EU to halt Sri Lanka trade preferences amid human rights concern

BRUSSELS (Reuters) - The European Union said on Monday it planned to withdraw preferential trade benefits to Sri Lanka because of concerns about the south Asian island's human rights record.

The European Commission, which oversees the 27-nation bloc's trade policy, said an investigation had revealed significant shortcomings in Sri Lanka's implementation of three UN human rights conventions linked to preferential trade tariffs.

The trade benefits, worth about 100 million euros ($136.1 million) a year to Sri Lanka, will be withdrawn in six months' time unless EU concerns are addressed, the Commission said.

"I hope Sri Lanka will sit with us over the next six months in order to agree upon a set of measures that will result in rapid... progress in relation to the human rights shortcomings we have identified," EU Trade Commissioner Karel De Gucht said in a statement.

Sri Lanka benefits from concession in the EU's Generalised System of Preferences Plus (GSP+), an incentive scheme tied to the improvement of human rights and good governance.

The scheme offers tariff cuts to support vulnerable developing countries.

Brussels has consistently warned Sri Lanka it must meet 27 international human rights conventions to retain its GSP Plus status.

The country came under pressure last year from Western nations, including those in Europe with large Tamil populations, because of civilian deaths in the final phase of the war against the Tamil Tigers, which ended with the separatists' defeat.

Suspension of the preferential tariffs could hit Sri Lanka's booming textile industry hard. The country earned a record $3.47 billion from exports of clothing to EU markets in 2008, the largest source of its foreign currency earnings.

(Reporting by Bate Felix; Editing by Susan Fenton)