SRI LANKA is calling on America and Europe to remove punitive tariffs imposed on the country’s clothing exports as it attempts to rebuild itself after suffering devastation in the Asian tsunami disaster.

The impoverished island state is asking Washington and Brussels to lift trade barriers that cost Sri Lankan exporters hundreds of millions of pounds a year. Sri Lanka’s garment-making industry, which employs hundreds of thousands of people stitching shirts and underwear for multinational retailers, underpins half the island’s economy, but its competitiveness is being undermined by tariff walls in rich countries.

The Sri Lankan representative to the World Trade Organisation yesterday asked America and Europe to lower the hurdle quickly. Ambassador Gomi Senadhira said: “Even a temporary derogation (of the tariff rules) would seriously help.”

Seamstresses in Sri Lankan mills stitch billions of pounds’ worth of brassieres for leading-brand companies such as Marks & Spencer, Triumph and Victoria’s Secret. However, the country faces a double-edged threat from new competition and old tariffs.

For every dollar of Sri Lankan clothing imported into the United States, Washington takes up to 20 cents in tax; in the EU, the duty is 12 per cent. Mr Senadhira says that even the EU tax is penal. “This is very damaging for Sri Lanka,” he said. “It erodes the margin in a very competitive market.”

Sri Lanka should benefit from a special EU preference system, known as GSP-plus, which would reduce tariffs to zero, but the island fails to qualify because it does not satisfy rules of origin — Sri Lanka imports the cloth used in its factories.

A spokesman for the European Commission said that a change in the rules of origin has been proposed and could be tabled early this year. Mr Senadhira said that Sri Lanka needs rapid relief to ensure that a vital industry is not crippled at a time when Chinese manufacturers are poised to grab up to half the world market in textiles.

Sri Lanka’s smaller garment manufacturers will come under huge pressure from Chinese competition this year after the final removal in Europe and the US of textile quotas on January 1. The quota system, widely criticised for being protectionist, also benefited very poor countries such as Sri Lanka and Bangladesh at the expense of high-volume producers such as China. In response, the EU has moved to expand its system of preferred trading partners, but Sri Lanka fails to qualify because its mills do not produce their own cloth.

Even less sympathy is found in Washington, despite the large dependence on Sri Lanka by retailers such as Gap and Victoria’s Secret. Powerful lobbyists for the US textile industry and garment workers ensure that tariff protection remains high.

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