GENEVA — The European Union on April 1 will extend duty-free treatment to imports of apparel and textiles from Sri Lanka to aid in the island nation’s recovery from the Dec. 26 tsunami.
That steps up by three months a move the EU had previously planned to make on July 1.
A spokeswoman for EU Trade Commissioner Peter Mandelson said the 25-member organization “is fast tracking the duty and quota free for GSP” program, or Generalized System of Preferences.
The GSP program offers a sliding scale of benefits to developing nations based on criteria such as their labor standards and compliance with other international agreements. India, Indonesia and the nations of sub-Saharan Africa also accrue benefits.
The EU spokeswoman said the bloc is looking at ways “to relax” the rules of origin under GSP. This is critical to Sri Lanka in particular since it makes little fabric of its own and the nation’s garment makers rely on imported textiles.
Sri Lanka’s ambassador to the World Trade Organization, Gomi Senadhira, said only about 20 percent of the country’s textiles and apparel exports to the EU would qualify for the zero duty, while the other 80 percent “do not get zero duty because of the rules of origin.”
The EU’s rules of origin operate on a system called “accumulation,” in which the GSP preference goes to the country that produces most of the value in a manufactured item.
For instance, shirts sewn in Sri Lanka of fabric woven in India would be deemed of Indian origin, which means the Sri Lankan garment contractors would not be eligible for the duty break.
A senior EU official, who spoke on condition of anonymity, said the EU might allow Sri Lanka qualifying garments to use fabrics from the seven-member South Asian Association Regional Cooperation countries, which include India and Pakistan, and also the 10-member Association of South East Asian Nations, including Indonesia, Thailand and Vietnam.
This story first appeared in the January 25, 2005 issue of WWD. Subscribe Today.