Sri Lanka exports, especially apparel, face uncertainty as EU GSP+ review looms
Sri Lanka’s apparel industry could be affected further if the European Union’s Generalised Scheme of Preferences Plus (GSP+) is not extended, an economist has said ahead of a review due this month.
“The EU is one of Sri Lanka’s largest export destinations, especially for apparels. If GSP+ is removed for SL then it will be another blow for the apparel sector which is already affected by the new US trade policy,” Economist and director at Arutha Research Rehana Thowfeek told EconomyNext.
“The GSP+ program gives Sri Lankan exports preferential duty-free access to EU markets which make our products very competitive in the EU market,” Thowfeek said.
Sri Lanka’s eligibility for the European Union’s GSP+ preference scheme is due for review this month, Foreign Minister Vijitha Herath told parliament earlier, with a team scheduled to visit the island.
The country’s use of the Prevention of Terrorism Act and the Online Safety Act have been sticking points in extending the scheme, which allows the island nation to export goods to the EU market at preferential tariffs.
In return, Sri Lanka has to implement 27 international conventions on human rights, labour rights, the environment, and good governance.
The Prevention of Terrorism Act has facilitated arbitrary detentions and torture of suspects violating fundermental rights, Sri Lanka Lawyer’s Collective said.
In the most recent incident of its use, a youth who stuck an anti-Israeli sticker at a shopping mall in Colombo was detained without charges.
“The provisions and scheme of the PTA fail to protect fundamental rights such as freedom from arbitrary arrest, freedom from torture and freedom of expression,” Sri Lanka lawyer’s Collective said. “The PTA has a record of being used as a weapon and continues to be used against any citizen with impunity.”
The European Union is the second largest export market for Sri Lanka, generating over 1,523.13 million US dollars annually.
Sri Lanka faced a temporary suspension of the GSP+ scheme in 2010, a year after the end of its 30-year civil war.
Human rights violations and unstable governance were reasons for the suspension. However, GSP+ status was then reinstated in 2017.
Following the US administration’s “Liberation day” increased tariff announcement, Sri Lanka is in danger of losing its largest market for apparel to neighbouring nations which were slapped with lower tariffs.
“Potentially, we could see the bulk of our US business migrate to competitor markets,” Yohan Lawrence, Secretary General of the Joint Apparel Association Forum (JAAF) said.
President Trump has stayed the tariffs for 90 days after US markets collapsed from policy uncertainty
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