Labour unions concerned US GSP may be withdrawn

Earlier this year trade unions offered to intervene to save the GSP+, the duty-free trade deal from the EU. But another petition from trade unions is asking the American government to take away the US GSP, the American government’s duty free trade arrangement used by Sri Lanka.

The petition to the US government, by a grouping of American trade unions, called the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), wants Sri Lanka removed from the US GSP - for not properly implementing worker rights. These labour rights are based on International Labour Organisation (ILO) conventions.

This petition was supported by local trade unions. However, now, local trade unions are worried and saying they do not want a repetition of the EU’s GSP+ with the US GSP. “The petition was submitted by a US trade union but local trade unions supplied the material for the petition.But we don’t want the US to withdraw the GSP. We want them to grant the GSP and also see that labour laws are enforced. Even with the EU GSP+, we never wanted the EU to withdraw the GSP+. What we wanted was good labour standards,” said one trade union source. The trade union sources declined to be named given the sensitivity of the subject following the EU’s GSP+ withdrawal.

However, even trade unions are surprised by the US government’s sudden interest in their petition.

“The petition was submitted in 2008, but they (US government) did not take it up then. It was submitted again in 2009, but again nothing happened and it was submitted again late 2009, but they didn’t seem interested. This is handled by the US Labour Department and the US Trade Representative’s office. About two months back, an official came to Sri Lanka and met trade unions as well. But there was no indication they were going to consider the petition this year. When we asked about the petition they seemed very negative,” said the trade union source.

Labour, trade and politics

Local trade unions have previously complained to the ILO and the EU, about poor enforcement of ILO conventions. However, ILO standards have been interpreted differently by different parties, at different times. On some occasions the ILO has ruled in favour of the trade unions. However, in end-2003, before the GSP+ was introduced, the EU, after a fact checking process, gave Sri Lanka special duty cuts under the EU’s GSP scheme, for protecting labour rights involving the same ILO standards.

Local manufacturers also point out that although the ILO sets labour standards, these standards are not enforced on western buyers. US and EU brands buy from manufacturers in developing countries purely on the basis of the lowest price. Western governments also do not stress on their companies respecting labour rights in foreign countries. So to stay price competitive manufacturers in countries like Sri Lanka cut corners on worker rights and worker welfare.

Protected from preference

At this point 131 countries are using the US GSP (Generalised System of Preferences) to export over 3,400 products, duty free, into the US. In 2009, US GSP benefits for Sri Lanka came to about US$ 116 million (about Rs 13 billion), according to the US embassy. The loss from EU GSP+ is estimated this year at Rs 57 billion.

Sri Lanka’s biggest exporter and biggest industrial employer, the garment industry, says it does not use the US GSP, although it was the main user of the EU’s GSP+. This is because most apparel and textile products are not included in the US GSP scheme, although the EU GSP+ allowed duty free exports of apparel and textiles.

“As far as I know all our factories pay duty to export into the US. The US GSP doesn’t give us any duty cuts. So we will not be affected if the US GSP is withdrawn,” said one garment factory owner.

However, it is the garment industry that has the most allegations of workers’ rights violations in the petition filed by the trade unions to the US government. Many large garment factories are listed in the petition for labour law and trade union rights violations. Buyers from these factories are major US and EU clothing brands.

All friendly

At this point, the US says the review does not mean the GSP will be withdrawn. “Acceptance of the petition is not a decision to revoke GSP nor does it set a deadline for a decision on action on GSP privileges,” said a press release from the US embassy in Sri Lanka dated June 30. Meanwhile, members of the Sri Lanka-US trade chamber, the American Chamber of Commerce, have been approached for inputs. Talks with the Sri Lankan government are expected to start soon.

A public hearing is also tentatively scheduled for August and the government will be invited to participate.

In addition to Sri Lanka, Argentina will also face a review this year on enforcement of arbitral awards. Bangladesh, Niger, the Philippines and Uzbekistan are under review for worker rights and Lebanon, Russia and Uzbekistan are being reviewed for intellectual property rights.