GSP+

What is the GSP+?

The following explanation of the GSP is given by the European Union:

“The EU’s Generalised System of Preferences (GSP) is a trade arrangement through which the EU provides preferential access to the EU market to 176 developing countries and territories, in the form of reduced tariffs for their goods when entering the EU market.

“The special incentive arrangement for sustainable development and good governance, known as GSP+, which offers additional tariff reductions to support vulnerable developing countries in their ratification and implementation of international conventions in these areas.

“GSP+ beneficiaries must also have ratified and effectively implemented 27 specified international conventions in the fields of human rights, core labour standards, sustainable development and good governance.”

(Ref 1)

These statements give the impression that the EU has a strong ‘ethical’ standard. But in reality no country would qualify, if these “core labour standards” or “good governance” clauses were properly implemented!

Who benefits?

The GSP+ is one of many trade systems that have been developed by rich countries, and the international trade organisations that represent their interests, to increase their profits. None of the tariff relaxations or even ‘aid’ is based on a genuine approach aimed at improving living conditions and labour standards. Furthermore the GSP+ was only given for selected products that developed countries are interested in.

It is the legacy of imperialism that is to be blamed for the disastrous conditions in neo-colonial countries. Resources and labour continue to be plundered in these countries. Even so-called developed countries could not qualify with clauses such as ‘core labour standards’ or ‘good governance’.

However, workers and the poor suffer immensely in neo-colonial countries and tariff concessions and aid can help a very small layer of workers. But the main beneficiaries are the bosses and the rich. All the research shows that the gap between rich and poor countries continues to widen. The World Resources Institute summarised its findings as follows (Ref 2):

“In addition, the gap between rich and poor is widening, both within and among countries (25). In 1960, the richest 20 percent of the world’s population controlled 70 percent of global income. By 1993, they controlled 85 percent, and the share of the poorest 20 percent had decreased from 2.3 to 1.4 percent. These disparities are likely to increase for the next half century even if real economic growth rates in most developing regions significantly outpace those in the developed regions (26). Within many countries, income is also distributed inequitably.”

Many African and Asian countries rely on aid packages to save them from economic collapse. The poor countries’ ‘dependency’ makes them vulnerable to all kinds of exploitation. This dependency helps the so-called ‘donor’ countries to dictate neoliberal policies to maximise their profits. The local ruling classes also plunder the aid and, without remorse, implement what their masters in the multinationals and world trade organisations want. As a result labour rights are attacked and humanitarian crises are sharpened. Brutal attempts are made to suppress any mass movements that try to challenge these deteriorating conditions. In fear of labour revolt and mass movements local ruling classes arm themselves to the teeth with the help of their international counterparts. This is the situation in Sri Lanka too.

Neoliberal offensive and regional interest

J R Jayewardene, the leader of the viciously neoliberal United National Party (UNP) was behind the opening up of the country for a neoliberal offensive in the 1980s. He also established the executive presidency, increased defence budgets and brutally suppressed all labour revolts during and after the 1980 general strike. Since then, living standards have deteriorated rapidly and now Sri Lanka has joined the big queue for IMF loans.

The Sri Lankan government is expected to cut public spending and implement a wage freeze, if not a wage cut, to meet the IMF pressure to reduce the rocketing budget deficit which is estimated to be 11.3% (Ref 3). At the same time the Sri Lankan government has shown no sign of reducing its defence budget. Instead it aims to increase defence spending and has made a $300 million defence deal with the Russian government (Ref 4).

The Chinese government, which is also aiming to exploit Sri Lanka’s strategic shipping routes and natural harbours, helped the government in the recent brutal war on the Tamil population. This war saw at least 20,000 massacred in the last few weeks alone. Now the UN estimates that the Sri Lankan government murdered 40,000 Tamil-speaking people during the last few months of the war. Despite this brutality, the United Nations Human Rights Council immediately voted to congratulate the Sri Lanka government on its victory (Ref 5)! This vote was initiated by Sri Lanka and supported by China, India and even Cuba and Venezuela. It took a major campaign later to push the UN to consider a possible war crimes enquiry but it is unlikely that this will come to anything. And now the UN offices may be closed down.

