Sri Lanka will have access to GSP+ for three more years - EU Ambassador Denis Chaibi

If this nation remains a lower middle-income country in 2021

European Union’s Ambassador Denis Chaibi speaks to the Daily Mirror about the foreign policy of Sri Lanka and responds to questions regarding the potential of Sri Lanka given its geostrategic positioning in the region. He also sheds more light on bilateral relations between Sri Lanka and Europe in the context of changed political environment.

• It is natural for Sri Lanka to have Asia–centric foreign policy given geography and demographic 
• Sri Lanka has the lowest corona death rate in the world
• It is going to be very delicate to explain to European traders that Sri Lanka just wants to stop more imports from EU
• We don’t see any incompatibility between Sri Lanka’s international commitments and the Government’s victory with a two-thirds majority at the recent polls
• Sri Lanka is very vulnerable to climate change

Excerpts:

 Q   Sri Lanka foreign policy is going to be Asia-centric as announced by Foreign Secretary Jayanath Kolombage. As the ambassador of European Union, what is your response to it?

Before responding as the ambassador, I would like to respond as an expert on international relations.   What is foreign relations? It is basically managing relations with other nations.  What is essential in foreign relations? Obviously one could list the resources, power, history, wealth. If you look at the roots of all that, it is geography and demographics. If you look at geography and demographics, it is the most natural thing to have an Asia-centric foreign policy. You have to manage relations between big regional powers and big countries. In terms of demographics, neither India nor China can be beaten by any country. It is totally normal to have an Asia-centric foreign policy. That is notable and compatible with good relations with the European Union.  It is even quite conducive.  Why?  First of all, Asia–centric means you want to re-impose regional links. We, the European Union, are all for it- re-establishing regional trade relations. We think it is conducive to peace.  The more people want to re- establish their regional links, the better it is.  Secondly, we, as the European Union, have strong relations with big powers in Asia. There aren’t many countries that can say that they have very deep relations both with India and China. That means that we are among the few ones that can work alongside to ensure that Sri Lanka pursues an equidistant policy that is conducive to peace in the Indian Ocean.  We are ideal partners in that. We have strong legitimacy.  Sri Lanka can and will have an Asia-centric policy. That is not detrimental at all to what EU offers.  EU is important. We stand for trade, tourism, and cooperation for Foreign Direct Investment.  We are either the number one or two partner of Sri Lanka. We see this as strength in the relationship.   

 Q   How do you describe Sri Lanka’s potential for European Union?

Any visitor to this island is convinced of the potential of Sri Lanka. It is an island. It is born to trade. You have a fantastic port whose capacity can be expanded.  At present, 75 percent is transshipment. Its volume is transshipment to India. There could be more diversification with more European activities. You know EU is a superpower of standards. If you can export to EU, you can export to many more countries. Social standards, for example in child labour are better in Sri Lanka than in the region.  Environmental standards can also be important in the future. Potential is there. At the same time, there is facilitation through the GSP +. This could be increased. At the moment, the use rate of GSP + is 60 percent. By having more added value, you can grow it. In Bangladesh, the ratio of use is above 90%.  The second thing is to have a trade policy that is more conducive for exports and imports. It is very good that Sri Lanka wants to export more. It is going to be very delicate to explain to European traders that Sri Lanka just wants to stop more imports from EU. This might be understandable when there is a foreign currency crisis. If this is extended over and over, it would be difficult to convince European operators to import from Sri Lanka since they know that to export to Sri Lanka is impossible. 

 Q   The World Bank has ranked Sri Lanka as a lower middle-income country.  Does this mean that Sri Lanka will stand the chance to enjoy the GSP + facility further in the future?

In July, 2019, Sri Lanka became an upper middle-income country, just above the US $ 4000 limit per capita.  Sri Lanka fell below that threshold this year.  It means, at least for three more years, Sri Lanka will continue to have access to the EU market at zero percent tariff rate for two-thirds of its customs line provided that it adheres to international conventions and all conditions. If Sri Lanka is still a lower middle-income country in 2021, it would have access to GSP + for 2022, 2023 and 2024, provided all other conditions are met. 
EU will have new legislative instruments on GSP + in a couple of years.  We have to see how this instrument will be. 

 Q   How does the European Union see Sri Lanka’s strategic positioning in the Indian Ocean?

If you look at the big map of the world, it is unique to be an island with nothing under it right down to the South Pole. You are next to a big mass which has recorded significant economic progress. At the moment, the situation is difficult. Which country, other than Sri Lanka, has above 60,000 ships passing by every year just south of its southernmost point? Which country can see that many ships carrying two-thirds of the world’s oil? Which country can see that many ships carrying 50 percent of global trade? 
There is only one that has all that. For us Europeans, it is very important because we are the biggest consumer market in the world, the one that is most exposed to international trade. If you look at Colombo as a port, 75 percent of its transshipment is to and from India. At the same time, half of the trade from other big regional powers is close. Sri Lanka is uniquely positioned to manage relations between those big powers. What we particularly appreciate is that it is using its geostrategic positioning for regional integration. Sri Lanka is active in SAARC, BIMSTEC. It is also one of the pioneers of the Indian Ocean Rim Association. We really welcome that because it can reinforce peace and stability.  We really hope that this will generate a more rule-based order in the Indian Ocean. It is a project for peace rather than survival of the fittest. 

