Ceramic Sector in dire straits over
GSP +

The ceramics sector which is just recovering from high energy costs and intense global competition warns of another crippling blow to the industry if the GSP + concession is removed by the European Union.

*Tableware
exporters to pay 8.5% duty under GSP
*Asks for 3-5 year extension to emerge competitive
*Loss of jobs, markets and buyers if
concession revoked “We are still struggling with lost markets after the global financial crisis,” Ceramics Council President Dayasiri Warnakulasooriya informed the press yesterday. “We now appeal to the European Commission to consider the negative impact that the refusal of GSP+ would bring to this sector.”
Sri Lanka exports close to USD 42 million worth of ceramics annually which although of the highest quality amounts to only 1% of the global market, but 2009 has been a pressing year with the severely hit US economy resulting in many of the 15 ceramic companies looking towards the EU for new markets.
Sri Lanka exports Rs. 745.64 million worth of ceramics to EU primarily in the tableware sector and Dankotuwa Porcelain Chairman Sunil Wijesinha explained that the loss of GSP+ will have multiple impacts on the industry. His firm exported over Rs. 300 million worth of tableware to the EU from January to August and would be affected the most with 53% of their total exports leaving to EU.
Currently, ceramic exports to the EU are duty free under the GSP+ scheme which was initiated by EU with the aim of making vulnerable countries more competitive. The loss of GSP+ concession would mean that Sri Lankan exports to the EU will fall under the GSP (General Sales Preference) band where rates are still high for many ceramic exporters. The sector to suffer the most from the removal of the concession however would be the tableware manufacturers.
If the EU decides to cut back the GSP+ concession, tiles and wall tiles will be taxed at 3.5% under GSP and 7% if it is a normal duty. Ornamental and other articles will be charged a duty of 2.5% under GSP and 6% under normal duty charges. However, tableware will be charged a duty of 8.5% under the GSP band where the normal duty is at 12%.
“It is impossible for us to sustain our exports to the region with this amount of duty,” Wijesinha informed, “We know we cannot rely on the GSP+ forever, but we are asking the European Commission to allow us to emerge as a competitive industry after the world recession severely affected us.” He said that the Council had not approached the Government because their stand had been very clear and must be respected.
Noritake Lanka Porcelain Executive Consultant Nimal Perera said that the GSP+ revocation would be disastrous to the industry which is on the verge of recovering. “Noritake Japan has already decided to invest Rs. 300 million more on expanding operations here and Sri Lanka has always had a competitive edge by complying to all the international auditory requirements of our buyers.” However, with countries such as Bangladesh emerging as a high quality porcelain manufacturer driven by an expat Sri Lankan team trained in these organisations, they were concerned that these competitive advantages will no longer be enough to sustain the industry.

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