Sri Lanka can’t afford to lose EU’s GSP+ concession at this stage: trade expert

by Sanath Nanayakkare

Dr. Dayaratna Silva, International Trade Expert and Sri Lanka’s former Ambassador and Permanent Representative to the World Trade Organisation (WTO) said recently that those who assumed that Sri Lanka could do without EU’s GSP+ concessions at this stage were mistaken.

“When it happened the last time, GDP declined by more than 1% and it had an impact on employment levels, particularly in the apparel industry,” he said.

“Studies show that developed countries taking the decision to remove trade concessions based on non-economic reasons leads to punishing the poor and creating problems in achieving the United Nations’ Sustainable Development Goals such as poverty alleviation,” he said.

Meanwhile, Suresh de Mel Chairman of Export Development Board (EDB) speaking at the same forum said that Sri Lanka must do its best to retain the existing concessions made available to Sri Lankan exporters.

Hemantha Perera, Secretary of the Sri Lanka Chamber of Garment Exporters, a constituent member of Joint Apparel Association Forum said that Sri Lanka’s apparel industry must increase the value addition to its exports to the EU from the current 52 per cent to 65 per cent quickly if the industry wants to utilize the fullest extent of the GSP+ benefits.

“Vertical integration in Sri Lanka’s apparel industry is one of the quickest ways to do that,” he said.

The three speakers made these remarks while speaking at a panel discussion, ‘GSP Plus; Past, Present and Future’, hosted by the Federation of Chambers of Commerce and Industry of Sri Lanka and the Colombo Chamber of Commerce.

Perera noted that certain fabrics used for apparel production are currently being imported from regions that disqualify the manufactured product for tariff reductions under the EU’s GSP+ concessions. He noted that this disqualification could be resolved via local production of such inputs.

Speaking further he said: “Fabric is a key raw material required for apparel production. Synthetic fabric often has to be imported to Sri Lanka, making them ineligible for GSP+ concessions to the EU,” Perera said. “However, developments such as the Eravur Fabric Processing Park can change this situation and allow the industry to make greater utilization of GSP+ to the EU, which is our second-largest market.”

“We currently lack infrastructure for functions such as dyeing and printing. These are vital in improving key indicators such as lead times and strengthening the output potential of the industry. Even at present, our competitiveness primarily depends on factors like ethical manufacturing practices, compliances and the high skill levels of our employees,” he said.

The other speakers at the event included the Ambassador of the European Union to Sri Lanka and the Maldives – Denis Chaibi, and Ambassador of Sri Lanka to the European Union – Grace Asirwatham.

The Joint Apparel Associations Forum said that it has been working with the government and companies in the industry to develop solutions to increase value addition into apparel; the setting up of the Fabric Processing Park at Eravur is the first step, achieved with consistent government support, JAAF said.