There was much concern in Sri Lanka about your open letter of June 16 addressed to members of the Sri Lankan Tamil Diaspora who had written to you complaining that the EU had not done enough to prevent the civil war in Sri Lanka war from ending in the way it did. When I asked Mr. Bernard Savage, the EU head of delegation in Colombo during an interview with this newspaper, whether this letter does not indicate a certain partiality on your part towards interested parties who were obviously out to use the European Commission as instruments of their revenge, he assured me that it did not and that anybody who writes to the EU can expect an answer within a stipulated period of time. When I asked him about the letter being posted on the Commission’s website, he told me, that was normal too and in accordance with the transparency rules in your organization.

Even though political commentators don’t usually write open letters to anybody, there are many unanswered questions regarding the present EU investigation against Sri Lanka, and I decided to address this letter to you to seek clarification on these matters.

 1. The EU has at present, three schemes to give preferential tariff reductions to developing countries. The general GSP scheme, the Everything But Arms (EBA) initiative which gives duty free access to the LDCs (least developed countries) and the GSP+ scheme. Of these schemes, the general GSP and the EBA initiative are by and large stable and predictable, because those are given across the board to countries that come within a certain definition. So long as such countries remain within certain economic parameters, they will continue to enjoy general GSP or EBA privileges. In the GSP+ scheme, however, that element of stability and predictability seems to be absent because the GSP+ concession can be there one year and not there the next, and the criteria applied for either removing it or retaining it are not confined to trade and industry matters but extends beyond that into much wider political issues. Neither the EBA nor the general GSP scheme would be affected by such political considerations. To qualify for EBA privileges, all that is required is a UN classification as an LDC, and such countries automatically get EBA privileges. The objective in granting such countries preferential access to the EU is the undoubtedly laudable one of helping the ordinary people of those countries to improve their lot in life. You do not try to impose strict rules of compliance with democratic ideals on such countries because that would only lead to those countries failing to qualify for trade concessions and increase the hardships faced by their people.   

2. The recipients of GSP+ are not ‘least developed countries’ (LDCs) like those receiving

EBA privileges. However, one of the criteria applied to see whether a country qualifies for GSP+, is that it should be  "dependent and vulnerable". A country is deemed to be dependent and vulnerable if its economy is not diversified and five exports represent 75% of its total exports. Because of this very factor, recipients of GSP+ cannot afford a lack of predictability and stability in its international trade. It seems perverse to choose ‘vulnerable and dependent’ countries out of the general GSP recipients and give them GSP+ privileges which accord it duty free access to the EU market, but which brings with it a great deal of instability and unpredictability owing to the triennial investigative process. You might then ask ``Why did Sri Lanka apply for GSP+ in the first place if it did not want to be subject to this investigative process?’’ The answer to that is simple. When Sri Lanka was a recipient of the general GSP privileges, there were no judgmental investigations. When the EU introduced new schemes such as special GSP incentives for maintaining environmental and labour standards, naturally Sri Lanka felt confident enough to apply for these because this country had made immense progress in these fields. Then in 2004, following litigation initiated by India in the WTO, the special GSP privileges for labour and environmental standards along with the special scheme for countries combating the production and trafficking of illicit drugs was scrapped and replaced with GSP+. Hence, Sri Lanka which wanted the special privileges for environmental and labour conditions ended up being included in the GSP+ because this was the scheme that replaced the previous incentive schemes.

 3. Thus the instrument itself is very new and, as in the case of the previous special incentive schemes which were found wanting, GSP+ also has its downside in the highly judgmental and non-trade related ‘investigative’ procedure that goes with it. Had the government of the day known how judgmental, how unrelated to trade and commerce, and how wide and open ended the investigation was going to be, they probably would never have applied for GSP+. Such judgmental investigations are alien to our experience. Never before to our knowledge has a trade issue been at the centre of a political controversy in this manner. This is a new thing that has come in with GSP+. It would not have existed before 2005 under the old incentive scheme for meeting labor standards, the environment and combating the production and trafficking of illicit drugs. So this is a weakness in this particular instrument that needs to be addressed.

