Contingency plans for non-GSP+

Central Bank to formulate bail out package:

Anjana Samarasinghe

Sri Lanka will come up with an effective mechanism to face a no GSP+ concession situation.

Governor of Central Bank of Sri Lanka, Ajith Nivard Cabraal said local industries which depend on GSP+ concessions need to be geared to survive even in a non GSP concession scenario as a long term solution.

GSP concessions have been awarded to over 7,000 local products which export to the European Union to the value of US$ 150 million.

“The apparel industry is heavily dependent on GSP concessions for entering the European Union.

“However the industry has the capacity to survive even without GSP concessions. GSP concessions came to operation three years back and the industry has been existing in the country for 30 years.

“Today the local apparel industry is developed with correct value addition and it has contributed heavily to the country’s GDP, Cabraal said.

The Sri Lankan Government will facilitate the smooth migration of these industries from a dependency syndrome and make them survive in the international arena even without concessions,” the Governor said.

“To face a non GSP+ concessions scenario, the industry needs to provide apparels at competitive prices for European buyers. The industry needs to increase productivity and efficiency by adopting viable strategies for competing in the European market,” he said.

“The Sri Lankan Government is ready to assist the industry with correct mechanisms to drive the industry even without the GSP+ concessions.

“Central Bank will conduct a complete study on a non GSP+ concession situation and consult the Government on the necessary steps to be carried out in this situation,” he said.

“Before setting up a mechanism we will discuss with the apparel industry on what kind of assistance is needed for this migration and what barriers they face.

“The Government will provide financial support and other assistance for the industry.

“We will be meeting the industry next week to initiate a mechanism,” he said. “Through this mechanism we expect to protect the apparel industry even without the GSP concessions,” he said.

Sri Lanka was eligible for the GSP+ scheme in 2005 and the concession period will conclude by the end of December 2008.

The country has applied to extend the period for another three years starting from January 2009 from the European Commission complying with necessary requirements.

GSP concessions have been awarded to 15 countries including Sri Lanka.

The European Commission has asked to carry out a special investigation before extending the concessions for the next three years.