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Extend GSP+ to FTA : JAAF

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Sri Lanka’s garment industry umbrella body – the Joint Apparel Association Forum (JAAF) says that while GSP+ tariff concession will assist the industry in the short-term, the long-term desire of the industry is to elevate the trade relations to that of a Free Trade Arrangement (FTA) as it will provide stable long-term market access with predictability.

Addressing a six-member EU delegation at a working luncheon held last week, Chairman of JAAF, Azeem Ismail, stated that the industry is very much eager that the restoration of GSP+ to Sri Lanka will take place as early as possible and hopefully, by the end of this year as the GSP+ tariff concessions enjoyed by the industry from 2005 to 2010 had helped the trade to move in the right direction.

“Our exports increased from US$ 1 billion in 2005 to US$ 1.7 billion in 2010; after the withdrawal of GSP+ in August 2010, the industry was able to sustain its exports to the EU and achieved a moderate annual growth rate of 6% to 7% during the period 2010 to 2014. However, the industry could have maintained an annual growth rate of over 10% and added an additional US$ 600 million to US$ 700 million to our export turnover if the GSP+ had been available,” representatives of JAAF which included the Secretary General –M P T Cooray, Chairmen of its member associations and industry leaders told the delegation from European Union led by Head of Mission - Marc Vanheukelen, Director – DG Trade of the European Commission together with David Daly – Ambassador and Head of Delegation.

During the meeting it was highlighted that although in the year 2014, the apparel industry had exported US$ 2.1 billion or 46% of its exports to the EU, Sri Lanka’s market share still remains around 2% of the total market demonstrating the enormous potential for the industry to expand its market share.

Another issue that was mentioned during the meeting was the absence of a level playing field in the international market place for Sri Lanka. Representatives from JAAF said that while Least Developed Countries (LDCs) have duty free market access, many of Sri Lanka’s competitor countries either enjoy preferential access or are on the verge of concluding Free Trade Agreements, which will put Sri Lanka at an enormous disadvantageous position and pose new challenges.

In response, the EU Head of Delegation stated that the very fact they were in Sri Lanka displayed the desire of the EU in assisting the Government and the people of Sri Lanka in order to achieve development goals through unilateral extension of concession of GSP+.

The Head of Delegation, however, pointed out that the submission of application for GSP+ should be made with credible reporting on the relevant 27 conventions, in particular, on Human rights and the confidence has to be built with implementing measures to reflect actual commitment to correct the deficiencies, if any.

Meanwhile, JAAF emphasizing the importance of the time frame attached for the restoration for the GSP+ requested the EU delegation to explore the possibility of hastening the process while promising that the industry will work consciously with Government and provide necessary support through the industry relationship in the EU countries.

Sri Lanka’s textiles and garments sector, which recorded an export revenue growth of 9.4% to US$ 4.93 billion last year, compared to the year 2013, is expecting to achieve a revenue surpassing US$5 billion this year.

Secretary General, JAAFSL, Tuli Cooray addresses the EU delegation during the discussion on reviving the GSP+ facility while Azeem Ismail (left) and MD of Hidaramani Industries Ltd Anil Hirdaramani (right) look on
Pic by Ravindra Dharmathilake

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