The Sri Lankan government has categorically rejected European Commission (EC) conditions to extend the GSP+ duty free trade scheme for another six months -- a move garment makers say will be felt, but will not be catastrophic.
The EC's conditions included a written commitment by the government to improve the country's human rights record. This means the GSP+ will no longer be available for Sri Lanka after 15 August this year. However, in application terms, the GSP+ will not be available for Sri Lankan exporters shipping their goods to the EU from around 10 July.
Total gains from the GSP+, which has given Sri Lanka's apparel exports zero duty access to the EU since 2005, are estimated at around 150 million dollars annually. "Yes, the GSP+ loss will be a loss, but it will not be a catastrophic loss," said Mr A. Sukumaran, chairman of the Joint Apparel Association Forum (JAAF).
"This is because out of our total exports to the world, only about one-third use the EU GSP+. At this point about 50 per cent of our exports are to the EU. Out of that, about two-thirds use the GSP+. So out of total exports only about one-third of our exports will be affected by the GSP+ loss. That is why the loss will not be catastrophic to the industry," he said.
However, the apparel industry, which is the biggest beneficiary of the EU's GSP+, says it will ask the government to continue a dialogue with the EU on the GSP+. The industry is expecting a 12-15% drop in export earnings this year due to a combination of recession impacts in western countries and the loss of the GSP+.
Exporters say European orders have already dropped since the start of the year because of the uncertainty regarding GSP+ availability.
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