitive. “There will be a price increase to the customer,” Rohan Masakorala, secretary general of the Joint Apparel Association Forum, told Reuters.
Around 60 percent of Sri Lanka’s garments are sent to the EU. Those exports accounted for over 46 percent of total exports of $7.08 billion last year.
Analysts and economists said the withdrawal would have no impact on the stock exchange .CSE as major apparel firms are not listed. But low revenue from garment exports could increase the trade deficit and overshoot the fiscal deficit.
Analysts say the withdrawal could hit post-war economic optimism that helped propel the bourse to become one of the world’s best performers with a 125 percent return last year.
“It will hit investor sentiment,” Hussain Gani, associate director at Asia Securities said.
Economists said closure of some garment firms in the face of competition after the loss of trade may trigger job losses and compound hardships for poor women in rural areas. (Editing by Ron Popeski)
Who is going to post a comment saying this that has happened because of RANIL,SOMAWANSA or SF 😉
GSP+ was introduced following the Tsunami to help SL on the road to recovery. Before the tsunami the garment manufacturers managed to market their products to the Western countries though the competition was harder. GSP+ helped to sell thir products cheaper and easily with less competition.
GSP+ is not going to be permanent relief measure anyway. It has to end sometime. Whether it ends in 6 months or in 1 or 2 years it had to end sometime. It was a temporary relief. Hence the garment manufacturers must find other avenues of meeting the stiff competition. Can I therefore suggest that they focus on winning the market through producing better quality products. Anyone would be willing to pay extra to a good quality product than buy cheap and regret it. Hence let us not make a big issue of this GSP+ being stopped in 6 months. Concentrate instead in capturing the foreign market by producing quality goods.
With regard to EU stating the reason for stopping GSP+ is because of poor human rights record and not re-settling the 300,000 Tamil hostages saved from LTTE clutches quickly enough, my reply is these are unreasonable excuses by EU. The hostages had to be re-settled in their own lands which have been heavily mined by the terrorist LTTE. These lands had to be first de-mined before re-settling these poor people. The MR government spent huge sums of money in buying demining machinery to speed-up the process. Once the lands were cleared the people were re-settled speedily with houses also built for them and gifts of cash and basic household goods to resume normal life again. We had little help from the West in this matter. More than 80% have been re-settled. Under LTTE they had suffered untold hardships for many years. VP used them like a herd of cattle to breed and rear children for his war machine to realise his dream of an eelam state. Today we are one united nation, and the Tamil hostages who had been liberated are grateful to the government for giving their children a future which is free, with universal franchise to elect their own local government.
The other matter of poor human rights record is hogwash. This is malicious propaganda of the LTTE diaspora in the West who is trying hard to create a situation to bring down the MR government. If the imperial West is going to withhold the paltry sum of GSP+ we will manage no matter to sell quality products facing stiff competition in the world amrket just as any other product we export.
I think, on a matter of principle, Sri Lanka should stop garment trade with the Colonialist Western Nations. Why should our lovely country lasses make extra large sized underwear to protect the bottoms of the white man’s wives, to earn a living? I am sure Mr Cabraal can find a better strategy that provides a dignified way of life to our girls.
Be practical, please look at the import and export categories in Sri Lanka..If we stop this we would be in a country like Kenya in near future…Probably you might be at a foreign countries..you people are boasting without knowing the reality….It is easy to say the thing but difficult to implement….Who is going to give da jobs for poor people work in this free trade zone..Think twice before writing foolish statements here