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Good news from EU for Lanka’s garment industry
By Feizal Samath
Sri Lanka’s garments industry received a much-needed boost when the European Union (EU) said the desperately-needed GSP Plus concessions would come into effect from Friday, July 1, contrary to earlier fears that it would be delayed.

Commerce Secretary S. Virithamulla told The Sunday Times that they had been informed by their Brussels office of the EU announcement. “It is a huge boost for the industry,” he said. The Commerce Secretary said the EU import threshold had been fixed at 12.5 percent for textiles and apparels and 15 percent for other items.

The industry, struggling to recover from the end to textile quotas this year, virtually sank after the EU concessions were postponed from the planned April schedule. It was earlier due to be enforced in July but had been advanced to April to help tsunami-hit countries such as Sri Lanka. The duty-free concessions were seen as a virtual life-line to an industry in which scores of small factories have closed or are struggling to survive.

The delay was due to a dispute between member states over the import threshold. An overjoyed industrialist Mahesh Amalean, chairman of MAS Holdings, said the concessions would help Sri Lanka recover from an anticipated bad year. “It would increase exports and help the industry recover in the second half of the year,” he said, adding that exports to the EU would substantially rise and Sri Lanka may be able to pull back orders to the EU from India and China.

He said if the EU has decided on the 12.5 percent levels, then it would appear that India had also succeeded in campaigning for these levels. Any lower threshold in imports to the EU would have affected Indian exports, he said. France, Italy and Portugal were among countries that opposed reducing thresholds to below 12.5 percent saying such a move would affect local apparel industry. Sri Lanka’s exports to the EU account for less than 3 percent.

A government cum private sector delegation led by Industries Minister Anura Bandaranaike visited Europe earlier this month to persuade EU authorities to expedite the GSP Plus scheme that would benefit Sri Lankan exporters. Another delegation was due to visit Britain to pursue these initiatives since the concessions were only likely to be enforced after August.

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