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| Bloomberg / Seoul Oct 21, 2009, 00:01 IST |
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In a move that will be closely watched by the Indian side of the ongoing free trade agreement negotiations with the European Union (EU), Sri Lanka is set to lose up to $150 million of trade preferences granted to it by the EU.
The European Commission, the EU’s trade authority, published the findings of a year-long investigation into allegations of human rights abuses in Sri Lanka on Monday. According to the report, Sri Lanka is in breach of its commitments to the EU and is therefore liable to lose its privileges under the Generalised System of Preference (GSP) Plus trade scheme.
The GSP Plus system was devised by the EU to help developing countries boost their economies in return for ar pledge to improve human rights and labour standards by adhering to 27 international rights agreements. The linking of a final trade agreement to human rights issues by the EU is also one of the sticking points in the EU-India FTA negotiations.
The Commission’s findings on Lanka reportedly show evidence of police violence, torture and breaches of labour laws, notably the use of underage children. The report focuses on abuses related to the 25-year-long civil war in Sri Lanka between the government and Tamil rebels. The EU says its has found violations of the UN Convention against Torture, UN Convention on the Rights of the Child and UN Covenant on Civil and Political Rights.
The Commission will discuss Monday’s report and decide by the end of November whether to propose to EU member-states that they temporarily suspend Sri Lanka’s GSP Plus status. Any decision is likely to take effect by the middle of next year.
In the event of the preferential tariffs being scrapped Sri Lankan exports would become around six per cent costlier. Sri Lanka’s textile industry, which makes up 10 percent of Gross Domestic Product and employs upwards of 250,000 people, is particularly likely to be hard hit, leading to large-scale job losses.
In 2008, the EU was Sri Lanka’s largest export market, accounting for 36 per cent of all exports. Garments earned the country a record $3.47 billion from EU markets and were its top source of foreign exchange.
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