Regaining GSP+ huge boost to apparel sector, says new research report
View(s):Regaining GSP + for the local apparel sector will be a big bonus as Sri Lanka has lost market share over the past few years. Commenting on a report by NDB Securities Pvt Ltd (NDBS) on the Generalized Scheme of Preferences (GSP) special incentive arrangement (GSP+) and its expected impact on the apparel sector of Sri Lanka, NDBS Head of Research, Sidath Kalyanaratne said that Sri Lanka’s total exports to GDP deteriorated to around 13 per cent in 2014 from around 30 per cent in 2000. “However, during the same period, other competing countries in the region strengthened their exposure to the global market.
For example, Vietnam (that competes with Sri Lanka on certain apparel and textile product lines) increased total exports to GDP from around 55 per cent in 2000 to around 86 per cent by 2014. This is expected to improve further due to Vietnam’s entry in to a Free Trade Agreement with EU (in 2015) and the recent inclusion in the Trans Pacific Partnership (TPP) which has induced some of the region’s leading textile and garment players such as Texhong Textile Group Ltd., Shenzhou International Group Holdings Ltd. and Pacific Textiles Holdings Ltd. to increase their operational exposure to Vietnam,” he said.
Sri Lanka first received GSP+ in 2005, the same year the European Union (EU) introduced the scheme to assist developing countries become more competitive in exports to the EU market. In 2010, the country lost GSP+. The topic of GSP + regained prominence after the elections in 2015 at which point the new regime lobbied its case amongst EU member states for GSP+ readmission for Sri Lanka. “As the global economic drive shift towards the developing countries, trade and competition amongst nations becomes two very important aspects of inclusive global economic growth. This may empower the developing nations through transfer of sophisticated technical knowledge, flow of capital and access to larger markets.
For Sri Lanka, one such way of harnessing those benefits from trade and competition and the resultant economic development is through access to global value chains,” noted Mr. Kalyanaratne. Sector analyst of NDBS Upul Atapattu stated that the GSP special incentive arrangement, if awarded to Sri Lanka, will benefit the country more through the apparel and textiles sector compared to any other sector covered under the scheme. He said GSP in particular is non-reciprocal in nature. Therefore, GSP arrangements with premier export destinations will provide tariff preferences for the exporters which is expected to have a considerably impact on the competitiveness of the export basket. Currently, Sri Lanka is enjoying GSP for destinations such as EU, US, Turkey, Japan, Canada, Switzerland, New Zealand and Norway.”