 4.  When investigative procedure that goes with GSP+  starts, regardless of the outcome, a great deal of instability and unpredictability is introduced into the economy concerned. Investors will be wary of putting down their money because they have no idea which way things will go. One may say that a grace period is given before GSP+ is withdrawn if at all, but that is unsatisfactory because industrial investments need to put down roots. What countries like Sri Lanka needs is Fixed Direct Investment, which will remain in the country and develop industry. What we do not need are temporary investors who come in wanting to make a quick buck and get out all within a period of 36 months. The Sri Lankan experience has shown that this periodic investigation process can wreak havoc on an economy. There should be a rule in the WTO which says that developed countries cannot use tariff concessions (non-reciprocal or otherwise) to deliberately introduce instability and unpredictability into an economy by making those concessions conditional on meeting criteria which have no relevance to trade matters and are so wide in scope that virtually anything can be used as a pretext to do away with the concession.

 5. What I understand is that many countries were wary about applying for the earlier labour and environmental standards concessions, because they did not want concessions tied to such variables. In fact a curious fact that one cannot help but notice is that among the first countries to get GSP+ in January 2006,  (Bolivia, Columbia, Costa Rica, Ecuador, Georgia, Guatemala, Honduras, Sri Lanka, Republic of Moldova, Mongolia, Nicaragua, Panama, Peru, El Salvador and Venezuela) except for Georgia, Sri Lanka, the Republic of Moldova and Mongolia,  all the other countries were in the old special incentive scheme for countries combating the production and trafficking of illicit drugs. Understandably, when the WTO ruled against the special incentive scheme for countries combating the production and trafficking of illicit drugs, on the basis that it was based on subjective criteria, the countries benefiting from that scheme could not simply be left in the lurch, and the EU included them in the GSP+ scheme after 2005. Of the twelve countries that were recipients of the special incentives scheme for combating the production and trafficking of illicit drugs, only Pakistan got knocked out. The other eleven still continue to be in the GSP+ scheme. Because the old  incentive scheme for countries combating the production and trafficking of illicit drugs,  was created out of the self interest of the EU countries, one may assume that even in ‘investigating’ these 11 countries, the EU will be much less judgmental than in the case of other countries. From the beginning of this year onwards, Armenia and Azerbaijan joined the group of GSP+ recipients, brining the total to 16. But most countries under the GSP+ scheme were as I pointed out, in the scheme for countries combating the production and trafficking of illicit drugs and it is in the interest of the EU to keep them there, even if their level of compliance with the 27 international conventions may not be very high. So my question is, are you sure, that objective criteria have been applied in calling for an investigation on Sri Lanka?

 6. When the GSP+ concession was first given to Sri Lanka, the EU knew very well that Sri Lanka was a country embroiled in a protracted civil war. The EU was in fact one of the co-chairs along with the USA, Norway and Japan, that oversaw the ceasefire agreement between the government of Sri Lanka and the Liberation Tigers of Tamil Eelam (LTTE). The EU also was well aware that despite the Norwegian brokered ceasefire, things were sliding back into war, because of the systematic violation of the ceasefire by the LTTE. It is this very reason that prompted the EU to name the LTTE as a terrorist organization in May 2006, while the ceasefire was still in place. Subsequently in 2008, the US Federal Bureau of Investigation officially declared  the LTTE to be the deadliest terrorist organization in the world, ahead of both the Al Queda and the Taliban. Thus, the situation in Sri Lanka, during the operation of the GSP+ scheme was far from normal. Obviously in a country at war with the world’s deadliest terrorists, things cannot be what they are in a country that is completely at peace. Is it therefore fair, reasonable and rational, to apply the same criteria that would be applied to a country that is completely at peace to a country such as Sri Lanka? You might respond to this by saying that even in a situation of war, there are guidelines that have been laid down by conventions such as the ICCPR, and that you will be judging us on that. But in doing so, are you sure that the USA, Britain, and some members of the EU in ‘the coalition of the willing’ itself have stuck to those very rules in Iraq and Afghanistan? How objective are the criteria you will be using to judge Sri Lanka against?

 7. Another question that needs to be answered is whether the EU takes into account the possible human cost of their actions? This so called investigation that has been launched against Sri Lanka has introduced an element of instability and unpredictability to the Sri Lankan economy at a time when this country can least afford it. The employment of around 300,000 workers, mostly rural women, has been endangered. The rehabilitation of the areas formerly controlled by the LTTE has been held back because of the instability in the industrial sector due to this GSP+ investigation. It may be the case that all this is new to the EU itself. The general GSP and the EBA schemes do not have this element of instability and unpredictability and even within the GSP+ scheme, we assume that those countries that were in the old programme for countries combating the production and trafficking of illicit drugs would not have the same instability or unpredictability as Sri Lanka, because the EU would want them to continue to enjoy GSP+ privileges in order to wean the rural people of those countries away from narcotics production.

