Impeding Sri Lanka’s ability to compete in the global apparel market are the E.U.’s HYPERLINK “http://www.nytimes.com/2010/07/07/business/global/07trade.html?_r=0” withdrawal of Generalized System of Preferences (GSP) trade benefits in 2010 which are still in force, according to Sukumaran. Labor shortages and the increasing cost of energy add to Sri Lanka’s problems, he said.
Sri Lanka’s loss of GSP benefits was based on what the E.U. HYPERLINK “http://www.lankabusinessonline.com/fullstory.php?nid=839976210” said were “significant short comings” on human rights issues.
Despite its continued denial of GSP preferences, Sukumaran insists that the Sri Lankan garment sector is ethical, going green, and claims it’s practices will provide ongoing sustainability in international markets.
Countries that enjoy GSP benefits are required to report to monitoring organizations that oversee requirements.
Sri Lanka’s major competitors — including Bangladesh, Cambodia, India, Pakistan and Vietnam — “are continuing to negotiate preferential agreements,” said Sukumaran. These so-called preferential agreements offer low or no duty on exports to the E.U.
Without duty-free access to European markets, the HYPERLINK “http://www.lankabusinessonline.com/fullstory.php?nid=839976210” profitability of the Sri Lankan apparel manufacturing industry is reduced and growth is stunted.
To offset problematic exports to the E.U., Sukumaran urged apparel manufacturers to increase efforts to boost exports to emerging markets.
“…A framework for penetrating into other markets particularly China and India needs to be pursued aggressively,” he said.
Plotting a future strategy with a view toward recapturing E.U. benefits, Sukumaran proposed a complete review of GSP Plus rules and requirements.
“A conscious study of these (GSP) new dimensions of requirements [and] obligations needs to be done in deciding our course of action,” said Sukumaran.
Among the Sri Lankan HYPERLINK “http://www.apparelsearch.com/World_Clothing_Industry/Sri_Lanka/sri_lanka.htm” garment manufacturers hurt by the country’s loss of E.U. import benefits is Tri Star Apparel, one of the world’s biggest clothing makers, with a list of top brand global customers. Buyers of Tri Star’s products include GAP, Guess, Champion, Ralph Lauren, Victoria’s Secret and Warner Brothers