EU Statement at the Trade Policy Review of the Democratic Socialist Republic of Sri Lanka, 15 October 2025
I would first like to welcome the Delegation of Sri Lanka, led by Mr Hon. Herath Mudiyanselage Wasantha Samarasinghe, Minister of Trade, Commerce, Food Security and Co-operative Development. My appreciation is extended to the Discussant, H.E. Ambassador Prasith Suon (Cambodia), for getting us started today with his remarks.
Mr. Chairman,
Since the last review, Sri Lanka has exhibited resilience in its economic performance. Following the unprecedented economic crisis of 2022 and the disruptions caused by the COVID-19 pandemic, the economy rebounded with 5.0% real GDP growth in 2024, marking a turnaround after a challenging period, and is projected to remain on a gradual path towards sustained growth.
The EU commends the progress made by Sri Lanka in stabilising its economy, and welcomes in particular the implementation of an ambitious reform-agenda, including the International Monetary Fund (IMF) - Extended Fund Facility (EFF) programme and debt restructuring efforts, which has allowed Sri Lanka to make significant improvements in many areas, including on governance, rule of law, and macroeconomic stability.
From the reports, we also learn that trade continues to play an important role in Sri Lanka’s economy, although its relative weight has remained modest in recent years. With this in mind, the EU is following with interest the authorities’ renewed efforts to reorient the economy towards greater openness and competitiveness.
The EU praises Sri Lanka’s active engagement in the WTO and, in particular, commends the country for having ratified the Trade Facilitation Agreement and promptly notified its Category A commitments, while also welcoming Sri Lanka’s ratification of the WTO Agreement on Fisheries Subsidies in August 2025.
Still, the EU encourages Sri Lanka to participate in the Multi-Party Arbitration Arrangement and become a party to plurilateral initiatives, including environmental ones. Sri Lanka has not joined the e-commerce Agreement at the WTO, despite the Agreement representing an opportunity to boost digital trade, by promoting openness, legal certainty and facilitating participation in global value chain. The EU encourages Sri Lanka to do so. The EU also invites Sri Lanka to join the other 127 WTO Members that want to be part of the Investment Facilitation for Development Agreement negotiated here, which will help countries attract foreign direct investment. Sri Lanka’s support to this agreement, or at least making it clear that Sri Lanka will not be an obstacle to its incorporation into the WTO rules book, is now pressing in view of MC14.
A word, Mrs. Chairman, on our bilateral relationship.
The EU enjoys a strong relationship with Sri Lanka which is governed by a Partnership Agreement on Cooperation and Development that dates back to 1995.
Since 2017, Sri Lanka has benefited from the EU’s GSP+ arrangement, ranking as its third-largest beneficiary. As a result, 59% of Sri Lanka' exports that are eligible for tariff reductions entered the EU market at preferential rates in 2024. These unilateral trade preferences consist of the full removal of duties on 66% of tariff lines, covering a wide array of products including textiles and fisheries.
In 2024, the EU was Sri Lanka’s third largest trading partner, accounting for 13.4% of Sri Lanka’s total trade in goods. In the same year, the total trade in goods between the EU and Sri Lanka was €3.7 billion with a €1.6 billion surplus for Sri Lanka, positioning the EU as a key trading partner for the country.
The EU and its Member States continue to be collectively a leading grant donor to Sri Lanka. Aligned with the EU’s Strategy for Cooperation in the Indo-Pacific and the Sustainable Development Goals (SDGs), the European Union has established a Multiannual Indicative Programme for 2021-2027, focusing on two key priority areas: 'Green Recovery' and 'Inclusive and Peaceful Society'. Within this strategic framework, the EU has allocated €10 million to support private and public sector in developing their capacity to expand sustainable trade, while other programmes are supporting standardization and geographical indications, and the improvement of the business and investment climate. Priorities linked to the Global Gateway Strategy are also being explored with Sri Lanka, with a dedicated facility to support the Government.
Additionally, in March 2023, the International Monetary Fund endorsed a USD 3 billion Extended Fund Facility (EFF) spanning four years, aimed at increasing Sri Lanka's economic policies and reform initiatives. This financial support is expected to act as a catalyst for attracting additional external funding.
Mrs Chairman, the EU acknowledges the positive progress Sri Lanka has made in modernizing its customs regime. Recent reforms include the expansion of paperless trade systems, digital issuance of certificates of origin, and the launch of an Authorized Economic Operator programme in 2021 and 2024.
Furthermore, Sri Lanka is advancing toward a fully operational National Single Window, expected by 2027. However, in relation to the WTO Customs Valuation Agreement, the EU encourages Sri Lanka to reduce residual administrative burdens for importers, particularly regarding valuation adjustments and documentation requirements. These measures are seen as creating unnecessary costs for businesses.
The EU hopes that this review will help Sri Lanka in its endeavours and remains committed to continue supporting Sri Lanka's efforts.
On behalf of the EU, I wish Sri Lanka delegation the utmost success during its 5th Trade Policy Review.