Attention turns once again to Sri Lanka this week as the country gears up for its parliamentary elections. The EU recently decided to stop treating Sri Lanka as a preferential trading partner. What does this mean for Sri Lanka, and does it affect the EU?s clout in standing up for human rights around the world?

Amid all the excitement around EU institutional change, the European Commission's recent launch of a consultation on the future of its trade instruments under the World Trade Organisation - the Generalised System of Trade Preferences (GSP) - went largely unnoticed. But those who want the EU to be an effective actor to promote human rights should care, because GSP+, one of the few EU human rights instruments that is not isolated from other areas of policy towards third countries, forms part of this.

In February, the EU announced that Sri Lanka's GSP+ status will be suspended in response to overwhelming evidence that the government was falling well short of its obligations under a number of key international conventions. Countries must respect these obligations in order to qualify for preferential access to EU markets.

This decision is not without its costs. It threatens many thousands of jobs in the Sri Lankan textile industry and consequently the standard of living of many. The EU is Sri Lanka's number one export partner, and according to the Commission's most recent figures, the textile industry accounts for more than 55 percent of the value of Sri Lanka's exports to the EU. However, it does at least show that the EU is sometimes willing to use the leverage that it has for its treaty-based principles.

Will this be effective? Sri Lanka could lose over €100 million annually due to EU withdrawal of preferential tariffs on their produce. Yet the government of Sri Lanka appears remarkably defiant in the face of the likely impact of the suspension from August 2010, arguing that they have other options for their textile exports, most notably US markets. In advance of the EU's announcement, Sri Lanka started to turn to other partners - China, Iran and Libya - for financial and military aid.

In this environment, can the EU afford to have principles? Since GSP+ status is largely to the benefit of the developing market in return for observance of international human and labour rights standards, the hit either way on the consumer in the EU is unlikely to be too noticeable. So yes, the EU can afford to, but is it worth it, if other markets are open to serious human rights abusers with no strings attached?

This is where the EU has to play its cards carefully. Until the sanction comes into force in August 2010, it would still be in the interest of the Sri Lankan government to show progress in tackling human rights abuses. What is being offered from other partners in terms of military and financial aid helps them, but is not preferential access to important markets at such a reduced rate. In the run up to the Sri Lankan parliamentary elections on April 8, loss of jobs in the garment industry must matter.

The coming months are the real test of whether the GSP+ can work - not just as a deterrent for governments more wary of the EU, but as a lever for change in countries that have proved themselves resistant at all levels to diplomatic pressure. This window is time-limited by market forces. Companies will eventually take their business elsewhere, and there will no longer be any point in the Sri Lankan government responding to the artificial tie between their respect for human rights and international humanitarian law, and the competitiveness of their textile industry.

After so many broken promises, can the Sri Lankan government really win back confidence that it is committed to improving its human rights record? Impunity persists for serious abuses on both sides during more than 25 years of civil war, and the current situation is moving backwards. Since the presidential elections in January, the environment has become even more dangerous for journalists and activists. In March, the parliament voted to extend emergency regulations, which have been widely used to enable this repression, until after the legislative elections in April.

Official discussions are nevertheless underway to look for a path back to Sri Lanka's GSP+ status. What is needed are some clear indicators of progress that would set Sri Lanka on a genuine path towards respect for human rights, so that the EU's principled decision earlier this year does not come to nothing. An immediate end to the emergency legislation, and the arbitrary arrests and enforced disappearances that it facilitates, would be a good starting place. Beginning an independent review of the Sri Lankan criminal justice system that allows torture, ill treatment and a broad range of other injustices would be another. Above all the indicators need to be concrete.

Getting this right matters, and not only for the future of Sri Lanka. Other recipients of this special trade status - Azerbaijan, Colombia and Honduras among them - will be watching this test case with interest. It is likely to shape their assessments of whether the human rights component of the EU's external relations is just talk, or something more important. GSP+ is only one part of this much bigger problem, to which post-Lisbon Treaty Europe needs to give an answer. Is the EU really committed to using its influence to promote and protect its values in its international relations? Indeed, is it capable of doing so? What price is it willing to pay in its wider relations for these ideals? And if, in the changing global environment, it is not, or it cannot, is anyone else going to?

This piece was first published by E!Sharp. 


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The European Council on Foreign Relations does not take collective positions. This commentary, like all publications of the European Council on Foreign Relations, represents only the views of its authors.