Sri Lanka lost considerable revenue on garment exports after the European Union (E.U.) suspended its duty-free trade access under the Generalized System of Preferences (GSP) Plus scheme in 2010. The penalties were due to alleged human rights violations that took place during Sri Lanka’s civil war.
Four years later the E.U. revisited Sri Lanka’s situation and discovered it was still not adhering to three of the 27 international covenants on human rights, labor rights, sustainable development and good governance that a country must comply with for the consideration of GSP Plus.
However, the new government that took office in January has taken measures to improve human rights and it now looks like the E.U. might reinstate Sri Lanka’s GSP Plus status.
Last week, an eight-member E.U. Trade Working Group (TWG) held discussions with Sri Lankan officials to discuss the possibility of reinstating the trade concession to boost the country’s apparel exports. Dubbed the E.U.-Sri Lanka Working Group on Trade and Economic Cooperation, it was co-chaired by RDS Kumararatne, director general of commerce for Sri Lanka, and Marc Vanheukelen, director of the European Commission Directorate General for Trade for the E.U.
According to a joint statement released by the group after the meeting, the two sides discussed issues related to promoting bilateral trade and investment. “In particular they started the process that may lead to the re-admission of Sri Lanka to the status of GSP Plus under the European Union’s new GSP regulation,” the statement continued.
The full application process takes about 10 months. If the status is granted, Sri Lankan exports to the E.U. will attract lower or no duty and could put a dent in the garment industries of Bangladesh and China.
Currently, Sri Lanka is the seventh largest garment exporter in the $450 billion global market, according to data from the World Trade Organization. The E.U. is its largest export destination, accounting for a quarter of all exports, of which roughly 60 percent are garments.