By: Staff Writer
March 20, Colombo (LNW): Sri Lanka currently benefits from the European Union’s Generalised Scheme of Preferences Plus (GSP+) program, which grants preferential access to EU markets. However, continued eligibility for these trade privileges depends on adherence to international conventions. The upcoming assessment by an EU delegation will play a critical role in determining Sri Lanka’s future under this scheme.
The Sri Lankan government faces pressure to fulfill several obligations, including repealing the Prevention of Terrorism Act (PTA) and amending the Online Safety Act, to meet the updated requirements for GSP+ eligibility. Additionally, improvements in anti-corruption measures are necessary to align with the EU’s revised criteria for beneficiary countries, which will come into effect in 2027.
As of 2023, the EU is Sri Lanka’s second-largest trading partner, accounting for 12.4% of the country’s total trade. The primary exports to the EU include textiles and rubber products, with 49% of Sri Lanka’s total EU exports benefiting from GSP+ preferences, and a preference utilization rate of 59%.
The current GSP+ scheme remains valid until 2027, but Sri Lanka must demonstrate consistent implementation of international conventions to maintain these benefits. The EU regularly monitors compliance, and in October 2024, Sri Lanka reaffirmed its commitment to strengthening trade ties with the EU, particularly emphasizing the role of GSP+ in boosting exports.
Next week, an EU delegation will visit Sri Lanka to evaluate the country’s adherence to GSP+ requirements. This visit underscores the importance of compliance with international standards to retain preferential trade access, which is crucial for Sri Lanka’s export-driven economy.
A recent report by the Institute of Policy Studies (IPS), titled “Who Stands to Lose? The Effects of GSP+ Withdrawal on Sri Lanka’s Exports and Labour Force,” highlights the potential economic repercussions if Sri Lanka loses GSP+ benefits. The report underscores the significance of the scheme for the country’s export sector and labor market, reinforcing the necessity of continued compliance with EU requirements.
GSP+ serves as a special incentive program promoting sustainable development and good governance. It grants zero tariffs to economically vulnerable low- and lower-middle-income countries that implement 27 international conventions covering labor rights, human rights, environmental protection, and governance. Compliance with these conventions, particularly those related to environmental sustainability and governance, will be mandatory under the revised framework. Furthermore, the EU has established a mechanism for the swift withdrawal of GSP+ benefits if a country fails to meet its obligations.
Under the new system, beneficiary countries will be given a two-year transition period to ratify newly added conventions. Additionally, they must submit detailed implementation plans outlining their strategies for complying with all required conventions. The EU has already made it clear that Sri Lanka’s current form of the PTA is unacceptable and requires reform.
The revised GSP+ framework will place greater emphasis on good governance, including anti-corruption measures such as stricter laws to combat bribery, the implementation of transparent public procurement procedures, and enhanced mechanisms to prevent corruption.
Sri Lanka previously lost its GSP+ status but regained it in 2017 after pledging to repeal the PTA. The country’s trade volume with the EU currently stands at USD 3.2 billion, with a trade balance favoring Sri Lanka. Given the importance of GSP+ in facilitating trade, ensuring compliance with EU requirements is vital for sustaining economic growth and maintaining market access.
