Sri Lanka faces trade loss

Sri Lanka is set to lose trade concessions worth more than $100m after a European Union investigation found it in breach of the human rights commitments it had made in exchange for lower tariffs.

A year-long independent report commissioned by Brussels found shortcomings in Sri Lanka's protection of civil and political rights.

The European Union has found Sri Lanka in breach of International Human Rights laws, implying that Colombo does not fulfil the basic human rights conditions of GSP plus, according to an exclusive update by Reuters.

A spokesman for Lady Ashton, the EU's trade commissioner, said: "The Commission has completed a thorough investigation into the human rights situation in Sri Lanka. The report comes to the conclusion that Sri Lanka is in breach of [its] commitments."

The EU report serves up a wide-ranging critique of Sri Lankan human rights, and includes charges that government security forces were complicit in the recruitment of child soldiers.

"The assessment report says Sri Lanka does not fulfil the requirements of GSP plus," one EU source told Reuters.

"The evidence is very clear that Sri Lanka does not fulfil the basic human rights conditions of GSP plus," the source was quoted as saying, citing the report.

Brussels has consistently warned Sri Lanka it must meet 27 international human rights conventions to retain its GSP plus trade scheme.

"GSP plus is not an instrument used for short-term political crisis, but is meant to provide long-term stability," a European Commission official told Reuters.

"This is not a trade sanction. There are rules for GSP plus and if you break the rules, then unfortunately there are consequences. They will keep basic GSP either way."

The suspicion of violations of the UN Convention against Torture, the UN convention on the Rights of the Child and UN Covenant on Civil and Political Rights triggered the investigation and the report has supported these suspicions with complicity in the recruitment of child soldiers by the military and un-investigated civilian disappearances.  

Human rights organisations have welcomed the findings having long-called for investigations into war crimes by the Sri Lankan military.

"You name it and Sri Lanka has the problem," Brad Adams of Human Rights Watch told Deutsche Welle.

"From extra-judicial killings, disappearances, torture, illegal detentions, 250,000 people illegally detained in displaced persons camps, war crimes allegations from the final assaults on the LTTE - it's quite a terrible record."

The blockage has yet to be approved by member states but despite last minute attempts by groups such as ‘Friends of Sri Lanka’ and many British retailers such as Marks &Spencer to prevent it, it is likely to go ahead due to the findings.

The Sri Lankan government in reply has steadfastly withstood pressure on human rights and has repeatedly said it will not forgo its ‘sovereignty’ at the behest of western governments.

Claiming that their new key allies - Pakistan, China and India - will be more than capable of making up for the shortfall they have refuted the report and any possible independent investigation.

In an attempt to support its government the country’s central bank has declared that there would be no adverse impact on its exporters.

"Our exporters are resilient and the loss would be minimal," K.D. Ranasinghe, director at central bank's economic research department, told Reuters.

The government is currently studying the EU report and will raise its counter-arguments to compel European governments to prevent the block. The decision will be made towards the end of the year by a vote.

Sri Lanka is a beneficiary of the EU's Generalised System of Preferences Plus scheme, which gives 16 poor countries preferential access to the trading bloc in return for following strict commitments on a wide variety of social issues.

Sri Lanka was handed the preferential treatment following the 2004 Indian Ocean Tsunami.

The scheme provides the holder the opportunity to import trade products into the EU for much lower tariffs then they would otherwise face and Sri Lanka has since reaped the rewards of it being granted.  

Its suspension from the scheme - which still has to be approved by member states - would be the first since its inception in 2005.

Trade with Europe is key to Sri Lanka's economy: EU members account for 38 per cent of its exports, and provide it with a large trade surplus which Sri Lanka uses in turn to finance an equivalent deficit with neighbouring India.

Sri Lanka’s garment industry earned $3.47 billion from the EU as well as $1.2 billion from its tea exports.