The EU Parliament last week resolved to consider the temporary suspension of Sri Lanka’s GSP+ status, citing the country’s continued failure to adopt human rights reforms. However, at the time of release of this note, nothing has yet been confirmed.
The potential suspension would result in Sri Lanka losing preference into the country’s largest export market which accounted for 30% of all merchandise exports last year. Nearly 60% of Sri Lankan exports benefit from some form of preferential access due to EU GSP+ according to SC Research Division.
Sri Lanka also benefits from full duty benefits on over 7,000 products. The temporary revocation of this scheme will significantly hamper the country’s export earnings, in particular, the apparel manufacturing sector – which generates over USD 5 billion in foreign exchange to the economy.
“It is important to note that suspension could undermine the regional competitiveness of the Sri Lankan apparel sector, competitors such as Bangladesh, India, Pakistan and Vietnam all enjoy the benefits of having preferential trade agreements with the EU.”
Listed players such as Hayleys Fabric (MGT) and Teejay Lanka (TJL) have high exposure to EU-based clothing retailers.
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