EU-Sri Lanka trade is thriving under the GSP+ facility. Last year Sri Lanka exported goods to the value of about EUR 2.5 billion to the EU, with a positive trade balance for Sri Lanka of over EUR 1 billion, Ambassador of the Delegation of the European Union to Sri Lanka, Denis Chaibi told Sunday Observer Business on Friday.
He said Sri Lanka can do even better, as its current use rate of GSP+ is about 60 percent which is lower than the average rate for GSP+ beneficiaries.
There are opportunities for growth in sectors such as apparel, machinery, gems, organic agriculture and food processing.
“Of course all GSP+ beneficiaries must abide by their international commitments on human and labour rights, environmental protection and good governance, in addition to WTO rules on technical regulations, sanitary and phytosanitary measures, as well as the rules of origin,” the Ambassador said, adding that an actual example of improving quality standards is to secure geographical indication (GI) for Ceylon Cinnamon. This is part of the EU-Sri Lanka Trade-related Assistance project. Securing GI will boost the profile and competitive advantage of Ceylon Cinnamon in international markets, including in the EU.
“Trade, however, must remain a two-way street,” Chaibi said.
With regard to new GSP Plus instruments the ambassador said EU is still in the consultation phase and that it is early to say what the instrument will look like.
However, concerns have been raised that Sri Lanka would lose the trade concession in 2023 as the country graduates to an upper middle income country.
The Generalised Scheme of Preferences Plus (GSP+) which provides duty-free access to EU markets for over 7,200 products is scheduled to go up to in 2023.However, speculation is rife that it is likely to be extended upto 2025.
A recent media report citing the EU Ambassador stated the EU’s GSP Plus concession to Sri Lanka would most probably be extended up to 2025 because of the current circumstances in which the country is in.
However, he said that Sri Lanka will enjoy an extension of the concession only if the post- pandemic economic contraction results in a lower per capita income or the country’s per capita income is at the current level and also the EU conventions and principles, including labour and human rights, are met by the nation.
EU-Sri Lanka trade has remained strong over the years making the region Sri Lanka’s largest export market taking close to 30 percent of Sri Lanka’s exports. Sri Lanka ranks as the EU’s 65th trading partner and third largest in South Asia.
GSP Plus offers incentives in the form of duty reductions on exports as a reward to developing countries for their commitment to upholding the 27 core international conventions on human and labour rights, sustainable development and good governance.