- Hopes to mitigate recessions losses through RCEP
- Say competitors demonstrate potential to expand beyond existing markets
Sri Lanka apparel exporters seek to join the Regional Comprehensive Economic Partnership (RCEP) urgently in mitigating losses caused due to the global recession, which is still under discussion by the Government of Sri Lanka (GoSL), The Daily Morning Business learnt.
Speaking to The Daily Morning Business recently, Joint Apparel Association Forum (JAAF) Secretary General Yohan Lawrence stated: “There is some discussion about Sri Lanka joining the Regional Comprehensive Economic Partnership (RCEP) which is a regional FTA (Free Trade Agreement) covering some fifteen countries. Australia, Japan, South Korea and China are all part of the RCEP and we (JAAF) would welcome this initiative in order that we do not lose out on possible regional trade opportunities. There is a sense of urgency here (in joining RCEP) as every month’s loss has a massive impact on the (apparel) industry .”
He pointed out that JAAF has observed that countries such as India, China, Japan, Australia, Canada and South Korea demonstrated their potential to grow, apart from their existing markets of the United States (US), the European Union (EU) and the United Kingdom (UK).
When it comes to the market potential of the aforesaid countries, he said: “Last year Sri Lanka exported about $ 61 million worth of apparel to India. And the lion's share (approximately $ 51 million) was under the India-Sri Lanka Free Trade Agreement (ISFTA).”
However, the ISFTA has limited the export of apparel to India to a mere 8 million pieces free of duty while Bangladesh was able to export approximately $ 700 million worth of apparel to India which was free of duty. It is also noteworthy that last year, Bangladesh’s exports of apparel to India grew by more than the total of Sri Lanka’s exports to India, He explained.
Therefore, JAAF strongly supports the FTAs with both India and China as the apparel body sees these as being able to allow the island to gain a significant market share. At the same time, the rest of the potential markets that have been mentioned should also be looked at urgently, Lawrence reiterated.
He noted that due to the continuous drop in Sri Lanka’s apparel exports since August 2022 to its major markets due to the downturn in economic activity, JAAF estimates that a 20 - 25% reduction of apparel exports would continue over the coming months highlighting that the industry’s capacity in mitigating the situation is limited.
In January and February this year (2023) apparel exports declined to below $ 400 million while January remained at $ 397 million and in February, the apparel exports were able to secure $ 398 million respectively.
Simultaneously, the exports to the USA, one of the major markets for Sri Lanka’s apparel exports, showed a decline and JAAF does not foresee any positivity in the economic situation in the coming months. However, it expects, “this current level of trading (to the US) is to remain.”
JAAF, the apex body of Sri Lanka’s apparel industry, is committed towards becoming the “Preferred Ethical Apparel Sourcing Destination” in the world and is determined to accelerate the country’s apparel sector to a $ 8 billion by 2025.