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Part II – “IMF bailout” and future with Wickramasinghe

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It was officially announced by the IMF on 01 September (2022) the SL government agreed with the IMF Staff on a Staff level Agreement for their 48 month “Extended Fund Facility” (EFF) package of USD 02.9 billion. Their official statement issued, says, “The agreement is subject to the approval by IMF management and the Executive Board in the period ahead, contingent on the implementation by the authorities of prior actions, and on receiving financing assurances from Sri Lanka’s official creditors and making a good faith effort to reach a collaborative agreement with private creditors. Debt relief from Sri Lanka’s creditors and additional financing from multilateral partners will be required to help ensure debt sustainability and close financing gaps.”
It thus means, the promised USD 02.9 billion would be released only after “the implementation by the (Sri Lankan) authorities of prior actions, and on receiving financing assurances from Sri Lanka’s official creditors and making a good faith effort to reach a collaborative agreement with private creditors”.

Interestingly, “prior actions” are not clearly stated in the statement that mentions (i) major tax reforms (ii) cost-recovery based pricing for fuel and electricity (iii) raising social spending and improving social safety net programmes (iv) restoring price stability through data driven monetary policy and stronger Central Bank autonomy (v) rebuilding foreign reserves through restoring a market-determined and flexible exchange rate (vi) safeguarding financial stability (vii) Reducing corruption vulnerabilities through improving fiscal transparency and public financial management, introducing a stronger anti-corruption legal framework, making the total list of key elements in the programme.

These have many contradictions and serious limitations. What would “cost-recovery based pricing” mean to the poor? It would mean increase of fuel prices and electricity charges. Fuel and electricity prices decide prices of every service and consumer product leading to a chain effect of price increases. The 90 percent food inflation prices the WFP calculated for the first half of 2022 would  shoot beyond 150 plus at a minimum with this “cost-recovery based pricing”. Thus “restoring price stability” would mean nothing for the poorest 40 percent.

On tax reforms proposed, in Sri Lanka “indirect tax” is 84 per cent of annual inland revenue with VAT contributing a major share. Indirect taxes burden the poor and the vulnerable far more heavily than even the middle-income population. The richest hardly feel a pinch with indirect tax increases. In pre-Covid SL indirect tax paid through food consumption by the poorest 10 percent accounted for over 16 percent of their income while the richest accounted for a negligible 01.8 percent. Any increase of VAT would further increase the burden of the poor.

The key element “raising social spending and improving social safety net programmes” is stillborn with Wickramasinghe’s interim budget passed in parliament on 02 September, the day after the IMF Staff level agreement was announced, axing the school mid-day meal allocation from Rs.06.2 billion to 02 billion, completely halting the mid-day meal programme. This despite 35 percent of households struggling to feed their children one meal a day and malnutrition in the rise. Contrast this with increasing defence allocations that was Rs.177 billion in 2009, the year the civil war was concluded and the 2022 defence estimates of Rs.371 billion that goes untouched. Is this “raising social spending and improving social safety net programmes?”  

Of all “key elements” proposed the last on “Reducing corruption vulnerabilities through improving fiscal transparency and public financial management,….”. is the most hilarious when neither party to the EFF assistance would make details public. They yet stand for “improving fiscal transparency and public financial management”.

Governor of the Central Bank (CBSL) Mr.Nandalal Weerasinghe, onetime IMF employee as an Alternate Executive Director representing SA countries, went public saying Sri Lanka had IMF funding 16 times before but agreements have never been made public or presented to parliament. “There is no practise like that” he told the TV anchor and added even debt restructuring cannot be made public as they include sensitive information related to “trade secrets”.

That there was no practise of making IMF agreements public in the past is known. What is not said is, details of IMF agreements kept out of public scrutiny had been adversely effecting SL. That is all the reason to break out of that non-transparent practise of the past. Reason to make all agreements and commitments public before they are officially accepted.

Calling “business deals” as “trade secrets” do not make them decent and clean. All huge unpayable dollar loans heaped on Citizens during the past carried with them “trade secrets” never made public by any means. Professionals and top bureaucrats have always been party to mega corruption with undisclosed information. State owned Lanka Marine Service privatisation in 2002 August and the 2015 April Bond Scam are clear proof. What confidence and trust can People have in bureaucrats handling debt restructuring with “trade secrets” entrenched?  

