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TRANSCRIPT
The EU Generalised System of
Preferences: An overview of proposed
reforms
by Eckart Naumann
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www.tralac.orgReaders are encouraged to quote and reproduce this material for educational, non
acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of WO
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The EU Generalised System of
Preferences: An overview of proposed
Eckart Naumann
tralac
No. D12WP06/2012
����Please consider the environment before printing this publication
www.tralac.org | [email protected] | Twitter @tradelawcentreReaders are encouraged to quote and reproduce this material for educational, non-profit purposes, prov
acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of
Working Paper
The EU Generalised System of
Preferences: An overview of proposed
tralac Working Paper
No. D12WP06/2012
May 2012
Please consider the environment before printing this publication
Twitter @tradelawcentre | Copyright © tralac, 2012.
profit purposes, provided the source is
acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.
Working Paper
Copyright © tralac, 2012.
Readers are encouraged to quote and reproduce this material for educational, non-profit purposes,
provided the source is acknowledged. All views and opinions expressed remain solely those of the
authors and do not purport to reflect the views of tralac
This publication should be cited as: Naumann, E. 2012.
The EU Generalised System of Preferences: An overview of proposed reforms. Stellenbosch: tralac.
tralac gratefully acknowledges the financial support of the Danish International Development
Assistance (Danida) for the publication of this Working Paper.
www.tralac.org | [email protected] | Twitter @tradelawcentre
Readers are encouraged to quote and reproduce this material for educational, non-profit purposes,
provided the source is acknowledged. All views and opinions expressed remain solely those of the authors
and do not purport to reflect the views of tralac.
Table of Contents
1. Introduction ..............................................................................................................................1
2. Reform of the EU: background and legislative framework ......................................................2
2.1 What is the GSP? .................................................................................................................2
2.2 Legislative framework .........................................................................................................3
3. Reform of the EU GSP: the nuts and bolts of the proposal for change ....................................4
3.1 Key facts about GSP trade and coverage ............................................................................4
3.2 The GSP Rules of Origin .......................................................................................................6
3.3 Changes to the eligibility criteria: a narrowing of scale and scope ....................................7
3.4 Revised product graduation mechanism and vulnerability criteria for beneficiary countries
9
3.5 Safeguard mechanisms .....................................................................................................11
3.6 Implication for EU import duties .......................................................................................12
3.7 Administration and changes from 2017 ...........................................................................13
3.8 Summary of GSP changes .................................................................................................17
4. The EU proposal to withdraw trade preferences from certain ACP countries .......................21
4.1 Background and context ...................................................................................................21
4.2 Implications for GSP beneficiaries and possible legal issues ............................................22
Sources and References ..............................................................................................................25
Tables:
Table 1: Key features of the EU GSP .............................................................................................6
Table 2: Current GSP Beneficiaries that will no longer benefit under the new arrangements ...8
Table 3: Categories of EU GSP import duties ..............................................................................13
Table 4: Overview of key changes to the proposed EU GSP .......................................................19
1. Introduction
European countries through the European Commission (EC) have embarked on a reform
process that aims to focus the non
Union (EU) Generalised System of Preferences (GSP)
reforms can be placed within a much broader context not only of lower EU import tariffs and
dwindling preference margins, but also
provision of relatively generous nonreciprocal market access preferences to a large number of
countries. This issue is relevant in the context of its own economic situation,
recent years been affected by the global financial crisis and more recently by
Eurozone debt crisis. Also telling in this respect is a recent EC proposal, discussed later in this
paper, to remove nonreciprocal preferences from
countries that have failed to make progress in implementing a reciprocal trade agreement
with the EU.
The proposed GSP programme
that were implemented at the start of 2011, and which in tur
measures that simplify the applicable origin requirements and reduce the number of product
specific rules. The amended RoO also contain a number of provisions that apply only to
Developed Countries (LDCs).
The EU GSP contains three program
conditions and obligations attached and applicable to countries that meet a
vulnerability test) as well as the Everything
will continue to exist, their respective eligibility criteria will change, especially
to the standard GSP. Countries that have achieved h
which have received preferences up until now would lose their beneficiary s
proposed changes. as would
another EU trade regime, or the Overseas Countries and Territories (OCTs) that have
alternative market access arrangements in place.
The main beneficiaries of the proposed scheme will be LDCs, not so much through changes to
their preferences (they already receive almost full duty
The EU Generalised System of Preferences:
An overview of proposed reforms.
tralac Working Paper | D12WP06/2012
1
European countries through the European Commission (EC) have embarked on a reform
process that aims to focus the non-reciprocal trade preferences offered under the
Generalised System of Preferences (GSP) on fewer countries.
reforms can be placed within a much broader context not only of lower EU import tariffs and
dwindling preference margins, but also of the EU's reassessment more generally of its
provision of relatively generous nonreciprocal market access preferences to a large number of
This issue is relevant in the context of its own economic situation,
ected by the global financial crisis and more recently by
elling in this respect is a recent EC proposal, discussed later in this
paper, to remove nonreciprocal preferences from African Caribbean and Pacific (
countries that have failed to make progress in implementing a reciprocal trade agreement
me changes follow recent reforms of the GSP Rules of Origin (RoO)
that were implemented at the start of 2011, and which in turn also included a number of
measures that simplify the applicable origin requirements and reduce the number of product
specific rules. The amended RoO also contain a number of provisions that apply only to
ains three programmes: the standard GSP, the GSP
conditions and obligations attached and applicable to countries that meet a
as well as the Everything-But-Arms (EBA) Agreement.
