Zero duty for 7200 lankan products under GSP +

THE GSP Plus Incentive Scheme will enter into force on a provisional basis on July 1, 2005 and will remain unchanged until the end of 2008 the Commerce Department said. The scheme will cover around 7200 Sri Lankan products which can enter the EU duty free.

At the end of this period, the allocation of preferences will be reviewed to better meet evolving development needs of each beneficiary.

The Current GSP Scheme will be replaced by a three tiered structure consisting of the GSP Plus Scheme applicable to Sri Lanka, the General Scheme and the Everything But Arms Scheme for least developed countries.

While the GSP Plus will enter into effect on July 1, 2005, the other two, General Scheme and Everything But Arms sections of the new GSP Scheme as a whole will enter into force on January 1, 2006 until the end of 2008.

The scheme will have fairer graduation threshold which focus on preferential access for countries that have a lower share of EU imports.

Groups of products from beneficiary countries which in a given sector account for more than 15% of EU imports from GSP countries are "graduated" and cease to benefit from a preferential access. In the case of textiles the "graduation threshold" is set at 12.5% as it is for clothing.

Under the new GSP regime, China will be graduated under the General Scheme for 80% of its exports, while remaining under the normal concessions of the GSP. As in the previous regime, Indian textiles will not benefit from the GSP preferential access although its clothing exports will continue to do so under the General Scheme.

Graduation will normally be assessed at the end of 2008 except in the case of textile and clothing which will be reviewed annually to evaluate the possibilities of sharp increases of Textile and Clothing export.

As part of a wider review of its Rules of Origin, the EU is in the process of reforming the Rules of Origin that govern GSP Eligibility. The objective is to simplify and, where appropriate relax these rules to provide further access for developing countries.

The new GSP+ Scheme of the European Commission giving zero duty for Sri Lanka's GSP eligible exports to the 25 member states of the EU which was to have come into effect by April 1, 2005 and will now come into effect from July 1, 2005.

In January this year Minister of Trade, Commerce and Consumer Affairs Jeyaraj Fernandopulle, requested his counterpart the European Commissioner for Trade, Mr. Peter Mandelson to give Sri Lanka duty free treatment for export to the EU as an immediate relief measure to tide over the tsunami crisis.

The European Commissioner had indicated the advancement of the date of this concession to April 1, 2005.

Subsequently due to internal debate amongst EU members relating to the exclusion of certain other suppliers on the issue of threshold for eligible products, the implementation of the GSP+ Scheme was subject to delays much to the dismay of the apparel and textile trade in Sri Lanka.