EU asks Sri Lanka not to be ‘WTO incompatible’

by Sanath Nanayakkare

Sri Lanka should avoid any unnecessary damage to the commercial and economic interests of any other WTO party including the EU, Frank Hess, Head of Cooperation Section at EU Delegation to Sri Lanka and the Maldives said.

He said so while addressing a media briefing online, following the final project steering committee meeting of the EU – Sri Lanka Trade Assistance Project at Taj Samudra Colombo recently.

“Some policy makers openly talk about protectionist aims. I ask: Is this what the country needs for economic growth? Is this what is fair to the EU? Sri Lanka enjoys a positive trade balance with the EU, and I would like to underline that no modern economy can operate in isolation.

“We raised this issue at the WTO meetings end of last year and the WTO Market Access Committee in January. We remain concerned by measures some of which have been implemented in a WTO incompatible manner”, he said.

Elaborating on his views he said:

“The European Union believes that global problems such as the pandemic and the ensuing economic crisis, can only be solved through global cooperation. We can help ourselves only by working together.

“Sri Lanka should pay due regard, in carrying out its domestic policies, to the need for maintaining or restoring equilibrium in its Balance of Payment on a sound and lasting basis, by adopting measures which increase instead of decreasing international trade.

“Recently the European Commission set out its trade strategy for the coming years. Reflecting the concept of open strategic autonomy, the strategy builds on the openness to contribute to the economic recovery through support for the green and digital transformations, as well as a renewed focus on strengthening multilateralism and reforming global trade rules to ensure that they are fair and sustainable.

“For the recovery of the Sri Lankan and global economy, open and rules-based trade is essential as it gives confidence to businesses to invest, and re-start exchanges that bring in employment and revenues.

“We understand the government is keen to pursue a trade model aiming at export growth and FDI growth, attracting foreign investment also from the EU. But which investor will come here if he or she is forbidden or face obstacles when importing from other countries? To increase GSP+ utilization, you will need to have a balanced approach and not close doors. Trade is about mutual benefits. I fully expect that doing business with Sri Lankan enterprises will not only open new markets in the EU and regionally to you, but will enable EU SMEs to link with local businesses and grow together as well.

“If companies and the Government want to increase the competitiveness of Sri Lanka, the best way is to open up the economy, invest in research and development, provide skills to workers, nurture entrepreneurs, provide decent jobs and most importantly create a business conducive environment which supports both exporters and importers.”

“The EU has also helped SrI Lanka through giving it GSP+ status. With GSP+, the EU has unilaterally opened its market and granted duty free access on 66% of the EU tariff lines representing about 6000 products.

“About €3 billion worth of goods were exported to the EU from Sri Lanka in 2019 using the GSP+ preferences. This resulted in a positive trade balance for Sri Lanka of 1.5 billion euro in

2019 alone. Even without the UK, this balance is still 1 billion euro in the favor of Sri Lanka.”