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Asian Tribune is published by World Institute For Asian Studies|Powered by WIAS Vol. 12 No. 2909

GSP+ : Is the European Commission Treading on Thin WTO Ice

By Don Joao Konappo Bandara

The GSP+ concession extended to least developed countries and some selected developing countries by the European Community (EC) on an exceptional basis is not consistent with WTO rules on most favored nation treatment and non-discrimination. The goal of the GSP+ is stated to be the facilitation of 'sustainable development and good governance' and was approved by the WTO as an exception to its rules. It was never endorsed with the intention of being used as a coercive tool to attain wider political, human rights and humanitarian goals. As evidence mounts of the European Commission's attempts to manipulate the GSP+ to achieve extraneous objectives under the influence of influential and partisan NGOs and other lobby groups in the case of some countries such as Sri Lanka, the possibility of a legal challenge before the WTO Dispute Settlement mechanism looms large.

Additionally, after its humiliation before the WTO in the Banana Case, where its banana regime which favored the African, Caribbean and Pacific (ACP) countries, all former colonies of certain European Union (EU) states, to the detriment of other banana exporters, especially in the Caribbean, the EC could be expected to be extremely circumspect in being seen as blatantly discriminatory in implementing its GSP+ regime to achieve non trade related goals.

In the case of Sri Lanka, the GSP+ concession has made a significant contribution towards sustainable development. Sri Lankan exports, including a wide range of non-traditional exports, to the EU countries have expanded significantly and today approximate USD 3 billion. Thousands of new jobs have been generated in Sri Lanka and among EC importers of Sri Lankan products, including over 100,000 for rural Sri Lankan women who are now gainfully employed near their own homes.

Sri Lanka followed an enlightened industrial policy of locating key industries away from major cities. Another 500,000 persons in Sri Lanka may be directly or indirectly dependent on employment generated by the GSP+ concession. The denial of the GSP+ concession to Sri Lanka at this stage would result in mass job losses, especially among young women, and a socially destabilizing population drifts to over-crowded cities which would appear to be a cynical contradiction of the EC's self proclaimed humanitarian concern for labor. Furthermore, economic pressure could only contribute to aggravating the ongoing conflict which has at least some of its roots in economic disparities. The blatant infusion of extraneous considerations into determining GSP+ eligibility would also appear to contravene established GATT/WTO principles.

The EC has initiated an investigation to determine Sri Lanka's compliance with three UN human rights conventions (the ICCPR, Rights of the Child and Torture) with a threat of suspension of the GSP+ concession in the event of non-compliance/non-implementation. This development raises a number of fundamental issues. First and foremost, it appears to be a not so subtle effort by the EC to import extraneous elements to the global trade regime governed by the WTO. The GATT and later the WTO had strenuously resisted the use of extraneous standards applicable under other regimes (environment, human rights, labor, humanitarian, disarmament, etc) to dilute or modify the rules applicable under the WTO regime or the use of benefits available under the GATT/WTO as a bargaining chip to enforce standards under those regimes. The surreptitious import of extraneous standards to the WTO framework could lead to their arbitrary and capricious corruption.

One recalls the strenuous resistance by the WTO to attempts to use trade sanctions, as demanded by environmental NGOs, to enforce global environmental standards. Any unilateral modification of established GATT/WTO rules to enforce standards applicable under a different regime is likely to be struck down by the WTO and severely resisted by the Member States of the WTO who would perceive the introduction of an unhealthy precedent.

Evidence suggests that the investigation launched in the case of Sri Lanka was motivated by factors other than development or trade considerations. Vindictive malice may have been a major factor. Repeated threats were made in public at high levels to withdraw the GSP+ concession from Sri Lanka for alleged breaches of human rights and labor conventions and the non-compliance with certain demands not related to trade. Sri Lanka for its part has strenuously contested these allegations. It has asserted that its compliance with these conventions was consistent with global standards or, at least, its performance had significantly improved over the years.

The reliance by EC officials on dated and self serving reports from sources antagonistic to the Sri Lanka government, the gleeful highlighting of excerpts from published documents ignoring the wider context, and the refusal to acknowledge improvements on the ground against the background of countering a brutal terrorist threat seemed to suggest a deep prejudice, a lack of objectivity and an intent to drive the GSP+ knife deep into Sri Lanka's flesh and twist it for what it was worth.

Sri Lanka has repeatedly responded that the standards being applied to itself were far in excess of those evident in many of the EU countries themselves. Commentators have noted the lack of prosecutions two years after the killing of an innocent Brazilian student in London by the Metropolitan Police at a time when tensions ran high following the 7/7 bombings, the treatment of the Roma in certain parts of the EU, the inexplicable silence about the NATO peace-keepers who stood by as 6000 Bosnian Muslims were massacred in Srebrenica, or the public vilification of immigrants in certain Member States of the EU. Sri Lanka, which has been battling a brutal and racist terrorist group for over two decades has scrupulously avoided letting the conflict spilling over to civilians although sometimes it has been unavoidable. Nevertheless, the civilian casualty rate has remained minimal. (Much better resourced and bigger militaries fighting militants elsewhere have not been able to avoid civilian casualties or internal displacements. Over 4000 civilians have been killed in Afghanistan in 2008 alone. The Australian special forces have admitted eliminating key non-combatant but militarily significant supporters of the Taliban). The 187,000 civilians displaced when the Eastern Province was recovered from terrorist control by the Sri Lankan military were returned to their homes within 12 months with the approval of the UNHCR.

Even among the GSP+ beneficiaries, there appears to be a marked difference in the standards being applied to determine compliance. The discriminatory application of standards and the lack of objectivity would seem to contravene at least the spirit if not the letter of the WTO law.

It has been suggested that the better way to achieve global human rights and humanitarian standards would be to work cooperatively with countries rather than adopt a confrontational, messianic, and holier than thou approach. The European tendency to preach from the pulpit, after having been responsible for 60 million dead and a much larger number displaced in two world wars, has been resisted in much of the developing world.

Humanity may have moved beyond the simplistic and punitive approach to resolving differences and improving the world. On many occasions, the international community has achieved success through this enlightened method. In a different context, one notes for example, the success achieved under the Montreal Protocol to the Vienna Convention on the Ozone Layer through a sympathetic and cooperative approach. With a country like Sri Lanka which over the years has attained remarkably high standards with regard to the UN MDGs and UN HDI, it would seem relatively easy to seek compliance with even the higher standards demanded by the EC through a cooperative approach than through a confrontational punitive approach. One couldn't help but suggest that increasing prosperity through trade would contribute to minimizing the ethnic tensions in the country and bringing the conflict to an end.

- Asian Tribune -

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