Urgent reforms vital to secure new GSP Plus scheme as Sri Lanka faces a critical deadline to secure continued preferential access to one of its most important export markets. Industry leaders and European Union officials have warned that structural reforms can no longer be delayed.
Urgent reforms vital to secure new GSP Plus scheme before 2027 transition
Calls for accelerated economic, legal, and regulatory reforms intensified last week as government officials, exporters, and European Union representatives outlined the steps required for Sri Lanka to successfully transition to the EU’s revised Generalised Scheme of Preferences Plus (GSP Plus) framework, which is set to take effect from January 1, 2027.
Speaking at the Sri Lanka German Business Forum 2026 in Colombo, European Union Ambassador to Sri Lanka and the Maldives, Carmen Moreno stressed that the preferential trade arrangement should be viewed as a catalyst for economic transformation rather than simply a trade concession.
She noted that Sri Lanka has historically underutilised the full potential of the scheme despite benefiting significantly from duty-free access to the European market. According to trade data presented during the forum, imports from Sri Lanka to the European Union reached approximately 2.7 billion euros in 2024, with around 1.5 billion euros benefiting directly from GSP Plus preferences.
The country also achieved a record utilisation rate of 69 percent during the year, highlighting the importance of the facility for export-oriented industries. However, substantial export potential remains untapped, particularly in sectors such as agriculture, agro-processing, and value-added manufacturing.
The importance of GSP Plus Sri Lanka extends beyond trade volumes. The European market accounts for nearly 24 percent of Sri Lanka’s total exports, making it one of the country’s most significant export destinations.
Recognising the economic significance of retaining duty-free access, Export Development Board Chairman Mangala Wijesinghe confirmed that the government has received approval to move forward with the application process for the new scheme.
According to Wijesinghe, preliminary discussions have already taken place with policymakers, and authorities intend to submit a formal application well ahead of the deadline. Sri Lanka has until March 2027 to complete the necessary procedures and secure a successful transition into the revised framework.
The process, however, involves more than a routine application. Once the final regulations are formally published by the European Union, countries seeking eligibility must submit a comprehensive request to the European Commission. This is followed by a detailed evaluation process that can take up to ten months.
The revised framework retains the requirement for beneficiary nations to ratify and implement 27 international conventions covering human rights, labour rights, environmental protection, and good governance. Additional conventions have also been incorporated into the new framework, including agreements related to the rights of persons with disabilities and the protection of children from involvement in armed conflict.
Authorities must not only ratify these conventions but also demonstrate measurable progress in implementing them through concrete action plans and institutional reforms.
One of the most closely scrutinised areas remains Sri Lanka’s legal framework relating to national security and counter-terrorism. European officials have repeatedly expressed concerns regarding the continued existence of the Prevention of Terrorism Act (PTA), urging Sri Lanka to adopt legislation that aligns with international human rights standards.
Although the government has proposed the Anti-Terrorism Act as a replacement, the draft legislation continues to attract criticism from international organisations and civil society groups over concerns related to executive powers and the scope of certain provisions.
Observers believe that meaningful progress on these reforms will be a decisive factor in determining the country’s eligibility under the revised GSP Plus framework.
Ambassador Moreno argued that compliance with the new framework should not be seen as an external burden. Instead, she described the requirements as an opportunity for economic modernisation, institutional strengthening, and long-term competitiveness.
She also emphasised the need for broader market reforms, including reducing protectionist barriers, improving regulatory efficiency, and embracing sustainability standards that increasingly define access to global markets.
The private sector has echoed these concerns, particularly within the apparel industry, which remains one of the largest contributors to Sri Lanka exports. Industry leaders have warned that retaining tariff preferences is critical as European buyers increasingly prioritise sustainability, ethical sourcing, and environmental compliance when selecting suppliers.
Sri Lanka Apparel Exporters Association Chairperson Rajitha Jayasuriya described the continuation of the scheme as a “do or die” issue for local manufacturers, arguing that the loss of preferential market access would significantly weaken the competitiveness of Sri Lankan exporters against regional rivals.
As the countdown to 2027 continues, policymakers face increasing pressure to accelerate reforms and demonstrate tangible progress. The outcome of these efforts will not only determine future access to European markets but could also shape the next phase of Sri Lanka’s export-led economic growth strategy.