The recent announcement that Sri Lanka had successfully defeated a motion to deny the GSP Plus trade concession would boost the country’s export sector, which had been flagging over the last 18 months, Chief Economist at the Ceylon Chamber of Commerce, Anushka Wijesinha said.

Wijesinha commented on the economic implications of receiving the GSP Plus concession, noting that he was not placed to comment on the human rights and political implications of Sri Lanka gaining the concession.

He said that the news of the concession came not just at a fortuitous time for Sri Lanka, but also for the European Union (EU).

“In the last quarter, the EU markets have been beginning to show a steady recovery, and we’re hoping that demand conditions improve,” Wijesinha said. “If we had gotten the concession [even] last year there would have been less opportunities, as the market was tepid. That has changed quite a bit.”

Given this, the concession would help Sri Lanka’s export sector, particularly as the EU was a central part of the country’s overall export market.

However, he added that Sri Lanka should avoid complacency at this success and focus on economic reform that would help the country’s competitiveness in the long run.

“The GSP Plus concession is time bound. The moment we graduate to upper middle income status (which is not too far away) we’ll cease from being eligible for it,” Wijesinha explained. “One of the strange circumstances is that we lose concessions like these as we progress as a country. We need to treat this as a much needed breathing space of about five to six years… we really need to boost the competitiveness of exports to the EU.”

This could only be done by removing some of the trade barriers faced by exporters, some of which the Ceylon Chamber of Commerce has raised in a policy paper titled “Tackling Constraints Closer to Home: An Overview of Regulatory and Administrative Barriers faced by Sri Lankan Export and Import Traders.”

This included cumbersome procedures and delays in government processes but also helping exporters gain better access to technology and improve their branding and packaging.

An additional challenge were labour shortages in industries like apparel. “Private exporters might not be able to take advantage of GSP Plus if they’re facing challenges in terms of labour,” Wijesinha said.

Apart from apparel, sectors ranging from food processing, to fisheries, food products, toys, rubber products and porcelain and ceramic-ware stand to benefit from the GSP Plus concession – as has been the case when Sri Lanka received the concession in the past.

Some Background

Sri Lanka lost the GSP Plus trade concession in 2010, due to “shortcomings in its implementation of three UN human rights conventions,” as a press release from the European Union noted at the time. This affected Sri Lanka’s competitiveness in terms of exports to the EU, then a key market for the country, particularly in the garment and fisheries industries.

In the run up to this year’s GSP Plus deliberations in Brussels, Groundviews received a leaked copy of the proposed amendment to the Code of Criminal Procedure (Special Provisions) Act No.02 of 2013, presented at the Cabinet meeting on the 25th April 2017.

The amendment is a cornerstone of Sri Lanka’s bid to successfully regain the European Union’s preferential trade agreement. The secrecy surrounding the negotiations, including the text of a proposed Counter Terrorism Act to replace the Prevention of Terrorism Act, was highlighted in the lead up to the vote.

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