Exporters to US Asked to Claim GSP Benefits as the Programme May Get Reauthorized

13th February 2011, www.island.lk

The American Chamber of Commerce (AMCHAM) and the Federation of Chamber of Commerce and Industry (FCCISL) sought to clarify a misconception that the suspension of the US GSP scheme of preferential tariff lines was only targeted at Sri Lanka.

It is expected to be reinstated soon and exporters were requested to keep making claims as they would be honoured once the programme is reauthorized.

Issuing a joint statement yesterday (11) the two chambers after consulting the US Embassy in Colombo said, "The recently suspended GSP programme provided trade preferences for 131 countries, and exporters of all these countries will not receive GSP benefits until the programme is reauthorized.

This decision applies to the entire world, and is not specific to Sri Lanka. The GSP programme has lapsed before, and each time the GSP programme was reauthorized, and it is expected that this would be the case this time as well.

Sri Lankan exporters are encouraged to continue to claim GSP benefits, because in the past, benefits were made retroactive to the expiration of the programme."

The statement encouraged exporters to pay attention to following:

1. Sri Lankan eligible export products which were hitherto benefited from US GSP scheme will also be excluded and liable to pay normal custom duties when entering into the US market as stated above.

It should also be noted that the American importers who keep proper records can claim duty free treatment for eligible products as and when the US Congress extend the duration of the US GSP Scheme.

Since Form "A" is no longer use by the US Customs, it is the responsibility of the American importer to keep the proper documents and submit them to claim benefits from the US Customs at the appropriate time.

2. We also urge Sri Lankan exporters to the USA under US GSP Scheme to request their buyers/importers to keep all import records as "If and when GSP is renewed retroactively the US custom authorities will automatically process refunds of duties deposited on program eligible entries."

3. Sri Lanka has been a beneficiary of the US GSP Scheme since its inception. Sri Lanka has been ranked as 14th Top Exporter under US GSP Scheme in 2006.

Rubber tires, Plastic sacks and Bags, Rubber Gloves, Activated Carbon weighing machine weights, Gold Jewelry, Porcelain/China household ware and Rubber floor coverings were among the major export products benefited from the US GSP Scheme.

Most textile and apparel articles, footwear, handbags and luggage flat goods, kitchen and bed linens, leather products, electronic products are not eligible to receive duty free treatment under this scheme.

4. In order to qualify the eligible products for duty free treatment, the product must have 35% of domestic value addition and "substantially transformed "the imported material and input.

5. We will closely monitor the future developments of the scheme and keep Sri Lankan exporting community informed of any developments.

6. More analytical information on trade policy issues of this nature can be accessed via the Trade Watch Series of the FCCISL on their blog, (www.blog.fccisl.lk).

Related Info :
• US GSP Trade Facility for Sri Lanka Likely to be Renewed

US GSP Trade Facility for Sri Lanka Likely to be Renewed

07 January 2011, www.lankabusinessonline.com, By Ashanthi Ratnasingham

A United States trade facility allowing duty free Sri Lankan exports that lapsed is likely to be renewed with retroactive effect as has happened in the past, officials said.

The US Congress has not renewed the Generalized System of Preferences (GSP) program before its conclusion of business and therefore GSP expired from December 31.

"The Congress considered legislation in December 2010 to extend the facility but ultimately adjourned without taking action to extend it," Subhashini Abeysinghe, Economist at the Ceylon Chamber of Commerce said.

"This means, GSP products from GSP beneficiary countries arriving in the United States on or after January 1, 2011, will not be eligible for the concession.

"This has happened before and the last time authorization of the GSP program lapsed was in 2001," she said.

"The Congress subsequently reauthorized the program ten months later with the renewal being made retroactive."

If renewed retroactively, companies can arrange to be reimbursed for tariffs paid during the gap period.

In the past, U.S. Customs and Border Protection has arranged for the timely processing of refunds of duties deposited on GSP-eligible entries.

The GSP program is designed to promote economic growth by providing preferential duty free entry for about 3,400 products from 131 designated countries which include Sri Lanka.

"It is not only Sri Lanka that will not have this facility extended from January 2011; there are 131 countries involved as well," Abeysinghe said.

"This has happened seven times since 1993 and we think the US will renew the program retroactively as has happened before."

Products covered under the facility include machinery, electrical goods, chemical products, agricultural products, and jewelry.

Most textiles and apparel are not eligible for preferential benefits under the program.

"Only a small percentage of the overall bilateral trade will be affected because garments and textiles which comprise 79 percent of Sri Lankan exports to the US are outside the realm of the GSP," Abeysinghe said.

Countries eligible for GSP benefits must meet several criteria.

These criteria include internationally recognized workers rights like the right of association, the right to organize and bargain collectively, a prohibition on compulsory labor, and a minimum age for the employment of children.

Prohibition on the worst forms of child labor, acceptable conditions of work with respect to minimum wages, hours of work and occupational safety and health are also included.

Sri Lankan Exporters Should Make Use of Free Trade Deals

20th October 2010, www.lankabusinessonline.com

Sri Lankan exporters are still not making enough use of free trade deals giving duty free or preferential access to big markets, a senior trade official said.