nue to exist, their respective eligibility criteria will change, especially
Countries that have achieved high and upper-middle
have received preferences up until now would lose their beneficiary s
countries that currently benefit from similar preferences under
another EU trade regime, or the Overseas Countries and Territories (OCTs) that have
alternative market access arrangements in place.
ciaries of the proposed scheme will be LDCs, not so much through changes to
their preferences (they already receive almost full duty- and quota-free market access) but
European countries through the European Commission (EC) have embarked on a reform
preferences offered under the European
on fewer countries. The proposed
reforms can be placed within a much broader context not only of lower EU import tariffs and
of the EU's reassessment more generally of its
provision of relatively generous nonreciprocal market access preferences to a large number of
This issue is relevant in the context of its own economic situation, which has in
ected by the global financial crisis and more recently by fallout from the
elling in this respect is a recent EC proposal, discussed later in this
African Caribbean and Pacific (ACP)
countries that have failed to make progress in implementing a reciprocal trade agreement
recent reforms of the GSP Rules of Origin (RoO)
n also included a number of
measures that simplify the applicable origin requirements and reduce the number of product-
specific rules. The amended RoO also contain a number of provisions that apply only to Least
the standard GSP, the GSP Plus (with various
conditions and obligations attached and applicable to countries that meet an economic
While each of these
nue to exist, their respective eligibility criteria will change, especially those relating
middle-income status and
have received preferences up until now would lose their beneficiary status under the
benefit from similar preferences under
another EU trade regime, or the Overseas Countries and Territories (OCTs) that have
ciaries of the proposed scheme will be LDCs, not so much through changes to
free market access) but
rather through the higher concentration of preferences and perhaps reduced competition i
the EU market. LDCs’ benefits
gains in relative preference margins.
The new scheme would also be open
beneficiaries will enjoy greater econom
Up until now, the GSP was subject to 10
year intervals. The current legislative period covers the 2009
legislation already adopted which
(or to any such earlier date when the
proposed legislation for a new GSP still needs to be debated in the European Parliament and
Council.
2. Reform of the EU: background and legislative framework
2.1 What is the GSP?
The GSP is a nonreciprocal trade program
developed countries to provide t
countries. The programme has its
Favoured Nation (MFN) principle were introduced
and Trade (GATT), and later made permanent under the
differentiated tariff preferences.
The GSP of the EU has long been the
nonreciprocal trade preferences to 176 developing countries and territories. It consists of
three separate but related program
• Standard GSP which covers all developing countries including 35 nonindependent
overseas countries and territories
the EU for qualifying products
The EU Generalised System of Preferences:
An overview of proposed reforms.
tralac Working Paper | D12WP06/2012
2
concentration of preferences and perhaps reduced competition i
benefits under the proposed scheme are therefore
gains in relative preference margins.
The new scheme would also be open-ended which means that traders both in the EU and GSP
beneficiaries will enjoy greater economic certainty with respect to their trading relationship.
Up until now, the GSP was subject to 10-year cycles with periodic renewals mostly in three
The current legislative period covers the 2009–2011 period with roll
which extends the current scheme to the end of 2013 at the latest
any such earlier date when the revised GSP is finalised and implemented).
proposed legislation for a new GSP still needs to be debated in the European Parliament and
background and legislative framework
a nonreciprocal trade programme that has been adopted by a number of
developed countries to provide trade preferences to developing and least
has its formal origins in 1971 when exemptions to the Most
Favoured Nation (MFN) principle were introduced under the General Agreement on Tariffs
, and later made permanent under the enabling clause, paving the way
differentiated tariff preferences.
The GSP of the EU has long been the main mechanism through which it extended
nonreciprocal trade preferences to 176 developing countries and territories. It consists of
separate but related programmes, namely:
which covers all developing countries including 35 nonindependent
overseas countries and territories (the OCTs), and offers reduced tariffs on imports into
the EU for qualifying products
concentration of preferences and perhaps reduced competition in
are therefore primarily through
ended which means that traders both in the EU and GSP
pect to their trading relationship.
year cycles with periodic renewals mostly in three
2011 period with roll-over
extends the current scheme to the end of 2013 at the latest
GSP is finalised and implemented). The
proposed legislation for a new GSP still needs to be debated in the European Parliament and
background and legislative framework
that has been adopted by a number of
rade preferences to developing and least developed
when exemptions to the Most
General Agreement on Tariffs
enabling clause, paving the way for
through which it extended
nonreciprocal trade preferences to 176 developing countries and territories. It consists of
which covers all developing countries including 35 nonindependent
, and offers reduced tariffs on imports into
• Everything-But-Arms Agreement
countries classified as LDCs
for all goods imported into the EU
• The GSP Plus (GSP +) scheme which is available to developing countries that have signed
and implemented 27 international conventions
environmental and good governance rights and rules
In order to obtain GSP preferences, products exported from beneficiary countries are
required to comply with the relevant rules
which a product is classified as originating in the exporting country rather than
country – a question that becomes relevant when goods are made up from both local and
imported materials. The RoO
under the various GSP program
introduced at the end of 2010 and
country. The RoO were also overhauled in various other substantive areas.
(Commission Regulation 1063/2010)
(Naumann, 2011). It should be noted that the GSP scheme and its RoO are distinct legal texts
and as such do not have to be amended at the same time.
2.2 Legislative framework
The EU GSP scheme is renewed and implemented in three
covering the period 2006 to 2008 (GSP Regulation No 980/2005) and the 2009 to 2011 period
(GSP Regulation No 732/2008).
GSP Regulation No 512/2011 and is
and extends the previous regulation 732/2008.
The EU is embarking on a substanti
implications for beneficiary countries.
