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EU-GSP plus for Sri Lanka, pressurizes Bangladesh exporters

On 19 May 2017 the European Union re-granted Generalized Scheme of Preferences Plus (GSP+) for Sri Lanka. As compared to before EU GSP+ status will now help Sri Lanka’s economy develop and create more and better jobs for its people.

On the other hand, Bangladeshi apparel makers now would face another competition from Sri Lankan companies and the value added market segment will definitely feel a pressure now. Due to GSP+ in Sri Lanka the company is always cross checking price with Sri Lanka.

The EU introduced GSP+ with the aim of providing more extensive market access than the standard GSP scheme, giving beneficiary countries duty free access to EU markets for over 7200 products. Sri Lanka will be benefitted from the full removal of tariffs on Sri Lankan imports into the EU on 66 per cent of tariff lines covering a wide array of products including textiles, small machinery, and fisheries.

GSP-Plus concessions were initially granted to Sri Lanka in 2005, after the Tsunami. However, in 2010, the EU withdrew Sri Lanka’s preferential access under GSP-Plus to the European market due to the government’s failures in adhering to human rights standards set under the provisions of the scheme.

Contrastingly, during the 2010-15 period, Sri Lankan exports to the EU grew by a mere 1.02 per cent compared to previous years. The most direct impact was tariffs being reinstated on Sri Lankan imports to the EU, making them uncompetitive compared to similar imports from other developing economies.Compared to the larger firms. The impact was severe on medium sized apparel producers, because they did not possess the technical and financial resources to adequately diversify their export portfolio.As a result a significant volume of both domestic and foreign investment relocated to these countries looking for preferential access to the EU market.

The EU is Sri Lanka’s second-largest trading partner after India but its main export destination, absorbing 31 per cent of Sri Lankan exports in 2015. At present under the new trade concessions granted under the GSP+ for Sri Lanka would undoubtedly result in boosting the economic prosperity of the country.

 
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