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The connection between human rights and a trade concession
By Sumudu Chamara
Last month, the European Parliament adopted a resolution urging the European Commission to consider a temporary withdrawal of the Generalised Scheme of Preferences (GSP+) trade concession granted to Sri Lanka, taking into consideration Sri Lanka’s prevailing human rights situation.
The resolution made specific references to the use of the Prevention of Terrorism Act (PTA), and the controversial arrests and detentions of human rights lawyer Hejaaz Hizbullah, former Criminal Investigation Department (CID) Director Shani Abeysekara, and poet Ahnaf Jazeem. The resolution also pointed to discrimination and violence against religious and ethnic minorities, the 20th Amendment to the Constitution, the infringement of judicial independence, and the militarisation of civilian government functions.
Sri Lanka’s commitment to protecting human rights is, in fact, a condition upon which the GSP+ trade concession was granted to the country.
The issue became a topic of discussion again last week, after the Foreign Ministry in a statement said that it had informed the EU of steps taken to revisit provisions of the PTA with the study of existing legislature, past practices, and international best practices.
The Ministry had further informed the EU of the decision taken by the Cabinet to appoint a Cabinet Sub-Committee, as well as an Officials’ Committee comprising senior representatives of the Ministries of Justice, Defence, Foreign Affairs and Public Security, Attorney General’s Department, Legal Draftsman’s Department, Sri Lanka Police, and the Office of the Chief of National Intelligence, to assist the said Sub-Committee.
“The Sri Lankan Government maintains a regular, cordial, and multifaceted dialogue with the EU. This includes the constructive co-operation existing between Sri Lanka and the European Commission on the review of the country’s EU GSP+ compliance with the 27 core international conventions. In this regard, the third cycle of review of Sri Lanka in the GSP+ Monitoring Process for 2020-2021 is ongoing,” the Ministry said in its statement.
“As part of this process, the Ministry has provided to the European Commission through diplomatic channels, the comprehensive response of the Sri Lankan Government to the list of follow-up questions on the current GSP+ monitoring cycle, in adherence to the agreed timeline. The response was compiled by the Foreign Ministry in consultation with 26 line ministries/state ministries/agencies and commissions. A GSP+ Monitoring Mission for the third cycle is scheduled to visit Sri Lanka on mutually convenient dates in September/October 2021.”
The conventions the GSP+ is conditional upon
Even though what Sri Lanka currently only faces the risk of losing the GSP+ trade concession, in 2010, Sri Lanka actually lost that concession, as the then-Sri Lankan Government and the EU failed to come to certain agreements with regard to human rights-related issues, especially human rights violations said to have happened during the last stage of the war that ended in 2009.
However, during the tenure of the former United National Front (UNF)-led Government, Sri Lanka regained the GSP+ trade concession in 2017, after it promised to implement 27 international conventions on human rights, good governance, environmental protection, and labour conditions. These 27 conventions fall under two categories of conventions, namely the “core human and labour rights, or United Nations (UN)/International Labour Organisation (ILO) conventions” and the “conventions related to the environment and to governance principles”.
Under the “core human and labour rights, or UN/ILO conventions”, are the Convention on the Prevention and Punishment of the Crime of Genocide (1948), International Convention on the Elimination of All Forms of Racial Discrimination (1965), International Covenant on Civil and Political Rights (1966), International Covenant on Economic Social and Cultural Rights (1966), Convention on the Elimination of All Forms of Discrimination Against Women (1979), Convention Against Torture and other Cruel, Inhuman or Degrading Treatment or Punishment (1984), Convention on the Rights of the Child (1989), Convention concerning Forced or Compulsory Labour, No. 29 (1930), Convention concerning Freedom of Association and Protection of the Right to Organise, No. 87 (1948), Convention concerning the Application of the Principles of the Right to Organise and to Bargain Collectively, No. 98 (1949), Convention concerning Equal Remuneration of Men and Women Workers for Work of Equal Value, No. 100 (1951), Convention concerning the Abolition of Forced Labour, No. 105 (1957), Convention concerning Discrimination in Respect of Employment and Occupation, No. 111 (1958), Convention concerning Minimum Age for Admission to Employment, No. 138 (1973), and Convention concerning the Prohibition and Immediate Action for the Elimination of the Worst Forms of Child Labour, No. 182 (1999).
