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Monday December 6th, 2021
Economy

Sri Lanka diplomats should help keep GSP+ going: Central Bank Governor

ECONOMYNEXT – Sri Lanka’s diplomatic missions should try to influence opinion in the European Parliament to keep the GSP+ concession until the country reach the upper-middle-income status, Central Bank Governor W D Lakshman said.

The European parliament on Thursday voted to use the GSP+ as a lever to stop the use of the anti-terrorism law against minorities including a poet after the United Nations earlier documented a decline in rule of law.

The GSP+ is given to lower middle income nations as a carrot to improve rule of law and citizens freedoms.

Governor Lakshman said Sri Lanka’s diplomatic missions could help in maintaining the facility by talking to EU nations and the parliament until Sri Lanka graduated out of lower middle income status.

“There are certain product categories which depend very heavily on exports to Europe,” he told reporters in Colombo.

“These negotiation ought to be made by the diplomatic officers and also internal ministries and departments which are doing the promotional work in this product areas also will have to take up with the relevant authorities and also the producers,”

“What I can say is that is good if the concession is there, but there have been times when we have not had it also.”

He said the central bank was also assessing the issue and would work out measures to help.

Colombo based brokers CT CLSA Securities said in a note to clients that Sri Lanka had full duty benefits for over 7,000 products. About 60 percent of the benefits were used by the apparel sector.

Rules of Origin prevented greater utilization and inputs for some items came from Vietnam and China, the report said.

Sri Lanka GSP+ benefits was withdrawn and re-instated in 2017 after being withdrawn over human rights violations of citizens by the state, exports to the EU had grown 5 percent in 2018.

“However, we believe that if EU GSP+ preferences are revoked, it could impair the regional competitiveness of the Sri Lankan apparel sector as competing countries such as Bangladesh, India, Pakistan and Vietnam benefit from similar preferential trade agreements with the EU,” CT CLSA said.

The EU move came days after police launched a crackdown on social media says people who made posts deemed ‘fake’ would be arrested without a warrant, which however has not made it into a UN or EU report yet.

The Central Bank’s Director of Economic Research Chandranath Amarasekera said sri Lanka was in line to lose the concession in a few years when it became an upper middle income nation.

“So when talking about the future of Sri Lanka it is not good to always to depend on such concessions,” he said.

“We know most of the exports from Sri Lanka goes to the US and Europe but as a country going forward, it is necessary to diversify export destinations and not just the products.” (Colombo/June11/2021)

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