US GSP: All countries will be on the same level of competition

The expiration of US Generalized System of Preferences (GSP) for Sri Lanka and 119 other countries, with effect from today, will not have any negative impact as every country will need to pay the same duty and be placed on a level playing field, Deputy Minister of National Policies and Economic Affairs, Dr. Harsha de Silva said.

The US GSP program has been renewed by US Congress as a normal practice and it applies to all 120 countries.

“So we are not singled out and there is no disadvantage at all. All the countries will be on the same level of competition like just now. In any case, only US$173m of $2.8 billion of exports to US last year had US GSP. Apparels only $27m,” the Deputy Minister asserted.

According to a research by the Institute of Policy Studies, although nearly three-quarters of Sri Lanka’s exports to the United States are concentrated on apparel and articles, only about 0.2% of the current apparel exports are eligible to receive GSP concessions. Exporters of rubber, the second largest export product to US, will have only about a quarter of their exports covered under GSP concessions.

Meanwhile, analysts pointed out that when the US GSP scheme was authorised for renewal in 2015 by the former United States President Barack Obama, he had only signed the ‘Trade Preferences Extension Act of 2015’ on June 29, 2015 almost two years after it expired in 2013. Thereafter, the preferential duty-free tariffs to the US market for selected products were applied retroactively for the years that were missed out.

The scheme, instituted in 1974 and renewed periodically is designed to promote trade in developing countries. The full list of GSP-Eligible Beneficiaries (as of March 2017) is found on this link