The EU's executive arm, the European Commission, has insisted on "significant improvements on the effective implementation of the human rights conventions" for the island to continue enjoying the trade benefits.
The GSP+ scheme gives 16 poor nations preferential access to the vast European market in return for following strict commitments on a variety of social and rights issues.
These benefits will be withdrawn on August 15 unless Sri Lanka makes a written commitment by July 1, a statement from an EU mission to the island said.
Sri Lanka's hawkish government has faced almost constant criticism in the past several years over the way it conducted a war against Tamil Tiger separatist rebels who were finally defeated in May 2009.
Government forces have been accused of a host of rights violations including the indiscriminate killing of thousands of Tamil civilians, the murder of aid workers and the execution of surrendering rebels.
Sri Lanka criticised the EU's warning to withdraw the trade benefits, with the foreign ministry in Colombo complaining that Europe was setting "unattainable targets".
Sri Lanka gains about 150 million dollars annually due to preferential tariffs, according to trade estimates.
The island's clothing industry is the main beneficiary, using the concessions to sell to high street retailers in Europe.
© EU Business
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