Sri Lanka’s apparel exports to the US will be reduced by at least 25% if the reciprocal tariffs are implemented while the country is facing risks in sustaining GSP-plus conditions, Joint Apparel Association Forum (JAAF) said.

Speaking at a webinar organised by Bartleet Religare Securities,  JAAF Deputy Chairperson Felix Fernando said that if the tariffs are implemented total apparel exports to the US will reduce by at least 25% in the initial stages as companies will not be able to bear the cost.

He said this could lead to apparel companies downsizing themselves, while some SME sector apparel companies will have to close down their businesses.

Early in April, the US announced a 44% tariff on Sri Lankan exports to the US, which has now been suspended for 90 days as the US is open to negotiations with the countries.

A team led by President Anura Kumara Dissanayake is expected to leave for the US in the coming week to negotiate a deal with the US trade representative office.

Moreover, Fernando said that the apparel industry does not have time to look at export diversification, to look at different markets and products as the sector has been doing in the past 10-15 years without the help of the Government.

He added that JAAF has been asking the governments to sign free trade agreements with its export destination to gain a level playing field with its competitors in the region.

For example, Fernando said that Bangladesh, being a least developed country, can export their apparel products to the European Union (EU) without worrying where they source the fabric. 

“But we are still utilising  about 50% of the GSP plus and we have conditions, we have to source the fabric from EU, SAARC countries or from Sri Lanka. Because of that, we are not able to expand our exports even to the EU,” he said.

He said it is uncertain how long Sri Lanka can sustain the GSP-plus condition, and by the end of next year, GSP-plus will be relooked at by the EU to see whether Sri Lanka has completed its political conditions.