It is therefore pertinent to ask the CBSL Governor, “will the best solution to restructure loans borrowed with no details made public leading to this massive tragedy be in the same way, keeping the public blind on trade secrets?”        

It is also important to ask,

1.     how does “secret” debt restructuring help pay back dollar loans?

2.     will the “publicly unspecified” key elements help generate forex earnings to meet external trade cost without any more borrowings?

3.     how will key elements help reduce the yawning income gap in society that keeps growing?

4.     what is there in this IMF assistance for the rural poor to improve their lives?

Ground preparations for IMF assistance is already proving this economic revival is aimed at creating a society without basic human rights and with unrestricted labour exploitation. Amending labour laws have begun without any dialogue with trade union representatives. Minister of Labour is violating ILO Co-Convention No.144 by totally ignoring the tripartite forum “National Labour Advisory Council” (NLAC) established in 1994 to (1) promote social dialogue (2) provide government a forum “to seek views, advice and assistance” of worker organisations and employers on social and labour policies, labour legislations and international labour standards (3) promote good relations between stakeholders for the benefit of economic development and improving working conditions.

As media reports indicated, regulations enacted with restrictions on night and overtime work for female workers to ensure workplace safety have been either relaxed or reduced for the benefit of employers. Minister has instructed the Secretary to initiate reforms on labour laws including the Termination Act. Incidentally the Secretary to Ministry of Labour handling such reforms is one who was removed from the post of Commissioner General of Labour (CGL) and sent out of the department in 2020 October by then Minister of Labour on allegations of total bias for employer interests and corruption involved.      

Arguments go on the basis Sri Lanka needs to attract more foreign direct investments for export manufacture to earn more dollars and that requires “free labour” for investors to come. There are around 1,700 factories operating with BOI-SL approvals enjoying everything from custom duty waivers to tax holidays, free infrastructure and more as incentives. BOI also has guidelines that allow investors to deny worker rights including organising trade unions in total violation of the Constitution of the country and ILO Conventions 87 and 98 signed and ratified by the SL government. Of all those factories, not more than a dozen and a half have allowed workers to organise trade unions. Of them, only about 05 factories have signed Collective Agreements (CA) with trade unions.

There is no forensic audit done to compare tax revenue forfeited and infrastructure expenses provided as incentives for foreign direct investors (FDI) for 40 years that in fact was public revenue as against what the People gained from FDIs in return. I will not be surprised if what we gained was a complete loss as against incentives provided.  

What more are they asking for? Right for bonded labour? Labour law reforms carried out outside the NLAC without trade union representation would create an environment for bonded labour, though not in direct legal terms. It’s a flawed perception that non-unionised labour with packed incentives attract massive FDIs. While BOI creates the ground for non-unionised labour, increasing incentives have not been the issue for major investors to ignore SL.

Reputed major investors need labour in millions for large scale hi-tech manufacture. While China is beyond comparison, SL is nowhere close to countries like Bangladesh and Vietnam too. With adult populations of 104 million and 68 million respectively, they have large factories with workforces far exceeding the total at Katunayake FTZ that in pre-Covid era was only 31,000 employees. This in fact was half the number employed in the single multi-storey building Rana Plaza in Dhaka Bangladesh, that collapsed in August 2013 killing over 1,132 workers.

Sri Lanka therefore attract mostly runaway investors. They come for economic incentives in imports and exports. This was evident with 721 BOI approved companies closing down in 07 years by 2016 at an average of 103 per year. “Of the companies that closed down, all had received BOI concessions such as tax exemptions while 103 had leased BOI land” the investigative exposure confirmed. (https://www.sundaytimes.lk/170903/news/721-boi-companies-closed-down-from-2010-to-2016-257726.html)    

All that said about preparing the ground for EFF assistance, the total approach of President Wickramasinghe is to revive the “free market economy” that for 40 years played the “ruthless devastator” of everything decent and progressive in society. As most have accepted, this “historical tragedy” allows Sri Lanka an opportunity to navigate itself towards a decent and an inclusive future. That demands “development” to be defined to begin with.

