Sri Lanka must comply with WTO obligations – EU
By Rajiesh Seetharam
Expressing concern over Sri Lanka’s import restrictions, Delegation of EU Head of Cooperation, Frank Hess, stated that for the recovery of the Sri Lankan economy, open and rules-based trade was essential as it gives confidence to businesses to invest, and re-start exchanges that bring in employment and revenue.
“The EU does not believe in protectionism, especially in times of a global crisis like COVID, and the EU market remains wide open to Sri Lanka with GSP+ unilateral duty free access for your exports.” stated Hess, joining a Press conference virtually on the successful completion of the EU-funded 8 million euro project to help Sri Lankan SMEs.
Even though Sri Lanka could apply quantitative import restrictions in case of critical Balance of Payments situation, it has to comply with main WTO obligations when invoking Balance of Payments restrictions, Hess said.
“As per WTO obligation, import restrictions should be notified to the General Council and enter into consultations with other WTO Members. Measures should be temporary in nature as the Sri Lankan regulations are being applied without an expiration date; there is an obligation to present timetables for the progressive relaxation until final elimination of the measures; import restrictions should be managed in a transparent manner,” he said.
Import restrictions applied by Sri Lanka, are in place for more than 10 months now, which is a major trade concern for the EU, Hess said.
Sri Lanka has benefited through GSP+ noted Hess. “With GSP+, the EU has unilaterally opened its market and granted duty-free access on 66% of the EU tariff lines representing about 6,000 products”, he added.
About 3 billion euro worth goods were exported to the EU from Sri Lanka in 2019 using the GSP+ preferences. This resulted in a positive trade balance for Sri Lanka of 1.5 billion euro in 2019. Even without the UK, this balance is still 1 billion euro in favour of Sri Lanka.
It shows the EUs commitment to help Sri Lanka become more competitive. EU is also a major donor in terms of development assistance to the country. Each year we provide over LKR 7 billion to Sri Lanka in grant assistance. Currently, another programme for a seven- year period is being planned for Sri Lanka,” he added.
Hess further stressed that for Sri Lanka to attract FDI and utilise the GSP plus to maximum, it should relax the current protectionist policy.
“Trade is about mutual benefits. It is a two-way street. If companies and the Government want to increase the competitiveness of Sri Lanka, the best way is to open up the economy, invest in research and development, provide skills to workers, nurture entrepreneurs, provide decent jobs and most importantly create a business conducive environment which supports both exporters and importers”, Hess said.