The latest EU regulations on the GSP scheme are expected to give Sri Lanka a second chance with the GSP+ and also indirectly benefit the local footwear industry. The new GSP regulations provide an opportunity for Sri Lanka to regain GSP+ duty free concessions within one-and-a-half years, even if Sri Lanka does not qualify for the scheme at the end of this year.

A statement on the new rules, said “For countries that do not yet meet the GSP+ qualifying criteria this year, the new Regulation provides an additional opportunity for applications in mid-2010.” “Previously, if a country did not qualify, they had to wait for another three years to be able to reapply. But now they can reapply within one-and-a-half years,” said Roshan Lyman, head of politics and trade at the European Commission delegation to Sri Lanka.

The new regulations have also generated an advantage for the footwear sector. This is because under the new rules, Vietnam, one of the world’s largest, low-cost footwear producers, has been “graduated out” of the GSP scheme for a number of categories including footwear exports.

This means Vietnamese footwear will not get duty cuts when entering EU markets. However, if Sri Lanka were to regain the GSP+, Sri Lankan footwear can enter the EU at zero duty. This would translate into a price advantage for Sri Lankan footwear in the EU.

“This can be a good thing for smaller producers like Sri Lanka because graduation means Vietnam will have to face the standard MFN duties,” said Mr Lyman. The new GSP rules are applicable for the 3 year period from 2009 to 2011.