Sri Lanka to receive GSP concession from May 19th
Tun Lai Margue, Ambassador of the Delegation of the European Union to Sri Lanka and Maldives confirmed that Sri Lankan exports would enjoy the benefits from the removal of import duties levied on Sri Lankan goods entering the EU market from 19th May. He commented that as with all countries who are provided with the GSP plus concession Sri Lanka too would be under close monitoring and also that the EU expects Sri Lanka to commit to ratifying and implementing the 27 international conventions it has entered into on various subjects such as Human Rights, labour conditions, environmental protection and good governance.
EU releasing a statement expressed that access to GSP does not mean it accepts that Sri Lanka is in a perfect situation with regards to complying with the relevant 27 treaties. The access to GSP is to serve as an incentive for increased access in exchange for progress in relation to implementing the conventions and this access is to serve as a platform capable of engaging with the many stakeholders.
The granting of the GSP Plus scheme would mean full removal of duties on 66% of tariff lines on a range of products from textiles to fisheries. The concession has come into force from 19th May following the publication in the official Journal of the European Union in 18th May. Sri Lanka now has access to export over 6,000 products duty free due to this concession.
The Journal entry read “”The Commission has examined the GSP+ request from Sri Lanka in accordance with the provisions of Article 10(1) of Regulation (EU) No 978/2012, and the Commission has established that Sri Lanka meets the conditions. Sri Lanka should therefore be granted GSP+ from the date of entry into force of this Regulation. Annex III to Regulation (EU) No 978/2012 should be amended accordingly,”
Trade Commissioner Cecilia is quoted “Granting GSP+ to Sri Lanka aims to provide the opportunity to develop further economically, including creating more and better jobs for all Sri Lankans, on a sound foundation that advances human and labour rights, and in a manner that is environmentally sustainable. It is also a vote of confidence from the European Union that the Sri Lankan government will maintain the progress it has made in implementing the international conventions. At the same time, no one is pretending that the situation is perfect. The process of replacing the Prevention of Terrorism Act still needs to be completed. There are still too many incidents of torture, there are still children being forced into marriage, there are still laws that discriminate against sections of Sri Lankan society. We want to see an end to these practices.
However there remains some considerable challenges for Sri Lanka as well due to Sri Lanka’s non-diversified export base and as well its non-competitiveness in the EU market accounting for a less than 6.5 import- share ratio. Furthermore, Sri Lanka is among 8 other Countries such as Armenia, Bolivia, Cape Verde, Kyrgyzstan, Mongolia, Pakistan, Paraguay, and the Philippines and therefore need to be competitive to obtain the full extent of the benefit offered under the scheme.
Sri Lanka will enjoy the GSP Plus scheme uninterruptedly as long it period reviews are met with satisfactory progress. However, the window that Sri Lanka is able to enjoy the GSP Plus scheme is not without limitation as once Sri Lanka graduates to a “upper – middle income economy” status and remain such for three years, Sri Lanka would no longer be eligible for the GSP Plus scheme or even the regular GSP scheme.
The Sri Lankan government will work with employers to ensure that a share of the benefits shall be distributed among the employees, Foreign affairs Deputy Minister Dr. Harsha De Silva has expressed. He further commented that the greatest benefit from this is the number of jobs it will create. He also stated that Sri Lanka has begun unofficial discussions with the UK to work out a plan to export to UK, due to looming Brexit exit within two years. Also, he noted that Government has taken steps to encourage investment in the backdrop of this to the tune of granting a 200% depreciation allowance for investments in the north and a 100% depreciation in the rest of country.
EU is Sri Lanka’s biggest market and accounts for a value of Euro 2.6 billion (Rs. 442 Billion) while total trade is Euro 4 Billion. The granting of the GSP will immediately inject about Euro 300 Million per year and can even surpass Euro 1 Billion mark if Sri Lanka were to diversify and enter new markets, according to Ambassador Margue. He also stated he too expects the granting of GSP Plus will entice direct foreign investments and the focus to be on fisheries and foods which has the potential to directly affect for the rural areas. He was also of the opinion that the GSP Plus scheme would go some way to alleviating the trade deficit of Sri Lanka as well.
OSL Take
OSL perceives the granting of the GSP Plus step as an increasingly valuable opportunity for both Sri Lankan ventures that are existing and for any new investments particularly given the government has laid out plans for depreciation allowance for investors in the GSP plus backdrop. Sri Lanka also being a much less diversified exporter there is much room for potential investors and entrepreneurs to stake out market niche’s that will already have a secured and tariff free pathway to one of the largest markets in the world. Furthermore, as it is expected the GSP Plus scheme is certain to last until 2021 the least, there is significant growth opportunity available within the market.
Press release can be found here – https://eeas.europa.eu/delegations/sri-lanka/26153/eu-grants-enhanced-market-access-sri-lanka-reform-incentive_en
| Article Code : | VBS/AT/22052017/Z_1 |