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Last updated: 20 October, 2009 - Published 14:32 GMT
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Losing GSP+ can be 'very negative'
Apparel industry
Thousands of apparel workers may lose jobs if the GSP+ benefit is withdrawn
The apparel industry in Sri Lanka has expessed concern of disastrous “chain of activity” in the industry if the country loses GSP+ trade concession offered by the EU.

Sri Lanka could lose special trading rights with the bloc because of a failure to improve its human rights record, the European Union warned on Monday.

A year-long inquiry by the EU has revealed "significant shortcomings" in Sri Lanka's human rights efforts.

The European Commission now says it will ask the 27 EU member states if it should suspend trade privileges.

Deputy secretary of the Joint Apparel Forum (JAF), Rohan Masakorala, said that over fifty percent of Sri Lanka’s total apparel exports were shifted to the EU since the facility was granted in 2005.

50 percent of exports

He said Sri Lankan exporters had the privilege of providing apparel exports to the EU ‘on zero duty base’ as a result of the concession.

“In the event this facility is withdrawn, price of our products, apparel would go up by ten percent. It is huge price increase for any product,” he told BBC Sandeshaya.

 Losing the privileged position we have in the EU can have a heavy impact on the industry. If we have less demand, the production will be reduced making job losses and reduction of revenue
Rohan Masakorala, deputy secretary, JAF

“So finally it is up to the buyer whether to purchase for a higher price or find cheaper products from elsewhere. Losing the privileged position we have in the EU can have a heavy impact on the industry. If we have less demand, the production will be reduced making job losses and reduction of revenue.”

Deals with the EU worth more than $100m (£62m, 67m Euros) are linked to Sri Lanka's human rights record.

The European Union's 12-month inquiry was launched during Sri Lanka's final offensive against Tamil Tiger rebels in the north of the country.

Torture and violence

It found evidence of torture, police violence and breaches of child labour laws, officials say.

European customers
Europe is currently the biggest market for Sri Lanka apparel industry

The report outlines how it expects Sri Lanka to take "vigorous, rapid and verifiable" action to tackle discrepancies over its current human rights record.

Mr. Masakorala recalled how the impact of the withdrawal of US quota system in 2005 was negated by the EU trade concession.

A decision on suspending Sri Lanka's trade incentives could be taken by the end of November and take effect from early next summer, reports suggest.

The Sri Lanka government, responding to the report, said it will continue the dialogue with the EU.

“The GoSL for its part will continue to engage with the European Institutions, in-keeping with the spirit of transparency and mutual respect that is appropriate to the historic and long standing relationship between Europe and Sri Lanka,” a statement issued by Sri Lanka foreign ministry said.

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