GSP Plus reinstatement:

Commitment to conventions, a key factor- Experts

Sri Lanka will regain access to the European Union (EU) markets with zero duty concession under the Generalised System of Preferences (GSP) Plus trade scheme according to trade sector experts who expressed positive sentiments last week at a trade discussion on the reinstatement of the benefit to Sri Lanka by the EU.

However, a major hurdle is the compliance with the United Nations conventions which binds beneficiary States to adhere strictly to 27 conventions to be eligibile.

The GSP Plus concessions granted to Sri Lanka was withdrawn in 2010 following its failure to implement the conventions.

The former government refused to comply with the EU conditions following an investigation on the implementation of the regulations.

Trade experts said that the country lost trade worth around US$ 500 million, with the EU, due to the withdrawal of the zero duty concessions.

Exports to the EU dropped from around US$ 5.5 billion in 2011 to around US$ 5.1 billion last year according to data.

Trade with EU increased sharply during the effect of the GSP Plus scheme from 2005 to 2010. Sri Lanka continues to enjoy the standard GSP scheme which is not bound by conventions.

“We expect an early outcome of the discussions on reinstating the GSP Plus concessions to Sri Lanka due to the positive developments taking place on various fronts, Department of Commerce, Director General R.D.S. Kumararatne said.

However, he said that the EU will look into the report submitted by Sri Lanka and other international organisations on the promotion of good governance, human and labour rights and protection of the environment.

“The GSP is not an end all and be all for Sri Lanka. It is a temporary access to the EU market with duty concessions.

"We need to develop our competitiveness in the export market and be committed to Corporate Social Responsibility and good practices to gain a competitive edge over other exporters,” Kumararatne said.

The EU is certain that Sri Lanka will graduate out from the GSP Plus scheme soon as it gets to the upper middle income category country which disqualifies a State from enjoying the trade benefit.

Sri Lanka’s per capita income is around US$ 3,200 The GSP Plus is granted to countries which are below, upper middle income, five sectors accounting for 75 percent of the exports to the region and compliance with 27 conventions.

Trade experts said that the trade concession if granted will benefit Sri Lanka for the next three years which will be a huge boost to exports to the EU grew from 4.13 percent in 2013 to 6.43 percent last year.

Apparel accounts for a major share of the exports to the EU followed by agricultural, rubber based products and ceramics.However, trade experts said that the time line for the reinstatement cannot be determined as it takes around 10 months for the EU to approve the eligibility of a State for the scheme.

The European Union comprises three bodies, the European Commission which is the administrative arm of the EU, the European Parliament and the European Council the decision-making institutes. A trade expert said, "We are confident that the GSP plus concession will be granted to us as the Government has taken steps to address the issues through good governance."

“Sri Lanka has to address the fishing issues with the conditions outlined by the EU if we are to regain exports to the region”, the Commerce Department, DG said.He said that the discussion on the GSP Plus for Sri Lanka with the EU delegation last month was fruitful and added that the country can be hopeful that the trade benefit will be granted. CEO, Shippers’Academy, Rohan Masakorala said that Sri Lanka’s export base is low and its target of US $ 420 billion by 2020 is not sufficient as it is less than 20 percent of the GDP.

He said that the GSP Plus should not be looked as a mere subsidy scheme. Sri Lanka is the seventh sourcing country to the EU.

Trade experts said that Expo Milano2015 will help to promote Sri Lankan exports as it will attract 20 million visitors from around140 countries. Expo Milano 2015 is the largest worldwide exhibition organised to unite countries, institutions, companies and citizens around the world.

Chairman, Export Development Board, Bandula Egodage said the EU as a trading region is significant to Sri Lanka, being the number one export market accounting for 32% of exports of which Italy accounts for 18%, Germany 14%, Belgium 9%, France 7% and the Netherlands 7 percent.

He said, “At a time the Government seeks to reinstate GSP+ assistance and the lifting of the ban imposed by the EU on Sri Lanka’s fishery exports, this opening and inroads will pave the way for the strengthening of relationships and to establish dealings with the international business community.

- LF