9 SRI LANKA AND THE GSP+ SCHEME
(31126)
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| Draft Council Regulation temporarily withdrawing the special incentive arrangement
for sustainable development and good governance provided for under Council
Regulation (EC) No. 732/2008
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| Legal base |
Article 19(4) of the GSP+ Regulation (Council Regulation (EC) No 732/2008); QMV
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| Deposited in Parliament |
17 November 2009 |
| Department | International Development
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| Basis of consideration |
EM of 19 November 2009 |
| Previous Committee Report |
None |
| To be discussed in Council
| To be determined |
| Committee's assessment | Politically important
|
| Committee's decision | Cleared
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Background
9.1 The EU's Generalised System of Preferences (GSP)
is a trade arrangement through which the EU provides preferential
access to the EU market to 176 Developing Countries and territories,
in the form of reduced tariffs for their goods when entering the
EU market. There is no expectation or requirement that this access
be reciprocated. It is implemented by a Regulation applicable
for a period of three years at a time. GSP covers three separate
preference regimes:
— the standard GSP, which provides preferences
to 176 Developing Countries and Territories on over 6200 tariff
lines;
— the Everything But Arms (EBA)[24]
arrangement, which provides Duty-Free, Quota-Free access for all
products for the 49 Least Developed Countries (LDCs);
— the special incentive arrangement for
sustainable development and good governance, known as GSP+, which
offers additional tariff reductions to support vulnerable developing
countries in their ratification and implementation of international
conventions in these areas.
9.2 According to the Commission, the primary objective
of the GSP is to contribute to the reduction of poverty and the
promotion of sustainable development and good governance; the
preferential tariff rates when exporting to the EU market enabling
developing countries to participate more fully in international
trade and generate additional export revenue to support them in
developing industry and jobs and reducing poverty. On 22 July
2008 the EU adopted a regulation applying a new GSP scheme for
the period from 1 January 2009 to 31 December 2011.
9.3 For the period 2009-2011, 16 beneficiary countries
have qualified to receive the additional preferences offered under
the GSP+ incentive arrangement. Any GSP+ beneficiary country must
be considered "vulnerable" in terms of its size or the
limited diversification in its exports. Poor diversification and
dependence is defined as meaning that the five largest sections
of its GSP-covered imports to the Community must represent more
than 75% of its total GSP-covered imports. GSP-covered imports
from that country must also represent less than 1% of total EU
imports under GSP.
9.4 GSP+ beneficiaries must also have ratified and
effectively implemented 27 specified international conventions
in the fields of human rights, core labour standards, sustainable
development and good governance.[25]
The draft Council Regulation
9.5 The document sets out a proposal to remove the
trade preferences (i.e. tariff reductions) that Sri Lanka receives
through its membership of the GSP+ trade preference scheme.
9.6 In his Explanatory Memorandum of 19 November
2009, the Minister of State at the Department for International
Development (Mr Gareth Thomas) explains that the proposal results
from a year-long Commission investigation into Sri Lanka's effective
implementation of three of the conventions — the International
Covenant on Civil and Political Rights, the Convention
against Torture and Other Cruel, Inhuman or Degrading Treatment
or Punishment and the Convention on the Rights of the Child.
The Minister says that, the investigation having been completed
in October 2009, the Commission's final report concluded that
"none of the conventions or the legislation incorporating
the obligations under these Conventions had been effectively implemented
during the period covered by the investigation."
9.7 The Minister goes on to explain that the Council
is required to vote upon the proposal within two months of receiving
it; and that, should the proposal be approved by the Council,
the decision to withdraw GSP+ trade preferences from Sri Lanka
will come into force six months later — a period that is
laid down in the GSP Regulation. This "grace period"
will, the Minister says, help give Sri Lankan and EU businesses
time to adapt to the new trading circumstances; and also allows
time for the Commission to propose a reversal of the decision,
if significant new evidence emerges showing an improvement in
the areas of concern raised in the report (with any such new proposal
also having to be approved by Council).
