The Ceylon Chamber of Commerce has formally submitted its observations on the proposed Protection of the State from Terrorism Act (PSTA), raising significant concerns about the potential economic and trade implications of the legislation. The Chamber, one of Sri Lanka's most influential business advocacy bodies, has urged the government to conduct a thorough and careful review of the proposed law to ensure that the country's international competitiveness and access to the European Union's Generalised Scheme of Preferences Plus (GSP+) trade facility are not compromised in the process.
What Is the PSTA and Why Does It Matter?
The Protection of the State from Terrorism Act is a proposed piece of legislation aimed at strengthening Sri Lanka's national security framework. While the government has presented the bill as a necessary tool to combat terrorism and safeguard state institutions, critics and business leaders have raised red flags about certain provisions that could have far-reaching consequences beyond the security domain.
The Ceylon Chamber of Commerce has acknowledged the government's intent and recognises the importance of maintaining national security. However, the Chamber has made it clear that the manner in which such legislation is drafted and implemented can have a direct bearing on Sri Lanka's international trade relationships, investor confidence, and long-term economic growth. In a country still navigating its path to economic recovery, these are concerns that cannot be taken lightly.
GSP+ Access: A Critical Economic Lifeline
At the heart of the Chamber's concerns is Sri Lanka's continued eligibility for the EU's GSP+ scheme. This preferential trade arrangement allows Sri Lanka to export thousands of goods to European markets at reduced or zero tariff rates, providing a significant competitive advantage for key industries including apparel, fisheries, and manufacturing. The GSP+ facility is not unconditional — it requires beneficiary countries to ratify and effectively implement 27 international conventions covering human rights, labour rights, environmental protection, and good governance.
Any legislation that is perceived to undermine civil liberties, democratic principles, or human rights standards could trigger a reassessment of Sri Lanka's GSP+ eligibility by the European Commission. Such a development would be devastating for Sri Lanka's export sector, which depends heavily on preferential access to European markets. The apparel industry alone, which accounts for a substantial portion of the country's foreign exchange earnings, could face severe disruption if GSP+ status were suspended or revoked.
The Chamber's submission therefore calls on lawmakers to carefully evaluate every clause of the PSTA through the lens of Sri Lanka's international obligations, ensuring that the legislation does not inadvertently create grounds for a GSP+ review or withdrawal.
Business Competitiveness and Investor Confidence
Beyond the immediate GSP+ concern, the Ceylon Chamber has also highlighted the broader impact that poorly calibrated security legislation can have on the business environment. Investor confidence is closely tied to perceptions of rule of law, transparency, and the protection of fundamental rights. Legislation that grants expansive powers to security agencies without adequate checks and balances can raise alarm bells among foreign investors, multinational corporations, and international financial institutions.
Sri Lanka is currently engaged in significant efforts to attract foreign direct investment and rebuild its economy following the 2022 financial crisis. In this context, the business community is particularly sensitive to any policy developments that could send negative signals to the international community. The Chamber has stressed that national security and economic openness are not mutually exclusive goals, and that well-crafted legislation can achieve both simultaneously.
Prevention of Organised Crime Act Also Under Review
In addition to its observations on the PSTA, the Ceylon Chamber of Commerce has indicated that it is in the process of finalising its views on the proposed Prevention of Organised Crime Act. These observations will be communicated to the relevant authorities in due course. The Chamber's engagement on both pieces of legislation reflects its broader commitment to participating constructively in the national policy dialogue, particularly on matters that intersect with economic and trade outcomes.
A Call for Inclusive Consultation
The Chamber's submission also underscores the importance of inclusive and transparent consultation processes when drafting legislation of this magnitude. Engaging the private sector, civil society, legal experts, and international stakeholders early in the legislative process can help identify potential pitfalls and ensure that the final law strikes the right balance between security imperatives and economic realities.
Sri Lanka's path to sustainable economic recovery depends on maintaining strong trade relationships, attracting investment, and upholding the international standards that underpin agreements like GSP+. The Ceylon Chamber of Commerce has made it abundantly clear that the business community stands ready to support the government's security objectives, provided that the legislative framework is crafted with the care and precision that Sri Lanka's economic future demands. A rushed or poorly reviewed PSTA could cost the country far more than it seeks to protect.