Sri Lanka will be able to obtain greater market access and a boost to its apparel industry’s competitiveness within the European Union (EU) following a regional cumulation with Indonesia which has agreed to provide the approved textile fabric for exports to the EU.
Sri Lanka and Indonesia made an application to the EU for the regional cumulation which they obtained approval for this year. This opens up opportunities for the industry’s growth, Joint Apparel Association Forum (JAAF) spokesman Yohan Lawrence told.
This would mean that Indonesia can export fabrics to Sri Lanka for the purpose of re-processing to manufacture apparel products by Sri Lanka and export to the EU market. This agreement between Indonesia and Sri Lanka is said to be a “win win” situation for both countries.
Under this agreement permission is granted to cumulate origin for certain materials from Indonesia, namely HS Chapters 51 to 55, 58 and 60, and to then produce certain textile products of HS Chapters 61 and 63 under regional cumulation, as long as both countries remain in the GSP scheme. This would also ensure that Sri Lanka obtains a consistent supply of high quality materials.
He noted that this comes as a boost for Sri Lanka as the country is currently facing tough times since it has been uncompetitive with Bangladesh and Vietnam. “This will help boost our business into the EU,” Lawrence said, adding that it should also help to protect the apparel market.
Indonesia is a source market for Sri Lanka to import different types of fabric for processing garments to be exported to the EU, Free Trade Zone Manufacturers Association Chairman Dhammika Fernando told.
The relevance in this arrangement is that Sri Lanka is already in talks with Indonesian authorities to enter into a Free Trade Agreement.
However, the latest development would be beneficial solely for trade with the EU under the GSP Plus scheme. In this respect, Sri Lanka would have to work out an arrangement with the UK separately which is one of the biggest markets in Europe for Sri Lanka’s apparel exports.
On Friday the EU issued a media release stating that based on a joint request by Sri Lanka and Indonesia, the European Commission made a landmark decision permitting regional cumulation between the two countries on selected textile and apparel products, when they export to the 27-member countries in the EU bloc.
