Sri Lanka apparel costs seen rising with loss of EU access

Feb 16, 2010 (LBO) – Sri Lankan exporters of apparel, the island’s main industrial export, said the withdrawal of European Union trade benefits would increase costs and erode their competitiveness. European Union nations decided Monday to withdraw the ˜GSP Plus’ preferential trade benefits from Sri Lanka because of what the EU Commission called "significant shortcomings" on human rights issues.

It will have an impact on the industry, said A Sukumaran, a clothing exporter who is chairman of the Joint Apparel Association Forum, an industry body.

Over 50 percent of our apparel exports go to the EU. Whatever apparel qualifies for GSP Plus, costs will go up by about 10 percent. Many of our buyers have told us we have to bear the extra cost.

Loss of the GSP (Generalised System of Preferences) Plus benefits would mean Sri Lankan exporters lose duty free access to EU markets and their shipments would be charged an import duty of about 9.6 percent.

It will be extremely costly for exporters, said Sukumaran. I do not think many are working on 10-15 percent margins. Unless some of the buyers are ready to bear part of the burden it will be a problem.

Sukuma