Sri Lanka is exploring a comprehensive trade agreement with the European Union (EU) to secure long-term access to the European market, Deputy Minister Anil Jayantha told Parliament.
He was replying to a question from MP Ravi Karunanayake on the future of Sri Lankan exports to the EU. The Deputy Minister said the Government is expected to examine and report on options for long-term, sustainable access through a deeper economic arrangement, including a possible comprehensive trade agreement.
That option would apply if Sri Lanka graduates from the GSP+ scheme, which happens if the World Bank classifies the country as upper-middle-income for three consecutive years. The Deputy Minister said Sri Lanka recorded upper-middle-income status in 2026.
He said the EU has adopted a new Generalised Scheme of Preferences (GSP) regulation covering another 10-year cycle, which takes effect on 1 January 2027. Sri Lankan exporters will keep preferential access under the new GSP+ framework, he said, subject to submitting a new application and obtaining EU approval before 31 December 2028. The Government is working to keep GSP+ benefits and plans to reapply between 1 January 2027 and 31 December 2028.
Background
GSP+ is an EU trade arrangement that gives eligible developing countries duty-free or reduced-duty access to the European market for many products, in return for commitments on matters such as human rights and labour standards. The EU is a major market for Sri Lankan exports, including garments.
The Deputy Minister said the conclusion of negotiations on the EU-India Free Trade Agreement (FTA) is expected to affect the competitiveness of Sri Lankan exports. Indian exporters would gain preferential, duty-free access similar to what Sri Lanka now has under GSP+, which he said could affect the level playing field for Sri Lankan exporters competing with Indian exporters.
He said the EU-India FTA negotiations were concluded on 27 January 2026, but the agreement has not entered into force and remains subject to internal procedures in each side. Ratification and implementation are expected to follow, with 2027 as the anticipated timeframe.
He also said Sri Lanka currently benefits from regional cumulation provisions, mainly by sourcing fabrics from India under SAARC cumulation provisions of the EU GSP framework. The availability and scope of such cumulation could be affected once the EU-India FTA is implemented.
What it means
For workers and businesses in export industries, the timeline matters. According to the Deputy Minister’s account, preferences continue into the new GSP+ cycle if the EU approves a new application, which Sri Lanka can file between 1 January 2027 and 31 December 2028.
Exporters that source fabric from India could face changes to cumulation rules once the EU-India agreement is implemented, the Deputy Minister said. The Government’s stated plan is to pursue a wider agreement with the EU if Sri Lanka leaves GSP+, so that access to the European market is not lost. The Deputy Minister did not say in the remarks reported when talks on such an agreement would begin.
