The Sri Lanka Garment Buying Officers Association (SLGBOA) has urged the Sri Lankan Government and the European Union (EU) to pursue its dialogue on the restoration of the GSP +facility as soon as possible and arrive at a win-win situation to save the country’s apparel industry.
Issuing a statement, SLGBOA Secretary Hiran Bandaranaike said, if the GSP+ status is not restored in the near future, Sri Lanka’s apparel industry which is the major foreign exchange earner of the country for many decades may have to face bad times with decline in exports and employment opportunities.
The country stands to lose millions of dollars worth of apparel exports to the 27–nation EU market and the livelihood of thousands of apparel sector workers are at stake, as the withdrawal of the privileges is expected to affect large number of factories.
According to industrialists, the loss of the GSP+ benefit will exert tight pressure on profit margins, for, when the benefits are lost, sellers will have to bear the cost of additional tariff. Under the GSP+ concessions Sri Lankan goods entering the EU need to pay no duty; but now the privilege is lost and the standard GSP kicked in and thus Sri Lankan apparel became subject to concession of only 2-2.4% duty which is 20% of standard tariff averaging 10-12% as against zero duty which was enjoyed prior to withdrawal of GSP+ in 15th, August, 2010.
Mr. Bandaranaike said that despite Sri Lanka enjoying the GSP+ privileges in the EU, Sri Lanka’s Apparel exports to EU market contracted by 8.4% during the first eight months of current year from the year ago level. The apparel exports to EU during Jan/August, 2010 was US$ 986 million as against US$ 1,077 million during same period 2009. The European Commission (EC) announcement of 15th February,2010 of it’s intention to suspend the GSP+ concession granted to Sri Lanka with effect fromAugust 15,2010 would have also led to the above decline in exports, he said.
“The apparel exports to the US market during the first eight months of 2010 declined by 4.6%. The exports during the first eight months of this year were US $833 million as opposed to the first eight months of 2009 recording US $ 873 million,” he said.
Sri Lanka was the eighth leading apparel exporter to the 27 countries in the EU, but Sri Lanka is bound to lose that position as well after the loss of EU’s GSP plus concession on August 15, Mr Bandaranaike said, adding that according to the Joint Apparel Association Forum apparel exports, which was the country’s key industrial exports, would come down by 10-15% this year.