 8. The reason for bringing all this pressure on Sri Lanka is probably with the best of intentions – to pressurize the government to adhere to higher standards of accountability and human rights. Nobody will dispute the fact that the implementation of those 27 conventions, will result in a country with more democratic freedoms. We Sri Lankans should be more aware of that fact than any developing country, because Sri Lanka is the oldest democracy not just in Asia, but among all developing nations. However, if the strategy to force the government of any country to adhere to higher standards of human rights is to hold a very vulnerable part of the population of that country hostage, that would be human rights advocacy from hell. Do you, not agree with me that what the EU is doing right now, in holding the threat of discontinuation of GSP+  over Sri Lanka, is exactly that? Do you not think that this kind of human rights advocacy defeats the very purpose it seeks to serve?

 9. I realize that this kind of question will immediately get a response to the effect that according to your LAWS, you are allowed to grant GSP+ concessions only to countries which are deemed to have not only ratified but also implemented the 27 international conventions. You cannot take refuge behind the LAW. If there is a law which says that you have to bring untold suffering upon a segment of the population of a country in the quest to improve human rights situation in that country, it is high time that law is changed. The Sri Lankan case may be an ideal opportunity for you to re-scrutinize your laws in this regard. Nobody is perfect and here’s an opportunity to make your laws less ‘genocidal’ in its application. This granting of special concessions which can be continued or withdrawn on political grounds, such as shortcomings in the human rights record would in itself be found unacceptable to a body like the WTO, which lays much store by predictability and stability – which are the very cornerstones of trade.

10. It can also be pointed out that the GSP+ system is a non-reciprocal concession given by the EU, which means that Sri Lanka does not give the EU anything in return. However when this non-reciprocal nature of GSP+ is mentioned, the EU seems to assume that because it is non-reciprocal, the recipients should passively accept whatever verdict the EU comes up with regarding its continuation or withdrawal.  That indeed would be the ideal situation, since it’s the EU’s right to give and take away. But the problem is that we are too vulnerable, too dependent and too desperate to take things so stoically. The reason why we cannot simply give up, is precisely because we meet the ‘dependent and vulnerable’ criteria for GSP+ so completely. So even though GSP+ is non-reciprocal, our first instinct would be to cry blue murder at any attempt to suspend it.  The EU was pained and expressed ‘deep regret and surprise’ when India challenged the special incentive scheme for combating the production and trafficking of illicit drugs in the WTO earlier this decade. The EU should not have been surprised. Even though this concession is non-reciprocal, once it is given, it can create a new situation in the recipient country, because there is a big difference between having duty free access to the EU, and not having it. Because GSP+ preferences cover a wide range of products, arbitrarily giving or taking away such a duty free concession can wreak havoc on the economy of a country. When the WTO appellate body delivered their ruling on the appeal made by the EU against the ruling in the case filed by India against the special incentives scheme for countries combating the production and trafficking of illicit drugs, one of the things that they made clear was that "…in granting such differential tariff treatment, preference-granting countries are required by virtue of the term "non-discriminatory" to ensure that identical treatment is available to all "similarly-situated" GSP beneficiaries that have the "development, financial and trade needs" that the treatment in question is intended to respond to".

11. It can be argued that the EU is being fair by all the recipients of GSP+ because all the 16 recipients will be held to account as to the ratification and implementation of the 27 conventions. But when it comes to the implementation of these conventions, no country in the world can possibly have 100% compliance. This is why I asked you earlier in this letter whether you are absolutely sure that the USA and Britain and the EU countries involved in military operations in Iraq and Afghanistan were complying with those 27 conventions in toto. When it comes to compliance with the provisions of the 27 conventions, since no country has 100% compliance, we are necessarily in nebulous territory. When I asked your head of delegation in Colombo Mr. Bernard Savage, as to what the required level of compliance is, what he said was at one level there is 100% compliance. At the other, there is complete non-compliance to the extent where the words of the conventions do not mean anything. Like every other country, Sri Lanka is somewhere between those two extremes. Therefore, any judgment between similarly situated countries will of necessity be subjective.   

