Sri Lanka: Textile sector unaffected by EU subsidy cut

Report
from IRIN
Published on 28 Mar 2011
OLOMBO, 28 March 2011 (IRIN) - More than seven months after the European Union (EU) suspended its preferential trade agreement with Sri Lanka in protest over the country's human rights record, [ http://www.irinnews.org/Report.aspx?ReportID=86759 ] the subsidy cut has had little impact on the sector targeted, according to government officials.

Many of the country's 250,000 textile workers - who tend to work 12 hours a day, six days a week for a monthly salary of US$150 - had feared they would lose their jobs under the cut. But most are still employed.

"We are still doing good," Nilanthi Perera, 29, a garment worker from Colombo, told IRIN. She supports three younger brothers and is the breadwinner of the family - like many of her colleagues. "Any loss [of jobs] would have destroyed us."

For five years Sri Lanka received a 10 percent tax concession under the EU's Generalized System of Preferences Plus scheme (GSP), and textiles account for 65 percent of the country's exports, according to Central Bank data.

But the country failed to prove to the EU its commitment to three international human rights conventions - the International Covenant on Civil and Political Rights, the Convention against Torture and the Convention on the Rights of the Child - said Jehan Perera, director of Colombo-based think-tank the National Peace Council.

"The EU wanted to send an investigation team to the country to see for itself the situation [regarding alleged human rights violations] - but the government refused to let them in," leading to suspension of the GSP concession.

"The government would have been concerned that permitting the EU investigation team in would set a precedent, and lead to more pressure on the issue of war crimes," Perera said.

Sri Lanka has been resisting efforts by a UN Secretary-General's expert panel to conduct an independent investigation into alleged war crimes during the 26-year conflict between the government and the Liberation Tigers of Tamil Eelam (Tamil Tigers) which ended in May 2009.

Lost leverage?

The National Peace Council advocates a step-by-step process and was against the total removal of GSP concessions, according to Perera.

"The GSP Plus concessions should not have been fully suspended but should have been used for further leverage to push Sri Lanka to adhere to a human rights agenda. Now the EU has lost this leverage," Perera said.

He said the EU should have set more achievable human rights goals and used the GSP concession issue as leverage. "Threats are more effective than the actual punishments in aid policy," he said.

"The GSP Plus suspensions did not have a negative impact on the Sri Lankan economy, exports and apparel industry," Tissa Vitharana, a senior government minister, said.

In fact, the textiles sector notched up nearly 6.5 percent in exports from 2009 to 2010, according to the Central Bank.

Foreign buyers are continuing to place orders for Sri Lankan garments due to their high quality, and timely and efficient delivery, according to Chamara Hettiarachi, a Colombo-based economist. He said the textile industry had maximized capacity by appropriate use of technology.

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