Business

Japan extents GSP to Sri Lanka till 2031

By Yakuta Dawood 

The Generalised Scheme of Preferences (GSP) provided by Japan for Sri Lanka that was under review for extension according to the 2020 Annual Report of the Central Bank of Sri Lanka, was extended for a period of 10 years until 31 March 2031, The Sunday Morning Business learns. 

Speaking to us, Department of Commerce Director of Commerce (Head of Bilateral Affairs Division) Somasena Mahadiulwewa stated that including Sri Lanka, Japan also grants preferential tariff treatments under its new cycle of the GSP to 127 developing countries and five territories.

“After the GSP+ scheme provided by Japan expired on 31 March 2021, it is now extended for a period of 10 years until 2031,” Mahadiulwewa said. 

Furthermore, Mahadiulwewa added that in terms of the product coverage, there is not much difference between the new GSP scheme compared to the previous scheme, as only one additional product (plastic facemask) is included for tariff concessions in the new scheme for all beneficiaries.

The GSP was introduced by the General Agreement on Tariffs and Trade (GATT) to grant autonomous trade preferences to all developing countries or least-developed countries by the developed countries or the industrialised countries as per the instructions of United Nations Conference on Trade and Development (UNCTAD). 

The GSP facility provided by Japan to Sri Lanka grants preferential tariffs under the Temporary Tariffs Measures Law. The facility was granted from 1 August 1971 onwards. 

According to the Embassy of Sri Lanka in Japan, under the GSP, Japan introduced measures such as expanding the product coverage of tariff-free and quota-free treatments for goods from least-developed countries. 

The value of exports under the preferential trade agreements of Sri Lanka was $ 71 million last year. However, it is a drop of -16.4% compared to the previous year. The major export products to Japan are tea, coconut non-kernel products, food, beverages and tobacco, rubber products, and chemical products. 

Furthermore, with reference to the CBSL report, Sri Lanka benefits from Russia, Turkey, Australia, Canada, Switzerland, Norway, and New Zealand, and the UK’s Global Tariffs (UKGT). UKGT became effective from 1 January 2021 – which is a separate tariff system from the European Union (EU). Whereas, the export of Sri Lankan products under the EU GSP+ scheme is eligible for accessing the duty-free market on the UKGT until the expiration of the EU GSP+. 

In terms of free trade agreements (FTAs), Sri Lanka benefitted from bilateral FTAs such as the Indo-Sri Lanka FTA (ISFTA) and the Pakistan-Sri Lanka FTA (PSFTA) till 2020. The total exports remained high from both India and Pakistan. In terms of regional trade agreements, the Asia Pacific Trade Agreement (APTA) and Global System of Trade Preferences (GSTP) improved in 2020, whereas exports under the SAARC Preferential Trading Arrangement (SAPTA) and the South Asian Free Trade Area (SAFTA) remained low in 2020.