Sri Lanka should consider signing an FTA with EU: diplomat
ECONOMYNEXT- The Sri Lankan government should consider signing a free trade agreement (FTA) to keep preferential market access after the Generalized System of Preferences (GSP) Plus benefits ends, the Ambassador to the European Union (EU) said.
"I don’t think there’s any interest in leaving the GSP Plus advantages for the moment," Tung-Lai Margue said at a business forum organized by the European Chamber of Commerce of Sri Lanka.
"You should keep reaping the best benefits of GSP Plus as long as it’s lasting, but that doesn’t mean you shouldn’t be prepared or the government shouldn’t be prepared at one stage to look at the matter from an FTA point of view," he said.
Sri Lanka is expected to enjoy GSP Plus till 2023. Negotiating an FTA takes years as well.
Margue said there could be difficulties in implementing an FTA in Sri Lanka.
There has been much domestic resistance to FTAs from nationalist lobbies.
Margue said the government has to support exporters, especially small and medium enterprises, by getting rid of technical obstacles and gaining market access.
He said while there is uncertainty in the British market due to Brexit, the EU will continue to grow.
"Something like 30 percent of Sri Lankan exports to the EU go to the UK and that’s important, but it also means there’s a lot of opportunities to diversify to other European countries," he said.
"And don’t forget that we will be continuing to grow while Brexit is taking place," he said.
Meanwhile, Margue said political will is required to maintain Sri Lanka on the correct path for reforms required to remain eligible for GSP Plus.
During the recent political crisis, when Mahinda Rajapaksa became Prime Minister for 51 days, Margue warned that Sri Lanka would risk losing GSP Plus if Rajapaksa’s policies on human rights differ from the previous government.
Margue said although a situation which led to the loss of GSP Plus in 2010 is unlikely to repeat itself, a similar state of affairs could lead to the cancellation of the benefit.
He said the government has a responsibility to explain to its citizens that following the human rights conventions required to remain eligible for GSP Plus is beneficial to them.
Apparel and fisheries industries have benefited most from GSP Plus.
Margue said enironmentally sustainable and labour-friendly products could be marketed well in the EU. (Colombo/Feb05/2019 – SB)