Import restrictions a concern for the EU

Despite import restrictions by Sri Lanka which are hurting other countries and the current international human rights discourse against Sri Lanka, the European Union (EU) is unlikely to reduce trade ties and in any way withdraw GSP + concessions.

This assurance was given by Frank Hess, Head of Cooperation, EU connecting online at the media briefing following the final Project Steering Committee Meeting of the EU-Sri Lanka Trade Assistance Project held this week at Taj Samudra Hotel.

Further, it was the view expressed to the Business Times by Jairo Andres Villamil-Diaz, International Technical Specialist, United Nations Industrial Development Organisation (UNIDO), at the meeting, that there is no such risk.

Continuing Mr. Hess said that economic and trade cooperation is at the centre of their cooperation to Sri Lanka and the positive balance of trade in favour of Sri Lanka was one billion EUR (about Rs. 220 billion) in 2018 and 2019, showing EU commitment to help Sri Lanka become more competitive. “Each year we donate over Rs 7 billion as assistance over a period of 7 years,” he said.

He said that GSP + can help Sri Lanka to recover from the economic impact of the pandemic while 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 local exports.

However he pointed out that import restrictions by Sri Lanka, is a major trade concern for the EU. “Even if Sri Lanka can apply quantitative import restrictions in case of the critical Balance of Payments situation, it has to comply with main WTO obligations when invoking Balance of Payments restrictions,” he said.

He said that there is an obligation to notify these import restrictions to the General Council of the EU and enter into consultations with other WTO Members and these measures should be temporary as the Sri Lankan regulations are applied without an expiration date, while there is an obligation to present timetables for the progressive relation until final elimination of the measures. He also stressed that import restrictions should be managed in a transparent manner.

He questioned whether some policy makers in the country openly talk about protectionist aims is what the country need for economic growth. He queried “Is this what is fair to the EU? And I would like to underline that no modern economy can operate in isolation”. He said that they believed that global problems such as the pandemic and ensuing economic crise can only be solved through global cooperation.

On the desire of Sri Lanka to attract FDIs and foreign investment, he again queried “Which investor will come here if he or she is forbidden or at least has obstacles to importing from other countries? To increase GSP + utilization, you will need to have a balanced approach and not close doors”.

Even if Sri Lanka can apply quantitative import restrictions in case of the critical Balance of Payments situation, it has to comply with main WTO obligations when invoking Balance of Payments restrictions,”