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Sri Lanka demands EU trade concessions without rights probe

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(COLOMBO) - Sri Lanka will not submit to an investigation into its rights record to qualify for extended trade concessions from the European Union, a government minister said Tuesday.

The deputy minister of state revenue, finance and planning, Ranjith Siyambalapitiya, said Colombo wanted an extension of the EU generalised system of preferences (GSP Plus), but would agree to pre-conditions.

The EU had given a list of questions on rights issues and had wanted to send a mission to the island to investigate allegations of abuses following the end of nearly four decades of ethnic conflict with Tamil rebels.

"We didn't allow them (EU investigators) to come," the minister told reporters here. "We do not have human rights issues."

Sri Lanka has been exporting to EU-member states under GSP Plus for over four years and import taxes will kick in unless tariff concessions are extended at the end of this year.

The EU has insisted that an extension would depend on Colombo cleaning up its rights record and its handling of some 300,000 ethnic Tamils who were displaced by the fighting and are now housed in interment camps.

An official close to the negotiations said the EU may phase out the trade concession by the middle of next year, unless there was a breakthrough in the current negotiations.

Sri Lanka's clothing industry is the main beneficiary of GSP Plus, using the tax breaks to sell to high street retailers in Europe.

Garment shipments to the EU will cost about 10 percent more if the trade concessions are removed and threatens to undermine the livelihood of nearly 500,000 people, according to local industry officials.

Sri Lanka's ceramics will also be hurt, making it tough for exporters to retain buyers in a price-sensitive market dominated by cheaper supplies from China, Indonesia and Bangladesh, officials said.

Sunil Wijesinghe, who heads the Japanese-controlled Dankotuwa Porcelain Plc, said an extra three- to five-year trade concession period would be ideal.

"It was difficult for us to sell during the war because some key buyers couldn't even visit us. Removing GSP Plus will only make matters worse, because it will threaten livelihoods and manufacturers' survival," Wijesinghe said.

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