Colombo: With fears of a global economic recession looming, the Joint Apparel Association Forum (JAAF) has urged the Sri Lankan government to expedite negotiations on Free Trade Agreements (FTAs) to help boost exports and strengthen the industry’s resilience.
“In a challenging environment, it is essential for Sri Lankan apparel entities to diversify their markets. Hence a central focus for our discussions with the government has been the urgent need to finalize FTAs with countries like China, India, Japan, and Australia,” JAAF Deputy Chairman Felix Fernando said.
The Daily FT newspaper on Saturday quoted Fernando as saying that he was happy the Secretary to the Prime Minister has been appointed to head a task force to expedite the Chinese FTA.
It was pointed out that August saw a 20 percent increase in export turnover generated by the apparel sector. If the trend continues, earnings are likely to increase to approximately $ 5.6 billion by the end of 2022.
“However, it is difficult to anticipate industry performance moving into 2023, given the geopolitical tensions and economic volatility created by the situation in Europe – home to many of Sri Lanka’s most valuable markets,” he said.
The US, the EU, and the UK comprise about 86 percent of Sri Lanka’s total exports.
“At present Sri Lanka is not competing on a level playing field. Our main competitor countries like Bangladesh, Vietnam, and some African nations have duty concessions in global markets, which we do not have.
“Sri Lanka’s only concessions are for the UK and the EU markets, and those come coupled with a variety of strict conditions pertaining to the origin of raw materials which means that utilization of these preferences remains around 50 percent for apparel,” Fernando added.
So, he emphasized that securing new FTAs can help reduce barriers for Sri Lankan apparel exporters to diversify. The Chinese FTA is the first priority.
He said that further trade concessions will help to better integrate Sri Lanka with regional markets.
“If, for example, we are able to penetrate the Indian market, even 10 percent would be equivalent to 100 million people, where we are presently limited to supplying just 8 million pieces. JAAF has reiterated its request to have this quota increased.