The shortest explanation would be, “a new path towards a decent, civilised society that treats all as equal, leaves no one behind and improves quality of life within a secured and a diverse environment creating a rich culture of human values”. Free or neo-liberal market economy within the global market during all its 40 plus years, was everything contrary to that.

Globally neo-liberalism is a disaster with Climate Change and Global Warming “wreaking havoc across the world and threatening lives, economies, health and food” according to UNEP’s “Climate Action Note”. In SL, we need no extra proof of what this free-market economy dishes out for the People. During the past decades a new breed of “filthy rich” dealers emerged within the free-market economy. With them social values, ethics and morals were completely deformed and destroyed leaving an extremely selfish “consumer” tirelessly running round to earn what is impossible for the larger majority. We are helpless with all State agencies going corrupt and inefficient leading to heavy trafficking and peddling of drugs, increase of extortions, minor and grave crimes, and also rape and child abuse turning into a daily occurrence. All political parties now depend on the “filthy rich” for funding. With all such barbarism around, the whole society is left at the mercy of unrestricted industrial pollution, illegal deforestations, sand mining, manmade floods and major landslides.

Is this the economic model we are planning once again to revive with IMF assistance? Is this the economic model that is marketed showcasing “massive growth” in China, Vietnam, South Korea, India and in few other countries where the majority are as poor and deprived as the poor in SL?

In China, average per capita GDP in coastal provinces is 113,365 Yuan with provinces like Shanghai enjoying a per capita GDP of 157,279 while in poor Central and Western China their per capita GDP is less than 44,000 Yuan. What is also not spoken of is the rich growing richer despite the pandemic. Forbes recorded world “dollar billionaire” number as 2,755 in 2021, an increase of 493. China now have 698-dollar billionaires, second to USA with 724 and above India with 237 billionaires.

Strength of all economies are spoken of forgetting the majority poor who are deprived of access to facilities and opportunities and a huge disparity in income. “Oxfam briefing paper – 2017” says “Today the world is facing an unprecedented inequality crisis. Over the last 40 years, there has been a vast increase in the gap between the rich and the rest”. That in fact is what the free market economy is about, apart from being an inherently corrupt city based economy. It is also about politically holding the poor and marginalised majority within the free market economy on a racist ideology created for electioneering.    

EFF assistance of IMF has nothing that can guarantee, SL of negating these cancerous anti-social growths. Nothing that can reduce social crime, environmental disasters and massive corruption. Publicly unspecified activities in IMF assistance will not support improving social space, social dialogue and strengthening democratic structures, a fundamental necessity for decent social development.

Sri Lanka needs a different route out of this economic tragedy. This package Wickramasinghe is obsessed with would only marginalise more as poor and deprived under an increasingly authoritative and repressive regime. That will not make it easy for Wickramasinghe, heading a government on borrowed parliamentary majority. That may provide more clout for the Opposition call for a parliamentary election in February 2023. His advantage would still be an Opposition with no alternative programme for saner resolution of this crisis,

In short, call for tabling all EFF loan related IMF documents including proposals for restructuring of debts in parliament immediately for serious social discourse is now the responsibility of social activists outside parliament. Call for elections should be thereafter. As often stressed by me, the final demand, in this instance an election, should never be made the first. An election with none offering an alternate programme is not going to make any difference, though with different names and faces.

– Kusal Perera

21 September 2022

(kusalperera.blogspot.com)

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Why the mighty Himalayas are getting harder and harder to see

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Trekking in Nepal’s Annapurna region, where haze obscures visibility of the epic mountains even at close range

I grew up in Nepal’s capital watching the Himalayas. Ever since I left, I’ve missed sweeping, panoramic views of some of the highest mountain peaks on Earth.

Each time I visit Kathmandu, I hope to catch a glimpse of the dramatic mountain range. But these days, there’s usually no luck.

The main culprit is severe air pollution that hangs as haze above the region.

And it’s happening even during the spring and autumn months, which once offered clear skies.

Just last April, the international flight I was in had to circle in the sky nearly 20 times before landing in Kathmandu, because of the hazy weather impacting visibility at the airport.

