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Sunday, 13 March 2011

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Exports flourish sans GSP Plus

There was a strange belief at one time that Sri Lanka's economy would be doomed if the European Union (EU) ceased the GSP Plus trade concessions for the country's exports.

The EU even attempted to link various internal affairs in Sri Lanka with the GSP Plus facility and exerted pressure on Sri Lanka to take several measures during the battle against terror.

However, the Government stood its ground and did not take any steps which would affect the battle against terror as well as Sri Lanka's sovereignty and territorial integrity. President Mahinda Rajapaksa vowed that he would never permit external forces to dictate terms and conditions and accept concessions as Sri Lanka's sovereignty and territorial integrity reigns supreme.

When the EU made a subtle attempt to paint a gloomy picture on Sri Lanka's economy, especially the garment industry, Opposition Leader Ranil Wickremesinghe went globe-trotting to Europe to tarnish the image of the country before the international community.

Though Wickremesinghe maintained that the aim of his tours to Europe was to restore the GSP Plus facility, as a matter of fact, he conducted a sinister campaign to humiliate Sri Lanka before the international community to gain petty political mileage.

Several other opportunist Opposition politicians and leaders of key NGOs which swallowed the bulk of foreign funding also worked 'tirelessly' to influence the EU and exert pressure to cease the GSP Plus facility offered to Sri Lanka.

Wickremesinghe and his so-called economic pundits projected a gloomy picture in the event the GSP Plus facility was discontinued and instilled an abominable fear in the minds of people that hundreds of thousands of jobs in the garment industry would be at stake due to the inefficiency of the Government.

The Opposition had no qualms in giving it a political twist notwithstanding the fact that the GSP Plus trade facility was merely a temporary trade concession granted to Sri Lanka and a few other countries severely affected due to the tsunami devastation. When the GSP Plus facility was granted in 2005, it was made explicitly clear that it was only a temporary facility granted for some Sri Lankan exports.

Regrettably, the EU and some INGOs attempted to intertwine the GSP Plus facility with human rights and other issues in a tendentious attempt to thwart Sri Lanka's courageous campaign against terrorism. The so-called champions of democracy and world leaders, who claimed to be battling against international terrorism, did not come to Sri Lanka's rescue at that crucial hour. Instead, they exerted pressure on Sri Lanka to abandon its battle against terror.

Thanks to President Rajapaksa's political fortitude and the unstinted support of Sri Lanka's friendly countries, the valiant Security Force beat all overwhelming odds to destroy the most ruthless terror outfit in the world.

Even at the time the Opposition and INGOs projected a dismal picture that Sri Lanka's garment industry would be unable to survive without the GSP Plus facility, President Rajapaksa stood resolute and had implicit faith in the quality of local garments and its comparative advantage to compete in the open market.

Today, it has been proved beyond a shadow of doubt that Sri Lanka's garments could make an indelible mark in the international arena. Sri Lanka vindicated its position that it could compete in the international market despite the withdrawal of the GSP Plus concessions.

On the other hand, Sri Lanka's exports to the EU countries had grown by 38 percent in the last four months of 2010 despite the withdrawal of the GSP Plus concession. According to the Central Bank Governor Ajith Nivard Cabraal, this had been made possible as the country had braced itself for this eventuality and consequently the impact of its loss was minimal.

The Governor of the Central Bank of Sri Lanka said that the exaggerated fear that the withdrawal of the GSP Plus facility would lead to massive job losses and a drop in exports did not materialise.

The EU is Sri Lanka's major trading partner and local exports to the EU have been growing rapidly at a time when it had been falling in other key markets, such as the United States. Sri Lanka exports products and services worth 1.7 billion euros to the EU, which is 29 percent of Sri Lanka's total exports. Garments and the textile sector account for over 55 percent of the value of Sri Lanka's exports to the EU, amounting to more than one billion euros.

It is now opportune that we take note of our potential and the quality of our products. Local products no longer need concessions to compete in the international market as we could do so on the basis of their quality, competitiveness and improved productivity. Sri Lanka had succeeded in attracting investments from all parts of the world and several countries have shown a keen interest in the manner in which they could help strengthen Sri Lanka's economy.

Around 75 percent of the two billion dollar investment in government international bonds had been funded by the US and EU countries. Over one billion US dollars had been invested by Malaysia in the telecommunication sector, while around 800 million dollars had been provided by China in loans towards the power and ports sector, and moreover, hundreds of millions of dollars had been invested by India in building the railways and oil exploration operations.

Our guiding principle is that Sri Lankan products no longer need concessions to compete in the international market. Sri Lankan products could compete effortlessly on the basis of their quality and improved productivity. It is imperative that Wickremesinghe and opportunist Opposition politicians take cognizance of this fact rather than try to compel the Government to 'beg' for the GSP Plus facility and degrade the country and its industries.

Some Opposition politicians shouted from the rooftops and pressed the panic button that the GSP Plus withdrawal would lead to unprecedented job losses and result in a sharp drop in exports. The competitiveness and high quality of Sri Lankan garments put paid to all such predictions.

The garment industry continues to flourish with exports to the EU countries and a 38 percent growth was recorded in the last quarter of 2010.

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