Beginning from next year, the national currencies of twelve of the 15 member European Union (EU) countries will be replaced by the Euro, said European Commission’s (EC’s) Head of Delegation in Sri Lanka, Ambassador Ilkka Uusitalo at a meeting on Friday.

"There are concerns about fraud and forgery and chaos and problems arising within the first few weeks of next year when the new currency and new coins are introduced," the Ambassador however conceded.

The countries coming under the Euro area include Germany and France, but excludes the UK. "By the middle of next year, currencies such as the Deutsche mark and the French Franc will disappear," he added.

"The question is, what business opportunities will be available for Sri Lanka (SL) with the advent of the Euro?" Uusitalo asked. The Ambassador was of the opinion that the Euro currency would be less important for SL in the short term, because the UK, which absorbs nearly 50% of SL’s exports to the EU, was out of the Euro region.

"When you look at the history of the EU, the UK was slow to join the Union. Yes, ultimately UK would join the Euro area, but I don’t think it will be ‘tomorrow’," the Ambassador said.

"We mustn’t expect much too soon, about the possibility of the UK joining the Euro. Labour had a huge landslide in Parliament. But it is a huge emotional issue in the UK. It will take a couple of years at least, when that decision to go ahead is taken," Uusitalo said.

"The worse situation is to rush to a referendum and lose it. Then there will be a huge delay. Next year, when the Euro becomes more concrete and if the benefits are there, it will be easy to integrate," he further said. "However, one should take note of the fact that UK firms may still use the Euro in invoicing," he added.

The Euro came into being at the beginning of 1999, ‘so, we are in the transition period,’ Uusitalo further said. It was introduced for the benefit of Europe. The Euro has eliminated exchange rates and offers better business opportunities, the Ambassador said.

There is a slowing down in the US and European economies. Therefore, this is affecting those who export to Europe. But, there won’t be any major changes, he added. Uusitalo also said that in Europe, the small and medium enterprises were not prepared for the Euro.

He said that prices in Europe are expressed in both the Euro and the local currency. Sri Lanka will remain an important trading partner for the EU. Uusitalo was of the opinion that the EU, ‘despite problems will expand.’ "So, it will have a membership of more than 15 countries in a few years time. Therefore, providing further opportunities to Sri Lanka."

He also said that the EU, is SL’s second largest export market after the USA, with Textiles and Garments being the most important export. "Perhaps, SL is too dependent on textiles and garments," the Ambassador said.

The Multi-Fibre Agreement (MFA) ends in 2005, and then there shall be full competition with the removal of quotas, Uusitalo said. The only answer is for SL to raise its competitiveness levels, export better quality products (compatible with European standards) and to diversify into higher value products.

With regard to the question of standardisation, Uusitalo said that EU inspectors have had checked the local fishing produce, inspected the processing factories and were satisfied that except for certain minor issues, SL has fulfilled EU standards on this score. (PA)