A deal is a deal

With the suspension of preferential trading access, the European Union has sent a strong message to the Sri Lankan authorities.

The European Union's decision, in February, to withdraw Sri Lanka's preferential trading access to its market came as little surprise. Domestic reaction ranged from anger and feigned indifference within the government to despair and resignation on the part of business and labour. The timing of the announcement, after an acrimonious presidential contest whose results were disputed by the opposition, and in the run-up to the 8 April parliamentary election, was itself seized upon as evidence of Western bias and sabotage, or confirmation of diplomatic and economic mismanagement, depending on one's political loyalties.

Under what is known as the EU's Generalised System of Preferences Plus, commonly referred to as GSP+, duty-free access (currently on more than 6300 product classifications) was extended to a handful of developing countries with poorly diversified economies shortly after the 2004 tsunami in the Indian Ocean. Sri Lanka was eligible on all counts. The zero-duty concession has since been of enormous competitive advantage, covering as it does 90 percent of the island's exports to the EU, mainly readymade garments but also rubber goods, machinery, frozen fish, precious stones and bulk tea. Shortly before the 26 January presidential poll, prominent leaders of the opposition claimed that only the government's defeat would secure extension of the GSP+ and safeguard the export earnings and employment that hinge on it. The EU's studied silence on the transparent politicking only further infuriated the Colombo government.

Initially granted for a period of three years, renewal of the GSP+ is dependent upon the beneficiary state's ratification and effective implementation of 27 international agreements encompassing human-rights and labour standards, narcotics and corruption eradication, and environmental protection. The EU's scheme, presently enjoyed by 16 countries (mainly in Latin America), therefore couples trade promotion with rights promotion towards its object of poverty reduction, good governance and sustainable development. February's verdict towards Sri Lanka was the culmination of a process that had begun two years earlier, when the EU provisionally renewed the facility while simultaneously initiating, in October 2008, an investigation into the application of selected international conventions ratified by Colombo.

At the time, the Ceasefire Agreement with the separatist LTTE had been annulled by Mahinda Rajapakse's administration in January 2008, and as the US State Department observed in its annual global survey of that year, "the government's respect for human rights declined as armed conflict escalated." Military operations had naturally resulted in civilian deaths and large-scale displacement in the northern and eastern conflict zones. However, there and elsewhere, unlawful killings, 'disappearances', arbitrary arrest and detention, custodial deaths and torture, and attacks on media freedom and freedom of expression accompanied the rise and consolidation of political authoritarianism.

A three-member fact-finding panel of external experts constituted by the European Commission was denied permission to visit the country, and had to rely on secondary sources for its investigation. Its evaluation focused on Sri Lanka's adherence to three international agreements, the International Covenant on Civil and Political Rights (ICCPR), the Convention against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment (CAT), and the Convention on the Rights of the Child (CRC). Based on this evaluation, the final report by the European Commission, in October 2009, concluded that the "legal and institutional framework giving effect to the ICCPR, CAT and CRC is not sufficient to ensure effective implementation of all relevant obligations provided for by the three instruments." It also noted that emergency laws overrode legislative safeguards in the ordinary law, and imposed unacceptable restrictions on rights protected by the conventions.

No alternative
Denouncing the EU move as an affront to national sovereignty and dignity, Colombo authorities refused to cooperate with the investigation, let alone engage on the substantive issues. The government subsequently described the process as "politically motivated and accompanied by a high degree of prejudice", arguing that the GSP+ was being unfairly used as a "weapon" to force a cessation of hostilities with the LTTE, and to resurrect a flawed and futile peace process. For its part, the EU insisted that the decision to investigate Sri Lanka was a technical process unrelated to the war, and squarely conforming to a deal entered into voluntarily and with prior and informed consent to its terms and conditions. Clearly, both sides were being disingenuous.

The military campaign was viewed unfavourably in EU capitals, and there were repeated European diplomatic efforts for a break in hostilities right into the final battle, in May last year. While convenient for some with honest or cynical motives alike, to construe human-rights monitoring as independent of political circumstance and considerations, contact with the everyday world of asymmetrical relations between states and the hypocrisy of great powers is a salutary corrective to this conceit.

Meanwhile, the invocation of sovereignty as a matter of national honour might be more persuasive, if it was not invariably deployed to shield scrutiny of the domestic governance and rights record. Indeed, there is no disquiet at home as to the actual or alleged effects of foreign aid and loans, World Trade Organisation (WTO) agreements, free-trade and foreign-investment pacts, and special economic zones on national sovereignty. Instead, the hyper-nationalists in Colombo wail against the 'neo-colonial' West in public, while submitting in private to their development model premised on export-led growth, trade liberalisation and foreign capital, which intensifies global integration and with it the island's vulnerability to external buffeting.

