The apparel sector which is one of the industries catering heavily to the UK market, attaches extreme importance to immediately commence a dialogue with the UK, for preferential bilateral arrangements without which it will be difficult for the industry to survive in the UK market, following Brexit.
The UK will rely on WTO rules to deal with all countries, in the absence of a bilateral preferential agreement where exporters will be subject to MFN duty rates, (the lowest possible tariff a country can assess), Joint Apparel Association Forum Secretary General Tuli Cooray said.
“We strongly believe that negotiation of a trade deal after the transitional period between the EU and the UK is in place, is unrealistic since the future pattern of negotiations does not point in that direction due to serious political differences in the UK.
Therefore, we should work on the assumption that the hardest Brexit will be a reality,” he said.
“We strongly recommend that the highest priority be given by the Government and request the Ministry of Development Strategies and International Trade to immediately approach the UK authorities to recommence a dialogue on preferential arrangements as an extremely high priority trade agenda item,” he said.
Sri Lanka will not be able to depend on the GSP+ facility for much longer as the country will reach a higher per capita income status which disqualifies it from this facility. However, it is necessary to continue the facility for at least another two years, he said.
Sri Lanka should take cognizance of the impact of Brexit in leveraging on GSP+ . Approximately 30 percent of our exports sent to the EU are in fact destined to the UK.
All those exports will no longer qualify for preferential access if UK exits the EU without a trade deal, unless a similar arrangement is negotiated between Sri Lanka and the UK. If adequate precautions are not immediately taken, Sri Lanka should be prepared to face an economic shock at least temporarily.
“Negotiations for Brexit is taking place and has reached critical levels. Given the development, it appears that by March 29, Brexit will take place either with a negotiated trade deal or without it,” he said.
If a negotiated trade deal takes place, then a 21-month transition period up to December 31, 2020 has been agreed upon by both parties to put everything in place and allow businesses and others to prepare for the moment when the new post Brexit deal between the EU and UK begins. In fact, during this period, UK can negotiate any trade deals.
On the other hand if there is no deal by the given date or the proposed deal, if any, is rejected by the British Parliament, UK will simply withdraw from the European Union with no transitional arrangement in place.