Thursday, September 17, 2009

Sri Lanka ceramics industry threatened by loss of EU trade concessions

Sri Lankan ceramic product exporters said they stand to lose heavily if duty free access to European Union markets is withdrawn, due to human rights concerns.

Sri Lanka Ceramics Council president Dayasiri Warnakulasooriya said exports would become uncompetitive as duties of 2.5 - 8.5 percent would have to be paid by buyers if the GSP Plus trade concession is withdrawn.

Exporters are struggling owing to demands for discounts and falling orders because of global recession and intensifying competition from cheaper Asian export nations, he told a news conference.

The EU said earlier this year that it had temporarily extended the GSP Plus scheme to Sri Lanka while it reviews the island's eligibility for the concession.

The EU has expressed concern over alleged human rights abuses by Sri Lankan government forces in the war against Tamil Tiger separatist rebels who were defeated in May 2009.

Sri Lanka maintains the government and industry complies with all GSP Plus eligibility criteria, including labour standards, and has refused to allow a probe by the EU on alleged human rights abuses.

Sunil Wijesinha, a former ceramic council president and chairman of tableware exporter Dankotuwa Porcelain, said the industry was appealing to the EU not to withdraw the GSP Plus trade concession.

"We're not lobbying the government whose position has been clear that it will not compromise the country's sovereignty. We're appealing to the EU."

Warnakulasooriya said the industry exported about 745 million rupees worth of ceramic products to EU markets in the last six months.

Sri Lanka exports ceramic products worth about 42 million dollars (about 4,830 million rupees) a year and accounts for less than one percent of the global market share.

Its main export markets are the United States, the UK, Italy, United Arab Emirates, the Netherlands, Germany, France, Japan, Greece and Belgium.

"The industry is going through serious difficulties owing to falling export orders because of the global economic crisis," said Warnakulasooriya, who is also chairman of ornamental-ware exporter Midaya Ceramics.

"We are also struggling from severe competition from regional producers in China, Thailand, Malaysia, Indonesia, India and Bangladesh."

Sri Lankan products were of higher quality than those of most other rival origins.

But exports from other Asian producers were relatively cheap owing to cheap labour and natural energy resources available in these countries, Warnakulasooriya said.

Energy costs of Sri Lankan manufactures are among the highest in the region.

"With the increase in ceramic manufacturing in several countries, it is today a buyer's market," he said.

"Therefore, if our buyers have to pay more duty for exports from Sri Lanka our products will be more expensive than our regional competitors and we will lose our buyers.

"This is why it is important for Sri Lanka to continue to get the GSP Plus trade concession from the EU."

© Lanka Business Online

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