By: Staff Writer
Colombo (LNW): The apparel sector stands to lose USD 494 million if Sri Lanka loses the GSP plus trade concession offered by the European Union.
Secretary General of the Joint Apparel Association Forum Sri Lanka, Yohan Lawrence, said that with the current GSP+ regulation set to expire by the end of 2023, it is imperative that Sri Lanka takes measures to secure concessionary access to the European market.
“Securing GSP+ depends on Sri Lanka upholding the already ratified conventions spanning human rights, labour, environment and governance. If Sri Lanka is to lose GSP+, the combined loss for the apparel sector is estimated at USD 494 million, which is 79% of the estimated trade loss,” Lawrence said
Sri Lanka’s overall economic outlook shows slow but steady signs of recovery, especially after the Sri Lankan Government reached a staff-level agreement with the IMF for a 4-year Extended-Fund Facility programme (EFF) earlier this year. This is critical to inspire investor confidence and attract much-needed foreign direct investment (FDI) to the country.
With that being said, the country was able to achieve over USD 1 billion[1] in March in exports for the first time in 2023;
however, in apparel exports specifically, there has been a 15-25% drop in orders as a result of the global economic slowdown caused by the increase in interest rates to combat high inflation in the West specifically in major exporting countries including the US, UK and Europe.
Recent data shows apparel exports declining by 14.95 per cent Year-on-Year (YoY) to USD 1.18 billion in the first quarter of this year compared to the same period last year, which is the lowest since the first quarter of 2013. The industry projects it could be five to six more months before it sees a recovery in global demand.
GSP+ is a trade incentive granted by the European Union (EU) to developing countries, eligible to import items to the EU market, guaranteeing increased trade with the EU.
It has also been observed that the EU’s GSP+ helps developing countries alleviate poverty by generating employment across vulnerable communities specifically, adding skill, knowledge and technological know-how to a pool of resources and creating jobs based on international values and principles.
Latest data shows that EU imports from Sri Lanka amounted to about €2.55 billion in 2021, of which approximately 54% benefitted from reduced tariffs under the GSP+ arrangement. Moreover, 85% of Sri Lanka’s current exports are eligible for tariff reductions under the GSP+ scheme[3]. Such preferential access granted through GSP+ provides Sri Lankan apparel exporters with an advantage of diversification and exploring new export opportunities.