 Q   Maritime security is a tricky area for Sri Lanka because the big powers- India, China and the United States- have competing interests. How does EU look at it?

As I said, for us, what is the most important is to make sure that all the big powers with interests in the Indian Ocean accept the same rules, the rules  that are conducive to peace. This is the number one priority for us.  How do we contribute to it? We contribute to it by practical initiatives such as the common fight against piracy, exchanging information, ensuring transparency and discussion of international rules that can be applied. EU and Sri Lanka have a strong legitimate approach in fostering rules because we, the EU, have no navy that can compete with the Indian navy or the Chinese navy.  That people respect rules is what we want. 

 Q   The new Government of Sri Lanka has decided to withdraw from the UNHRC resolution 30/1.  EU is a main backer of this resolution. How will this action by the government affect its relations with EU?

A couple of points of precision. Diplomats are sometimes interested in being vague, but, in this case, I would be precise.  First of all, the resolution still stands. Sri Lanka withdrew from the co-sponsorship. The resolution will still be discussed next March. 
The main issue about this resolution is reconciliation.  I think this resolution was useful to give a benchmark of engagement for the international community with Sri Lanka in terms of reconciliation. The EU stands by this. You say we are the main group sponsoring this. You have the core group–Germany  which is an EU Member State, Canada, the United Kingdom, Albania and Montenegro. So we have one Member State in the core group. There are 27 Member States. We stand by the resolution. We participate. But it is wrong to say we are the main movers. 
The impact of this decision will depend on what the Government proposes. We are waiting to hear from the Government about its plans and how it continues its engagement with the UN and the international community. 

 Q   You would have interacted with Sri Lankan leaders in this regard. What have you gathered from them?

We had fruitful meetings with a reciprocal wish to engage in. We had a unique period during the last few months.  Europe is still in the midst of the pandemic. Sri Lanka is much better.  We are making contact with the ministries, programming how we can institutionally meet and discuss details of our cooperation; development cooperation, as well as cooperation on climate change.

 Q   We talked about the resolution.  Sri Lanka cosponsored the resolution under the previous Government. By trying to implement the provisions of that resolution, the then Government became unpopular. There is a Government with a new mandate. How do you see the contents of the resolution in that context?

It is your assessment that the previous government’s loss of popularity stems from the co-sponsorship of the resolution. 

 Q   At least, it contributed to  a great extent for it becoming unpopular.

That is your view. You cannot ask me to share that view. I was not here. It is part of your assessment. I would not focus on that. The new Government says that it has a strong mandate with a two-thirds majority. We are keen to discuss with the Government and understand how they will use this legitimacy for the reconciliation process and implementation of international commitments. We don’t see any incompatibility between Sri Lanka’s international commitments and the Government’s victory with a two-thirds majority at the recent polls.  We don’t see them as incompatible. 

 Q  Other than that, what are the latest developments regarding our bilateral relations?

In the overall context, the cooperation has been broad and deep. Formally, it started in 1995 with the opening of the EU Delegation. The EU has spent almost one billion Euro in Sri Lanka. It is all grants–no  loans with conditions attached. For a country of 20 million people, it is a large amount. 
The EU has a lot of admiration for the resilience of Sri Lanka, which went through internal trouble, civil war, the tsunami, the Easter Attack, and now COVID-19. Every time Sri Lanka stood up and recovered with a very good human development index.  I think donors feel that their money is put to good use. Sri Lankan resilience is accompanied by donors. 
Secondly, one focus is on agriculture development now. Another is post-war rehabilitation and reconciliation. On agricultural development, it was 2/3 of 200 million Euro between 2014 and 2020. Basically we want to empower farmers by making sure that they get the best price for the best products. 

For example, we work very hard to make cinnamon from Sri Lanka a product with a geographic indication.  For example, if it is Champagne from the region called ‘Champagne’ in Europe, it is 30 Euros in supermarkets whereas it is only seven Euros otherwise.  In Europe, we import more cinnamon from Vietnam than from Sri Lanka. But, Cinnamon from Sri Lanka is much better. You make sure that Sri Lankan farmers get a better price because Sri Lankan cinnamon is better. We work for this recognition with added value. We also want to make sure that huge cool rooms are made so that there is less waste of vegetables and fruits. 
In the North and the East, we do a lot of psychological counselling, demining, and supporting widows. Recently we allocated 22 million Euros as a response to the COVID crisis, with specific activities in the agriculture, tourism, and health sectors. We were the first one to move. We gave the biggest amount in terms of bilateral donation.  For the future, we would also like to focus on the fight against climate change and sustainability. Sri Lanka is very vulnerable to climate change.  We would like to work together very much in this regard. 

 Q  What is your comment on Sri Lanka’s fight against COVID-19?

Well, Sri Lanka has the lowest per capita death rate due to COVID-19 in the world, with Vietnam.  We have a lot of admiration for Sri Lanka.  All citizens of Europe may not be able do as Sri Lankans did. We don’t have the same discipline. We love individual freedom so much that we are ready to take more risks.  The result is that the death rate is higher.