The hotel I checked in at was at a reasonable height from which mountains are visible on a clear day – but there was no such day during my two-week stay.

Even from the major vantage point of Nagarkot, just outside Kathmandu, all that could be seen was haze, as if the mountains did not exist.

“I no longer brand the place for views of ‘sunrise, sunset and Himalayas’ as I did in the past,” said Yogendra Shakya, who has been operating a hotel at Nagarkot since 1996.

“Since you can’t have those things mostly now because of the haze, I have rebranded it with history and culture as there are those tourism products as well here.”

During an earlier trip a year ago, I was hopeful I would be able to see the mighty Himalayan peaks on a trek in the mesmerising Annapurna region – but had hardly any luck there either.

View of the Himalayas on an increasingly rare clear day from the Nagarkot vantage point

The hazy view from the same vantage point during my most recent visit

Scientists say hazy conditions in the region are becoming increasingly intense and lasting longer, reducing visibility significantly.

Haze is formed by a combination of pollutants like dust and smoke particles from fires, reducing visibility to less than 5,000m (16,400ft). It remains stagnant in the sky during the dry season – which now lasts longer due to climate change.

June to September is the region’s rainy season, when Monsoon clouds rather than haze keep the mountains covered and visibility low.

Traditionally, March to May and October to November were the best times for business because that was when skies remained clear and visibility was best.

But with rising temperatures and a lack of rain, and worsening air pollution, the spring months are now seeing thick haze with low visibility. Those conditions are beginning as early as December.

Lucky Chhetri, a pioneering female trekking guide in Nepal, said hazy conditions had led to a 40% decrease in business.

“In one case last year, we had to compensate a group of trekkers as our guides could not show them the Himalayas due to the hazy conditions,” she added

An Australian tourist who has visited Nepal more than a dozen times since 1986 described not seeing the mountains as a “major let-down”.

“It wasn’t like this 10 years ago but now the haze seems to have taken over and it is extraordinarily disappointing for visitors like me,” said John Carrol.

Krishna Acharya, the provincial chair of the Trekking Agents Association of Nepal in the western Gandaki province, says the trekking industry is in deep trouble.

“Our member trekking operators are getting depressed because no sighting of the Himalayas means no business. Many of them are even considering changing professions,” he told the BBC.

Trekking guide Lucky Chhetri says business is down because of the hazy condition

On the Indian side, near the central Himalayas, hoteliers and tour operators say haze is now denser and returns quicker than before.

“We have long dry spells and then a heavy downpour, unlike in the past. So with infrequent rain the haze persists for much longer,” said Malika Virdi, who heads a community-run tourism business in the state of Uttarakhand.

However, Ms Virdi says tourists are persistent – with many who didn’t catch the mountain range returning to try their luck again.

The western Himalayas in Pakistan have been relatively less affected by the haze because the mountains are relatively far from cities.

But locals say that even the ranges that were once easily visible from places like Peshawar and Gilgit are often no longer seen.

“The sheet of haze remains hanging for a longer period and we don’t see the mountains that we could in the past,” said Asif Shuja, the former head of Pakistan’s environmental protection agency.

South Asian cities regularly top lists of places with highest levels of air pollution in the world.

Public health across the region has been badly impacted by the toxic air, which frequently causes travel disruption and school closures.

Vehicular and industrial emissions, dust from infrastructure construction and dry gravel roads as well as the open burning of waste are major sources of air pollution year-round.

This is compounded by soot from massive forest fires – which are increasing due to a longer dry season – and the burning of crop residues after the harvest by farmers in northern India, Pakistan and Nepal.

Weather conditions keeping warmer air above cooler air trap these pollutants and limit vertical air movement – preventing pollution from dispersing.

“Hazes and dust storms are increasing in South Asia, and this trend is projected to continue due to climate change and other factors,” Dr Someshwor Das from the South Asia Meteorological Association told the BBC.

In 2024, the number of hazy days recorded at the airport in Pokhara, a major tourism hub in western Nepal, was 168 – up from 23 in 2020 and 84 in 2021, according to Nepal’s department of hydrology and meteorology.

