EU grants Sri Lanka improved access to its market as incentive for reform

The European Union will remove a significant part of the remaining import duties on Sri Lankan products as from Friday, 19 May. This will be in exchange for the country's commitment to effectively implement 27 international conventions that it has ratified on human rights, labour conditions, protection of the environment and good governance.

These one-way trade preferences will consist of the full removal of duties on 66% of tariff lines, covering a wide array of products including textiles and fisheries.

These preferences would come under a special arrangement of the EU's Generalised Scheme of Preferences, known as GSP+. This supports developing countries by fostering their economic development through increased trade with Europe, and providing incentives to take tangible measures towards sustainable development.

EU Trade Commissioner Cecilia Malmström said: "Granting GSP+ to Sri Lanka aims to provide the opportunity to develop further economically, including creating more and better jobs for all Sri Lankans, on a sound foundation that advances human and labour rights, and in a manner that is environmentally sustainable. It is also a vote of confidence from the European Union that the Sri Lankan Government will maintain the progress it has made in implementing the international conventions.

At the same time, no one is pretending that the situation is perfect. The process of replacing the Prevention of Terrorism Act still needs to be completed. There are still too many incidents of torture, there are still children being forced into marriage, there are still laws that discriminate against sections of Sri Lankan society. We want to see an end to these practices. The EU will work closely with the Government and Non-Governmental Organisations to rigorously monitor progress".

When the EU grants access to the GSP+ scheme, it does not necessarily mean that the beneficiary country is implementing the 27 international conventions in a fully satisfactory way. Instead, the scheme offers the incentive of better access to the EU market for the country's exporters, in return for further progress in fully implementing those conventions.

It also means the EU can engage with the beneficiary country on all areas where implementation is unsatisfactory. The EU will remove customs duties for Sri Lanka while rigorously monitoring the country's progress in pursuing sustainable development, respect for human rights and good governance, in close cooperation with all stakeholders.

The EU is also working with the Government of Sri Lanka to support the development of SMEs and better enable them to export to the European market. The EU will build on its existing work with the Government and partners in civil society to ensure that the benefits of GSP+ accrue to as wide a section of the population as possible. This includes communities in the north and east of the country that were most affected by civil war and areas in the south that have historically been the poorest.

Background

The Sri Lankan government applied for GSP+ in July 2016. This decision confirms that Sri Lanka meets the GSP+ entry criteria set out in the EU Regulation. The granting of GSP+ preferences to Sri Lanka will enter into force on 18 May 2017.

Sri Lanka had benefited from GSP+ previously. But in 2010 the EU decided to stop giving preferential treatment to Sri Lankan imports because the government had failed to address reported human rights violations in the country. In 2015, the new government embarked on major reforms aiming to achieve national reconciliation, and respect for human rights, the rule of law and good governance, as well as sustainable economic development.

Sri Lanka has taken major steps to improve governance and respect for human rights. One example is the 19th constitutional amendment, which re-establishes the independence of key institutions such as the National Human Rights Commission. Sri Lanka has also acted to:

• ensure cases of missing persons are examined;
• offer better protection of witnesses and victims;
• release people detained under controversial anti-terrorism regulations;
• combat child labour.

In addition Sri Lanka has re-engaged with the UN system, in particular the UN Human Rights Council, where it has made commitments to promote reconciliation, accountability and human rights. And it has achieved most of its Millennium Development Goals, especially in health, education and gender equality.

At the same time, more needs to be done on issues of concern:

• Sri Lanka must ensure its counter-terrorism legislation is fully in line with international human rights conventions.
• As a matter of priority, it must put a definitive stop to the use of torture by security forces and the related impunity.
• The government must also adopt policy and legislative processes to improve the rights of women and children, for example with regard to:
  • discrimination
  • domestic violence
  • minimum age of marriage
  • sexual exploitation
• Those processes must also address the issue of harassment of trade unions.

All of these issues will be subject to GSP+ monitoring to ensure positive progress continues.

The EU is Sri Lanka's biggest export market, accounting for nearly one-third of Sri Lanka's global exports. In 2016, total bilateral trade amounted to almost €4 billion. EU imports from Sri Lanka amounted to €2.6 billion and consisted mainly of textiles as well as rubber products and machinery.

There are now 9 GSP+ beneficiaries: Armenia, Bolivia, Cape Verde, Kyrgyzstan, Mongolia, Pakistan, Paraguay, the Philippines and Sri Lanka.

More information

EU trade preferences for developing countries

EU-Sri Lanka trade relations