2011 and the time required to complete
1 Originally adopted as Council Regulation (EC) 416/2001
Regulation (EC) No 2501/2001. 2 See European Union GSP: http://ec.europa.eu
preferences/.
The EU Generalised System of Preferences:
An overview of proposed reforms.
tralac Working Paper | D12WP06/2012
3
Arms Agreement1, an offshoot of the main GSP and which offers
LDCs by the United Nations (UN) duty- and quota
for all goods imported into the EU, except for arms
scheme which is available to developing countries that have signed
plemented 27 international conventions involving ‘respect of labour, human,
environmental and good governance rights and rules’2
In order to obtain GSP preferences, products exported from beneficiary countries are
required to comply with the relevant rules of origin. These rules set the conditions under
which a product is classified as originating in the exporting country rather than
a question that becomes relevant when goods are made up from both local and
The RoO have until recently been largely consistent with each other
under the various GSP programmes, although a number of aspects of differentiation were
introduced at the end of 2010 and depend on the development status of the beneficiary
lso overhauled in various other substantive areas.
(Commission Regulation 1063/2010) form the subject of a separate
It should be noted that the GSP scheme and its RoO are distinct legal texts
do not have to be amended at the same time.
framework
The EU GSP scheme is renewed and implemented in three-year cycles, with
2006 to 2008 (GSP Regulation No 980/2005) and the 2009 to 2011 period
P Regulation No 732/2008). The legal framework for the period 2012 to 2013 falls under
GSP Regulation No 512/2011 and is in effect an interim roll-over arrangement that amends
the previous regulation 732/2008.
embarking on a substantial overhaul of its GSP which is likely to have far
beneficiary countries. Given the initial expiry date of the GSP on 31 December
2011 and the time required to complete the consultative and legislative process, the EU
Regulation (EC) 416/2001, and later incorporated into the GSP under
http://ec.europa.eu/trade/wider-agenda/development/generalised
SP and which offers 49
and quota-free treatment
scheme which is available to developing countries that have signed
respect of labour, human,
In order to obtain GSP preferences, products exported from beneficiary countries are
of origin. These rules set the conditions under
which a product is classified as originating in the exporting country rather than in a third
a question that becomes relevant when goods are made up from both local and
have until recently been largely consistent with each other
, although a number of aspects of differentiation were
the development status of the beneficiary
lso overhauled in various other substantive areas. The revised RoO
separate tralac Trade Brief
It should be noted that the GSP scheme and its RoO are distinct legal texts
year cycles, with recent regulations
2006 to 2008 (GSP Regulation No 980/2005) and the 2009 to 2011 period
for the period 2012 to 2013 falls under
arrangement that amends
al overhaul of its GSP which is likely to have far-reaching
of the GSP on 31 December
consultative and legislative process, the EU
, and later incorporated into the GSP under Council
agenda/development/generalised-system-of-
introduced the interim regulations in May 2011
complete the process of overhauling its GSP. The period of extension was thus
to be open-ended but rather
period than the usual renewals
becomes applicable.
The revised regulation is still in the legislative process and the European Commission's
proposal on this is contained in
basis for this analysis.
3. Reform of the EU GSP
3.1 Key facts about GSP trade and
The EU's GSP reform seeks to substantially revise the eligibility criteria an
preferences on poorer countries that it considers to be
decades of EU GSP has seen
landscape has changed drastically with regard to level
of countries have become economically more advanced during this time period while others
remain poor and marginalised; in many instances developing countries
other less developed countries in the Europ
preferential market access.
Politically, the situation has also changed. A period of global growth earlier in the past decade
changed somewhat with the economic recession and global financial crisis in the la
This not only affected large developed countries, including the
countries of the EU, but had marked effects on poorer countries affected by the downturn in
commodity prices and relying on EU exports.
attitudes towards nonreciprocal preferences
seen, for example, in the United States where its African Growth and Opportunity Act (AGOA)
programme is at risk of not being extended to non
As is discussed later, the proposed
beneficiaries, and it remains largely the prerogative of the preference
The EU Generalised System of Preferences:
An overview of proposed reforms.
tralac Working Paper | D12WP06/2012
4
he interim regulations in May 2011 that would then allow additional time to
complete the process of overhauling its GSP. The period of extension was thus
ended but rather will now expire by 31 December 2013 at the latest
period than the usual renewals – or any such earlier date on which the
The revised regulation is still in the legislative process and the European Commission's
proposal on this is contained in European Commission (2011a) which consequently forms the
Reform of the EU GSP: the nuts and bolts of the proposal for change
Key facts about GSP trade and coverage
The EU's GSP reform seeks to substantially revise the eligibility criteria an
preferences on poorer countries that it considers to be ’lagging behind’. While the past few
GSP has seen relatively few changes to country eligibility
landscape has changed drastically with regard to levels of trade and development.
of countries have become economically more advanced during this time period while others
marginalised; in many instances developing countries
less developed countries in the European marketplace, while often receiving similar
the situation has also changed. A period of global growth earlier in the past decade
changed somewhat with the economic recession and global financial crisis in the la
This not only affected large developed countries, including the United States
countries of the EU, but had marked effects on poorer countries affected by the downturn in
commodity prices and relying on EU exports. There has generally been
attitudes towards nonreciprocal preferences, particularly non-LDC beneficiaries
in the United States where its African Growth and Opportunity Act (AGOA)
is at risk of not being extended to non-LDC countries in the post
As is discussed later, the proposed EU GSP reform also plans to radically reduce the number of
and it remains largely the prerogative of the preference
that would then allow additional time to
complete the process of overhauling its GSP. The period of extension was thus never intended
at the latest – a shorter
the new GSP Regulation
The revised regulation is still in the legislative process and the European Commission's
which consequently forms the
the nuts and bolts of the proposal for change
The EU's GSP reform seeks to substantially revise the eligibility criteria and instead focus
. While the past few
to country eligibility, the international
s of trade and development. A number
of countries have become economically more advanced during this time period while others
marginalised; in many instances developing countries are out-competing
while often receiving similar
the situation has also changed. A period of global growth earlier in the past decade
changed somewhat with the economic recession and global financial crisis in the late 2000s.
