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Extension of GSP Plus concessions
Apparel exporters pin hopes on government

Sri Lanka’s biggest exporter, the apparel sector, is confident the government would do all it can to secure European Union GSP Plus concessions.

Earlier this week a top official of the Ministry of Export Development and International Trade had been quoted in media saying a preliminary report on Sri Lanka’s human rights environment was adverse and that an extension of the GSP Plus facilities would be unlikely.

"We do not know what this report has to say but as we understand it, this report is one of several processes that have to be taken by the EU when deciding to extend the GSP Plus facilities," Chairman of the Sri Lanka Apparel Exporters’ Association, Kumar Mirchandani, told the Island Financial Review.

"It is also our understanding that no decision on granting an extension of GSP Plus will be made before October," he said.

Secretary General of the Joint Apparel Associations Forum, Rohan Masakorala, said the preliminary report had not been made known to the industry.

"We are confident however, that the government would do all it can to secure an extension of the GSP Plus facility. The government has all the right to deal with what ever this report has to say. The industry is confident that the concessions will come through," he said.

Mirchandani said the concessions should not come at a cost to the country’s integrity.

"The apparel industry and other exports to the EU need GSP Plus, we are desperate for it. We hope the government would do what it has to do in the diplomatic sphere to ensure we get these concessions," he said.

Last year, the European Commission wanted to investigate human rights abuses in Sri Lanka before deciding on an extension of GSP Plus but the government held it was unnecessary.

Not a question of labour...

Compliance with ILO core labour rights conventions is among the requirements for country to be eligible for EU GSP Plus concessions.

Violations of some these conventions have gone to the ILO’s tripartite Conference Committee on the Application of Conventions and Recommendations and also to the Committee of Experts on the Application of Conventions and Recommendations.

"The situation with GSP Plus has nothing to do with labour. The apparel industry in Sri Lanka is one of the top practitioners of labour rights in the world. There are a few instances where this may not be the case, nothing is perfect, but across the board Sri Lanka’s apparel industry is clean. We continuously try to do better," Masakorala said.

Masakorala went on to say that Sri Lanka’s competitor countries in the global garment trade, Bangladesh and Vietnam, were far behind Sri Lanka in application of ILO labour standards.

But Mirchandani said high labour standards have a cost.

"Buyers are not willing to pay a little extra because our garments are made ethically, they do not care for such things," he said.

"That is why we need GSP Plus concessions because we are competing in a tough market where pricing is very poor. We are trying to cut our transaction costs in a bid to survive the hard times we are facing at the moment," Mirchandani said.

Masakorala said the industry is facing a slight downward trend.

Waiting for the EDRS...

The government proposed an Export Development Reward Scheme (EDRS) for which about Rs. 8 billion has been allocated through the supplementary estimates but capacity constraints is delaying payments. Nine months into the year, applications for the first quarter are still being processed.

"Payments for the first quarter are a little bit too delayed but we have already begun applying for the second quarter," Masakorala said.

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