The Fishtail mountain in Nepal on a clear day

The same mountain range covered in haze, taken from roughly the same location

Experts believe the Himalayas are probably the worst affected mountain range in the world given their location in a populous and polluted region.

This could mean the scintillating view of the Himalayas could now largely be limited to photographs, paintings and postcards.

“We are left to do business with guilt when we are unable to show our clients the mountains that they pay us for,” said trekking leader Ms Chhetri.

“And there is nothing we can do about the haze.”

– Navin Singh Khadka

(Environment correspondent, BBC World Service)

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Jewels linked to Buddha remains go to auction, sparking ethical debate

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The jewels comprise nearly 1,800 pearls, rubies, sapphires, and patterned gold sheets

On Wednesday, a cache of dazzling jewels linked to the Buddha’s mortal remains, which have been hailed as one of the most astonishing archaeological finds of the modern era, will go under the hammer at Sotheby’s in Hong Kong.

For over a century these relics, unearthed from a dusty mound in northern India in 1898, have sat largely unseen, cradled by a private British collection.

Now, as the gems prepare to leave the custody of their keepers, they are stirring not just collectors’ appetites but also some unease.

They come from a glittering hoard of nearly 1,800 pearls, rubies, topaz, sapphires, and patterned gold sheets, first glimpsed deep inside a brick chamber in present-day Uttar Pradesh in India, near the Buddha’s birthplace.

Their discovery – alongside bone fragments identified by an inscribed urn as belonging to the Buddha himself – reverberated through the world of archaeology. Nicolas Chow, chairman of Sotheby’s Asia and worldwide head of Asian Art, believes this is “among the most extraordinary archaeological discoveries of all time”.

Yet as these relics now face the glare of the auction room, experts tell the BBC that a question hangs heavy: can the sale of treasures so intimately woven into India’s sacred past be considered ethical?

William Claxton Peppé, an English estate manager, excavated the stupa and found the jewels

In 1898, William Claxton Peppé, an English estate manager, excavated a stupa at Piprahwa, just south of Lumbini, where the Buddha is believed to have been born. He uncovered relics inscribed and consecrated nearly 2,000 years ago.

Historians agree these relics, intact until then, are the heritage of both the Buddha’s Sakya clan descendants and Buddhists worldwide. The bone relics have since been distributed to countries such as Thailand, Sri Lanka and Myanmar, where they continue to be venerated.

“Are the relics of the Buddha a commodity that can be treated like a work of art to be sold on the market?” wonders Naman Ahuja, a Delhi-based art historian. “And since they aren’t, how is the seller ethically authorised to auction them?

“Since the seller is termed the ‘custodian’, I would like to ask – custodian on whose behalf? Does custodianship permit them now to sell these relics?”

Chris Peppé, great-grandson of William, told the BBC the family looked into donating the relics, but all options presented problems and an auction seemed the “fairest and most transparent way to transfer these relics to Buddhists”.

Julian King, Sotheby’s international specialist and head of sale, Himalayan Art, New York told the BBC the auction house had made a thorough review of the jewels.

“As is the case with any important items and collectibles that are offered for sale at Sotheby’s, we conducted requisite due diligence, including in relation to authenticity and provenance, legality and other considerations in line with our policies and industry standards for artworks and treasures,” King said.

Ashley Thompson, of Soas University of London, and curator Conan Cheong, both experts in Southeast Asian art, have more questions. In a joint statement they told the BBC: “Other ethical questions raised by the sale are: should human remains be traded? And who gets to decide what are human remains or not? For many Buddhist practitioners around the world, the gems on sale are part and parcel of the bones and ash.”

The sale of the relics has also sparked concern among Buddhist leaders.

“The Buddha teaches us not to take other people’s possessions without permission,” Amal Abeyawardene of London-based British MahaBodhi Society, told the BBC. “Historical records indicate that the Sakyamuni clan were granted custody of these relics, as the Buddha emanated from their community. Their wish was for these relics to be preserved alongside adornments, such as these gems, so that they may be venerated in perpetuity by the Buddha’s followers.”

The jewels were unearthed from this stupa in Piprahwa, northern India in 1898

Chris Peppé has written that the jewels passed from his great-uncle to his cousin, and in 2013 came to him and two other cousins. That’s when he began researching their discovery by his great-grandfather.