Local regional interests in Sri Lanka’s resources have now overtaken western interests. The Chinese and Indian governments compete to control Sri Lanka’s ports, minerals and other economic benefits (Ref 6). China has overtaken Japan as Sri Lanka’s biggest donor. The fear that Sri Lanka is moving away from a so-called ‘western axis’ forces western governments to use the ‘humanitarian issue’ as a bargaining card. Western governments do not have any credibility as protectors of human rights. This is widely demonstrated in the rotten role they play in Iraq and Afghanistan, attempting to control the oil wealth. Governments of countries such as the UK and US are responsible for tens of thousands of deaths and major humanitarian disasters around the world. The US government, for example, maintains a close relationship with the Saudi Arabian ruling class, which has no respect whatsoever for human rights. It is no secret that western governments use the need to act on ‘humanitarian abuse’ and trade sanctions as a method to achieve their economic objectives.

EU sanction and its background

The European Union’s sanction of the GSP+ concession to Sri Lanka should be understood against this background. Tamil Solidarity has highlighted the hypocrisy of the European Union in aiding Sri Lanka right through its brutal war. At the same time, we are quite aware that our campaign against the GSP+ would have been much more difficult if the interests of the EU in Sri Lanka were not at stake. However, the right wing in the west still argues that best way to deal with Sri Lanka is to give them more funds! For the Conservative Party in the UK, the war on terror by Sri Lanka is a just war. The secretary of state for defence, Liam Fox, argued for more funding and a better relationship with the Rajapaksa regime. Fox said: “The president won a huge victory and deserves congratulations” (Ref 7). However, fear of opposition from workers and the poor in the UK and around Europe push these right wing rulers towards at least ‘seeming to be defending human rights’ at times. This is what is reflected in the recent European Commission (EC) decision to withdraw GSP+ concessions to Sri Lanka.

EC debate on GSP+

Tamil Solidarity participated in the debate on the GSP+ tariff concession to Sri Lanka which took place on 14 January at the European Commission. As well as a Sri Lankan government representative, arguing the case for not withdrawing the GSP+, was Alisdair Gray, director of the British Retail Consortium in Brussels. Incredibly Gray argued that Sri Lanka is an “ethical and green producer”. The majority of the right-wing MEPs supported these arguments.

The Sri Lankan government’s argument on this issue can be summarised in the following way: 

a) There will be a loss of export earnings. It will reduce economic growth to address poverty.

b) At least one million people will face the danger of losing their jobs.

c) 99% of the workforce employed in the apparel sector and of those producing fish, bicycles, ceramics and rubber-based products etc are women. So withdrawal will affect the empowerment of women.

All the arguments centred on those three points (Ref 8). The document also maintained that the EU would lose out on exports as the “Opening-up of the Northern and Eastern regions for fishing, covering nearly 2/3 of sea of the island, will be a main source of livelihood in the post conflict-development efforts through further increase of fishery products from Sri Lanka to the EU”

Quite incredibly, the document also argues that: “Sri Lanka can be considered a model among developing countries with regard to its ethical trading practices. Sri Lanka is one of the few countries in Asia, where use of child labour has been banned through national legislation. Over 100 garment factories in Sri Lanka have been awarded with the ‘garments without guilt’ label by the International Certification Authorities for their adherence to providing better environment for workers.”

With regard to the humanitarian crisis, the Sri Lankan government representative claimed that:

a) Internally displaced people (IDP) welfare villages have been converted into open camps [!]

b) Former combatants have been released and sent for rehabilitation or held back for closer investigation.

c) There are no reports of killings or disappearances.

While denying any human rights abuse, the Sri Lankan government representative claimed that the ‘war context’, in which some mistakes may have been made, is now over! And now conditions are improving.

This Sri Lankan government representative also accused the ‘Diaspora’ of acting against democracy! He claimed “All the Tamil parties in Sri Lanka are actively participating in the ongoing presidential election, dismissing demands from Diaspora groups, such as Tamil Solidarity which is represented here today, to boycott the election.” This was an unfounded lie told in order to divert the debate and present TS as undemocratic. However, in our response, we explained that we did not lend our support in the presidential elections to either warmongering candidate, Mahinda Rajapaksa or former army general Sarath Fonseka. TS explained that instead we want people to vote for those who genuinely fight for the rights of the poor and the oppressed, like Siritunga Jayasuriya of the United Socialist Party. Siri has been fighting for workers’ rights and the right to self-determination for the Tamil-speaking masses consistently for decades (Ref 9).

