Proposed Counter-Terrorism Law Endangers EU GSP+ Trade Lifeline 📈

Sri Lanka’s new Protection of the State from Terrorism Bill (PSTA) threatens the country's EU GSP+ trade preferences. Legal experts warn that broad definitions and a lack of judicial oversight fail to meet required international standards. • Apparel Sector Risks: - Apparel export earnings stand at ~US$ 5 Bn annually (>40% of merchandise exports), with fabric/textiles adding ~US$ 522 Mn. - EU absorbs >30% of total apparel exports, with H1 2026 sales to the EU reaching US$ 705 Mn. - H1 2026 apparel exports to the EU dropped 8% YoY, losing market share to regional competitors like China (+5%) and Vietnam (+9%). • Key Bill Concerns: - Lacks judicial oversight; grants permanent powers to armed forces for search and 48-hour arrests. - Presidential power to ban organizations without judicial thresholds. - Detention orders up to 1 year and 72-hour movement restrictions before magistrate review. • Economic Implications: - Non-compliance risks failure in Sri Lanka's application for the next GSP+ cycle (ending 2027), endangering vital duty-free market access and hundreds of thousands of livelihoods. - The Supreme Court petition window closes 14 days post-table; amendments ahead of the Nov 12 Budget present the best path for reform.