Exporters have alternative to GSP+

Sri Lankan exporters can fall back on the European Union’s (EU) GSP (Generalised System of Preferences) scheme, if the GSP+ (Generalised System of Preferences Plus) is withdrawn, officials say.
“We are compliant with the GSP+ requirements.

So there is no reason to think the GSP+ would be withdrawn. But even in this unlikely case, exporters can still use the EU GSP scheme,” Secretary to the Ministry of Export Development and International Trade, S Ranugge told the Sunday Times FT.

The Department of Commerce also confirmed that the GSP will be accessible to Sri Lanka as a fall back option. But exporters noted that the GSP scheme gives lower benefits than the GSP+ scheme.
The GSP gives a percentage of duty reductions, while the GSP+ gives outright zero duty access. Industry sources said this difference could become important to some export sectors like garments that are heavily price competition oriented.

The ‘textiles and garment’ category is Sri Lanka’s biggest export (43% of total industrial exports) and is the biggest export into the EU. But recession in major European economies and heightened competition, have already hit Sri Lankan garment exports this year.

Although in the first quarter of 2009, garment exports to the EU increased by 20.3% compared to 2008, in the month of May, exports to the EU reduced by 18.39%. Garment exports are expected to recover later in the year, but exporters say the GSP+ will be more useful than the GSP for export product diversification and market protection in the EU.

GSP+ investigation
Exporters are waiting for an outcome from the EC about the continuation of the GSP+ scheme. The EC started an investigation last year on Sri Lanka’s implementation of 3 international conventions, out of 27 conventions that have to be enforced, to qualify for the GSP+ scheme.

The local European Commission office said “the final report from the investigation is due to be given out only in October this year. The report will be given directly to the government.” The government is also allowed to respond to any allegations against continuing the GSP+ for Sri Lanka.