Home / Knowledge / News / Textiles / Lanka braces for likely trade diversion, courtesy TPP
Lanka braces for likely trade diversion, courtesy TPP
12
May '16
The Institute of Policy Studies of Sri Lanka (IPS) has said that the Trans Pacific Partnership (TPP) can have a significant impact on trade flows of countries that are outside the trading bloc, including Sri Lanka, as trade would be diverted towards TPP countries where buyers can benefit from purchasing cheaper goods.

The size and scope of the TPP makes it a pertinent trade policy issue for both members and non-members like Sri Lanka. TPP is anticipated to transform current global trade patterns and affect all countries, particularly those that rely on the US as an export market and share a similar production/export structure to member countries.

The potential for trade diversion – that is, diverting trade away from a more efficient supplier outside a trading block towards a less efficient supplier within the block – is a pressing concern in the rapidly evolving international trade and investment environment.

Preliminary estimates by the IPS indicate that the level of trade diversion/market loss for Sri Lanka due to exclusion from the TPP will be about $39.8 million. This amount is negligible in the context of Sri Lanka's total exports of $11 billion in 2014. A country-wise analysis shows that the biggest loss in exports for Sri Lanka would be in the US (81 per cent). To a much lesser extent, export loss will also take place in Mexico (8.8 per cent), Canada (5.7 per cent) and Japan (1.7 per cent), the IPS said on its website.

“Given that the majority of Sri Lanka's loss in exports owing to TPP would occur in the US market, the biggest loss in exports include textiles and apparel: product codes HS 61 and 62 (Articles of apparel, accessories, knit or crochet and not knit crochet), which account for around 90 per cent of total export loss in USA. HS 40 (Rubber and articles thereof) will also experience losses, albeit to a lesser extent.

Much of the trade loss will be diverted to Vietnam, which is a signatory to the Agreement and competes with Sri Lanka in the US market in a similar range of products. About one-fourth of Sri Lanka's exports are similar to Vietnam's exports to the US, and in these products Vietnam is almost twice as competitive to that of Sri Lanka. This is not surprising, as Vietnam has been touted as the biggest winner of TPP, and it is expected to boost exports to the US which already Vietnam's largest export market,” IPS said.

Nevertheless, the overall loss of earnings in exports of textiles and apparel to the US of approximately $24 million is very low relative to current total exports earnings of $4.9 billion in 2014. However, trade diversion effect might be lower than estimated due longer tariff liberalization period, safeguards, and restrictive rules of origin, etc., specified under the Agreement to protect import sensitive products like textiles and apparel, which would affect the utilization of the Agreement by member countries. For example, TPP requires a 'yarn forward' rule of origin. It means that all stages of production, starting with yarn spinning, moving to fabric formation and the final garment assembly, must be done using yarns and fabrics from TPP countries.


Must ReadView All

Textiles | On 29th Jun 2017

Nan Ya files trade petition in US against Korea & Taiwan

Nan Ya Plastics Corporation, America, a US synthetic fibre producer,...

Textiles | On 29th Jun 2017

Indian textile industry will reach new milestone by 2020

By 2020, textile technologies will be highly advanced not only with...

Apparel/Garments | On 29th Jun 2017

Amazon intends to keep investing and growing in India

American online retail giant Amazon intends to keep investing and...

Interviews View All

Arvind Saraf
Triveni Sarees

e-Commerce is still evolving fast with constant flux and surprises

Rajiv Sirohi
Shara

‘Portugal is taking away a major share of the mill made sector.’

Mohammad Mamun Ar Rashid
UL VS Bangladesh Ltd

Productivity, creativity and innovation play a vital role in the growth of ...

Kevin Nelson
TissueGen

Kevin Nelson, Chief Scientific Officer, TissueGen discusses the growing...

Johan Berlin
InvestKonsult Sweden AB

Investkonsult Sweden AB has been buying and selling second-hand textile...

Lynda Kelly
Suominen Corporation

Suominen Corporation is a manufacturer of nonwovens as roll goods for...

Prathyusha Garimella
Prathyusha Garimella

Hyderabad-based designer <b>Prathyusha Garimella</b> is known for blending ...

Silvia Venturini Fendi
Fendi s.r.l

"Yes, my confidence and positive attitude are my strengths and should be...

Sonam & Paras Modi
SVA

Sonam and Paras Modi's Sva Couture is synonymous with head-turning...

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


editorial@fibre2fashion.com

Letter To Editor






(Max. 8000 char.)

Search Companies





SEARCH

news category


Related Categories:
July 2017

July 2017

Subscribe today and get the latest update on Textiles, Fashion, Apparel and so on.

SUBSCRIBE


Browse Our Archives

GO


E-News Insight
Subscribe Today and Get the
Latest News Update in Your Mail Box.
Advanced Search



X