Later, the Sri Lankan government representative stated that he was ‘disappointed’ and urged everyone to challenge his ‘statistics’. He also tried to dismiss TS’s argument as a “Diaspora view”. But all the so-called statistics he provided were false. Also he chose not to answer many human rights abuse related questions, including regarding the exposure of the Channel 4 video of the brutal execution of unarmed and bound Tamil prisoners.

The reality

The GSP+ was first given to Sri Lanka after it was hit by a tsunami in 2005. the tsunami devastated whole sections of the population, literally washing away both their homes and their livelihoods.Apart from tax concessions such as the GSP+, at least $2.2 billion was pledged by foreign donors. Millions were donated by individuals and through some organisations. Now five years have passed and there is no sign of any improvement for the victims (Ref 10). Transparency International reported that more than $1 billion is still unaccounted for. Thousands of people remain without adequate shelter. The majority of the houses built were in the southern province, a stronghold of the ruling party. Most of those homes are also occupied by ruling party supporters (Ref 11).

Women workers, as in many countries, do not get equal pay to the men and they work in harsh conditions. The government’s claim that these exploited women workers will lose their empowerment due to the GSP+ withdrawal is an absolutely ridiculous one.

It is also true that companies that benefit from the GSP+ will not be stopped from cutting jobs to protect their profits. However, the Sri Lankan economy, stretched by defence spending, had already seen major job losses. In the first quarter of 2009 more than 60,000 workers lost their jobs, according to the International Labour Organisation (ILO). An official survey by the government’s statistics office said 155,000 industrial jobs were lost in the second quarter of 2009.

Even before the Tsunami, as early as 2002, the textile sector was facing crisis due to the Multi-Fibre Agreement (MFA), put in place by the United States and European Union to protect their ‘domestic markets’. As a result of the MFA phase-out alone, from 2004 to 2006 at least 130 factories have been closed and thousands of workers lost their jobs. But the overall export of garments has increased. While pushing small factories out of the market, the big factories continue to make huge profits. The Sri Lankan government has made no effort whatsoever to protect the jobs of small businesses or to protect the rights and conditions of workers in big companies, which have made huge profits.

ALaRM (Apparel industry Labour Rights Movement), set up with the help of Oxfam, has published reports and materials that clearly show how the Sri Lankan government, not only made no effort to protect workers’ rights and jobs, but also prevented any defence actions taking place. AlaRM explained that a comprehensive report, with a number of recommendations, was prepared on this issue by a taskforce that included the ILO. However this report was delayed and then blocked from publication due to the opposition from business groups and the government. ALaRM also reported that the board of investment was never keen on ‘this kind of research’ and continues to discourage the process (Ref 12). A majority of the workers who lost their jobs have not been paid any compensation. Despite 25,000 signatures collected from the workers by ALaRM and many other campaigns, the government refuses to take any action to properly compensate workers. There are reports that workers turned up to the factory in the morning to find out that it had been closed and all equipment moved out. Many workers are owed a month’s wages! No government body has come to the aid of these workers.

The pro-business Sri Lankan government also gives its full support to garment manufacturers in their clamp down on workers’ rights. They don’t allow any unions. Instead, with government recommendation, the employer appoints representatives to the so-called ‘workers’ council’ which has no power to take actions against the employer. The average wage of workers is around 5000 SRS (£25) which is not even enough to survive on. Even if they work overtime, which the majority do, as they simply cannot afford to live on the normal wage, they still earn a poverty wage. This is the reality of the garment industry.

With global demand falling, due to the acute world economic crisis, no boom is expected in the manufacturing sector. The textile sector has not recovered since the Tsunami which wiped out factories as it killed thousands of workers and their families. Now the economic Tsunami facing Sri Lanka and the world means huge job losses internationally. In Sri Lanka, at least one million jobs in the textile and related sectors are expected to go. The Chartered Institute of Personnel and Development (CIPD) has warned that as many as 350,000 public sector jobs could be lost over the next five years.

And yet the government is not only refusing to cut the huge defence expenditure, it has moved to increase it. The estimated benefit of the GSP+ to the economy is much less than defence expenditure.

If the government is serious about ‘defending jobs’ and truthful about wanting a flourishing democracy and human rights, then it will immediately cut its huge defence expenditure and the huge sum of money wasted on ‘presidential care’. That is not to mention the millions lost due to the high level of corruption. Sunil Wijesinha, Director of Dankotuwa Porcelain Ltd, one of the companies cited by the government as affected by the GSP+ removal has accused the government of corruption (Ref 13).

