GSP Plus suspension will cost Lanka Rs. 57 billion a year

By Leon Berenger

The European Union’s suspension of the GSP Plus preferential tariffs from August 15 this year will lead to a loss of US $ 500 million or Rs 57 billion a year, a top official in the apparel sector said yesterday.
“This will mean a loss of 12 percent of the country’s apparel exports,” Joint Apparels Association Federation (JAAF) President A. Sukumaran told the Sunday Times yesterday.

Speaking on the telephone from New York, he said export earnings from apparel which stood at US$ 3.3 billion (Rs 37.6 billion) last year would drop to US $ 2.7 billion (Rs 30.7 billion) or 2.8 billion (Rs 31.9 billion), this year. Earlier, Government officials had placed the loss of revenue at US $ 150 million or Rs 17.1 billion.

The news of staggering losses comes as trade unions in the apparel sector voiced concerns of cost cutting by employers in the apparel sector. “The future looks bleak and fears of retrenchment are worrying the workers,” Progressive Union President Palitha Athukorale said.

He said 40,000 workers had been laid off during the past 14 months. “These figures can rise rapidly when the suspension of the GSP Plus scheme takes effect,” he said. Free Trade Zone and General Services Employees Union Secretary Anton Marcus said there were fears over the future of workers. Cost cutting to cope with the losses caused by the GSP Plus suspension would naturally affect some members of the workforce, he said.

Their remarks came as the Government granted clearance for a team of US officials to visit Sri Lanka to discuss the planned review of worker rights. This is to determine whether the United States should continue its own GSP tariff concessions for exports from Sri Lanka. A US embassy official said, “We are working on dates and other issues for the visit.”

The US Embassy in Colombo said in a statement last Wednesday that the US Government had accepted a petition from the American Federation of Labour (AFL) and CIO (Congress of Industrial Organisations) for a review of worker rights in Sri Lanka. This is to ascertain whether Sri Lanka was following the designated criteria to remain eligible for the GSP preferences from the United States.
Union leader Marcus said US officials have been visiting Sri Lanka regularly to consult many stakeholders on worker issues.

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