BRUSSELS, Belgium – As of from next week bicycles as well as bike components imported from Sri Lanka into the European Union will become more expensive. On August 15th 2010, Sri Lanka will lose its (import) duty free access to the EU market.
As from August 15. 2010 EU imports from Sri Lanka will instead be subject to standard Generalized System of Preferences (GSP) preferential treatment, under which Sri Lanka would still enjoy preferential access to the EU market for its key export items such as clothing, fisheries products as well as bicycles and bicycle parts.
It will make complete bikes imported from Sri Lanka 10.5% more expensive as this is the preferential EU import duty on bicycles (regular import duty is 14%). Bike components will become 1.2% more expensive (regular import duty 4.7%); of course unless the Sri Lanka makers are prepared to include the import duty in their ex-works prices.
The decision to withdraw Sri Lanka’s import duty free status (according to the preferential tariff system GSP+) has been taken by the EU Council of Ministers in February 2010. Based on dialogue with the Sri Lankan authorities on shortcomings in its implementation of three UN human rights conventions, the EU in June offered to delay the entry into force of the Council decision by a further six months. In exchange, it asked for tangible and sustainable progress on a number of outstanding issues. In the absence of a reply from the authorities in Colombo by 1 July, the Commission is not in a position to table a proposal with a view to delaying the Council Decision.
"We very much regret the choice of Sri Lanka not to take up an offer made in good faith and in line with the EU commitment to a global human rights agenda. We will however keep the door open for Sri Lanka to return to talks," said EU High-Representative/Vice-President for Foreign Affairs and Security Policy Catherine Ashton. "Our precedent-setting offer sought to recognise some tangible progress yielded during these last months of dialogue," added Commissioner for Trade Karel De Gucht. "We hope that these results, however partial, will be sustained, in line with the incentivising characteristics of GSP+."
On 15 February 2010, EU Member States decided to temporarily withdraw the preferential tariff benefits for Sri Lanka. This decision followed an exhaustive 12-month investigation concluded in October 2009 by which the European Commission identified significant shortcomings in respect of Sri Lanka's implementation of three UN human rights conventions relevant for benefits under the scheme. Since February, the European Commission has been able to engage in a dialogue with the Sri Lankan authorities with a view to agree a set of measures that would result in rapid, demonstrable and sustainable progress in relation to the issues addressed in the investigation.
In June 2010, the European Commission took stock of results obtained during the dialogue. In a letter addressed to Sri Lanka's Foreign Minister, Professor Gamini Lakshman Peiris, EU HR/VP for Foreign Affairs Catherine Ashton and EU Commissioner, Karel De Gucht, offered to propose to the Council of the European Union to maintain GSP+ preferences for an additional six months. This offer was conditional on the receipt of assurances from the Sri Lankan government as to the sustainability of results obtained since February 2010 and a firm commitment that fifteen principal outstanding issues would be addressed during the proposed extension. A longer-term dialogue covering the full range of human rights issues would be undertaken in parallel by the European Commission and Sri Lanka.
In order to properly prepare for the next steps in EU decision-making, the Government of Sri Lanka was invited to respond in writing by 1 July. No official reply has been received from the authorities in Colombo.
Sri Lanka is a major beneficiary of the trading opportunities offered by GSP+. In 2008, EU imports from Sri Lanka under GSP+ totaled € 1.24 billion. The most important import products benefiting from these trade preferences were t-shirts and other clothing items, as well as fisheries products and bicycles.
For more on EU’s Generalized System of Preferences (GSP) and EU import duties: