EU GSP+ stands out as vital trade tool for Sri Lanka’s pandemic recovery

But ‘Rules of Origin’ viewed as diluting the objective

by Sanath Nanayakkare

EU’s GSP+ trade concession that reduces or eliminates tariffs on a range of exports from Sri Lanka, is one of the international trade tools Sri Lanka could better use in its effort towards post-pandemic recovery, Rajesh Aggarwal, Chief, Trade Facilitation and Policy for Business of International Trade Centre (ITC) said recently.

“The EU-Sri Lanka Trade Related Assistance project has published the GSP+ Business Guide which provides relevant information for exporters from Sri Lanka to gain awareness as to how to get the most from this preferential trade scheme,” he said speaking at a webinar on ‘GSP+ for Enhanced Market Access’, hosted by the EU-Sri Lanka Trade Related Assistance and the Department of Commerce in Sri Lanka.

Ananda Dharmapriya, Acting Director General of the Department of Commerce speaking at the webinar referred to the ‘Country of Origin’ criteria included in the GSP+ Business Guide.

” In this regard, the Sri Lanka apparel sector has submitted a joint request to the EU Commission for cross regional cumulation for raw material originate from Indonesia. A high-level discussion with the EU Commission to get approval for this joint request of Sri Lanka and Indonesia on regional cumulation for apparel products is an important matter that needs to be looked into in the near future. Further, we expect to make a formal submission to the EU Commission to source fabric from Vietnam, as Vietnam recently entered into a Free Trade Agreement (FTA) with the EU.

‘Although there has been a gradual increase in exports to the EU after regaining GSP+ from 2017, the utilisation of EU GSP+ by Sri Lanka was only 62% in 2019. Despite the fact that GSP+ has generally been observed as a beneficial platform, with over 7,000 product lines eligible for duty-free entry under the GSP+, Sri Lankan exporters are concentrating only on a few sectors due to the cost of compliance included in Country of Origin criteria, it was pointed out.

Dharmapriya pointed out that Rules of Origin were the key reason for this and it has nothing to do with a lack of awareness or willingness to benefit from the facility. “Utilisation of EU GSP+ by the apparel sector is only 52% as Sri Lanka’s apparels are made of fabric imports from outside the South Asian Association for Regional Cooperation (SAARC) and the EU region which are not eligible for EU GSP+ concession,” he said.

The cost of compliance involved with the Country of Origin criteria, which is excluded from the tariff concessions, was also highlighted as another reason for the under-utilisation of the GSP+ facility by Sri Lankan exporters.