Feb 10, Colombo: The Sri Lankan government is considering to reapply for the European Union's trade concession Generalized System of Preference plus (GSP+) , a Sunday newspaper report said.

The English weekly Sunday Leader said in a report that government is currently engaged in preparing the initial paperwork related to the re-application for the GSP Plus facility.

The European Union, citing Sri Lanka's failure to meet human rights conventions relevant for benefits under the scheme, in August 2010, suspended the GSP+ tariff concession for Sri Lanka that provided tax free access to European markets for the country's products, especially for garment exports.

The government claimed that the removal of GSP+ facility had no effect on the economy as there were more orders for Sri Lanka's garment industry.

However the with the global economic downturn and the flooding of European markets with cheap products from Bangladesh, Vietnam and China, the removal of the GSP+ facility was estimated to cost the government US$ 1.5 billion.

The closing of factories due to the loss of the GSP+ and the resulting increase in the unemployment rate has now forced the government to re-think its stance on the EU's trade concession, the Sunday Leader said.

The Inter Company Employees Union (ICEU) last month said that several factories have closed down operations leaving thousands of employees stranded.

Ten garment manufacturing factories have been closed in Biyagama, Nittambuwa and Katunayake investment zones causing losses of about Rs. 5 billion to the banks that financed them, Sri Lanka Labor Minister Gamini Lokuge said earlier.

Moreover, some foreign investors have closed their factories in Sri Lanka and moved elsewhere since their products have lost the zero percent duty advantage from EU markets.

Recently Premium bicycle maker Firefox Bikes closed its Sri Lankan plant and moved to Bangladesh, which enjoys the EU's GSP+ facility, since a majority of the plant's products is exported to European countries.

According to the report, the Commerce Department is preparing the necessary documents to reapply for the GSP+ facility and the government is planning to submit them to the the EU Commission in June 2014.

However, the EU would still require Sri Lanka to meet the initial conditions it set regarding the renewal of the facility in 2010.

The European Commission (EC) on February 2010 decided to suspend the GSP+ trade facility to Sri Lanka following an investigation by the European Commission that said the country fell short in implementing three UN human rights conventions relevant for benefits under the scheme.