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GSP doesn’t take Sri Lanka far as Bangladesh edges ahead in RMG exports

GSP has not really helped Sri Lanka enhance its exports to the EU. Production and labor costs remain high compared to competitors’, and it is doubtful if the country can meet its goal of doubling exports by 2020.

Bangladesh, for instance, has moved ahead in textile and apparel production in the last few years. Bangladesh accounts for 6.4 per cent of global clothing exports compared with Sri Lanka's 1.2 per cent. The EU, which is Sri Lanka's biggest export destination, absorbing some 36 per cent of total shipments, reinstated the country into the GSP Plus program in mid-May, removing import tariffs on more than 6,000 products, including clothing.

Sri Lanka was dropped from GSP Plus in 2010 for human rights violations, but remained in the less-favorable GSP program, under which its exports were taxed at 9.6 per cent. Wages in Sri Lanka are typically higher than in Bangladesh and Vietnam, making the country better suited to producing high-end garments such as swimwear, trousers and underwear, including lingerie for top brands such as Victoria's Secret. Sri Lankan labor laws also limit factory workers to 57.5 hours per week, with fixed weekly holidays. This compares with Bangladesh's working limit of 60 hours and Vietnam's 64 hours.

 
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