Apparel industry to lose US $ 494mn if GSP Plus withdrawn: JAAF
■ „SL’S apparel sector to severely lose competitive edge, risking its sustenance „■ Highlights need to secure new FTA deals, specially with China, to overcome any impact from loss of GSP Plus
■ EU is expected to adopt a new cycle of EU GSP Regulation for 2024-2033, which will be effective from January 1, 2024, for next 10 years
Sri Lanka’s apparel sector would face a major setback if it fails to renew the GSP Plus tariff concession from the European Union (EU), the Joint Apparel Association Forum (JAAF) cautioned, as the collective loss for the industry would amount to about US $ 494 million in exports.
JAAF Secretary General Yohan Lawrence pointed out that alongside the staggering loss of export revenue, with the withdrawal of GSP Plus, the local apparel sector would also “severely lose its competitive edge”, risking the sustenance of the industry.
“This comes at a time when the country’s priority should be in reaching as many diverse markets as possible,” said Lawrence.
“With Sri Lanka being identified as a country with the least use of its preferential market access among all the GSP Plus countries, the loss of preferential access will halt the industry’s drive to increase the current utilisation rate of 63 percent and efforts to expand Sri Lanka’s apparel market share in the EU,” he added.
Colombo-based economic think tank Institute of Policy Studies has also highlighted that the apparel industry would be among the worst-hit sectors, if Sri Lanka is to be withdrawn from GSP Plus.
However, the sector is exploring all options and is looking to chart a way forward without GSP Plus, in case the market access is not extended.
While acknowledging the EU is an integral market to Sri Lanka’s apparel sector, it is looking to grow the market share outside of it.
“We have a number of European investments in the sector, some going back to 40 years and protecting this market is one of our key objectives. That said, we acknowledge the need to have a wider base of exports,” said Lawrence.
The apparel sector stakeholders have been reiterating for the need to expedite negotiations on free trade agreements (FTAS) to enter new markets.
“At a time when the country’s economy is in a critical state, securing new FTAS can help export diversification and reduce barriers for Sri Lankan apparel exporters. Furthermore, it will generate the muchneeded foreign exchange for the country. Therefore, securing an FTA with China is one of our key priorities,” he shared.
The JAAF leadership expressed confidence in the local apparel sector increasing its resilience and securing the jobs of the untold hundreds of thousands earning a living through this sector, if it can diversify its market.
For this, the strategic vision of the Sri Lankan government and coordinated actions of its diplomatic missions would be most important, asserted Lawrence.
In 2010, Sri Lanka lost the GSP Plus status due to the country’s deteriorating human rights situation. However, in 2017, this status was restored.
The EU is expected to adopt a new cycle of the EU GSP Regulation for 2024-2033, which will be effective from January 1, 2024, for the next 10 years.