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Garment Industry in Sri Lanka and the Removal of GSP Plus by EU

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  • Jayatilleke S. Bandara
  • Athula Naranpanawa

Abstract

The ready‐made garment industry plays an important role in Sri Lanka both in terms of export earnings and poverty alleviation through employment generation. Following the removal of GSP Plus by EU in 2010 on the basis of alleged human right violations by the Sri Lankan government during the last stage of the civil war in 2009 and after, it currently faces serious challenges in exporting to the EU, its major market. Given the important role of the ready‐made garment industry in poverty alleviation through employment generation, the impact of removal of GSP plus on the poor is examined in this paper. The empirical results of this study demonstrate that poverty and income inequality are expected to be exacerbated in Sri Lanka as a result of the removal of GSP Plus by the EU using non‐economic reasons such as human rights violation. The results are also relevant for the renewed emphasis on trade preferences as a potential instrument for the Millennium Development Goals and the debate on how trade preferences are to be designed to maximise their effectiveness in stimulating a manufacturing supply response.

Suggested Citation

  • Jayatilleke S. Bandara & Athula Naranpanawa, 2015. "Garment Industry in Sri Lanka and the Removal of GSP Plus by EU," The World Economy, Wiley Blackwell, vol. 38(9), pages 1438-1461, September.
    • Handle: RePEc:bla:worlde:v:38:y:2015:i:9:p:1438-1461
    DOI: 10.1111/twec.12182
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    References listed on IDEAS

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    1. Borchert, Ingo & Conconi, Paola & Di Ubaldo, Mattia & Herghelegiu, Cristina, 2021. "The Pursuit of Non-Trade Policy Objectives in EU Trade Policy," World Trade Review, Cambridge University Press, vol. 20(5), pages 623-647, December.
    2. Kiyoyasu Tanaka, 2022. "The European Union's withdrawal of trade preferences for Cambodia," The World Economy, Wiley Blackwell, vol. 45(11), pages 3398-3419, November.
    3. Themal Ellawala, 2019. "Legitimating Violences: The ‘Gay Rights’ NGO and the Disciplining of the Sri Lankan Queer Figure," Journal of South Asian Development, , vol. 14(1), pages 83-107, April.
    4. Jayani Ishara Sudusinghe & Stefan Seuring, 2020. "Social Sustainability Empowering the Economic Sustainability in the Global Apparel Supply Chain," Sustainability, MDPI, vol. 12(7), pages 1-18, March.
    5. Liyanaarachchi, Tilak Susantha & Bandara, Layatilleke S. & Naranpanawa, Athula, . "A Quantitive Evaluation of the Potential Effects of Trade Policy Reversal in Sri Lanka: A Computable General Equilibrium (CGE) Analysis," Sri Lankan Journal of Agricultural Economics, Sri Lanka Agricultural Economics Association (SAEA), vol. 16, pages 1-26.

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