Sri Lanka will not reapply for trade concessions from the European Union under the Generalized System of Preferences (GSP), a top government official said here on Wednesday.

The European Union canceled the GSP plus facility given to Sri Lanka in 2010 because the government declined to implement its recommendations to strengthen good governance and reconciliation after the end of a three decade war in 2009.

Under the GSP plus, Sri Lankan exporters enjoyed preferential access to the EU market, which resulted in a boom in the apparel industry, which is Sri Lanka's largest foreign exchange earner next to remittances.

With the loss of this facility, critics say exporters have been unable to compete with countries such as Bangladesh that enjoy this trade facility in the EU and have resulted in the closure of dozens of factories.

However, Finance Secretary Dr. P.B. Jayasundara insisted Sri Lanka's macro challenges have changed and asking for export concessions only leaves the country as a subsistence economy.

"The biggest block we had for our development, the war, is over. In the post conflict era, the biggest beneficiary is the private sector and today's challenges are different. New challenges are wage rate hikes, worker unrest and even lack of workers. Also, we will not ask for GSP. We should not grow markets on the basis of subsidies. Then the country will become vulnerable," said Dr. Jayasundara.

Jayasundara was addressing a forum on "Government Strategy for Industrial Development of Sri Lanka" held at the Ministry of Industry and Commerce in the presence of 95 leading exporters, businessmen and industrialists.

The EU has clearly stated that Sri Lanka can apply for the GSP plus concessions if they wish, which has sparked off a debate among industry stakeholders.