The “conventions related to the environment and to governance principles” include the Convention on International Trade in Endangered Species of Wild Fauna and Flora (1973), Montreal Protocol on Substances that Deplete the Ozone Layer (1987), Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal (1989), Convention on Biological Diversity (1992), the UN’s Framework Convention on Climate Change (1992), Cartagena Protocol on Biosafety (2000), Stockholm Convention on persistent Organic Pollutants (2001), Kyoto Protocol to the UN’s Framework Convention on Climate Change (1998), UN’s Single Convention on Narcotic Drugs (1961), UN’s Convention on Psychotropic Substances (1971), UN’s Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances (1988), and UN’s Convention against Corruption (2004).
Repercussions of losing GSP+
The Morning spoke to independent policy think tank Advocata Institute Chief Operations Officer Dhananath Fernando, to understand what repercussions Sri Lanka would have to face in the event Sri Lanka loses the GSP+ trade concession. In response, he emphasised that if Sri Lanka loses this concession, there will certainly be an adverse impact on the country’s economy, especially because the EU is among one of the regions Sri Lanka exports most of its apparel products.
“Without this concession, export prices would be higher and Sri Lanka would lose competitiveness. With the latest Covid-19-related developments, most of the apparel factories have shifted towards countries like Bangladesh, from India and even Myanmar, because India failed to manage the Covid-19 situation and because of Myanmar’s military coup.
“It could have been a golden opportunity for Sri Lanka because we had better market conditions to attract these companies because of competitiveness. Also, we have to remember that this is not a concession Sri Lanka can get forever; but, we desperately need it, because the situation is such that every dollar matters.”
Meanwhile, following the EU Parliament’s discussion, economist and Samagi Jana Balawegaya (SJB) MP Dr. Harsha de Silva, in a video posted on his Facebook page, said that Sri Lanka had achieved much greater export growth when it had the GSP+ concession.
He explained: “When we analyse the statistics, we can see that from 2011-2016, when we did not have the GSP+ trade concession, the value of imports to the EU region grew only from € 1.7 billion to € 1.8 billion, which is only a 6% growth. However, from 2017 to 2019, when Sri Lanka regained this concession, the value of imports to the EU region increased from € 1.8 billion to € 2.3 billion, which is a 28% growth.”
According to Dr. de Silva, among these imports to the EU region were apparel products worth € 1.3 billion, rubber products worth € 265 million, and fisheries products worth € 175 million.
To look into the overall situation concerning the GSP+ trade concession and Sri Lanka’s relationship with the EU, The Morning spoke to diplomat Dr. Dayan Jayatilleka, Sri Lanka’s Permanent Representative to the UN in Geneva between June 2007 and October 2009, who emphasised that at this juncture, Sri Lanka must not play around with GSP+ trade concession. He noted this while adding that the GSP+ trade concession is extremely important to Sri Lanka at this moment, because the country is in the midst of an economic crisis.
“Every indication is that we have a serious economic crisis, and in the context of such a crisis, if our export access shrinks, then the crisis will only worsen,” he observed.
He explained the overall situation pertaining to Sri Lanka receiving the GSP+ trade concession from an international relations perspective. “There are three major factors which come into play in our relationship with the outside world. We are a small island integrated into the world economy. Sri Lanka does not have the production to stand on its own, so our external relations are extremely important.
“Now those relations are not purely economic. I call this phenomenon the ‘three Es’, which are external, economic, and ethnic; and they are all intertwined in the way the world looks at us. We have to manage those three aspects in such a way that Sri Lanka’s national interests are served, and I do not think the present Government is doing that.”
Even though the promises the then-Sri Lankan Government made in 2017 play a big role in the discussion as to whether the country would continue to receive the GSP+ trade concession, according to Dr. Jayatilleka, the present situation was not created in 2017 and stretches way back to 2009.
“I think it is important to get the timeline of this situation correctly. This issue does not begin in 2017. At one point, I was briefly involved in this matter, and therefore I am familiar with the beginning of this issue, which happened way back in around 2009. We have to understand that the story does not start with the promises Sri Lanka made in 2017.”
He added: “I think we must also understand what the GSP+ trade concession is. The Government has said that it involves conditions which violate Sri Lanka’s sovereignty. However, earlier the Government obtained it. Well, the GSP+ concession is a privilege, not a right, which means that several countries meeting the criteria are getting preferential access to the European market.
“Now the EU market consists of consumers that care about certain things. It is only goods from countries that meet certain minimum standards, which include social and economic rights and standards, that qualify for this concession. It is not a question of anybody imposing anything on Sri Lanka’s sovereignty, because Sri Lanka sought and obtained this concession. If we want preferential access to certain markets – because we prefer not to have to compete on a level playing field since we suffer from certain disadvantages – we have to comply with those stipulations. Those stipulations are ones we agreed to when we sought and obtained this concession.