United States and the
countries of the EU, but had marked effects on poorer countries affected by the downturn in
There has generally been a hardening of
LDC beneficiaries. This can be
in the United States where its African Growth and Opportunity Act (AGOA)
ountries in the post-2015 period.
GSP reform also plans to radically reduce the number of
and it remains largely the prerogative of the preference-giving country to
determine the qualifying criteria as
country level) of their respective program
consultation process on the reform of the
(2010) made the following rem
GSP preference regime:
The current GSP scheme is due to expire at the end of 2011 and this is an opportunity to
conduct a serious and substantive review, to look at its implementation modaliti
ensure that the GSP responds to the changing economic environment and development
needs of poorer countries...
current GSP objectives remain valid and whether GSP preferences are still the be
achieve them. That implies asking the hard questi
available to traders who have in the meantime become major global players in
international trade with very significant and wide
In the context of GSP preference availability it is important to consider the basic aspects of
the GSP and also recent performance
combined 176 countries and territories are GSP eligible. Of these, 49 co
the EBA arrangement for least
for the GSP+ arrangement. Non
in 2009 the basic GSP program
billion total GSP, thus nearly 75%
In terms of product coverage and tariff preferences, the main GSP provides duty
for around 2,400 non-sensitive tariff lines, and tarif
Most Favoured Nation (MFN)
covered by the main GSP: 6,244 products
7,140 for the EBA programme
Of the countries utilising GSP preferences,
is India, which during that year accounted for 27% (
Thailand, Indonesia and Brazil together
that the five leading GSP export
approximately 60% of total GSP trade
The EU Generalised System of Preferences:
An overview of proposed reforms.
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determine the qualifying criteria as well as graduation mechanisms (at the product and
country level) of their respective programmes. At a speech when launching the public
reform of the EU GSP, EC Commissioner for Trade Karel de Gucht
made the following remarks which provide a pointer to a more restrictive and tailored
The current GSP scheme is due to expire at the end of 2011 and this is an opportunity to
conduct a serious and substantive review, to look at its implementation modaliti
ensure that the GSP responds to the changing economic environment and development
needs of poorer countries... The fundamental question for the review is whether the
current GSP objectives remain valid and whether GSP preferences are still the be
achieve them. That implies asking the hard questions: is it right that GSP continues to be
available to traders who have in the meantime become major global players in
international trade with very significant and wide-ranging exports to the EU?
In the context of GSP preference availability it is important to consider the basic aspects of
the GSP and also recent performance (see Table 1 below). Under the current program
combined 176 countries and territories are GSP eligible. Of these, 49 countries qualify under
the EBA arrangement for least developed countries while a further 15 countries have qualified
Non-GSP + and EBA exports form the bulk of GSP preferences, and
in 2009 the basic GSP programme accounted for more than a €35 billion
, thus nearly 75%) of exports from beneficiary countries.
In terms of product coverage and tariff preferences, the main GSP provides duty
sensitive tariff lines, and tariff reductions of typically 3.5%
) tariffs for most of the remaining tariff lines.
6,244 products are included compared to 6,336 for the GSP+
me.
countries utilising GSP preferences, based on 2009 data, by far the largest
which during that year accounted for 27% (€13.1bn) of all GSP trade.
Thailand, Indonesia and Brazil together account for a further 33% of EU GSP trade
GSP exporters under the main GSP program
GSP trade with the EU. The largest exporters under the EBA are
well as graduation mechanisms (at the product and
At a speech when launching the public
EU GSP, EC Commissioner for Trade Karel de Gucht
arks which provide a pointer to a more restrictive and tailored
The current GSP scheme is due to expire at the end of 2011 and this is an opportunity to
conduct a serious and substantive review, to look at its implementation modalities and to
ensure that the GSP responds to the changing economic environment and development
The fundamental question for the review is whether the
current GSP objectives remain valid and whether GSP preferences are still the best tool to
ns: is it right that GSP continues to be
available to traders who have in the meantime become major global players in
ranging exports to the EU?
In the context of GSP preference availability it is important to consider the basic aspects of
. Under the current programme, a
untries qualify under
developed countries while a further 15 countries have qualified
GSP + and EBA exports form the bulk of GSP preferences, and
€35 billion share (out of €48
In terms of product coverage and tariff preferences, the main GSP provides duty-free access
ductions of typically 3.5% over regular
the remaining tariff lines. Not all products are
included compared to 6,336 for the GSP+ and
the largest beneficiary
€13.1bn) of all GSP trade. Bangladesh,
33% of EU GSP trade, meaning
ers under the main GSP programme account for
The largest exporters under the EBA are
Bangladesh, Cambodia , Senegal, Malawi and Ethiopia (EBA exports formed 13% of total GSP
exports in 2009) while Sri Lanka, Ecuador, Peru, Venezuela and C
beneficiaries (GSP+ exports account for a combined 11% of total GSP exports).
Product categories accounting for most GSP trade include first and foremost textiles and
clothing (with just under 30% coverage in 2009) mineral products, chemical pro
machinery, plastics and rubber, vegetable products and prepared foodstuffs and live animals.
