By Ranga Sirilal

COLOMBO, Oct 20 (Reuters) - Sri Lanka on Tuesday 20 October said it would argue its case to counter a European Union-commissioned rights probe that has threatened a trade concession worth more than $100 million to its top exports to Europe.

The European Union on Monday 19 October published the findings of an investigation, which found Sri Lanka in breach of human rights laws that threaten Sri Lanka's access to the Generalised System of Preferences Plus trade concession.

Sri Lanka's foreign ministry in a statement said it would study the report closely, and noted that the European body has asked it to provide its response before Nov. 6.

"The government of Sri Lanka will continue to engage with the European institutions, in keeping with the spirit of transparency and mutual respect that is appropriate to the historic and longstanding relationship," the statement said.

The European Commission in November is expected to recommend to EU member states whether to temporarily suspend Sri Lanka's GSP Plus status. If suspended, Sri Lanka would likely enjoy the current benefits for six months after a vote by member states.

Sri Lanka has thus far refused to cooperate. But four ministers were assigned to lobby for GSP Plus after Sri Lanka's now-fired export development secretary in September said the EU's findings likely meant the end of the concession.

EU sources who have seen the report have said it showed evidence of police violence, torture and breaches of labour laws.

"We don't accept that we have violated the conditions," said government defence spokesman Keheliya Rambukwella. "We are a sovereign nation and we will bring our thoughts very forcefully."

A year ago, the government was still fighting a war against the Tamil Tigers and refused to cooperate with the EU probe or allow investigators to visit the island, saying it was a violation of sovereignty.

Many in President Mahinda Rajapaksa's government are wary of the influence that the Tamil diaspora has in foreign capitals, and they often accuse Western governments of pandering to the Tamil populations in exchange for electoral support.

In this case, however, diplomats say the rules attached to the GSP Plus trade scheme are rigid: Brussels had consistently warned Sri Lanka that it must abide by 27 international human rights conventions to retain it.

GSP Plus helped Sri Lanka earn a record $3.47 billion from garment exports in 2008. If it loses GSP Plus, it will still be eligible for the Generalised System of Preferences, which has higher but still concessional tax rates.

Suspending the preferential tariffs could hit Sri Lanka's apparel industry hard and many fear big job cuts as a result.

In 2008, the European Union was Sri Lanka's largest export market, accounting for 36 percent of its $8.1 billion in total exports, followed by the United States with 24 percent. (Editing by Bryson Hull and Bill Tarrant)