Dec 29, Colombo: Deputy Minister of National Policies and Economic Affairs Dr. Harsha De Silva today clarified that the Generalized Scheme of Preferences (GSP) given by the United States and the Generalized Scheme of Preferences (GSP) Plus given by the European Union (EU) are different and people should not confuse with the two concessions.
In a Facebook post the Deputy Minister said the facts on the U.S. decision not to extend the trade facility from 31 December need to be explained because some are saying that the US has decided not to grant GSP concession only to Sri Lanka.
He said the U.S. Congress has decided not to extend the concession to all 120 countries receiving the GSP concession including Sri Lanka Accordingly, this policy decision by the United States affects all benefactors of the concession and does not apply to Sri Lanka alone.
"It is not a disadvantage for Sri Lanka alone. All 120 countries will have to pay roughly 3.5% duty on exports to US," he added.
The impact of the removal of GSP concession for exports to the US will be negligible, the Deputy Minister said.
He explained that last year, Sri Lanka had exported US $ 2.8 billion worth of exports, but the only US $ 173 million worth of exports under the US GSP concessions. It is only 6.2% of all Sri Lanka's exports last year.
Further this concession does not significantly apply to most apparel exports to the U.S. Last year apparel exports to the U.S. amounted to only US$ 27 million and it is only 1% of all exports.
What is more important for Sri Lanka is the European Union's GSP+ concession, he adding that the U.S. GSP is given to 120 countries whereas the EU's GSP+ concession is only granted to 9 countries.
And last year we exported $2,100 worth apparels to EU of a total $3,000 without the concessions.
The EU GSP+ concession grants 10-20% tax relief to the Sri Lankan exports and when EU withdrew the GSP+ in 2010, 77% of Sri Lankan product were eligible for the concession.
Last year Sri Lanka has made nearly US$ 3.1 billion of exports to the EU and the importance of regaining the GSP Plus concession to Sri Lanka this year can be understood through this export volume, the Minister said.
"We can proudly say this government was able to regain the GSP+ concession the country lost during the previous government," Deputy Minister Dr. De Silva said.
Explaining further, the Minister pointed out that while US$ 27 million worth apparel were exported to the U.S. under its GSP concession last year, Sri Lanka has exported US$ 2.1 billion apparel out of total of US$ 3 billion exports under the European Union's GSP+ facility.