The European Union (EU) has strongly encouraged Sri Lanka to seek continued preferential access to the bloc’s market under the next Generalised Scheme of Preferences Plus (GSP+) framework, while noting that the country has not fully capitalised on the opportunities provided by the trade concession over the past decade.
Addressing the Sri Lankan-German Business Forum 2026 in Colombo last week, EU Ambassador to Sri Lanka and the Maldives Carmen Moreno said Sri Lanka should use the period before the next GSP+ reapplication process to accelerate reforms, attract investment, and strengthen industrialisation.
“We firmly believe that countries such as Sri Lanka can develop through trade,” Moreno said.
Her remarks come as Sri Lanka prepares to launch a new National Export Development Plan (NEDP) this month aimed at increasing exports to $ 36 billion by 2030, placing renewed focus on market access and export competitiveness.
Moreno challenged what she described as persistent misconceptions surrounding GSP+ in Sri Lanka, noting that the facility is often viewed through the lens of compliance obligations rather than economic opportunity.
“GSP+ is an opportunity. Use it fully. Apply for it,” she said.
The Ambassador acknowledged that the scheme had helped expand Sri Lankan exports, particularly apparel exports, but noted that the broader objective of promoting industrialisation and economic transformation had been only partially achieved.
“GSP+ has delivered mixed results in Sri Lanka,” she said.
While the Scheme was designed to support industrial development, job creation, and sustainable growth, Sri Lanka’s manufacturing sector remains relatively small compared with other export-oriented Asian economies.
“Manufacturing accounts for around 25% of GDP, while in countries such as Vietnam, it is significantly higher. Therefore, Sri Lanka could have benefitted much more from duty-free access to the EU market,” Moreno noted.
However, she pointed out that new opportunities were emerging, particularly among agro-processing firms and small and medium-sized enterprises (SMEs).
Moreno said she had personally visited several Sri Lankan companies with fewer than 40 employees that were successfully exporting to the EU, demonstrating the untapped potential within the country’s SME sector.
The Ambassador also highlighted that Sri Lanka’s competitive landscape was changing rapidly as the EU expanded its trade relationships across Asia.
She cited the recently concluded EU-Indonesia trade agreement and ongoing negotiations with Thailand and Malaysia, noting that Sri Lanka would face increasing competition in several export sectors.
“The first question is how Sri Lanka fits into the regional landscape, particularly in light of the new free trade agreements the EU has concluded with countries such as Indonesia,” she said.
Moreno argued that Sri Lanka must simultaneously diversify export markets, attract greater foreign investment, and expand into higher-value sectors if it is to achieve its ambitious export targets.
She also stressed that eligibility for GSP+ was closely linked to broader governance and reform efforts.
“What matters is not only commitments, but action. We would like to see reforms translate into tangible outcomes that demonstrate Sri Lanka’s openness to trade and investment,” she stressed.
While noting that GSP+ discussions often focus on governance and human rights obligations, Moreno highlighted that the scheme also contains provisions related to trade practices, though such measures have rarely been invoked by the EU.
“Market access is not a threat. It is a tremendous opportunity,” she said.
The Ambassador stopped short of commenting on Sri Lanka’s forthcoming eligibility assessment report, but described the Government’s willingness to undertake reforms as “a very positive sign.”
Moreno said Sri Lanka may never compete directly with manufacturing giants such as China or Vietnam in terms of scale, but could successfully develop “niche export sectors,” where it enjoys a competitive advantage.
“Please make full use of GSP+ and reapply for it,” she urged.
The comments are significant given the importance of the EU as one of Sri Lanka’s largest export destinations and the central role GSP+ preferences play in maintaining the competitiveness of Sri Lankan exports, particularly apparel, seafood, and industrial products.
Earlier this year, the Government expressed its intention to reapply for the vital trade concession scheme during European External Action Service (EEAS) Acting Managing Director – Asia and Pacific Paola Pamploni’s visit to Sri Lanka.
The GSP+ of the EU is a non-reciprocal tariff concession given to low- or lower-middle-income countries, conditional upon the implementation of 27 international conventions related to labour and human rights, environmental and climate protection, and good governance.
In order to ensure compliance with the 27 international conventions, the Government is undertaking legislative reform that includes the repeal of the Prevention of Terrorism Act (PTA), as well as introducing amendments to the Online Safety Act (OSA).
The EU reviews its regulations every 10 years to ensure they remain effective and aligned with evolving global and internal priorities. The current EU GSP Regulation No. 978/2012 was initially set to expire on 31 December 2023. However, due to delays in finalising the new framework, it has been extended until 31 December 2027, ensuring continuity of the Scheme.