It seems a veritable birthday gift - and one benefiting all of Sri Lanka! Last week’s decision by the EU Commission to restore the broad ‘GSP+’ trade support scheme to Sri Lanka came on the second anniversary of the National Unity government. The GSP+ will become operational over the next several months.
The EU, being one of our top three trading partners, is vital for this country’s exports, the driver of much of the nation’s emerging prosperity. The restoration of the GSP+, on the one hand, gives the country a profile of political and social stability, and, on the other, hugely boosts an already burgeoning export economy.
The Generalised Scheme of Preferences (GSP) had been in force for decades and is a developing country trade support scheme that enables sweeping duty and procedural exemptions for selected developing countries. Sri Lanka had been enjoying this ‘most favoured nation’ status for decades, until the EU lifted the GSP cover for this country in 2010 in response to falling social rights standards and decline of democratic governance, during the previous regime. President Maithripala Sirisena led the current National Unity government to power two years ago, promising rapid steps towards the recovery of systematic and democratic governance, ending of serious human rights and labour rights violations and, the restoration of inter-ethnic equality and harmony.
The decision by the EU Commission is to restore the ‘GSP+’ - that is, the GSP together with new additional arrangements for beneficiary countries. This is the acknowledgment by the EU, of the significant success of this government in, at least some, of the many crucial areas of national recovery facing this nation after a decade of Rajapaksa rule.
Under the EU’s criteria for GSP selection, a beneficiary country, while deserving support because of its basic underdeveloped status, must also demonstrate, through sustained democratic and rational government, its ability to ensure the fair distribution of the economic benefits deriving from GSP trade. The rapid degradation of democracy under Rajapaksa rule (or, misrule) and the displacing of systematically planned development with lavish, nepotistic and opportunistic schemes under the guise of ‘development’ had alarmed the EU.
During that decade, the EU repeatedly pointed out to Colombo that its policies, or lack of policies, were seeing serious violations of labour rights, basic human rights, media freedom, massive corruption, none of which are conducive to ensuring that the benefits of the GSP will accrue efficiently to all Lankans and to economic development. All these are part of the basic minimum criteria to qualify for continued GSP.
The current government has much more to do in the restoration of good governance, such as strengthening of government institutions, justice for victims of war and political violence, a long term settlement of the ethnic problem. But, numerous steps have been taken in many of these areas during the past two years, with growing positive trends, such as, the lack of serious political violence or intimidation, freer space for news media, labour unions, and business conditions free of nepotism. It is these successes that have been recognized by the European Union.
The GSP will enormously free up Sri Lanka’s trade with the EU at a time when the other major western market, the USA, is possibly moving towards a more protectionist trade posture under the forthcoming Donald Trump administration.
All of Sri Lanka – including both business and labour - will benefit from both, the expansive trade concessions as well as the careful monitoring by EU agencies, of Sri Lanka’s continued observance of the range of good governance criteria (as described above) that qualifies it for GSP.
Drought dangers
President Maithripala Sirisena’s quick convening of a special task force is a timely response to the emerging drought problem. The failure of the monsoon as well as inter-monsoonal rains has drastically undermined Sri Lanka’s agricultural capacities.
The drought presents two immediate challenges: the welfare of the farming and agro-industry populations on the one hand, and, on the other, supply stability for a whole range of food products.
The government of Tamil Nadu, one of three South Indian states affected by the same rainfall failure, has already declared a ‘drought contingency’ and has asked for special central government aid to help the poor and the farmer population.
It is up to the Government to work closely with the provincial administrations of the drought affected regions to ensure that the most affected social and economic groups are reached in the provision of crisis support. At the same time, the cooperation of the private sector, especially, the food processing and supply businesses, is essential if the population as a whole is to continue to benefit from regular food supplies and stable markets. And, it is up to citizens’ groups, especially, consumer organizations, to monitor such supply systems to ensure compliance with correct trade practices.
Any indications of market manipulators getting away with their fleecing of the public will only serve to remind the public of the days when the ruthless were shielded by the powers-that-be.
The Government must also, at the same time, deploy suitable planning efforts towards envisioning the long term solutions to both, food shortage risk as well as agricultural production in an era of climate change.