Economic relations with the Maldives

Economic relations with the Maldives

Since the beginning of the successful democratisation process in the Maldives, political and economic relations between the EU and the Maldives have become closer. In terms of economic assistance, the Maldives benefit from the Generalised Scheme of Preferences (GSP – Regulation No 978/2012), including its Special Incentive Arrangement for Sustainable Development and Good Governance (GSP+) for vulnerable countries.

The COVID-19 pandemic has caused an unprecedented crisis in the Maldives, for which general GSP arrangements are inadequate or not applicable. The IMF has concluded that Maldives is the worst effected economy in this region. The Maldives have undertaken numerous efforts to establish justice sector institutions and to remedy deficiencies in access to justice. The incumbent government’s plan prioritises the prevention of corruption, which is proved by its adoption of a zero-tolerance-policy. Furthermore, a 2019 Human Rights report on the Maldives attests that the authorities have taken steps against officials who have committed human rights abuses, including enforced disappearances, and established investigative commissions.

On 30 September 2020, Member of the European Parliament (MEP), Tomas Zdechovsky of the Group of the European People’s Party sent a written parliamentary question to the European Parliament. 

MEP Zdechovsky enquired “In this connection, could the Commission detail what measures are applicable to provide advanced economic support to the Maldives?” and “Is the Commission considering customs duty exemptions for tuna imports, which are a core export product for the Maldives?”

On 01 December 2020, Commissioner Jutta Urpilainen, responsible for International Partnerships, answered the parliamentary question on behalf of the Commission. 

Commissioner Urpilainen said that the European Union (EU) is committed to its partnership with the Maldives. She further stated that “as an upper middle-income country, the Maldives benefit from EU thematic and regional support” and “the country also receives financial support (EUR 5 million) for the Government to implement its Nationally Determined Contributions to reduce greenhouse gas emissions in the energy sector”. She added that “the European Investment Bank (EIB) contributes EUR 45 million to the Government’s programme on renewable energy options in outer islands”. 

Commissioner Urpilainen highlighted that “the Maldives are no longer eligible for the Generalised Scheme of Preferences (GSP)”.

Further, Commissioner Urpilainen explained that “the EU COVID-19 response for the Maldives consists of grants (EUR 3 million) to strengthen the public health system response capacity and to mitigate the economic and social impact of the COVID-19 crisis, notably in the tourism sector” and that “the European Investment Bank (EIB) has also signed a EUR 20 million loan with the Ministry of Finance of the Republic of Maldives to help sustain the local economy, protect jobs and support small and medium enterprises operating in the tourism and industry sectors in the wake of the COVID-19 pandemic”.

Regarding customs duty exemptions, Commissioner Urpilainen reported that “the Maldives requested an exemption from EU customs duties for its exports of tuna to the EU” and “this request has been discussed with the Maldives on several occasions in the past months”. She added that “the EU is bound by World Trade Organization rules, which do not allow in principle the granting of such unilateral trade preferences for one country only”.

Photo Credit : https://www.countryflags.com/en/flag-of-maldives-the.html

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