Exporters are pinning their hopes on President Mahinda Rajapaksa’s promise to assist them get over the loss of GSP Plus trade concessions for exports to the EU although recent experiences with the Export Development Rewards Scheme has somewhat shaken their confidence.

"On grounds of national interest we are behind the government’s stance of not agreeing to tolerate any international investigations. But the promise to assist exporters if GSP Plus is withdrawn came from the President himself at various occasions including a meeting with some members of the Joint Apparels Associations Forum and we hope he keeps his word," an industrialist in the garments sector said.

As reported in The Island last Saturday the European Union had decided to suspend GSP Plus based on Sri Lanka’s human rights record. The government has constantly denied its calls to allow for an investigation stating it was an infringement of the countrysovereignty.

But the President has promised exporters that the government would assist them and mitigate the loss caused by the suspension of GSP Plus.

"It is not about depending on GSP Plus but using it as a tool to gain advantage over our competitors in an extremely harsh and challenging international market. Another thing to keep in mind is that only a small component of tariff lines have been utilized by Sri Lanka, notably garments, so the potential to grow in diverse sectors is also lost," an exporter said.

"Consumers in the EU market are relatively higher spenders than the rest of the world so it makes sense to want to gain market access and grow in the region," he said.

With margins already squeezed, apparel exporters said it would now be extremely challenging to sell to the EU. "We have not yet thought about what we are going to do but we are likely to have tough times ahead," an apparel exporter said.

"It makes sense for the government to want to mitigate the affects of the loss of GSP Plus because maintaining jobs and foreign inflows are crucial to the economy but judging by how the Export Development Reward Scheme (ERDS) has so far worked we are a bit concerned as to whether the government would be in a position to help," he said.

Exporters said rewards for the first and second quarters of 2009 are yet to be made in full while applications for the third and fourth quarters have come to a virtual standstill.

"The EDRS is moving at a painfully slow pace and it is not of much help. There is also a problem with the whole scheme because exporters who do well are rewarded while those who have lost out because of the global financial crisis have nothing.