Table 1: Key features of the EU GSP
GSP (general scheme)
Country coverage 176 countries an
Value of exports
to EU
€48 billion
Key benefits - Duty-free access for non
sensitive products (±
product lines)
- Tariff reductions on other
products (typically 3.5%
preference)
Product lines
included
6,244
Main
beneficiaries
India, Bangladesh, Thailand,
Indonesia, Brazil, Russia
Main products Textiles and clothing, mineral
products, machinery
Source: European Commission (2011
3.2 The GSP Rules of Origin
The EU GSP RoO were amended late in 2010, and the changes implemented on 1 January
2011. Developments in this regard involved a number
defines substantial transformation
especially at the sector level.
provisions (which allow production sharing
RoO) and tolerance rules (de minimis
product sectors for countries classified as LDCs
also added.
The EU Generalised System of Preferences:
An overview of proposed reforms.
tralac Working Paper | D12WP06/2012
6
Bangladesh, Cambodia , Senegal, Malawi and Ethiopia (EBA exports formed 13% of total GSP
Sri Lanka, Ecuador, Peru, Venezuela and Costa Rica are the
exports account for a combined 11% of total GSP exports).
Product categories accounting for most GSP trade include first and foremost textiles and
clothing (with just under 30% coverage in 2009) mineral products, chemical pro
, plastics and rubber, vegetable products and prepared foodstuffs and live animals.
EU GSP
GSP (general scheme) GSP + EBA
176 countries and territories 15 beneficiary countries
(subset of 176)
49 LDCs (subset of 176)
€5.3 billion €6.2 billion
free access for non-
sensitive products (± 2,400
product lines)
Tariff reductions on other
products (typically 3.5%
Additional, mostly duty-
free preferences for
vulnerable countries who
ratify and implement
prescribed international
standards and
conventions
Duty
all products apart from
arms
6,336 7,
India, Bangladesh, Thailand,
Indonesia, Brazil, Russia
Sri Lanka, Ecuador, Peru,
Venezuela, Costa Rica
Bangladesh, Cambodia,
Senegal, Malawi, Ethiopia
Textiles and clothing, mineral
products, machinery
Vegetable products,
prepared foodstuffs,
textiles, live animals,
mineral products
Textiles, live anima
prepared foodstuffs,
footwear, vegetable
products
Source: European Commission (2011d)
The GSP Rules of Origin
The EU GSP RoO were amended late in 2010, and the changes implemented on 1 January
Developments in this regard involved a number of product-specific changes
defines substantial transformation, as well as a reduction in the number of different rules
especially at the sector level. Amendments were also implemented
provisions (which allow production sharing between countries and joint compliance with the
minimis), while differentiated treatment was introduced in some
product sectors for countries classified as LDCs, and new administrative requirements were
Bangladesh, Cambodia , Senegal, Malawi and Ethiopia (EBA exports formed 13% of total GSP
sta Rica are the main GSP+
exports account for a combined 11% of total GSP exports).
Product categories accounting for most GSP trade include first and foremost textiles and
clothing (with just under 30% coverage in 2009) mineral products, chemical products,
, plastics and rubber, vegetable products and prepared foodstuffs and live animals.
EBA
49 LDCs (subset of 176)
€6.2 billion
Duty-free, quota-free on
all products apart from
arms
,140
Bangladesh, Cambodia,
Senegal, Malawi, Ethiopia
Textiles, live animals,
prepared foodstuffs,
footwear, vegetable
products
The EU GSP RoO were amended late in 2010, and the changes implemented on 1 January
specific changes to what
a reduction in the number of different rules,
to the cumulation
between countries and joint compliance with the
differentiated treatment was introduced in some
administrative requirements were
The EU's approach to preferential RoO has
criteria are based on a definition of products considered
exporting country, and for all goods not included in this definition a line
sector) approach is followed with origin determined
percentage value (VA), change in tariff heading
detailed overview of changes to the EU GSP RoO
3.3 Changes to the eligibility criteria: a narrowing of
One of the overriding changes to the proposed GSP legislation
for the post-2013 period lies in the changed eligibility criteria.
countries that have attained ‘
a smaller group of countries that share common development needs.
could exclude countries classified by the World Ban
middle-income countries. Although the final list of eligible countries would be determined
later in the EU's decision making process, based on current data the
would drop to around 80. This
currently stands at 176 (see T
In terms of future eligibility criteria,
part of another preferential trade arrangement with the EU
substantially equivalent to the GSP. This would
Trade Agreement (FTA) is in place (for example South Africa) or
arrangement provides market preferences (for example A
Economic Partnership Agreements
However, changes to the list of countries included in the EU Market Access regulations are
likely to have an impact on GSP beneficiaries.
OCTs which have a separate preferential arrangement with the EU
the provisions foresee that countries in the first two categories below would remain eligible
to qualify for GSP benefits, for example when their economic situation no longer
3 See Council Regulation (EC) No 1528/2007. [Online]. Available
4 See also European Commission (2009).
The EU Generalised System of Preferences:
An overview of proposed reforms.
tralac Working Paper | D12WP06/2012
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roach to preferential RoO has, however, remained largely the same. Origin
criteria are based on a definition of products considered to be ‘wholly obtained
exporting country, and for all goods not included in this definition a line-by
sector) approach is followed with origin determined by applying one or more of the
, change in tariff heading (CTH) or technical requirements
detailed overview of changes to the EU GSP RoO is undertaken separately
Changes to the eligibility criteria: a narrowing of scale and scope
One of the overriding changes to the proposed GSP legislation (European Commission, 2011a)
2013 period lies in the changed eligibility criteria. The intenti
‘higher levels of diversification’ and instead focus preferences on
a smaller group of countries that share common development needs. Specifically, the scheme
ould exclude countries classified by the World Bank as falling into the high
Although the final list of eligible countries would be determined
later in the EU's decision making process, based on current data the number of beneficiaries
would drop to around 80. This is less than half the current number of benefic
Table 1).
