Sri Lanka could lose up to US$ 1.23 billion in exports if its GSP+ trade benefits with the EU are revoked, according to a study by the Institute of Policy Studies (IPS).
The report warns of a 36.7% drop in exports to the EU if tariffs revert to Most Favoured Nation (MFN) levels.
The study, titled “Who Stands to Lose?”, highlights severe economic and labour market impacts from the potential loss of GSP+.
Export diversification would be hindered, especially for high-tech products like transformers, which made up 50% of EU exports in 2019.
Transformer exports could drop by 10%, while tariffs on apparel could rise by nearly 10 percentage points, affecting a key export sector.
The formal manufacturing sector faces job losses, with 4.99% of its workforce vulnerable, including 13.47% in the apparel industry.
Over 73,000 workers could be at risk, with women and low- or medium-skilled workers making up nearly two-thirds of the affected group.
The report stresses that losing GSP+ at this stage of Sri Lanka’s development could be more damaging than losing it after achieving stronger economic growth.
IPS urges the government to adhere to required international conventions to retain GSP+ and avoid serious economic setbacks.
