Asia-Pacific, Economy & Trade, Headlines, Human Rights

Q&A: EU to Sri Lanka on GSP Plus Probe: ‘No Tit for Tat’

Feizal Samath

COLOMBO, Oct 30 2009 (IPS) - Despite acrimonious exchanges between Sri Lanka and the European Union (EU) over human rights violations on which rests the fate of continued tax-free exports to Europe, development assistance continues unhindered to the Indian Ocean island, according to Europe’s top diplomat here.

"Relations between Sri Lanka and Europe are much bigger than the GSP (Generalised System of Preferences) Plus issue," said Bernard Savage, Head of Delegation to Sri Lanka and the Maldives from the European Commission.

"In fact a few weeks back, I inaugurated a new European Commission (EC)-funded school in eastern Sri Lanka in the presence of the President [Mahinda Rajapaksa]. That’s the extent of our relationship," he added.

In a wide-ranging interview with IPS, Savage dealt at length with the issues over Sri Lanka’s application for a second round of GSP Plus tariff arrangement in which tax-free exports are allowed to Europe.

The second phase of these concessions, due to begin in January 2010, has bogged down over Sri Lanka’s refusal to accede to an EC investigation to ascertain whether the country has implemented 27 international conventions on human and labour rights, environment and good governance. The government says such a probe is a violation of the country’s sovereignty.

Sri Lanka is the only country in Asia and one of only 14 countries in the world that enjoys this special status with the EU in which more than 7,200 products categories are allowed duty-free into the EU.

The facility has been in force since July 2005 and ended in December 2008, with the new round effective from then till December 11, when a new facility came into place. However, Sri Lanka continues to enjoy these concessions until the EU probe and final decision, which is eight to nine months from now, becomes effective.

Savage said other projects in Sri Lanka will not be affected even if the country’s application for a continuation of the trade concessions is refused. "We are about to start several projects in the north and the east," the EU ambassador said.

But criticism against the country is mounting and further doubts about Sri Lanka’s ability to get these concessions—which are essential for garments, the country’s biggest commodity export that employs thousands of mostly women workers—emerged when an EC report made public last week faulted the government on the rule of law, unlawful killings and arbitrary detentions.

"There have been a significant number of disappearances which are attributable to state agents or paramilitary factions’ complicity with the government," said the report. "Hence Sri Lanka has failed to implement its obligation to prevent disappearances by State agents and other forces for which it is responsible."

The report added that serious restrictions have been placed on freedom of movement for people displaced by bloody battles between government forces and Tamil rebels while scores of journalists have been subjected to physical violence.

The 25-year civil war against the militant Liberation Tigers of Tamil Eelam ended in May, when government troops crushed the rebels after more than two years of intense fighting. According to conservative United Nations estimates, 7,000 civilians were killed and more than 13,000 injured during the final months of the battles. The military says over 5,000 soldiers died since mid-2007.

On Thursday, Central Bank Governor Ajith Nivard Cabraal told reporters that failure to receive the GSP Plus concessions will not affect Sri Lankan garments exports. He said a combination of factors, including rupee depreciation against the euro and the pound sterling, and lower domestic inflation and interest rates, will counter impacts from GSP plus withdrawal.

Government officials, who declined to be named, told IPS that in a worst-case scenario, another option is to provide a subsidy payment to exporters to make up for any loss in contract.

Savage expounds further on the issues involved.

IPS: There has been a lot of discussion on GSP Plus and government’s persistent refusal to subject itself to scrutiny. Will the concessions be given? BERNARD SAVAGE: A panel of three eminent experts, whose integrity hasn’t been challenged, conducted a probe and submitted a report. The EC then issued a report based on the investigation, and now that phase of the probe is over. Sri Lanka has been given time till Nov. 6 to respond to the report. Thereafter, within two months, the European Council will make recommendations to the European Parliament based on that investigation.

IPS: Is there a middle ground? BS: Clearly for Sri Lanka to be eligible for continued GSP Plus concessions, it must show some action [in enforcing the international conventions]. This action will be detailed by the Commission when it sends its recommendations as a Sri Lanka roadmap, which will specifically address the concerns stated in the probe. I cannot at this stage say what this roadmap will be.

IPS: If Sri Lanka does not respond by Nov. 6, will the EC go ahead with its recommendations? BS: In a hypothetical situation, if Sri Lanka doesn’t respond or [its] responses in our view are not sufficient to change the recommendations, this doesn’t mean the dialogue is finished. We still have a long time before any concrete action comes into effect.

After recommendations are made by the European Council to the European Parliament, the latter will decide, and [its] decision will be effective only six months from the date of the announcement, during which period Sri Lankan exporters will continue to enjoy tax-free benefits.

We would also like to use this two-month period [when the recommendations are made] for continuing dialogue with Sri Lankan authorities in the hope that concerns raised in the report are addressed.

IPS: Was there a roadmap toward the implementation of the U.N. conventions when the last GSP Plus was granted to Sri Lanka in July 2005? BS: At that point, no. It was clear, however, that the implementation of these conventions was the legal basis on which the concessions were being given, and this is the case for any country receiving these benefits.

The EU process is clear and it is well known that the Commission is obliged to start an investigation if there are doubts that the conventions haven’t been implemented. Thus the probe should not come as a surprise to anyone.

There have been several reports by U.N. rapporteurs on the human rights situation. When a U.N. official—who is responsible for overseeing the implementation of a convention that is listed as an eligibility criterion for GSP Plus—casts doubts on the effective implementation of the conventions, we in the Commission, on the basis of those rules, have no choice but to launch an investigation.

IPS: The fight over GSP Plus is seen as a tit-for-tat battle, since the government refused to bow to pressure from the West over demands to stop the fighting between government troops and Tamil rebels during its final stages between March and May. BS: Let’s be very clear on this. The process of the investigation began more than 18 months ago and long before the last stages of the conflict. It is not a knee-jerk reaction to current events. The whole question of the investigation goes back to the number of reports by visiting U.N. rapporteurs in 2007

IPS: Does this kind of investigation apply to all countries seeking a GSP Plus status? BS: There is no automatic investigation but specific things, elements and specific incidents could spark an investigation. At the moment, there are 14 countries that have GSP Plus [status], but this is the first case of a full-blown investigation. However, all beneficiary countries were aware of this [possible investigation if U.N. conventions are not implemented].

IPS: If Sri Lanka fails to get the concessions, won’t the workers be affected by eventual factory closures and job losses? Isn’t this an ethical issue? BS: Millions of jobs depend on these concessions. Our ethical responsibility…goes beyond workers in one country. Our responsibility is to maintain the coherency and integrity of the instrument [Council regulations on GSP Plus], because if we don’t, those countries who don’t have these concessions can point to the Commission and say, ‘you are not applying your own rules’.