It’s not rocket science to work out where the majority of the benefits that come from tax concessions and aid end up. That is why TS argues that aid must be sent directly to committees formed of the representatives of the people in the areas the aid should reach. Without such a safety mechanism, to ensure that the benefit will reach the most needy, any so-called ‘help’ will be hopeless.

No illusions in the EU

Having said that, there shouldn’t be any illusion in the EU, that the only reason it granted the GSP+ was to improve the conditions of workers! As we mentioned earlier, the profit motive of the capitalist governments who defend the interests of the richest in society is a driving force behind all EU decisions and its policies. The right wing within the EU continues to argue the case of brutal regimes such as that of Sri Lanka. In the debate in which TS participated, one right-wing MEP argued that: “I always smell this debate as a too British debate … There s a strong sense of a Tamil constituency in Britain that has somehow affected the possibility of an objective analysis of this issue.” It is true that the EU uses the opportunity to implement ‘protectionist’ measures, as the global economical slowdown affects the eurozone severely. However, the accusation that the Tamil constituency shaped the British decision is hilarious as it was the director of the BRC putting up a fight for the Sri Lankan government. A number of Conservative Party MEPs also supported that argument. But Joe Higgins, MEP for Dublin and honorary president of the Tamil Solidarity Campaign, pointed out that it is the government of Sri Lanka that is to be blamed for the withdrawal of the GSP+ as it continues to violate human rights and labour rights. He emphasised that we will not create a situation that can cause problems for the poor workers.

As Joe Higgins MEP pointed out, the Tamil Solidarity Campaign is dedicated to winning the rights of all workers and oppressed people in Sri Lanka. We will not act against the interests of the poor and the workers. That is why we pointed out that the EU action was “too little too late”. There should be a war crime investigation, including the active involvement of the victims in Sri Lanka and the independent labour movement outside.

On the question of aid we pointed out that TS is not against giving aid to the victims and poor. However, it must be channelled through an elected committee of workers and from the people who should benefit from the aid, rather than giving money to the government or big businesses. Through the government and big businesses there is little chance of aid or tax concessions reaching the needy.

References:

  1. Generalised System of Preferences (GSP) (http://ec.europa.eu/trade/wider-agenda/development/generalised-system-of-preferences/)
  2. The gap between rich and poor is widening. World Resources Institute (http://www.wri.org/publication/content/8659)
  3. Budget Track. Lankabusinessonline.com 15 Feb, 2010 (http://www.lankabusinessonline.com/fullstory.php?nid=275642011)
  4. Sri Lanka President to sign $300 million loan deal with Russia, ColombopagesSat, Feb 6, 2010 (http://www.colombopage.com/archive_10/Feb1265473748CH.html)
  5. A disgraceful vote which discredits the UN Human Rights Council. Times Online May 28, 2009 (http://www.timesonline.co.uk/tol/news/world/asia/article6382331.ece)

(a)            India Worries as China Builds Ports in South Asia. By VIKAS BAJAJ. February 15, 2010 (http://www.nytimes.com/2010/02/16/business/global/16port.html)

  1. Too many vested interests-Manny Thain, Tamil solidarity. November 11, 2009 (http://www.tamilsolidarity.org/?p=666)
  2. There must be a civil trial for General Fonseka.Liam Fox. Dr Liam Fox MP, Wednesday, February 17 2010 (http://www.conservatives.com/News/Speeches/2010/02/Liam_Fox_There_must_be_a_civil_trial_for_General_Fonseka.aspx)
  3. EU-Sri Lanka, GSP+ Concessions and its socio-economic impact. 09 November 2009. Sri Lankan government official document circulated to members of European Parliament.
  4. TS Denies boycott accusation, http://www.tamilsolidarity.org/?p=854
  5. Money Wave. By Mel Gunasekera.23 Dec, 2009 (http://www.lbo.lk/fullstory.php?nid=674151897)
  6. SPC Polls 2009 Hambantota Backward and still neglected. Monday, 5 October 2009 (http://www.lankanewspapers.com/news/2009/10/48517.html)
  7. ANALYSIS OF AN OXFAM INTERNATIONAL CAMPAIGN ON GARMENT WORKERS IN SRI LANKA. 2002 – 2007. Jeff Atkinson. Practitioner Fellow Institute of Commonwealth Studies. (We have not used direct quotes from this paper as we still awaiting author’s permission)
  8. Authorities not listening, Lanka times http://www.lankatimes.com/fullstory.php?id=23114

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