The much anticipated GSP+ concession, which Sri Lanka regained from the European Union, comes into force from today, May 19.
The Generalised System of Preferences (GSP) is a preferential tariff system awarded to developing nations such as Sri Lanka, to export goods to European markets at lower tariff rates.
Under this tariff system, Sri Lanka has the opportunity to export 6,200 items to the European Union, tax free.
Following the devastating 2004 Boxing Day Tsunami, Sri Lanka was awarded the GSP+ consession for a period of three years, however, the lack of progress by the earlier government in twenty-seven international agreements, including the fields of human rights, labour laws, environment conservation and good governance led to Sri Lanka losing the GSP+ concession on the 15th of August 2010.
The GSP+ consession which comes into effect today, will be implemented until 2021.
The 9.6% duty charged when exporting garments to the EU, will now be removed.
Around 33% of Sri Lanka’s exports are directed to the European Union.
A number of exporters held discussion with Prime Minister Ranil Wickremesinghe with regard to the decision made by the EU, yesterday.
“No less than three days since the tax concession was announced, we are seeing the fruits of the agreement. Our customers are contacting us and booking our excess capacities”.
“We hope to generate an additional annual turnover of 250 to 300 million”.
“We became eligible to receive GSP after European fishing ban was lifted. Our industry saw a positive outcome from 18 to 22 percent when we were receiving the GSP”.