The Los Angeles-based television director and film editor wrote he had found 1898 newspaper reports – from Reuters to the New York Tribune – announcing the find of Buddha’s remains.

“The colonisation of India by the British had been a source of some cultural shame for me [and continues to be] but, amidst the treasure hunters who hauled their finds back to England, there had also been people focused on the pursuit of knowledge,” Chris Peppé writes.

He noted his research revealed a lot about his ancestors who he had dismissed as “prejudiced Victorians from a bygone era”.

“I learned that Willie Peppé’s first wife chose to travel around India for her honeymoon and loved the country and its culture. Sadly, she died from an unspecified illness. I learned that my grandmother was outraged at the land laws that applied to Indian women.

“And I learned that the excavation of the stupa was an attempt by Willie Peppé to provide work for his tenant farmers who had fallen victim to the famine of 1897.”

The jewels are considered among the most extraordinary archaeological finds of all time

He writes his great-grandfather’s “technical diagrams of ramps and pulleys suggest that he was also a trained engineer who couldn’t resist a project”.

William Peppé handed the gems, relics and reliquaries to the colonial Indian government: the bone relics went to the Buddhist King of Siam (Rama V). Five relic urns, a stone chest and most other relics were sent to the Indian Museum in Kolkata – then the Imperial Museum of Calcutta.

Only a small “portion of duplicates”, which he was allowed to keep, remained in the Peppé family, he notes. (Sotheby’s notes say Peppé was allowed to keep approximately one-fifth of the discovery.)

Sources told the BBC the auction house considers the “duplicates” to be original items considered surplus to those donated, which the “Indian government permitted Peppé to retain”.

Over the past six years years, the gems have featured in major exhibitions, including one at The Met in 2023. The Peppé family has also launched a website to “share our research”.

Four containers made of steatite (a type of stone) and one made of rock crystal were found inside a sandstone box at the Piprahwa stupa

Some scholars argue Buddha relics should never be treated as market commodities.

“The Sotheby’s auction transforms these highly sacred materials into saleable objects, in continuation of acts of colonial violence which extracted them from a stupa and called them ‘gems’ and ‘objects of interest to Europeans’, creating a false division with the ash and bone fragments they were consecrated with,” say Thompson and Cheong.

Chris Peppé told the BBC that in all the monasteries he had visited “no Buddhists regard these as corporeal relics”.

“A few Buddhist academics at western universities have recently offered a convoluted, fact-defying logic whereby they may be regarded as such. It’s an academic construct that is not shared by Buddhists in general who are familiar with the details of the find,” he said.

Peppé said the family “looked into donation [of the relics] to temples and museums and they all presented different problems on closer scrutiny”.

“An auction seems the fairest and most transparent way to transfer these relics to Buddhists and we are confident that Sotheby’s will achieve that.”

Some also point to The Koh-i-Noor, seized by the British East India Company and now part of the Crown Jewels, with many Indians viewing it as stolen. Should the Buddha’s jewels be next?

“Repatriation, I believe, is seldom necessary,” says Ahuja. “Such rare and sacred relics that are unique and which define a land’s cultural history, however, deserve the government’s exceptional attention.”

– Soutik Biswas

(India correspondent – BBC News)

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What has Sri Lanka gained from EU GSP “Plus” since 2007?

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Let me say this straight and clear. “Sri Lanka has not gained anything on EU conditions laid down to qualify Sri Lanka for EU GSP+ post-Tsunami special offer”. What does the EU offer us and what have we to comply with? 

EU offers “zero duty” exports for over 700 listed Sri Lankan products including apparels, rubber and fish products, bicycles, toys, tea and spices, electrical parts and few others to the EU market. That means, though our present basket is limited, over 700 Sri Lankan products can be sold in the EU market at subsidised “zero duty” prices, hopefully gaining increasing volumes. But who gains on increased value on sales?