12. In the context of this subjectivity, a  TV talk show I watched on NHK World on Sunday the 26th of July 2009 assumes great importance. The participants in this talk show on Sri Lanka were Yasushi Akashi, the Japanese special envoy to Sri Lanka, the Sri Lankan foreign secretary Palitha Kohona, among others. At this interview Mr Akashi revealed that the other members of the co-chairs (USA, Norway and EU) appointed to oversee the Sri Lankan peace process, had wanted to block aid to Sri Lanka as a means of brining pressure on the Sri Lankan government, but that Japan refused to go along with such a strategy, as any cutting off of Japanese aid would have badly affected the ordinary people of Sri Lanka. The other members of the co-chairs included the EU, and what Akashi’s statement means is that the EU was among the countries that wanted to cut off aid to Sri Lanka regardless of the suffering that the ordinary people of this country will have to undergo as a result. It is this complete lack of concern on the part of the EU, for the human cost of their decisions - this latent genocidal streak - that worries us most. It is a well known fact that human rights advocates in their righteous ardour, tend to act sometimes as lynch mobs. One cannot but escape the feeling that this highly subjective ‘investigation’ that is being carried out by the EU at present is with a view to ‘punishing’ Sri Lanka for not toeing the EU’s political line.

13. I also wish to draw attention madam, to your letter of the 16th June, addressed to the members of the Tamil Diaspora who had written to you about the actions taken or not taken by the EU, concerning Sri Lanka. Why is it that you wrote back to this Tamil/LTTE lobby and posted the letter on your website but you never felt similarly compelled to address the anxieties of the other interested parties in the case, such as the various industrial associations and trade unions in Sri Lanka who would also have written to you? What is the guarantee that we have of your impartiality in this matter?       

14. The European Commission has appointed a three member investigating team to inquire into this matter as to whether Sri Lanka is in compliance with the ICCPR, the convention on the rights of the child, and the convention against torture. However I am to understand that the terms of reference of this team of investigators does not include an assessment of the economic impact of withdrawal of GSP+ or otherwise. This despite the fact that one of the criteria to qualify for GSP+ by your own stipulation is that a country should be a ‘vulnerable and dependent’ economy relying on less than five main exports. The three member team will complete their task by October and thereafter the commission will have to  convey its recommendation to the EU council. There is no time to carry out an economic impact assessment. How can anybody decide on the continuation or otherwise of a vital trade concession to a ‘vulnerable and dependent’ country  without doing an economic impact assessment? There is obviously something radically wrong in the whole procedure of this investigation. Of course I do understand that the GSP+ scheme was introduced only in 2005, and these investigative procedures are not yet well established. The procedure however should not go counter to both natural justice and  common sense. I don’t believe any country that is in a position of power should make decisions on economic and trade matters, on completely non economic, non-commercial criteria with no regard for the economic impact and human cost of those decisions.

15. When the GSP+ scheme was first created in 2005, I understand that the first recipients were allowed to get the concession provided 23 of the 27 key international conventions were ratified and implemented by October 2005. These 23 conventions related to certain fundamental  political, human and labour rights, including the elimination of discrimination against women; the prohibition on torture, the right to strike, the banning of child labour, preserving the environment, good governance and the fight against drug production and trafficking. (This last one was obviously meant for the 11 countries under the old  incentive scheme for countries combating the production and trafficking of illicit drugs). The remaining conventions had to be ratified within the duration of the first three years of the concession - by December 2008. The remaining conventions included the Kyoto Protocol, the Convention on International Trade in Endangered Species and the UN Convention against Corruption. Giving applicants time to get their act together was a good strategy in terms of nudging these countries towards the good governance envisaged in the 27 international conventions. That approach should be commended. These special incentive schemes are meant to play a supportive role in nudging countries towards good governance.

 16. However we get the inescapable feeling that in Sri Lanka’s instance, GSP+  is being used as a punitive, instrument to punish Sri Lanka for not toeing the EU’s political line. When the WTO appellate body ruled that it was possible for the EU to have special incentive schemes, (In the spinoff from the case filed by India) this was in the context of the "development, financial and trade needs" of the countries concerned. The WTO also thus looked at such special incentive schemes as playing a supportive role and they obviously never intended these special incentive schemes to become a big stick with which nations can be flogged. Using a trade instrument (even a non-reciprocal concession) as a punitive measure to punish a country for its omissions or commissions was obviously never envisaged in the WTO appellate body ruling that made GSP+ possible.