Sunday Dec 15, 2024
Sunday Dec 15, 2024
Wednesday, 1 January 2014 08:07 - - {{hitsCtrl.values.hits}}
While many EU GSP beneficiary economies will witness an end to their benefits today, 1 January 2014, with the activation of the new GSP scheme, some notables, including Sri Lanka, will continue to smile about their shipments to the world’s largest economy.
Despite the reduction of the number of countries enjoying EU GSP in June 2012, starting today, Sri Lanka has clinched 10 more years of this promising lifeline from the world’s largest trading bloc.
“The EU Parliament has approved the new GSP scheme on 13 June 2012 and it will come into effect from 1 January 2014. Sri Lanka will continue to be a beneficiary of the scheme,” revealed Minister of Industry and Commerce Rishad Bathiudeen.
Minister Bathiudeen was making his Ministry’s Budget Statement on 10 December at Parliament, which was then tabled by him.
The EU is the largest economy and the largest trading bloc in the world, acting as the top trading partner for no less than 80 countries – a feat that no any other economy has matched in modern times. It also ranks first in both inbound and outbound international investments. It is Sri Lanka’s largest global trading partner (the US ranks second) and is a 500 million strong market that holds clear promise for Lankan exports.
According to the Department of Commerce, there is an increasing trend in trade and the balance of trade between EU and Sri Lanka has been in favour of Sri Lanka. Total trade between Sri Lanka and EU which was at $ 3 b in 2004 rose to $ 4,946.18 million in 2012. Sri Lanka’s major export items to EU are apparel, diamonds, tea and rubber products.
The EU is also one of the most diversified investors in Sri Lanka, with leading European companies operating in almost all sectors of the economy, especially FMCG, higher education, apparel, infrastructure, manufacturing, agro, technology and even in strategic development projects.
EU multinationals such as Unilever and British American Tobacco are well embedded to Sri Lankan lifestyle with their decades-long FMCG presence. The UK, Germany, Italy, Belgium, France and Sweden are the leading EU investors in Sri Lanka.
The EU’s specific investment segments include hosiery, knitwear, surf sails, electronic products, light engineering, rubber-based products (e.g. tyres), coir-based products, gem and jewellery, diamond processing, tourism and recreational products, security printing, infrastructure development, activated carbon, food processing, computer software, ICT, etc.
In June 2012, the EU redesigned its GSP scheme and as a result, the beneficiary countries were reduced from 177 to 90. Twenty countries in high and upper-middle income range will stop benefitting from preferential access to the EU from 1 January. Among them are Saudi Arabia, Kuwait, Bahrain, Qatar, United Arab Emirates, Brazil, Venezuela, Belarus, Russia, and Malaysia. Their exports will now enter the EU with a normal tariff applicable to all other developed countries.
Of the former 177 GSP beneficiaries, 90 countries will continue to benefit from GSP, with Sri Lanka among them. The new GSP scheme will remain in effect for 10 years from today.
Sri Lanka is listed in the ‘Low and Lower Middle Income GSP beneficiaries’ category in the new scheme and several other countries in the same category too will continue to be entitled to EU GSP (similar to Sri Lanka) from January 2014 onwards. Notable among them are Thailand, Vietnam, Nigeria, Pakistan, Panama, the Philippines, Indonesia, India and China.
