Formalities of entry process to be finalised next week’
Concession withdrawn in 2010 due to Lanka’s poor human rights record
The Council of Ministers of the European Union (Foreign and Trade Ministers) formally approved Sri Lanka’s Generalized Scheme of Preferences Plus or GSP+ application yesterday, thereby making it official that the country will regain the coveted trade concession.
This completes all three procedural requirements for Sri Lanka to receive GSP Plus status. The European Commission and Parliament approved the application earlier.
“This is the final hurdle the country had to overcome, and next week they will finalise the formalities of the entry process,” Director General of the Government Information Department Dr.Ranga Kalansooriya said. Representatives from the Ministry of Foreign Affairs also confirmed the news.
“The GSP+ concession was withdrawn in 2010 due to Sri Lanka’s poor human rights record, and it has resulted in the loss of hundreds of millions of euros in exports,” according to Deputy Minister of Foreign Affairs Harsha de Silva.
The trade concessions will result in the removal of between 9-10 percent tax for exports to the EU. The GSP+ covers about 6,600 products, but Sri Lanka exports only a few of these.
Exports made up 34% of the country’s GDP in 2000, but that they had dropped to just 13% of GDP by 2015. There has not been a discernable improvement in exports in the last two years.
“This is a great turnaround for our exports. One of the main reasons our diversification into other areas has not improved is because we have not been able to compete with other countries which have had a better relationship with the EU,” de Silva said at a news conference in late April at the Ministry of Foreign Affairs. The benefits of the GSP+ could be short lived, however, as the country’s per capita income increase could make Sri Lanka ineligible for the trade concession. Countries that achieve upper-middle income status (about $4,036 per capita, according to the World Bank) for three consecutive years lose their GSP+ certification.
De Silva has stated that Sri Lanka hopes to reach middle-income status by the end of 2017, so the country would have three more years to benefit from GSP+. After those three years, the country would have to negotiate a Free Trade Agreement with the EU to maintain favourable trade status.