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Calvo Group Fears Loss Of GSP Plus By El Salvador

According to the board of the Spanish-owned tuna group Calvo, is pessimist about its future operations in El Salvador, if the country loses the European Union (EU) tariff privileges of the Generalised System of Preferences System (GSP Plus).

In order to continue benefitting from the GSP Plus, the Salvadoran Parliament must ratify constitutional reforms that allow the country to take refuge in an International Labor Organization (ILO) agreement, a requirement demanded by the EU for an extension of GSP Plus system status.

To do so, the Legislative Assembly, which initiated its period on 1 May, must ratify an amendment to Article 47 of the Constitution, which allows unions to be established in public institutions, stated the delegated adviser of the company, Manuel Calvo. EL Salvador must also ratify ILO Agreement 87, which allows for the same.

That ILO agreement was declared unconstitutional in October 2007 by the Supreme Court of Justice. There is as yet time through the end of the month to approve the reform before El Salvador is no longer covered by the EU tariff preferences system. Once it is no longer in effect, Calvo, like other companies that export to the EU, will have to pay a 20.5 per cent tariff to export products to the European market.

“In our case, a 20.5 per cent tariff is completely untenable,” Manuel Calvo stated.  “Given the “reduced profit margins” which the company is working with, such a high tariff would completely force it to withdraw from the market,” he explained.

“We cannot compete. So, it's not that we want to close down operations, but rather the situation is obliging us to do so,” he said. “It would be terrible to lose the benefits that, in fact, would disable operations, and not only ours, but those of many other exporters.”

At present, 90 per cent of the Spanish firm's production in El Salvador is exported to the EU market.

“We are talking about some USD 103 million to USD 105 million,” Calvo emphasized.

In addition, the Salvadoran processing plant would not be able to operate at 10 per cent of its capacity, due to the expected economic losses, he clarified.

The La Union port plant employs 1,500 workers to assist in producing between 3,000 and 4,000 tons of tuna monthly.

In June 2008, directors of the Calvo Group confirmed the opening of a new commercial division in El Salvador - the Calvo Distribution.– where products have been distributed to Nicaragua, Honduras, Guatemala, Costa Rica, Panama, the Dominican Republic, Taiwan, and Vietnam.