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.
In a newspaper interview last week, Sri Lankan President Mahinda Rajapakse shrugged off the EU threat to withdraw the trade benefits.
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Asked about the risk of losing trade concessions worth an estimated 150 million dollars a year because of his resistance to EU pressure, Rajapakse told the Times of India: "I am not bothered."
"If the EU doesn't want to give it, let them keep it. I don't want it. We have gone and explained what we have done."
The island's clothing industry is the main beneficiary of trade benefits, using the concessions to sell to high street retailers in Europe. Sri Lanka will "temporarily" lose its preferential access to the EU market from August 15 after it missed a July 1 deadline to deliver the pledge, the EU said in a statement.
The EU had o