The government is to re-apply for the EU GSP Plus trade concession that was withdrawn from the country in August 2010 for the non-compliance of the conditions connected to the facility, The Sunday Leader learns.
Despite government claims in 2010 that the loss of the GSP Plus facility would not have a severe impact on the country’s economy, the EU’s decision to withdraw the facility was estimated to cost the government US$ 1.5 billion.
The continuous closure of industrial factories and the increase in the unemployment rate due to the loss of the GSP Plus facility has now forced the government to re-think its stance on the EU’s trade concession.
The Sunday Leader reliably learns that the government is currently engaged in preparing the initial paperwork related to the re-application for the GSP Plus facility.
The necessary documents are being prepared by the Commerce Department and are to be handed over to the EU Commission in June 2014.
“Although the final application has to be sent by June 2014, the initial paperwork is currently being done,” a government source said.
The government also said at the External Affairs Ministry consultative meeting in parliament last week that discussions were underway to re-apply for the GSP Plus facility.
EU Commission’s Ambassador to Sri Lanka and Maldives, Bernard Savage when contacted said that he was unaware of the government’s decision to re-apply for the GSP Plus facility.
However, he said that EU would look at the conditions that were previously not met by the relevant applicant when considering the request.
The EU’s decision to withdraw the GSP Plus facility from Sri Lanka in 2010 was based on the government’s failure to show improvement in three main areas such as the application of international conventions agreed to by Sri Lanka on civil rights, labour rights and children’s rights.
Meanwhile, the loss of the GSP Plus facility that was granted by the EU to Sri Lanka is continuing to result in the closure of factories in the country making thousands jobless.
It was earlier reported that two such factories had closed down on January 2 since they are shifting their businesses to Bangladesh, a country that enjoys the GSP Plus facility.
President of the Inter Company Employees Union (ICEU), Wasantha Samarasinghe said that contrary to claims made by the government, the loss of the GSP Plus facility has affected many private sector businesses in the country.
He observed that the recent closure of two garment factories in the Gampaha District has affected the direct employment of 1,500 while a large number of indirect employment opportunities have also been affected.
He said that Chrystal Sweater (Pvt) Company in Malwatta Investment Promotion Estate in Nittambuwa was closed down on January 2nd and Firefox Pvt Ltd in Pamunugama in Wattala was closed down on the same day.
According to Samarasinghe, these factories have been established with the Board of Investment (BoI) approval.
“The government assured that the country would not face any economic fallout due to the loss of the GSP Plus facility. But now factories are closing. The government needs to provide solutions to the current crisis,” he said.
Samarasinghe added that the government has failed to address the issue of people losing their jobs.
“Although some employees have received some form of compensation payments due to the intervention of traded unions, some other workers have lost their jobs even without proper compensation,” he said.
The EU’s GSP Plus tariff concession allowed Sri Lanka to sell over 7,000 products to the EU countries tax-free. The country’s garment industry was the most benefited by the facility.
It is learnt that 10 garment manufacturing factories have been closed in Biyagama, Nittambuwa and Katunayake investment zones.The government has stated that these closures have caused losses amounting to around Rs. 5 billion to banks.
By Mandana Ismail Abeywickrema
SL