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Sinhala state terrorists, again, killed innocent people today.

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Winning GSP+ extension not a political issue but a necessity

By A. K. Azeez
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The European Union (EU) is today Sri Lanka's largest trading partner. The EU is also Sri Lanka's number one export destination, with products and services worth approximately 1.7 billion euros, being exported to the EU, which is 29 percent of Sri Lanka's total exports. Garments and textiles account for over 55 percent of the value of our exports to the EU, amounting to more than 1 billion euros.

The key factor behind the recent increase in Sri Lanka's exports to the EU is the GSP+ status, granted to Sri Lanka in 2005. Under this facility, Sri Lanka can export more than 7,200 product categories to the EU. Sri Lanka is one of the 15 countries in the world, that enjoys this trade concession and the only country in Asia.

The GSP + scheme is to be reviewed by the end of this year. . The review which is a technical procedure will only take place in the 4th quarter of 2008 and the list of countries, that qualify for the GSP+ scheme from 2009 to 2011, will be announced by mid-December, 2008. Regarding this review, the European Union (EU) maintains that, no decision has been reached over the GSP + scheme, as far as Sri Lanka is concerned and that, there is no reason to assume that, Sri Lanka would be disqualified from the preferential trade scheme, by the end of 2008.

At a recent Business Seminar organised by the Sri Lanka-Poland Business Council, the representative of the Delegation of the European Commission (EC) to Sri Lanka and the Maldives, Peter Maher emphasised that, no decision has yet been made in this regard and therefore, the impression created that Sri Lanka will not qualify, is erroneous.
In a recent message on Europe Day, Ambassador and Head of the Delegation of the European Commission to Sri Lanka and the Maldives Julian Wilson, also sought to clarify the impression that, the concession is all but lost to Sri Lanka, stating that the EU wanted Sri Lanka to get the GSP + for the next three years, and Sri Lanka had to meet certain eligibility criteria, that applies to all beneficiaries of the scheme, to guarantee the GSP + renewal.

Sri Lanka was granted GSP+ preferential trade concession, on the basis of ratifying 27 international conventions on human rights, labour rights and environmental standards. The labour standard in Sri Lanka was a driving force in making Sri Lanka, a beneficiary of the GSP + concession. Sri Lanka will have to submit a fresh application for the GSP+ by end October 2008, giving comprehensive information on the ratification of these 27 conventions. Since these conventions are directly under the United Nations and the International Labour Organisation (ILO), the findings of these international bodies will also be taken into account, when reviewing performance

We are Tamils from the day that the Constitution was written for Sinhala Buddhists only.

kallatoni = mamma no, pappa no, nidaganna ratak no

Doubts
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Sri Lanka's doubts on the extension of this preferential trade scheme, emanate from recent allegations pertaining to the country's human rights record. However, the EC office maintains that, it does not expect absolute compliance on the 27 conventions, but there would be an objective assessment, on the implementation of these conventions. The recent decision of the Supreme Court of Sri Lanka, which held that the rights recognised in one of these conventions and which had been disputed regarding its effective implementationm namely the International Covenant on Civil and Political Rights (ICCPR) are 'justiciable' through the country's legal and constitutional processes, as the decisions of the Supreme Court gave adequate recognition to the civil and political rights contained in the ICCPR, would no doubt be taken into consideration by the EC.
Despite these seemingly positive signals, there seem to be other developments, which do not augur well for Sri Lanka.
The EU plans to implement some changes to the rules of the GSP scheme, such as the requirement, for high domestic value addition of nearly 50% for products, exported under the scheme. Since most Sri Lankan garment manufacturers depend heavily on imports, this could affect our garment exports, a major export to the EU, even if the GSP+ scheme was to be extended. Meanwhile, in the least developed countries (LDCs), the proposed domestic value addition is 30% and these countries are also not required to undertake obligations, in the form of implementing the 27 conventions, and thus, there could be diversion of export orders from Sri Lanka to such LDCs, particularly the LDCs in the region. To increase the benefits from GSP+ it may be necessary to request the EU, to reduce the domestic value addition requirement for Sri Lanka to 30%, and permit cross regional accumulation, to enable our exporters to source inputs from both SAARC and ASEAN regions. At present, only imports from SAARC region qualify for GSP+ preferential concession.
Exporters particularly to the EU countries are also understandably perturbed, by a recent remark made by the Governor of the Central Bank of Sri Lanka, during the course of an interview with the BBC, which seemed to give the impression that, the government is not unduly concerned about international mechanisms, for fair trade. In this interview, the Governor described the GSP+ scheme as a subsidy, which our exporters specially garment exporters, would do well, to manage without. The Governor subsequently followed this up with a request to local banks, to have a plan to fall back, in the event, Sri Lanka does not get an extension of the concessions, when the EU reviews the country's claims to the concession, towards the end of this year, whilst asserting that, all steps will be taken to ensure that, the country receives the GSP+. He requested the banks to work closely with the apparel industry, the industry which is likely to be the worst affected, in the event of loss of concessions, so as to mitigate any adverse affects from the fallout.

