JAAF hails Govt.’s ‘Trade for development and not aid for development’ initiative

Friday, 28 June 2013 04:48 - - {{hitsCtrl.values.hits}}

The Joint Apparel Association Forum (JAAF) has expressed delight at the announcement that consequent to President Mahinda Rajapaksa’s visit to China, a number of Memorandums of Understanding (MoUs) had been signed to improve and strengthen bi-lateral economic relations between the two countries, particular on trade investment and tourism. In a media statement issued by the office of the Secretary-General of JAAF Tuli Cooray, it was stated that the JAAF has been advocating the need to negotiate market access instruments with new and emerging markets, particularly with China, over the past two years. The statement referred to China as the priority market due to its enormous potential the country offers, Cooray pointed out. Besides China being a top exporter of apparels to the global markets, it also has its own domestic demands and in 2012 alone, China had

imported apparels to the tune of US$ 4 billion, he said. Last year Sri Lanka’s apparel exports to China amounted to nearly US$ 15 million. A new market need was emerging for top quality Chinese local brands with high level of GDP growth, and rising per capita income has widened the middle class in China, he added. China’s global apparel imports in 2012 were a staggering US$ 4 billion from US$ 2.2 billion in 2010 and Sri Lanka’s exports during the same period increased from US$ 0.7 million to US$ 15 million, which demonstrates the growth potential of the Chinese market, he emphasised. Sri Lanka’s apparel industry, which has evolved to be a mature international player, is today a supplier to many leading brands and has significantly reduced its supplies to the low-end of the market, he pointed out. Sri Lanka has carved out a niche market for itself and does not consider China to be a competitor, he said. “Our aim is to supply to the higher end of the market by manufacturing for Chinese local brands as well as exporting international brands through manufacturing bases in Sri Lanka,” he said.

Speaking of the vision of the industry, the Secretary-General said that is to make Sri Lanka the apparel hub for Asia, as Sri Lanka is no longer a basic manufacturer but a total solutions provider to their clients. Last month, a delegation from the China National Garment Association (CNGA) visited Sri Lanka and had a series of fruitful discussions with the JAAF membership. It was in the background of this visit that the JAAF wished to congratulate the Government for the initiative it had taken and commended it for reaching the agreement to initiate negotiations on preferential trade packs, for which purpose a Working Committee is due to be established, he announced. “We believe the agreement to launch preferential trade pact with China demonstrates the visionary leadership of President Mahinda Rajapaksa as these trade pact that are to be negotiated will be another historical landmark since the signing of the rice/rubber pact in 1952, which laid the foundation for growing bilateral trade relations between the two countries,” he added. The Government, having successfully defeated 30 years of LTTE terrorism, brought lasting peace to the country and the business community is enjoying the peace dividend, he stated. The Government has now embarked upon massive infrastructure development projects of ports, roads, energy etc., and the focus is now also on forging economic relationships with new and emerging markets, he said. China has been and continues to be a major donor to the country. However, it is evident that the Government is now taking calculated steps to move away from aid for development to trade for development. The proposed trade pacts is a reflection of this policy direction which will open new vistas and take trade relations with China to a new level in the coming years, he added. “We commend the Government for taking this historical decision,” he announced. It is well known that apparel exports, which counts for 40% of country’s total exports, depends on two markets, namely the US and the EU to which Sri Lanka exports 90%, needs to be sustained, he remarked. However, diversification of export markets is an important component of the Government’s export growth strategy to reach an overall national export target of US$ 15 billion by 2016. “We ourselves at JAAF have set a target for our industry to reach US$ 5 billion by 2016, from the current level of US$ 3.8 billion, through organic growth. In this context, the proposed trade arrangements with China will facilitate, in no small measure, achieving our growth target as market diversification is a part of our export growth strategy,” he added. Cooray added that the industry was confident that apparel exports to China could reach US$ 1 billion level in the not too distant future. The current trade flows between the two countries also reflect the asymmetrical nature of the two economics; while Sri Lanka’s exports last year was a meagre US$ 108 million, imports from China amounted to US$ 2,568 million. JAAF believes that future trade pacts with China will be able to reduce this trade gap substantially over the coming years through increased exports to China. JAAF stands ready to fully support the Government on this laudable policy initiative which it believes should be taken to the next level by initiating similar trade arrangements with countries such as Russia, Japan and Turkey. In this regard, India too has become an important emerging market as it is poised to become a major economic power in the region with high growth levels and purchasing power of expanding middle class. The Indo-Lanka FTA which came in to force in 2000 provides a solid foundation to build trade with India but limited quota and stipulated restriction on apparel quota impedes such potential growth. The vision should be sectoral liberalisation on apparel from India which will not only open up new avenues of expansion of trade but also facilitate the South Asian region to become an apparel hub.