“My view is that we could not comply with some stipulations during wartime. But there was absolutely no reason to not comply with them once the war was over. We could very well have liberalised our internal regulations in a manner that brought us in line with our own commitments to obtain the GSP+ trade concession. It could have been done when the war was over. But it was not done by the Government, which is why we lost this concession.
“It was restored at a fairly high price. When you have something and you lose it, when you get it back, you have to pay a higher price. So in 2017, there were certain added stipulations, and the world had moved on, since the way Sri Lanka was looked at by Europe had changed. European consciousness had also changed, and there were a greater number of stipulations. But we could have had a much better deal if we had liberalised on our own as soon as the war was over.
“This liberalisation does not necessarily mean economic liberalisation, but also human rights and so on. So that was the biggest mistake we made, and now we are repeating that mistake at a worse time, because in 2009, when the war was over, our economy was doing much better than it is doing now.”
Dr. Jayatilleka further explained the economic aspects and repercussions related to this matter: “In the middle of a downward economic spiral, it is folly to be so careless about the GSP+ trade concession. I think we should fight hard to save this concession, because we cannot afford a further shrinkage in our export earnings. We have already stuck with the policy of banning chemical fertiliser because the tea industry has complained that its production has dropped drastically.
“So we will be earning less from our exports because of the ban on chemical fertiliser. Our external relations, including our external economic relations, are in trouble. If the EU Parliament resolution is acted upon, our situation in the world arena and world economy is going to be more problematic than it is now.
“The UNHRC is also another concern, and the possibility of changing opinions about Sri Lanka can impact our economy through shrinkage of purchases of Sri Lankan products, and also further reduction of tourism, which has already happened due to the Covid-19 pandemic.”
According to him, how Sri Lanka maintains its international relations have a direct impact on how foreign markets welcome Sri Lankan products. He also explained that the world economy also works on the basis of world opinions, and that it is not just about profit anymore, especially in Western societies.
“If we take the UN Human Rights Council (UNHRC) March session, not only from the West, we failed to get the votes from the majority of members of the UNHRC coming from the global South too. That is how bad our international standing is, and it impacts matters pertaining to the economy.
“There is a younger generation out there, not only in the US, but also in several other countries, and because of what we do, they will start to refrain from supporting us. They are consumers, and public opinion means consumer opinions and consumer preferences. If we have to manage our markets, we have to manage our domestic image, which includes human rights matters.
“Unfortunately, we are not doing that, because those who manage the Government’s economic policies do not understand that. We have to understand how non-economic factors, such as public opinion, impact economic factors in the world today.”
Although The Morning attempted to contact State Minister of Money and Capital Market and State Enterprise Reforms Ajith Nivard Cabraal, to know what he thinks of the current situation regarding the GSP+ trade concession, he was not reachable.
However, addressing a virtual press conference titled “Will the economy collapse? Will the GSP+ be lost?” organised by the Government Information Department, he said that as an economy, Sri Lanka needs to be prepared to face the eventuality of losing GSP+, and that steps are underway to deal with this while making best efforts to retain it through diplomatic engagement.
He added that the GSP+ is conditional more on political factors than economic factors and that the Government would not endanger the sovereignty of the country to regain GSP+.
He also stressed that there was no collapse of exports as feared following the previous withdrawal of the facility, and that it in fact increased each year till the previous Government regained the facility in 2017.
He said that in 2010, when the facility was withdrawn, the total exports to the EU stood at $ 2.9 billion, but that in 2011, without the facility, this figure rose to $ 3.6 billion, a growth of 20%.
Sri Lanka faces a dilemma as to whether import restrictions are bad or good to the country’s economy; on the one hand, import restrictions curtail foreign currency outflow, which is a necessity at a time when the country’s foreign reserves are at a very low state, and on the other hand, there are a large number of businesses the depend on imported goods and related services, and these restrictions adversely affect them.
On top of that, Sri Lanka now has to worry about export income. Prompt and prudent measures are more important now than before, as export income is the main factor that keeps foreign reserves stable, apart from controlled imports.
As highlighted by the case of the GSP+ facility, fiscal measures alone are insufficient to solve these issues and ensure economic sustainability; Sri Lanka will also need to work on maintaining its standing in the global arena by balancing its human rights record with its security concerns, if it truly aims to balance its budgets.
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