criteria, the proposal also seeks to exclude countries that form
part of another preferential trade arrangement with the EU where preferences are
substantially equivalent to the GSP. This would inter alia include situations where a Free
Trade Agreement (FTA) is in place (for example South Africa) or where another autonomous
arrangement provides market preferences (for example ACP countries
Economic Partnership Agreements qualifying under the EU Market Access Regulations
changes to the list of countries included in the EU Market Access regulations are
likely to have an impact on GSP beneficiaries. The new GSP regulations would also exclude the
have a separate preferential arrangement with the EU4. It should be noted that
the provisions foresee that countries in the first two categories below would remain eligible
its, for example when their economic situation no longer
See Council Regulation (EC) No 1528/2007. [Online]. Available: http://tinyurl.com/7wjvla8.
See also European Commission (2009).
remained largely the same. Origin
wholly obtained’ in the
by-line (or sector-by-
one or more of the
or technical requirements (SP). A
is undertaken separately in Naumann (2011).
(European Commission, 2011a)
The intention is to exclude
and instead focus preferences on
Specifically, the scheme
k as falling into the high-income or upper-
Although the final list of eligible countries would be determined
number of beneficiaries
is less than half the current number of beneficiaries, which
proposal also seeks to exclude countries that form
where preferences are
include situations where a Free
where another autonomous
CP countries that signed interim
Market Access Regulations3).
changes to the list of countries included in the EU Market Access regulations are
The new GSP regulations would also exclude the
It should be noted that
the provisions foresee that countries in the first two categories below would remain eligible
its, for example when their economic situation no longer places them
http://tinyurl.com/7wjvla8.
into the high or upper-middle
agreement or other arrangement with the EU lapses.
Table 2: GSP Beneficiaries that would
� High or upper-middle-income
threshold, will no longer benefit
� Countries that have other preferential trade arrangement
arrangements) will no longer benefit
� OCT countries have their own arrangements and will also no longer benefit
The revised GSP sets out country eligibility in Chapters I and II and provides a list of eligible
and beneficiary countries in Annex I and II respectively. The list of eligible countries includes
all developing countries and forms the pool of countries from which b
identified, subject to the exclusions listed above.
smaller group of countries and would be amended annually, with the determination on
beneficiary status made by 1 January of each year.
transitional period of one year means that
rather than at the outset of the revised GSP
from a country on the basis of an a
implemented would only apply two years after such date
eligibility under the income criteria is based on a three
therefore provide some certai
Using African countries as an example, the current list (Annex I) contains 51 countries
whereas the list of eligible countries (Annex II, based on an application of
time the GSP legislation was presented
contains only 29 African countries
countries include Kenya, Tanzania, Ghana,
d'Ivoire and Zimbabwe. Not all of these countries
5 The list is based on the status of countries at the
middle income and high-income countries
benefited from a similar access arrangement on similar or better terms as the GSP
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middle-income country categories or their preferential trade
agreement or other arrangement with the EU lapses.
GSP Beneficiaries that would no longer benefit under the new arrangements
income countries for the past 3 years, based on a Gross National Income per capita
, will no longer benefit (countries remain eligible should their situation change)
ther preferential trade arrangement with the EU (FTA or autonomous
arrangements) will no longer benefit (countries remain eligible should their situation change)
have their own arrangements and will also no longer benefit
ed GSP sets out country eligibility in Chapters I and II and provides a list of eligible
and beneficiary countries in Annex I and II respectively. The list of eligible countries includes
and forms the pool of countries from which beneficiary countries are
identified, subject to the exclusions listed above. Annex II therefore contains a substantially
smaller group of countries and would be amended annually, with the determination on
beneficiary status made by 1 January of each year. Once the new GSP is implemented, a
transitional period of one year means that eligibility status is determined only a year later
rather than at the outset of the revised GSP, and the decision to remove beneficiary status
from a country on the basis of an alternative preferential trade agreement being
implemented would only apply two years after such date. In turn, the determination on
eligibility under the income criteria is based on a three-year consecutive period, which would
therefore provide some certainty and predictability to economic operators.
Using African countries as an example, the current list (Annex I) contains 51 countries
e countries (Annex II, based on an application of
was presented to the European Parliament and Council of Ministers
contains only 29 African countries.5 Notable African omissions from the list of
include Kenya, Tanzania, Ghana, Cameroon, South Africa, Botswana,
Not all of these countries have signed an Economic Partnership
The list is based on the status of countries at the time of the revised EU GSP proposal, and includes
income countries, as well as countries that at the time the tentative list was drawn up
benefited from a similar access arrangement on similar or better terms as the GSP
country categories or their preferential trade
benefit under the new arrangements
for the past 3 years, based on a Gross National Income per capita
(countries remain eligible should their situation change)
with the EU (FTA or autonomous trade
(countries remain eligible should their situation change)
ed GSP sets out country eligibility in Chapters I and II and provides a list of eligible
and beneficiary countries in Annex I and II respectively. The list of eligible countries includes
eneficiary countries are
Annex II therefore contains a substantially
smaller group of countries and would be amended annually, with the determination on
Once the new GSP is implemented, a
status is determined only a year later
, and the decision to remove beneficiary status
lternative preferential trade agreement being
In turn, the determination on
year consecutive period, which would
operators.
