Sri Lanka's government has announced a "financial support package" for industries including garments in case the GSP+ (Generalised System of Preferences) trade concession with the European Union (EU) is not renewed at the end of this year.

The proposed rescue package is worth US$150m, and will be disbursed from January 2009 for all export sectors using the GSP+ if the scheme is terminated.

Sri Lanka's Government also said that it will not allow the European Commission to conduct an investigation into alleged human rights violations in the country - one of the key conditions for an extension of the GSP+.

Sri Lanka's GSP+ application was submitted earlier this month.

The current scheme, which allows which allows the country to export around 7,200 items to the European Union (EU) duty free, finishes at the end of 2008.

It is awarded to countries that have ratified 27 international conventions on environmental standards, labour rights and human rights.

This week's rescue package is expected to help local exporters absorb the additional cost of tariffs if the GSP+ is no longer there.

Government officials said the support package is a temporary measure, to cushion the shock of a sudden termination of the GSP+, and will be removed after one year.

The main beneficiary of the proposed rescue package would be the garment export sector.

According to Commerce Department data, garments account for 65% of exports to the EU, using the GSP+. Without the GSP+, garments will have to pay 8%-10% duties on exports.

Details of the rescue package will be finalised after holding discussions with garment and other exporters next Tuesday (28 October), it was announced.

By Dilshani Samaraweera.