Sri Lankan exports may face a major crisis in the wake of the European Union’s move to suspend GSP Plus concessions.

The impact has not been calculated yet, an official from the Export Development Board told The Island Financial Review.

The official said local industries could face a minor impact from the withdrawal.

Sri Lanka’s large exposure to EU markets because of the GSP Plus advantage boosted its exports, benefiting the national economy.

Bernard Savage, the head of the European Union delegation to Colombo, highlighted a number of reasons for suspending the preferential trade status to Sri Lanka.

He also said EU was still committed to pursuing talks with the Sri Lankan Government to reverse the decision before it comes in to affect.

The suspension will not be immediate and the process will gradually take over six months to be fully implemented.

The industries trading with the EU will face a major blow because of this decision, National Chamber of Commerce president Lal De Alwis told The Island Financial Review.

Even a temporary withdrawal of GSP Plus is unfair and it is a huge blow to the national economy, he said.

Sri Lanka is now focusing on developing its economy on a rapid pace and it should be supported by developed countries to boost its exports, he said.

Bangladesh is booming as it benefits from the GSP Plus concession. Its industries are now growing in a rapid space, said a leading businessman.

He said Sri Lanka’s exports could face a threat with the withdrawal of GSP Plus as it has to compete more with other developing nations for market access.

The impact will be severe if Sri Lanka fails to retain the facility, he said.

This is a major issue for Sri Lanka’s apparel sector because declining exports to the EU could harm the whole sector.

The apparel industry contributes the highest amount of foreign exchange to national economy.

According to the Customs statistics, the apparel industry exported US$1,426 million worth of apparel products to the EU, up from US$702.7 million in 2002, before the GSP Plus concession was granted.

The porcelain sector is also facing a major threat as exports to the EU bring a lot of revenues to the industry. The preferential trade status provided added advantages to this sector.

The statistics showed ceramic products worth US$16.5 million were exported to the EU in 2007.

All Lankan industries that relied on exports to EU markets may see a significant downfall and competitors will have an added advantage in capturing the market share, De Alwis said.

Sri Lanka is already facing strong competition from developing countries in protecting its market share in export markets, the businessman pointed out.

He urged the EU to reconsider its decision and provide the facility to boost Sri Lanka’s development process so that national economy could grow at a rapid pace.