As a result from August 15 Sri Lankan fisheries products and clothing will be subject to new taxes.
EU officials have given no estimate of the financial impact of the loss of preferential treatment.
In 2008, Sri Lankan exports to the EU totalled $1.55bn
In Colombo, Sri Lanka's Media Minister dismissed the EU's move, saying the annual loss would amount to just $107m.
"We will not accept the conditions put forward by the EU," Keheliya Rambukwella told reporters. "We are very clear on that."
He added that the Sri Lankan government had made "alternative arrangements" and was looking at other markets to compensate for the losses.
The EU's move is the latest example of the growing international criticism directed at Sri Lanka's government for not examining abuses allegedly committed during the final phase of the country's long-running civil war.