European Union (EU) Member States have decided to temporarily withdraw with effect from August preferential tariff benefits known as GSP+ granted to Sri Lanka under a special incentive arrangement for sustainable development and good governance on the ground that there were `significant shortcomings’ in implementation of three UN human rights conventions by the island nation.

Responding to the development the Foreign Ministry in a statement expressed the hope that the EU and its Member States would, during the process of engagement, pay due attention to the manifold challenges yet faced by Sri Lanka, as a democracy that fought a decisive battle against terrorism and continue the concessions.

“The Sri Lanka Government is hopeful that the unbroken engagement with the EU, would result in the timely reversal of the temporary suspension, thereby enabling the people of Sri Lanka to continue to draw on the GSP+ facility for their economic empowerment, including for the recovery of the North and of the East from the losses suffered due to terrorism”, it said.

The EU and Sri Lanka have been engaged in intense consultations on the subject for several months now with the former pointing out to the alleged human rights violations in the war between the security forces and the LTTE and later asking the Union to take into account the turbulent times witnessed by the island nation on account of the Tigers.

A press release by the EU posted on its web site ( says, “This decision follows an exhaustive investigation by the European Commission, which identified significant shortcomings in respect of Sri Lanka’s implementation of three UN human rights conventions relevant for benefits under the scheme”.

As a consequence of the temporary suspension the island nation stands to loose concessions to the tune of US 100 million dollars by the later to the textile and apparel industry in the island nation directly affecting at least one lakh workers. Sri Lanka is yet to response to the announcement.

The EU release says that the suspension of GSP+ benefits is temporary, as the overarching EU objective remains to use GSP+ as an incentive to underpin improvements in the human rights situation in Sri Lanka and will only take effect in six months time, giving Sri Lanka extra time to address the problems identified.

EU Trade Commissioner Karel De Gucht says, "I would like to emphasise that I hope Sri Lanka will sit with us over the next six months in order to agree upon a set of measures that will result in rapid, demonstrable and sustainable progress in relation to the human rights shortcomings we have identified."

The release says the EU remains open to a full dialogue with the government of Sri Lanka, above all to encourage it to take the necessary steps towards an effective implementation of GSP+-relevant human rights conventions and would closely monitor and regularly re-evaluate developments in this area.

“Once sufficient progress has been made, the Commission will propose to EU Member States that the decision taken today be reversed and GSP+ benefits restored. The decision to withdraw GSP + benefits from Sri Lanka has been taken in line with the proposal of the European Commission of December 2009”.

The temporary withdrawal takes effect 6 months from now. At that time, Sri Lankan exports would revert to standard GSP preferences as provided for in the current GSP Regulation (732/08). These preferences will still be more generous for key Sri Lankan exports such as clothing than those provided by other major developed countries.

Sri Lanka and the EU have been engaged in tussle over the GSP+ facility for several months now. In the third week of October the European Commission (EC) served notice to Sri Lanka to explain by November 6 charges of human rights violations and torture.

The EC report was based on findings of its investigation launched in 2008 into charges of human rights violations and torture in the war against the LTTE which concluded in May after the Tigers were militarily defeated and body of Velupillai Prabakaran found on May 19.

Sri Lanka is the only country in Asia and one of only 14 countries in the world that enjoys this special status with the EU in which more than 7,200 products categories are allowed duty-free into the EU.

The facility has been in force since July 2005 and ended in December 2008, with the new round effective from then till December 11, when a new facility came into place. However, Sri Lanka continues to enjoy these concessions until the EU probe and final decision, which is eight to nine months from now, becomes effective.

In 2008, the EU was Sri Lanka's largest export market, accounting for 36 percent of all exports, followed by the United States with 24 percent. Garments accounting for USD $3.47 billion from EU markets were the top foreign exchange earner followed by remittances of $3 billion and tea at $1.2 billion.

As per EU "GSP+" is common shorthand for the "special incentive arrangement for sustainable development and good governance" which is one of three non-reciprocal, preferential import regimes for developing countries under the EU's Generalised System of Preferences (GSP). Under GSP+ the EU provides additional preferences – beyond standard GSP treatment – to economically vulnerable developing countries which have ratified and effectively implemented 27 international conventions in the fields of human and labour rights, sustainable development and good governance and which voluntarily apply for GSP+ benefits and accept the associated conditions.

“The decision to withdraw GSP+ from Sri Lanka is based on the findings of an exhaustive Commission investigation launched in October 2008 and completed in October 2009. This investigation relied heavily on reports and statements by UN Special Rapporteurs and Representatives, other UN bodies and reputable human rights NGOs and identified significant shortcomings in respect of Sri Lanka's implementation of three UN human rights conventions – the International Covenant on Civil and Political Rights (ICCPR), the Convention against Torture (CAT) and the Convention on the Rights of the Child (CRC) – effective implementation of which forms part of the substantive qualifying criteria for GSP+”, says the EU press release.

GSP+ relies on beneficiary countries' continuing to respect the substantive eligibility criteria for the scheme. If this no longer is the case, the relevant EC Regulation foresees that the Commission should undertake an investigation to clarify the situation, and then in the light of its findings, take appropriate action either to confirm the continuation of GSP+ benefits or to propose to EU Member States in the Council that they be temporarily withdrawn.

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