Rs. 21b. bailout package if garment industry stripped of GSP+

By Dilshani Samaraweera

The government has agreed to an estimated US $ 200 million (Rs.21 billion) 'bailout package' for the garment sector, if the European Union's GSP+ trade concession is not renewed next year, garment exporters said yesterday.

The bailout package was offered after the government decided that it would not agree to any EU probe on whether Sri Lanka had conformed to labour and human rights covenants.

Export Development and International Trade Ministry Secretary S. Rannuge said that since the garment sector would be the worst affected, the bailout package was being considered for this sector.

Details of the source of funding for the bailout package were not available immediately, but International Trade Minister G. L. Peiris and Central Bank Governor Ajith Nivard Cabraal, among other officials, have called a news conference tomorrow to explain matters. It is also unclear whether the support package would be extended to other industries which benefit from the GSP+ concessions.

Commerce Department export data show that garment exports account for about 65% of total exports to the EU under the GSP+ scheme. The balance 35% of GSP+ exports come from emerging sectors like agriculture, fisheries and footwear.

The support package was expected to cushion the extra costs that garment factories would have to absorb if the GSP+ was suddenly terminated, the garment sector officials said.

They said that because of the uncertainty over the GSP+ facility, orders for next year were slow in coming and they would be in a precarious position if the support package was not implemented.

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