Monday, December 28, 2009

Ethics and politics of sourcing from Sri Lanka

Three weeks ago I wrote on this blog how the apparel manufacturers in Sri Lanka have embraced social and environmental responsibility and have benefited from it by way of increased productivity and peaceful industrial relations. I also mentioned how high-street retailers are failing to recognize the Sri Lankan garment industry's leadership in social responsibility.

Now a political action by the European Commission threatens the very existence of the garment industry in Sri Lanka. The Commission recently recommended temporary suspension of preferential trade terms for Sri Lanka because of the country's "poor human rights record." If approved by the Member Council, Sri Lankan garment industry's duty-free access to Europe will come to an end, a benefit the country has enjoyed since 2005. The Council has two months to decide by way of voting. If the Council accepts the recommendation, the suspension of benefits will become effective after six months.

The withdrawal of Generalised System of Preference benefits would mean garments exported from Sri Lanka will attract 9.6 percent duty in Europe, making made-in-Sri Lanka garments comparatively more expensive.

European retailers are maintaining a silence on the matter. Will they continue to source from Sri Lanka even if it means the products will cost 9.6 percent more? Or, will they move their orders to other low cost countries ignoring the excellent work Sri Lankan factories have done to improve working conditions?

European Commission's reference to "poor record of human rights" relates to the government's handling of ethnic violence in the northern part of the Island. But the industry has a clean record of human rights. Garment industry in Sri Lanka, like many other apparel producing nations, is the largest employer. European Commission's action could mean hundreds of thousands of innocent workers will lose their livelihood.

While politics has its own dynamics, it will be interesting to see how retailers view the situation and whether they do the right thing.

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