‘Apparel industry stands to benefit’
By Sanjeevi Jayasuriya
The apparel industry will benefit with the regaining of the GSP plus facility, which the European Union (EU) proposes to restore after taking into account the country’s unwavering commitment to strengthen good governance, human rights, labour conditions and environmental protection.
“The apparel industry will be able to produce quality goods at a cheaper price. This will enable Sri Lanka to sell more and will have a competitive market edge. There will be duty waiver of around 10 percent and this is a considerable amount in international trade,” former Secretary General of the Joint Apparel Association Forum, Rohan Masakorala said.
The country lost approximately US $ 23,000 million due to the withdrawal of the GSP plus facility. All that business was taken by Bangladesh, Vietnam and Pakistan. The country has a huge challenge of attracting lost business opportunities and this will not be an easy task, he said.
However, producing higher quality products and following ethical practices will be plus points for Sri Lanka. “We will be able to win buyer confidence with time and it will enable the country to earn an additional $ 500 million during the next one to one and half years from potential buyers,” he said.
The GSP plus facility will also facilitate foreign direct investment as there will be more demand for the country’s apparel in the EU market. The zero duty will enable the sector to grow tremendously and bring overall benefit to the country. The restoring of facility is a positive sign for Sri Lanka and gives free market access to Europe, he said.
“With the facility in place, we have to win back the buyers. This is the challenge we have ahead. For this, the prices have to be competitive,” Masakorala said.
The EU’s Generalised Scheme of Preferences (GSP) and GSP Plus is a trade concession system that allows developing countries to pay less or no duties on their exports to the EU. This gives them vital access to EU markets and contributes to their economic growth.
Biz community calls for best use of facility
By Lalin Fenandopulle
The business community while welcoming the imminent reinstatement of the GSP Plus facility by the European Union noted the importance of making the best use of the facility to drive more exports to the region and be ahead of competitors.
The Business Observer spoke to Chamber heads on the trade facility and how the country should boost export volume.
National Chamber of Exporters (NCE) President Sarada de Silva said, the business community should be thankful and give credit to the government and more so to the European Union for granting the facility to Sri Lanka.
He said the apparel export potential is stuck at around USD 4.8 billion in export turnover when Bangladesh has a turnover of USD 25 billion in garment exports. It is not only garments that are benefited by the GSP Plus concession. Exports of fish and bicycles to name a few are benefitted and all exporters should make good use of the facility to boost the export volume and enhance income to the country “Some exporters get over 12 percent duty free concession. They should drive more exports and enhance the volume,” de Silva said.
The chamber in a release notes with great satisfaction the success of the Government in regaining the GSP+ facility, which will undoubtedly boost the stagnating trend of Sri Lankan Exports to facilitate accelerated Economic Development through the achievement of ambitious national export targets.
The Chamber is pleased to note that the GSP+ Preference would entail the full removal of duties on 66% of tariff lines, covering a wide range of products including textiles and garments, fisheries products, rubber products and machinery. Since the EU consisting of 27 countries is the biggest export market for Sri Lanka accounting for 1/3 of total global exports of the country.
Currently there are eight GSP+ beneficiaries among developing countries. In this context the Chamber notes that Sri Lanka will have a particular advantage over competitor countries such as Pakistan, Bangladesh, and the Philippines for exports especially in the textiles and garments sector. Sri Lanka will have three to four months before the EU parliament ratifies the concessions to commence implementation. The Chamber calls on its members and other Sri Lankan exporters to prepare themselves during this period to make effective use of the concessions that will be available. The Chamber on its part will conduct awareness creating training programs for Sri Lankan exporters, and especially for its member companies, to have a clear understanding of the regulations and procedures, as well as product quality requirements of the EU countries to effectively compete in the EU market, using the advantage of the concessions that will become available.
National Chamber of Commerce of Sri Lanka President Thilak Godamanna said the Chamber welcomes the proposal of the EU Commission to grant GSP+ to Sri Lanka. “It is too early to commit as it will come into effect after ratification by the European Parliament after 4 months. Sri Lanka was requested to effectively implement 27 conditions, which are under the international conventions. If we are to receive this GSP+ around May, it will boost our exports to the European Union. Our exports to the European Union will be free of any duty and our market in the EU would be increased thereby,” he said. This facility will specially benefit the garments and fisheries sectors that have the largest percentage among 66 product categories that would benefit under this GSP+ scheme. GSP+ is offered to countries that need special consideration for their economic development.
Tea Exporters Association former Chairman Rohan Fernando said Sri Lanka is an island nation with 24 million people (including tourists) and an externally driven economy, unlike India our closest neighbor. Hence, external trade with developed nations is paramount for our GDP and export earnings.
Among the developed nations EU and USA are most important for us due to several reasons. Primary being the laid down procedures and a transparent legal system which will work according to agreements. Whereas other big markets such as China, India and Russia will pose obstacles in the form of non-tariff barriers and questionable declarations at the point of imports.
GSP plus is offered to developing countries to become developed and is based on good governance in a broad sense. Although we bragged that GSP plus is not essential, most developing countries in the region especially Bangladesh have made humongous gains in exports and GDP due to the very GSP plus we were denied of several years ago, Once the GSP plus is allowed for Sri Lanka, even the trade with USA stand for improvement based on the same policies of governance.
Currently, the EU is considering the formal application for re-entry into GSP plus regime by Sri Lanka and there is hope it will be accepted. The time line set for this procedure is 6 to 8 weeks.
“After we are included in the GSP plus regime, we will be able to access competitively the EU markets for fisheries, garments, light machinery and even assembled items using 70% local components,” he said.