Based on the joint request by Sri Lanka and Indonesia,The European Commission made a landmark decision on July 9 2024 permitting regional cumulation between the two countries on selected textile and apparel products, when they export to the 27-member countries of the European Union under the EU Generalized Scheme of Preferences (GSP) scheme. This decision will open more avenues to increase Sri Lanka’s apparel exports to the EU market.
After a thorough examination, the European Commission concluded that the conditions for granting cumulation between the two countries from two regional groups were met. The European Commission’s favourable decision will grant permission for Sri Lanka to cumulate origin for certain materials of HS Chapters 51 to 55, 58 and 60 originating in Indonesia and to then produce certain textile products of HS Chapters 61 to 63 under regional cumulation, as long as both countries remain in the GSP scheme.
This decision not only strengthens trade relations with the European Union but also underscores the commitment of both countries to adhere to rigorous origin rules and administrative cooperation.
The permission of the regional cumulation will allow Indonesia to export fabrics to Sri Lanka for the purpose of re-processing to manufacture apparel products by Sri Lanka and to export to the EU market. By leveraging Indonesia’s strong textile production capabilities, Sri Lanka can secure a consistent supply of high-quality materials.
The Sri Lankan export-oriented apparel industry, a pivotal driver of the national economy, has become the most significant contributor to the country’s economic growth over nearly three decades. The European Union has become one of the three largest buyers of Sri Lankan apparels in both volume and value. Moreover, the Sri Lankan textile and apparel industry employs nearly 350,000 workers directly and twice as many indirectly.
In 2022, Sri Lanka imported fabrics worth US$ 2,080.81 million out of which the import value of five tariff lines excluded from the joint request accounted for 59% of the total fabric imports. Conversely, Indonesia is a significant textile producer with robust output in cotton, man-made fibers, and synthetics.
The decision by the European Commission will be effective from 08 August 2024.
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