In an interesting turn of events, the Britain’s decision to leave the European Union (EU) is expected to result in a level playing field for Sri Lanka’s apparel exporters as countries which currently enjoy duty-free access to the United Kingdom (UK) set to lose the facility in such an eventuality, according to
According to the Joint Apparel Association Forum (JAAF) Chairman Noel Piyathilake, Sri Lanka, which hitherto competed with countries, which had duty-free access to the UK are now set to lose the facility and thus will result in fairer rules of competition.
“There is also an opportunity that I see from it (Brexit). If you take a country like Bangladesh, they have got GSP Plus and as a result they have duty free access but we don’t have duty free access. If Brexit happens, then we will be able to compete better,” Piyathilake told a forum which discussed the impacts of Brexit to Sri Lankan economy.
The Brexit will result in Sri Lanka having to negotiate a separate trade agreement with the UK and so are other countries exporting to UK as the GSP Plus concessions cease to apply on exports to the UK.
According to Central Bank data, 29 percent of Sri Lanka’s exports reach the EU and out of which 34 percent go to UK.
From the total exports from Sri Lanka, the UK accounts for slightly under 10 percent or slightly above US $ 1.0 billion. Apparel exports accounted for 46 percent of total exports from Sri Lanka in 2015.
Piyathilake said at least 18 percent of global apparel exports are to the UK—the fifth largest economy in the world—hence the impact of
Brexit could be felt deeply by the industry globally.
The head of the apex industry body for apparel exporters also observed a declining trend for apparel exports from Sri Lanka post-Brexit period.
This is probably due to the uncertainty surrounding the markets and the value of Sterling sharply falling after the Brexit, which resulted imports to the UK becoming expensive than they were before.
During the first three months, textiles and garment exports rose 8.9 percent year-on-year to US $ 1.37 billion.
Sri Lanka lost duty free access to EU under the GSP Plus scheme in 2010 due to alleged human rights violations during the final stages of the armed conflict, which ended in May 2009.
However, the countries with similar level of income or below to that of Sri Lanka continued to enjoy the preferential access to the world’s largest trading bloc.
Piyathilake said the apparel exports from Sri Lanka, which grew 11 percent per annum up to 2010 slowed down to 2.5 percent per annum since then.
According to him, the industry has lost about half a billion dollars a year since losing the GSP Plus facility.
The present government reapplied for GSP Plus only in June 2016 and the process is likely to take at least a year for the European Union (EU) to decide on the matter.
Sri Lanka’s success in regaining GSP Plus largely hinges on the progress of an exhaustive list of 58 conditions largely related to human rights – a claim flatly rejected by the Deputy Minister of Foreign Affairs, Dr. Harsha de Silva.
The EU this week renewed its calls for progress in Sri Lanka’s commitments to human rights to qualify for the GSP Plus.