Sri Lanka Applies For Renewal Of EU GSP+ Tariff Concessions

by Mary Swire, Tax-News.com, Hong Kong

28 September 2009

After a period in which doubt has been cast on its eligibility for the EU’s GSP+ tariff concessions, the Sri Lankan Government has said that it has formally applied for their continuation.

The EU states that the primary objective of its Generalised System of Preferences (GSP) is to contribute to the promotion of sustainable development and good governance. The additional preferences available under the GSP+ arrangement act as an incentive to vulnerable developing countries to ratify and effectively implement a set of key international conventions. These represent widely recognised international standards, which GSP+ countries are expected to meet, in the fields of human rights, core labour standards, sustainable development and good governance.

The tariff preferences – which take the form of duty-free access in the otherwise applicable standard import tariffs – cover roughly 6,400 tariff lines. All applications for GSP+ are examined by the EU Commission against the eligibility criteria set in its regulations, and Sri Lanka’s GSP+ preferences were renewed, late in 2008, for a further three year period from January 1, 2009 to December 31, 2011.

There was an EU visit to Sri Lanka in May 2009 to “discuss concerns about the current humanitarian and human rights situation in the country,” during the latest conflict. It appears that Sri Lanka has refused to allow further EU investigations as to the current situation in the country. Nevertheless, it was reported that the EU was to decide shortly on whether Sri Lanka should, in fact, be withdrawn from the special incentive scheme.

The GSP+ zero tariffs are of great assistance, primarily, to Sri Lanka’s clothing industry, which is said to provide jobs for more than 250,000 people. Withdrawal of GSP+ would put its industry at a distinct disadvantage, particularly against those countries that continued to benefit from tariff reductions.

The government has announced that it has applied for the continuation of GSP+ relief for Sri Lanka, and that the EU decision could be expected by the end of the year.

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