Using African countries as an example, the current list (Annex I) contains 51 countries
e countries (Annex II, based on an application of the criteria at the
to the European Parliament and Council of Ministers)
omissions from the list of beneficiary
Botswana, Namibia, Côte
Economic Partnership
time of the revised EU GSP proposal, and includes upper-
, as well as countries that at the time the tentative list was drawn up
Agreement (EPA) with the EU
therefore stand to lose preferential access to the European market.
3.4 Revised product graduation mechanism
countries
Various changes to the graduation mechanism
conditions under which beneficiary countries are excluded from
certain product groups known as 'sections' for customs purposes
graduation takes place when average imports of
country level, exceed 15% of GSP exports within that 'section' to
countries over a period of three years.
and this is specified at 12.5%
the EBA scheme.
Under the revised GSP, a number of changes are proposed
risk of graduation.
• The graduation thresholds (at the section level) are raised
general product sections and 14.5% for
representing a nominal 2% increase over current
• Product 'sections' used for graduation purposes are increased to 32 (currently 21)
are therefore more narrowly defined
• Countries benefiting under the GSP+ scheme are excluded f
mechanism but will face
As described earlier, the GSP+ allows certain countries to qualify for GSP benefits by signing
and implementing various international conventions.
specific conditions relating to GSP+ eligibility
6 'Sections' and 'chapters' are laid down by Regulation (EEC) No 2658/87 of the Common Customs Tariff .
7 See Section 4 Art. 13(1) of the scheme.
8 The vulnerability criteria are defined under Annex VI of the proposed GSP legislation.
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with the EU (or they currently face removal from the list
therefore stand to lose preferential access to the European market.
product graduation mechanism and vulnerability criteria
hanges to the graduation mechanism are foreseen and essentially involve
beneficiary countries are excluded from receiving preferenc
known as 'sections' for customs purposes.6 Under the current scheme,
graduation takes place when average imports of products within a 'section', defined at the
country level, exceed 15% of GSP exports within that 'section' to the EU from all beneficiary
over a period of three years. For textiles and clothing, a lower threshold is applied
and this is specified at 12.5%.7 These provisions do not apply to countries that qualify under
a number of changes are proposed which in some
he graduation thresholds (at the section level) are raised from 15%
general product sections and 14.5% for the textiles and clothing
representing a nominal 2% increase over current graduation thresholds
roduct 'sections' used for graduation purposes are increased to 32 (currently 21)
therefore more narrowly defined.
Countries benefiting under the GSP+ scheme are excluded from the graduation
mechanism but will face revised eligibility requirements under the new GSP
, the GSP+ allows certain countries to qualify for GSP benefits by signing
international conventions. The proposed GSP will alter some of the
specific conditions relating to GSP+ eligibility, inter alia by introducing revised vulnerability
'Sections' and 'chapters' are laid down by Regulation (EEC) No 2658/87 of the Common Customs Tariff .
See Section 4 Art. 13(1) of the scheme.
The vulnerability criteria are defined under Annex VI of the proposed GSP legislation.
currently face removal from the list: see Section 3) and
and vulnerability criteria for beneficiary
are foreseen and essentially involve specific
receiving preferences for
Under the current scheme,
a 'section', defined at the
the EU from all beneficiary
For textiles and clothing, a lower threshold is applied
These provisions do not apply to countries that qualify under
in some respects lower the
from 15% to 17.5% for
section respectively,
thresholds.8
roduct 'sections' used for graduation purposes are increased to 32 (currently 21) and
rom the graduation
eligibility requirements under the new GSP.
, the GSP+ allows certain countries to qualify for GSP benefits by signing
SP will alter some of the
by introducing revised vulnerability
'Sections' and 'chapters' are laid down by Regulation (EEC) No 2658/87 of the Common Customs Tariff .
criteria and stipulating stricter conditions relating to compliance
international conventions that form the core of
Vulnerability criteria are a key condition
ensure qualification for GSP+. The new rules specify that
when its total GSP-eligible exports to the EU
from all GSP recipients.10
Previously
significant reduction in the restrictiveness of this criteria.
criterion – countries with highly concentrated exports are generally considered to be more
vulnerable – a country's leading seven product sectors in terms of
represent at least 75% of its total
this threshold was applied to the leading
reduces the restrictiveness of this criterion.
The EU also seeks to tighten enforcement around the compliance with the various
conventions by clarifying the spe
thus reverses the burden of proof around compliance
Commission has had to prove situations where countries were in breach of their obligations in
this regard, under the proposed
is meeting its obligations and commitments.
programme, a beneficiary countries need
• demonstrate its vulnerability
product sectors criteria above)
• have ratified all the conventions required
included United Nations Framework Convention on Climate Change (1992) or
demonstrate effective implementation thereof
9 The new GSP proposes dropping one of the conventions
Convention on Climate Change. The relevant Conventions are listed under Annex VIII of the proposed GSP
regulation. 10
The vulnerability criteria are defined under Annex VII of11
See Chapter III Article 15 (2) of the proposed GSP legislation: ‘
the GSP+ beneficiary country’. 12
See Chapter III Article 9 of the proposed GSP legislation.