With heavy corruption across geographical borders including money laundering, this is one major question that is not being asked and answered in detail by the government nor by the manufacturers. What is manufactured here for exports are exclusive “orders” from “Brands” received by product manufacturing companies through “Suppliers” on quoted and agreed prices. They not only have agreed prices, but agreed deadlines in handing over the finished product with pre-defined quality standards. What it means is, a “supplier” brings an order from a global “brand” and a manufacturing company with BOI-SL approval located in Sri Lanka that accepts the order is paid for its manufacture. That product is sold in a consumer market including the EU by its “brand” at a price fixed by the “brand”.

Once the supplier takes over the product from the Sri Lankan manufacturer, we don’t have anything to do with its sales in any consumer market. In simpler language, we don’t have anything to do with the product, once it leaves Colombo port. This too is important. The “zero duty” export concession is provided to listed Sri Lankan products and not to Sri Lanka. It is therefore enjoyed by the “brand” that owns the “product label”, perhaps with a share to the “supplier” on pre-agreed terms. May be, the SL manufacturer too gets “something” through the “supplier”, but that is wholly unofficial and out of public gaze. But for sure, that does not reach Sri Lanka and is not Sri Lanka’s gain.

What are we as a country expected to comply with, to continue with this GSP+ that brings us no economic benefits? First qualification is, Sri Lanka has to remain below the “Upper Middle Income” (UMI) category of countries. Thereafter, Sri Lankan government has to ensure implementation of 27 International Conventions that cover human rights, labour standards and rights, environmental protection and good governance. This does not mean ratification of “conventions” that SL has done in most instances, but also effectively implementing them with new laws and legal amendments where necessary.

Beyond economics, this requirement in effectively and sustainably democratising the Sri Lankan society is definitely worth complying with. Yet, all through past years when EU GSP+ was effective and in operation, neither SL governments nor the EU were serious about any of the 27 international conventions the EU imposed on SL to implement. The EU has sent 03 or 04 GSP+ Review Missions to Sri Lanka during these 17 or 18 years, that met numerous agencies, groups and individuals including the Head of State, relevant ministers, Opposition Leader and politicians, private sector trade unions and funded civil society activists in Colombo. All such review missions left Sri Lanka with a nod for an extension of GSP+ though with reservations at times on delays in implementation, except in 2010 when the EU was under pressure from Tamil Diaspora groups after the civil war was declared over in 2009 May.

This suspension was effective till 2017 for 07 whole years. The new government elected in January 2015 thereafter re-applied for GSP+ in 2016 June. What is important to note is that, during the 07 years SL was denied the “comfort” of “zero tariff” exports to Europe, Sri Lanka’s exports did not drop. According to the “Brief on International Trade” published by the Department of Commerce in October 2021, during the 02 years after the withdrawal of GSP+ the value of Sri Lankan products sold in European markets totalled 01.8 billion Euro. A little more than what it was in 2016, the year before the GSP+ suspension. Surprisingly, the value of merchandise from Sri Lanka sold in European markets during the next few years increased to around 02 billion Euros, before SL regained GSP+ in 2017. It only means, with or without EU GSP+, Sri Lankan products would be there in the EU market.

What needs to be stressed is, 10 plus years of EU GSP+ in full operation (that excludes the suspension), private sector labour that manufacture all Sri Lankan products in the EU markets, have not gained even the basic right to association and therefore not even collective bargaining, except in 01 factory out of over 1,600 factories. Repeal of the notorious repressive law, the PTA that was promised to be repealed way back in 2017 by the then government, is now said to take few more months if it does happen under the present regime and the EU Review Mission seems “okay” with it too. Environmental safety is under an axe with continued deforestation no matter who the government is. Breakdown in law, organised crime and mega corruption that involves the State hierarchy as well, would speak volumes about what “good governance” goes through despite EU monitoring of EU GSP+ with regular extensions.   

End of the day, if the EU is not serious about having their conditions implemented, and if Sri Lankan governments can go on dragging their promises for democratisation over decades with no economic gains either, we are only wasting our tariff and tax incomes in billions doled out as annual incentives topping up free infrastructure provided to foreign direct investors, expecting them to provide us with much wanted forex. We need something more than a forensic audit to see how much we have lost as incentives given to export manufacture, a seriously corrupt sector most do not speak about.

That’s a wee bit about EU GSP+ and we Sri Lankans for now.

– Kusal Perera
2025 May 02                

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