Although the government claimed to be prepared for the outcome of the GSP+ review, industrialists and workers organisations alike complain that their interests and needs have been consistently ignored. In October 2008, a USD 200 million bailout to exporters was floated by the government in a blaze of publicity and then quickly and quietly jettisoned. Now, Central Bank Governor and Rajapakse-appointee Ajith Nivard Cabraal insists that fiscal incentives such as the devaluation of the rupee and interest-rate reductions will be sufficient to cushion the blow. On this, however, the chairperson of the Joint Apparel Association Forum, A Sukumaran, is unconvinced. Over half of Sri Lanka's exports to the EU are in readymade garments. Before the GSP+ facility was introduced, the US was Sri Lanka's major market for clothing; but between 2005 and 2008, the EU's share increased by a massive 42 percent and is now the island's single largest market. In addition, the ongoing impact of the global economic crisis has continued to erode the size of the US market, thus making exporters even more dependent on the EU. "If there are alternative markets, we would have shipped to them already," he says.

Sukumaran complains that buyers have already informed members of his association that they should absorb the additional cost of losing duty-free access to avoid passing it on to European consumers. The tariff that will now be levied can be as much as 9.6 percent, and Sukumaran claims that as most exporters operate on profit margins under 10 percent, they will be bankrupted if buyers do not also share the pain. Indeed, it will be the apparel sector that is hit first and hardest. While still in its infancy, this industry benefited from the global quota system on textiles and clothing known as the Multi-Fibre Agreement (MFA), which created incentives for foreign and local exporters to manufacture in Sri Lanka. When, under WTO rules, the MFA was phased out at the end of 2004, many feared large-scale job losses. Providentially, the GSP+ scheme entered into force around the same time, averting the anticipated fall-out.

Demonstrable and sustainable
Labour unions and workers' organisations are also unimpressed by the government's grandstanding, and the tales of woe spun by industrialists. While supportive of a GSP+ renewal, they claim that very few of the benefits of the arrangement found their way to the workers themselves. According to the Apparel-industry Labour Rights Movement (ALaRM), while jobs were created through the EU scheme, "the quality of this employment and the wage levels were not adequate."

Direct employment in the readymade-garments sector is 270,000, 85 percent of whom are women. Reeling under the impact of the global crisis, between 50 and 75 factories closed in the last half of 2009 alone. "What is the government's plan to protect jobs?" asks Chamila Thushari from the Dabindu ('Drops of Sweat') collective. She also reminds the government that garment workers are still awaiting the SLR 2500 monthly pay hike that was promised to them before the presidential election but subsequently buried after employers' protests. Stree Madhyastanaya ('Women's Centre') leader Padmini Weerasuriya urges the government to address the human-rights issues raised by the EU, but wonders why the latter and the Sri Lankan government tolerate anti-union discrimination by employers in the export-processing zones, in clear violation of international conventions.

ALaRM has urged the government to negotiate in good faith with the EU, calling on Colombo officials to commit to a 'road map' for the implementation of labour rights. In this, four critical issues have been identified: constitutional reform to ensure consistency with ratified international labour conventions; the adoption of trade-union certification procedures, for the purpose of collective bargaining; strengthening and enforcing laws on unfair labour practices, such as victimisation of union activists; and ensuring that any reference of a labour dispute to compulsory arbitration is requested by both parties.

Adding to the pressure, Sri Lanka's GSP eligibility to the US is also under challenge by a major US trade-union federation, which has likewise highlighted the violations of worker rights in the export-processing zones. The US GSP scheme excludes clothing, which is why it does not receive the same attention as the EU scheme. However, the loss of US preferences will likely be adverse to export diversification in non-traditional products such as plastics and rubber, vegetable products and machinery and electrical equipment.

The suspension of the GSP+ will take effect from July. The EU has qualified the process as "temporary" and reversible if, as Trade Commissioner Karel De Gucht underlined, measures are taken "that will result in rapid, demonstrable and sustainable progress" on human rights protection and institutional dysfunction. Taking its cue, the government recently despatched a high-level delegation to Brussels consisting of Finance Secretary P B Jayasundera, Foreign Secretary Romesh Jayasinghe, Justice Secretary Suhada Gamlath and Attorney-General Mohan Peiris.

Both Brussels and Colombo appear to be groping for a face-saving compromise. The government will trumpet its forthcoming National Human Rights Action Plan, and will accelerate the resettlement of those displaced during the last phase of the war. The notorious Prevention of Terrorism Act and draconian emergency laws in operation may also be qualified, while the draft Witness and Victim Protection bill could finally become law. For its part, the EU, will hear the clear and resounding message of April's parliamentary elections: the near two-third majority for the government (where its parliamentarians believe their duty is to flatter the executive, not hold it to account), and a divided and demoralised opposition that is scrambling for its political survival for at least the next six years. The abstention of millions offers no challenge to the hollowing-out of democracy, earlier under the sign of 'counter-terrorism' and now under that of ´development´. A new deal may be in the offing, its winners and losers foretold.

~ B Skanthakumar is with the Law & Society Trust, Colombo.

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