9.8 Finally, the Minister explains that:
9.9 "Temporary withdrawal" is the only
sanction allowed under the Regulation and is equivalent to a full
withdrawal of GSP+:
— Sri Lanka could potentially reapply to
the GSP+ scheme at any of the next entry points (either 1 July
2010 under the current regulation, or 1 January 2012 under the
next one);
— to do so, Sri Lanka would need to convince
the Commission that it was now effectively implementing the relevant
international conventions; and
— the Council and in some circumstances
the Parliament could oppose the Commission's proposal to readmit
Sri Lanka if it felt it did not respect the underlying principles
of the GSP+ Regulation.
The Government's view
9.10 The Minister notes that the legal basis of the
GSP scheme requires that all decisions on whether to withdraw
preferences must be made solely on the basis of whether or not
the beneficiary country has effectively implemented the 27 core
conventions under the terms of the GSP Regulation, which is necessary,
he says, to ensure the credibility of the scheme and parity amongst
GSP+ beneficiaries:
"Failure to act in this way would undermine
all our attempts to make the regulation work effectively as a
driver for improving human rights and good governance. It would
reduce the incentive of the other 14 countries on the scheme,
and those who aspire to join it, to improve their own human rights."
9.11 The Minister points up the Commission report's
conclusion that none of the three conventions under investigation,
nor the legislation incorporating the obligations under these
Conventions, had been effectively implemented by Sri Lanka, and
that it highlights (the Minister's underlining):
"… widespread unlawful killing,
torture and disappearances attributable to state
agents, emergency laws which enable arbitrary detention
without appeal and serious restrictions on freedom of movement
in the camps for internally displaced people."
9.12 Given that the investigation "clearly concludes
that the conventions have not been effectively implemented,"
the Minister believes that "the UK should also press for
the temporary withdrawal of Sri Lanka's GSP+ preferences, in support
of the Commission's proposal." He concludes his comments
thus:
"We do note that the withdrawal of GSP+
will have a negative effect on the economy of Sri Lanka, estimated
at up to 2% of its GDP.[26]
HMG in Colombo will continue to work with the Government of Sri
Lanka and other international partners, including the IMF, to
help ensure that the potential effects of the removal of GSP+
are managed and mitigated in ways that minimise the impact on
the most vulnerable parts of society."
9.13 Finally, the Minister notes that:
— in drafting this Explanatory Memorandum,
the Department for Business, Innovation and Skills, the Department
for International Development, the Foreign and Commonwealth Office
and the UK Permanent Representation in Brussels have all been
involved in the drafting of his Explanatory Memorandum;
— there are no financial implications for
HMG;
— the Commission will hold a technical
discussion on its draft Proposal at the GSP Expert Committee with
Member State representatives on 17 November 2009, which will be
followed by a first discussion in Council at the GSP Working Party
on 26 November;
— the Commission is then expected to present
a formal Proposal to the Council for a Decision in December 2009;
— the Presidency will determine the timetable
for discussion within the two months that the Council has to reach
a decision.
Conclusion
9.14 We are reporting this development to the
House because of the widespread interest both in the human rights
issues that the proposal seeks to address and in Sri Lanka.
9.15 We now clear the document.
24 Traditionally, it has been recognised that the group
of least developed countries (LDCs) should receive more favourable
treatment than other developing countries. Gradually, market access
for products from those countries has been fully liberalised.
In February 2001, the Council adopted Regulation (EC) 416/2001,
the so-called "EBA Regulation" ("Everything But
Arms"), granting duty-free access to imports of all products
from LDCs, except arms and ammunitions, without any quantitative
restrictions (with the exception of bananas, sugar and rice for
a limited period). See http://ec.europa.eu/trade/wider-agenda/development/generalised-system-of-preferences/everything-but-arms/
for further information. Back
25
See http://ec.europa.eu/trade/wider-agenda/development/generalised-system-of-preferences/
for further information. Back
26
University of Sussex 2008 'An Assessment of the economic impact
of the removal of Sri Lanka's trade preferences in the European
Union' Back
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