Whilst measures to revitalise an affected industry, which is vital to the country's economy, following loss of GSP + , is commendable, it is better to be prudent, to take all possible steps, to prevent such an eventuality, in the first place.
The Annual Report of the Central Bank of Sri Lanka for 2006, the first full year after the granting of the GSP+ trade concession by the EU to Sri Lanka in July, 2005, states that amidst intense global competition, the apparel exports exceeded US$ 3 billion in 2006, aided by increased access to the EU market under the GSP+ scheme and that Tariff concessions granted under GSP+ scheme, helped to diversify exports and markets in the EU region and that, despite intense competition, apparel exports to the EU increased by 17.3%, mainly on account of the GSP+ tariff concession . It also states that, Although apparel exports to the US declined marginally, exports to the EU including apparel, increased significantly by 18.4% , partly capitalising the concessions offered by the GSP+ scheme and that, apparel exports to the UK rose significantly, capitalising on the tariff concession, received by Sri Lanka under the GSP+ scheme .
Other industries
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Although the garment industry is by far the biggest beneficiary of the GSP + scheme, it cannot be forgotten that, the scheme benefits several other industries, such as leather products, gems and jewellery, fisheries, including new ones like bicycle exports. In fact, most non-garment products from Sri Lanka have managed to get new markets or expand existing market share, thanks to access given by GSP + .

Sri Lanka exports approximately 1.1 billion euros, worth of garments and under the GSP+ a 14% duty concession was given to Sri Lanka's fruits and vegetables. Currently, the garment industry is badly losing market share in the US and growth is being sustained only in Europe, due to the GSP+ concession. Loss of the trade concession, could also result in an unfortunate situation for the country, due to loss of jobs for many thousands, in the event, overseas investors who have set up factories and other enterprises here, due to the access given, as a result of the GSP+ concession, decide to pull out or close down their factories and go elsewhere.

Value addition
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The GSP + scheme encourages more value addition, to be done in Sri Lanka, thereby encouraging backward integration, resulting in the setting up of new industries, creating substantial employment in the country. The granting of duty free access, to many products tends to encourage Sri Lankan industries, to diversify their exports of products to the EU, thereby removing the country's dependence on few sectors, allows only few sectors, to earn valuable foreign exchange.

Both buyers and manufacturers have to take into consideration, the availability or non-availability of the GSP+ concession, when preparing for next year's orders. Orders for the winter season could start in June and buyers may want to know, what the price is. Knowledge of Sri Lanka's GSP+ status is vital, in deciding whether or not to factor in the duty component, into the costing. The present uncertainty, places many exporters in a predicament. Further, the loss of GSP+ may mean that, exporters may end up having to add between 12-18 % import duty, to the cost of an export unit.

This would make Sri Lankan products uncompetitive, against rival exporting countries' products, which continue to enjoy the concessions, giving them greater market access. Already there are negative influences, on some overseas buyers, as a result of the uncertainties, over the extension of GSP+ concession to Sri Lanka, have made them look elsewhere and some orders may have already moved to countries like, Vietnam and Bangladesh.

Struggle
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Sri Lankan exporters are presently struggling to remain competitive, with interest rates on borrowings going up and domestic inflation reaching almost 30%. The GSP+ scheme if extended, will continue to help boo

At a recent Business Seminar organised by the Sri Lanka-Poland Business Council, the representative of the Delegation of the European Commission (EC) to Sri Lanka and the Maldives, Peter Maher emphasised that, no decision has yet been made in this regard and therefore, the impression created that Sri Lanka will not qualify, is erroneous.

Nacho malli bana kiyanna eppa

without Sri Lanka, you terrorist goons will be just 'Kallatonis'