European Union nations have decided to withdraw preferential trade benefits from Sri Lanka due to "significant shortcomings" on human rights issues, the EU Commission has announced.
The decision came after an "exhaustive investigation ... identified significant shortcomings in respect of Sri Lanka's implementation of three UN human rights conventions," the Commission said in a statement on Monday.
The suspension of the "Generalised System of Preferences Plus" (GSP+) benefits will not take effect for six months "giving Sri Lanka extra time to address the problems identified," the EU executive added.
Karel De Gucht, the EU trade commissioner, said: "I would like to emphasise that 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, demonstrable and sustainable progress in relation to the human rights shortcomings we have identified."
The European Union's GSP+ scheme gives 16 poor nations preferential access to the trading bloc in return for following strict commitments on a wide variety of social and rights issues.
Sri Lanka's government has faced almost constant criticism over the past several years because of the way it has conducted a war against the Liberation Tigers of Tamil Eelam (LTTE) separatists.
Government forces have been accused of a host of rights violations including the indiscriminate killing of thousands of Tamil civilians, the murder of aid workers and the execution of surrendering Tamil Tigers during the final days of the war last year when the rebels were defeated.
Sri Lanka gains about $150m annually due to preferential tariffs, according to trade estimates.
The island's clothing industry is the main beneficiary, using the tax breaks to sell to high street retailers in Europe.