Gomi Senadhera, Director General of the Department of Commerce, said rates of utilisation of key trade deals like the Asia - Pacific Trade Agreement (APTA) and South Asia Free Trade Agreement (SAFTA) were low.

"Utilisation rates are not very high either because exporters are not obtaining certificates of origin from the department of commerce or because the importer is not presenting it and getting duty concessions," he told a forum.

The seminar on free trade agreements was organized by the Spices & Allied Products Producers’ & Traders’ Association (SAPPTA) of the Ceylon Chamber of Commerce.

Senadhera said APTA, previously known as the Bangkok agreement, was becoming more important as it gave exporters like SAPPTA members access to China, India and South Korea.

China's membership of APTA theoretically gives Sri Lanka access to one of the largest markets in the world, he said.

"Under APTA there is a substantially large volume exported without preferences being claimed to China and Korea for which your importer is paying duty when they are entitled to duty free or preferential duty," said Senadhera.

"The rules of origin and other aspects are quite simple," he said. "Its importance today is that we look at APTA largely as a platform for market access with China and Korea."

Although exports under APTA have grown, it was still only about 50 million dollars worth of goods to China, Korea, India and Bangladesh with about 1,800 certificates of origin issued by the commerce department.

"Our utilisation rates are not very high - only around 50 percent," said Senadhera. "It means there's another 50 percent of exports which should benefit and people are not aware of it."

The main products exports under APTA are coir, natural rubber, tea, apparel, rubber products, fish products, activated carbon, floor tiles, and porcelain.

"We must improve exports to China and South Korea," he said. "If we are not using these free trade arrangements exporters should come and see us to find out how best they can use these trade preferences."

Under the South Asia Preferential Trading Arrangement (SAPTA) also total Sri Lankan exports "remains modest," Senadhera said.

Exports have actually fallen to 1.8 million dollars in 2009 from 3.8 million dollars in 2007.

The main products exported are rubber gloves, natural rubber, black tea, bicycle tires, copra, coconut oil, nutmeg, desiccated coconut, activated carbon, coir yarn and coir fibre.

"To China alone we exported last year about 28 million dollars worth of good and to India 13 million dollars worth under APTA," Senadhera said. "Under APTA we exported more to India than under SAPTA."

These trade deals were useful for exporters as a lot of products covered under them are locally produced for the domestic market and therefore eligible for export.

Senadhera said there was a lot of criticism about the free trade deal with India because more products were sent under that deal than under others.

"That's why we don’t hear about other agreements - when you don't export you don;t have problems. Only when goods go and you have to clear them that you have the problems.

"If a trade agreement is successful that should generate problems - no successful trade agreement is without problems."

Sri Lanka GSP trade deal with the United States was also not being used enough.

"There is a substantially large volume exported where exporters do not use GSP," Senadhera said.

"It appears some exporters and importers are paying a few million dollars in duty for which they are entitled to duty free access. We're trying to find out who these exporters are to find out whether they could get the concession."

Related Info :

• South Asian Free Trade Area (SAFTA) - Detailed Information - The Board of Investment of Sri Lanka (BOI)

• Asia– Pacific Trade Agreement (APTA) Formerly the Bangkok Agreement  - Detailed Information - The Board of Investment of Sri Lanka (BOI)

Sri Lanka Not Claiming Full Duty Free Access to US Under Its Generalized System of Preferences (GSP) Programme

23rd October 2009, www.lankabusinessonline.com

Sri Lankan exporters are not making enough use of duty free access to the United States under its Generalized System of Preferences (GSP) programme, officials said.

"It is necessary to educate our exporters about the duty free access to the US," said Gomi Senadheera, Sri Lanka's Director-General of Commerce. "There is much potential."

He said if exports eligible for duty free access makes use of the access the "opportunities for market expansion are very high."

There are a large number of products covered by GSP which are not exported to the US, he said.

Total two-way trade between Sri Lanka and the United States totalled 2.3 billion dollars in 2008, with US imports of two billion dollars and US exports of 283 million dollars.

The main US exports to Sri Lanka were aircraft, cereals, industrial machinery, electrical machinery and plastics.

US imports from Sri Lanka are mainly apparel, rubber, precious stones and industrial machinery.

Officials said that in 2008, US imports from Sir Lanka qualifying for GSP preferences were valued at 153 million dollars.

The US is the largest single market for Sri Lankan exports as much as 80 percent of which consists of apparel and textile products.

But a conference on US trade and investments in the island was told recently that according to trade statistics nearly 17 million dollars worth of GSP eligible goods from Sri Lanka had entered the US market in 2007 without claiming duty free benefits.

In 2008, the value of such Sri Lankan exports had risen to 18.7 million dollars.

This was because of lack of awareness among importers and exporters of the zero duty concessions offered under the US GSP programme and insufficient documentation, trade officials said.

The total value of US imports from Sri Lanka under the GSP programme was 172.05 million dollars in 2008 accounting for 9.1 percent of total US imports from the island.

The value of such imports in the first seven months of 2009 was 68.5 million dollars.