The Ceylon Chamber of Commerce has raised serious concerns over recently proposed draft legislation in Sri Lanka, calling for a thorough and careful review to ensure that new laws do not inadvertently jeopardize the country's access to the Generalized Scheme of Preferences Plus, commonly known as GSP+. The trade body warns that without proper scrutiny, certain legislative proposals could undermine Sri Lanka's standing with the European Union and threaten billions of rupees worth of export revenue that the nation depends upon.
What Is GSP+ and Why Does It Matter?
GSP+ is a special trade arrangement offered by the European Union that allows developing countries to pay reduced or zero tariffs on a wide range of goods exported to EU member states. For Sri Lanka, this benefit is particularly significant, as it covers key export sectors including apparel, fisheries, rubber products, and various manufactured goods. The arrangement is not automatic — it comes with strict conditions. Beneficiary countries must demonstrate commitment to 27 international conventions covering human rights, labor rights, environmental protection, and good governance.
Sri Lanka regained GSP+ status in 2017 after losing it in 2010 over human rights concerns. Since its reinstatement, the scheme has played a critical role in reviving export competitiveness and attracting foreign investment. Losing these benefits again would deal a significant blow to an economy still navigating a fragile recovery following the 2022 economic crisis.
Ceylon Chamber's Key Concerns
The Ceylon Chamber of Commerce has specifically flagged concerns regarding the proposed Protection of Online Safety legislation and other draft bills currently under consideration. The Chamber argues that while the intent behind these laws may be well-meaning, certain provisions could conflict with international human rights and freedom of expression standards that the EU closely monitors as part of its GSP+ compliance review process.
In its formal communication, the Chamber emphasized that Sri Lanka must be acutely aware of how domestic legislation is perceived by its international trade partners. Any law that appears to restrict civil liberties, limit press freedom, or curtail digital rights could trigger a formal review by the European Commission, potentially placing GSP+ status at risk. The Chamber has urged policymakers to consult widely with industry stakeholders, civil society, and legal experts before finalizing any legislation that touches on areas covered by the 27 GSP+ conventions.
The business body has also stressed the importance of transparency and stakeholder engagement in the legislative process. Rushed or opaque lawmaking, it argues, not only risks trade consequences but also erodes investor confidence — a commodity Sri Lanka can ill afford to lose at this stage of its economic rebuilding.
The Economic Stakes for Sri Lanka
The significance of GSP+ to Sri Lanka's export economy cannot be overstated. The European Union is one of Sri Lanka's largest trading partners, and GSP+ preferences have enabled local exporters to compete more effectively in highly competitive European markets. The apparel sector alone accounts for a substantial share of the country's foreign exchange earnings, with a large portion of garment exports destined for EU markets.
Industry analysts estimate that the loss of GSP+ benefits could increase tariffs on Sri Lankan goods by anywhere from 9 to 12 percent, making locally produced items significantly less price-competitive compared to rivals from countries that retain preferential access. This would likely result in order cancellations, factory closures, and widespread job losses — particularly affecting women workers who make up the majority of the garment industry workforce.
Beyond apparel, sectors such as processed seafood, ceramics, and light manufacturing would also face serious headwinds. The cumulative economic impact of losing GSP+ could run into hundreds of millions of dollars annually, setting back years of hard-won export growth.
A Call for Balanced Legislation
The Ceylon Chamber of Commerce has been careful to clarify that its concerns are not about opposing necessary regulation or reform. The Chamber acknowledges that modernizing Sri Lanka's legal framework is both necessary and overdue in many areas. However, it insists that this modernization must be pursued in a manner that balances domestic policy goals with international obligations and trade commitments.
The Chamber has recommended that the government establish a formal inter-ministerial review mechanism to assess proposed legislation against GSP+ compliance requirements before bills are presented to Parliament. It has also called for greater coordination between the Ministry of Trade, the Ministry of Justice, and the Export Development Board to ensure that Sri Lanka's trade interests are adequately represented in the lawmaking process.
Looking Ahead
As Sri Lanka continues its economic recovery and works to rebuild credibility with international partners, the Ceylon Chamber's warning serves as a timely reminder that trade policy and domestic legislation are deeply interconnected. Protecting GSP+ is not merely a commercial priority — it is a matter of national economic security. Policymakers would be wise to heed the Chamber's advice and approach proposed legislation with the care and diligence that Sri Lanka's export future demands.