The Sunday Leader

Towards Global Duty Free Regime

Masakorala

As a middle income state, if we have to compete with countries classified as L.D.C.s, we need market access. We don’t consider G.S.P. Plus as a concession as it creates a level playing field for our exports with other L.D.C.s that have market access,” Joint Apparel Association Forum of Sri Lanka Secretary General Rohan Masakorala tells Benchmark.
“It’s a misconception that G.S.P. + are concessions because World Trade Organization negotiations are all about removing tariffs to create a level playing field. So this misconception must be corrected, as we need to enter into more agreements along the lines of those between Vietnam and Japan, which permit products from Vietnam to enter Japan duty-free,” he said.
“Apparel in Sri Lanka is a US$ 3.1 billion industry, over the years we have slowly migrated from U.S.A. to Europe. And today, as at last year’s numbers, the apparel industry sends over 50% of its exports to the European market. Of that over 66% is GSP + qualified garments. While duty on garments is about 12% in total, we get a 20% duty waiver under the G.S.P. regime.
But under the GSP + scheme we receive a total duty waiver, which means that our garments which enter 27 countries in the E.U. as well as the Customs Union which includes Turkey-are duty free,” Masakorala told Benchmark’s Special Correspondent Ms. Savithri Rodrigo recently. Explaining the impact of the scheme, he indicated that the real impact is 9.6% on average on some categories while it varies for others.
“The impact of this is directly on price and it is a tool of competition. It is a level playing field that we have received with competing countries to enter the European market,” he affirmed.

Commenting on the possibility of the Government and the E.U. reaching a consensus on the issues at hand, Masakorala was optimistic that the authorities would seize the new beginning that lies before us as a nation, and a resolution would be found sooner rather than later.
Elaborating on the forum’s position, Masakorala added: “We want the E.U. and the Government to meet halfway, because some of the requirements cannot be met within six months. It may take a year.
So both sides need to understand this and work on a general policy framework that ensures that Sri Lanka and its people do not suffer. After a 30 year old conflict we have to move forward, not backwards.”
Underscoring the importance of the duty-free status enjoyed by Sri Lanka’s apparel exports, Masakorala pointed out that the high cost of production in Sri Lanka may lead to products becoming uncompetitive in the long run.
“That is where we will have problems because the cost of manufacture in Sri Lanka has been relatively expensive. Energy and transportation costs and some labour regulations are hindering the apparel industry.

5 Comments for “Towards Global Duty Free Regime”

  1. Joint Apparel Association Forum of Sri Lanka is in the very fine hands of its Secretary General Rohan Masakorala, whose father is the most famous Sudas Maskoskorala, and his uncle is the eminent specialist Professor Maskorala

    • Rohan Masakorala

      To Siripala Karnelis,
      Just to let you know my father is Dr. B.J. Masakorala and not Sudas Masakorala.

      Thank you
      Rohan Masakorala

  2. Reality

    I doubt that the governments of the EU which can keep their cost of living index down by importing these clothing at a duty free rate from Sri Lanka are going to be foolish to cancell GSP+ to satisfy the dispora who supported the terror group LTTE.

  3. Leslie

    Rohan, bringing down labour cost means that you ( not only blue collared workers) and I have to accept much lower salaries with no perks… are you prepared for it???
    Increase in transportation is a global phenomenon which we have no control over. On energy yes, is an area where we could make representation to the GOSL and have redress.

  4. Panchauda- Abu Dhabi

    The time period given by EU for correction is justified as these restrictions were given some time back and only a mare effort from the government would have gone a longway to reconsider the GSP+ concession. Though you have a concern, it is hard to believe that the government is taking any genuine efforts to solve this problem

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