Sri Lanka's apparel industry is waiting for changes to GSP+ rules, but the European Commission (EC) office in Sri Lanka said an early announcement is unlikely.

"Any changes to rules of origin will probably be announced only towards end of this year," said Economic and Trade Adviser, EC delegation in Sri Lanka, Roshan Lyman.

Sri Lanka has requested changes to the rules of origin governing the GSP+ because Sri Lankan garment exporters find these rules too difficult to meet.
 
These include domestic transformation from yarn to fabric and fabric to clothing, a change in tariff heading and domestic value addition of over 50%.

Sri Lankan exporters say this is not possible due to heavy dependency on imported fabric. 

"Sri Lanka has proposed a single, value added criteria of 35% for clothing, instead of all the other requirements," said the Coordinator of the EU-Sri Lanka trade development programme, Sonali Wijeratne.

"The new rules of origin were supposed to come very shortly after the introduction of the GSP+ but this has not happened," said Wijeratne. 

As a result, utilisation of the GSP+ for zero duty entry into the EU, is low. Only 39% of total Sri Lankan garment exports are estimated to have used the GSP+ last year, based on EC data, but garment exporters say this estimate is unrealistically high.

Either way, "this means the balance exports are paying full duties," points out Wijeratne.

Delaying changes to rules of origin until end of this year would mean a full year of stiff competition for Sri Lankan exporters, despite the GSP+.

Sri Lanka is the only country in South Asia to qualify for the GSP+ and can use the scheme from July 2005.

By Dilshani Samaraweera