COLOMBO, Sri Lanka – Sri Lanka, the number 4 bicycle supplier of the EU, is about to lose its duty free export status for Europe per end of this year. What contributes to this measure is that the Sri Lanka government recently refused entry into the country of an EU investigation team that wanted to examine human rights violations and the deaths of thousands of Tamils at the end of this year’s war with Tamil Tiger rebels.
End October the European Commission received a report in which Sri Lanka is accused of breaching agreements on human rights as stipulated in the new European Generalised System of Preferences. This trade agreements grants developing countries reduced import duties. Sri Lanka is enjoying a complete exemption of duties for its export into the EU as it has committed itself to 27 conventions in the field of human and labour rights, sustainable development and good governance. As a result the export of bicycles, parts and accessories have free of charge entry into the EU.
Over 700,000 bikes
Under the GSP Plus scheme Sri Lanka’s bicycle export to the European Union thrived. It increased by 24% in 2008 to a total of slightly over 700,000 bikes. Average value of the imported Sri Lanka bikes stood at € 44.15. As said, Sri Lanka ranked as the number 4 bicycle supplier of the EU in 2008, after Taiwan, Thailand and China. Next to complete bikes also tyres for bicycles are a major Sri Lanka export product.
After receiving the report on the human rights breaches the European Commission said it would consult member states on suspending the trade benefit, granted in 2005. Also the EU made it clear to the Sri Lanka’s government that the GSP Plus status would not be extended beyond 2009 if its concerns were not addressed. According to a recent report in The Economist ‘Colombo’ reacted that this was economic blackmail; it rejected a probe into its eligibility, made no submissions to the investigation panel and refused entry to an EU team.
Factories may close
Now the Sri Lanka government is under pressure from industrialists in the country. Not without reason as in 2008 EU imports from Sri Lanka under the GSP Plus totalled € 1.24 billion. Exporting companies are warning that many factories may close if Sri Lanka loses the benefit, resulting in hundreds of thousands of job losses. As it stands now this will come too late.
Countries that currently have GSP Plus (duty free export status) to the EU are (among others) Bangladesh, Cambodia, Tunisia and Turkey.
Click here for a complete list and for all about the Generalized System of Preferences.