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President
pleads for expediting EU duty concessions to Lanka The Sunday Times learns that the President’s concerns were stated in a letter to all EU members -- personally handed over by Minister Anura Bandaranaike and Jeyaraj Fernandopulle when they led a quota-related delegation to the EU on May 16-20 for crisis talks. Sources said the letter explained the challenges Sri Lanka faces in 2005 outlining how the country’s economy was vulnerable following the December 2004 end to textile quotas, the tsunami and the impact of rising oil prices on the Balance of Payments (BOP). “The letter says the impact of the delay in implementing the zero duty concessions is much more substantial to Sri Lanka than other countries affected by the delay. It’s a small matter for the EU since we account for just two percent of imports there,” one source said, adding that the letter also says that with a slump in orders owing to the delay in the EU GSP plus, it would be difficult for Sri Lanka to arrest this trend. The GSP scheme – desperately needed by the garments sector after the end to the MFA - was earlier scheduled to be enforced in July but advanced to April to help economies like Sri Lanka that suffered badly from last December’s tsunami. It was also not enforced in April due to disagreements among EU members. The delegation that included BOI chairman Saliya Wickremasuriya and Ashraff Omar, head of JAFF – the coordinated industry body - were told that while some were prepared to raise the threshold levels to 12-12.5 percent, others were unwilling to budge from the 10 percent and below threshold. The unwilling countries are those that feel that insufficient protection against imports would hurt their own garment manufacturers. The 10 percent figure would effectively cut out India from the concessions. The source said most countries were hopeful that the concessions would be enforced by July, a date set by the WTO, but on the pragmatic side, the end of summer (end September) is seen as the most likely date of implementation. “Some time is needed for intra-EU issues to be sorted out where the hardliners would compromise on the GSP in return for other benefits. There will be some horse trading and a September date seems more realistic,” the source said. Sri Lanka’s garment industry is yet to feel the full blow of the end of the MFA with industrialists saying the impact would be felt only from June onwards when US orders for 2006 come in. On the other hand, China’s surge in the US markets accounting for an 82 percent rise in exports in the first quarter 2005 against a 16 percent drop in exports from Sri Lanka in the same period has triggered alarm bells in the industry. |
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