The British Retail Consortium (BRC) has warned that the withdrawal of tax-free arrangements for low-cost clothing imported from Sri Lanka could hit flourishing businesses and jobs in the country and put up customer prices.
It would also affect UK manufacturers such as Marks & Spencer and Next, which manufacture out of the country.
The EU has asked the Sri Lankan Government to respond to charges of human rights abuses during the country’s civil war earlier this year. If human rights complaints are upheld by a Commission investigation, Sri Lanka could lose its special trade access to EU markets, meaning that manufacturing in the country may become too expensive for UK retailers.
Alastair Gray of the BRC said: “Whatever the human rights concerns, any response has to be balanced. Otherwise, if the preferential access deal is withdrawn by the Commission, business in Sri Lanka could close.
“Sri Lanka has many very good textile factories, but profit margins are small, and if they lose their current import arrangements, there are textiles manufacturers in Bangladesh, Vietnam, and Thailand who will be ready to compete hard.”
An EU Commission spokesman said: “Questions remain over the degree of effective implementation of certain UN human rights conventions in the country.”
One supplier who has worked in Sri Lanka said: “I find the EU’s stance inconceivable considering that at the moment to my knowledge there is no certain proof of war crimes or crimes against humanity as mentioned. It’s easy to persecute a tiny Island like Sri Lanka whilst China and others like Burma are apparently invisible.”
Marks & Spencer confirmed that it sources lingerie and some other fabrics from Sri Lanka but a spokeswoman stressed that it was “one of over 70 countries we source from internationally”.