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criteria and stipulating stricter conditions relating to compliance
international conventions that form the core of GSP+ eligibility.9
a key condition, as previously, but in themselves
ensure qualification for GSP+. The new rules specify that a country is considered vulnerable
eligible exports to the EU make up less than 2% of the EU's total imports
Previously, this threshold was set at 1% and thus represents a
significant reduction in the restrictiveness of this criteria. Under a related nondiversification
with highly concentrated exports are generally considered to be more
a country's leading seven product sectors in terms of GSP exports to the EU must
total GSP-covered exports to the EU. Under the current scheme,
this threshold was applied to the leading five product sectors. This change
reduces the restrictiveness of this criterion.
tighten enforcement around the compliance with the various
by clarifying the specific roles and responsibilities for all contributing parties and
reverses the burden of proof around compliance.11
Whereas in the past the European
Commission has had to prove situations where countries were in breach of their obligations in
proposed new GSP the beneficiary country itself needs to prove
obligations and commitments. In order to qualify and rema
beneficiary countries needs to:12
demonstrate its vulnerability status in terms of lack of diversification (refer
product sectors criteria above);
onventions required (as listed in Annex VIII)
included United Nations Framework Convention on Climate Change (1992) or
demonstrate effective implementation thereof;
one of the conventions - on apartheid - and adds the UN Framewo
The relevant Conventions are listed under Annex VIII of the proposed GSP
The vulnerability criteria are defined under Annex VII of the proposed GSP legislation.
See Chapter III Article 15 (2) of the proposed GSP legislation: ‘The burden of proof for compliance...shall be on
See Chapter III Article 9 of the proposed GSP legislation.
with the various
themselves are insufficient to
a country is considered vulnerable
of the EU's total imports
this threshold was set at 1% and thus represents a
Under a related nondiversification
with highly concentrated exports are generally considered to be more
exports to the EU must
exports to the EU. Under the current scheme,
change likewise somewhat
tighten enforcement around the compliance with the various
cific roles and responsibilities for all contributing parties and
Whereas in the past the European
Commission has had to prove situations where countries were in breach of their obligations in
new GSP the beneficiary country itself needs to prove that it
In order to qualify and remain eligible under this
status in terms of lack of diversification (refer to 75% / 7
including the newly
included United Nations Framework Convention on Climate Change (1992) or
UN Framework
The relevant Conventions are listed under Annex VIII of the proposed GSP
The burden of proof for compliance...shall be on
• provide a binding undertaking to maintain ratification and ongoing implementation of
these conventions;
• accept and comply with reporting requirements imposed by each
accept regular monitoring and
• provide binding undertakings to cooperate with the European Commission
monitoring compliance.
Where a GSP+ beneficiary no longer meets any of its binding undertakings with respect to
the respective Conventions
from the list of beneficiary countries and preference would revert back to the general GSP
scheme.
3.5 Safeguard mechanisms
The proposed GSP regulation includes measures to
the textiles, agricultural and fisheries sectors.
current and past legislation
(including suspension of preferences) where
volumes and/or at prices which cause, or threaten to cause, serious difficulties to European
Union producers of like or directly competing products
Imports from within a number of product categories are assesse
monitored for increases in trade flows beyond a predetermined threshold.
the EU from a GSP beneficiary increase
in specific categories, compared to the previous
product or section may be withdrawn
but is limited to textile products
stricter regime in this respect
(textiles) and various specific product classifications
certain chemical preparations)
13
See Chapter VI Section I(22) of the proposed GSP legislation.14
HS codes for affected products can be found in the proposed GSP legislation under Section II Art 29.
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provide a binding undertaking to maintain ratification and ongoing implementation of
with reporting requirements imposed by each
accept regular monitoring and review of its implementation;
provide binding undertakings to cooperate with the European Commission
.
Where a GSP+ beneficiary no longer meets any of its binding undertakings with respect to
the respective Conventions – or no longer fulfils the vulnerability criteria
from the list of beneficiary countries and preference would revert back to the general GSP
chanisms
The proposed GSP regulation includes measures to avoid disruptions to t
the textiles, agricultural and fisheries sectors. It also includes – as has been custom under the
current and past legislation – clauses to permit the EU to implement general safeguards
(including suspension of preferences) where goods from a GSP beneficiary
volumes and/or at prices which cause, or threaten to cause, serious difficulties to European
Union producers of like or directly competing products’.13
Imports from within a number of product categories are assessed on an ongoing basis
monitored for increases in trade flows beyond a predetermined threshold.
from a GSP beneficiary increase by more than 15% by volume in a given
compared to the previous period, then tariff preferences for that
withdrawn. Under the current scheme this threshold is set at 20%
is limited to textile products, which means that the new scheme will follow a
in this respect of safeguard provisions. This provision applies to Section 11(b)
and various specific product classifications14
(ethyl alcohol, solvents,
certain chemical preparations).
VI Section I(22) of the proposed GSP legislation.
HS codes for affected products can be found in the proposed GSP legislation under Section II Art 29.
provide a binding undertaking to maintain ratification and ongoing implementation of
with reporting requirements imposed by each convention and
provide binding undertakings to cooperate with the European Commission in
Where a GSP+ beneficiary no longer meets any of its binding undertakings with respect to
ger fulfils the vulnerability criteria –it will be removed
from the list of beneficiary countries and preference would revert back to the general GSP
avoid disruptions to the EU's interests in
as has been custom under the
clauses to permit the EU to implement general safeguards
from a GSP beneficiary are ‘ imported in
volumes and/or at prices which cause, or threaten to cause, serious difficulties to European
on an ongoing basis and
monitored for increases in trade flows beyond a predetermined threshold. Where exports to
by more than 15% by volume in a given calendar year,
period, then tariff preferences for that
Under the current scheme this threshold is set at 20%
, which means that the new scheme will follow a slightly
This provision applies to Section 11(b)
ethyl alcohol, solvents, antifreeze and
HS codes for affected products can be found in the proposed GSP legislation under Section II Art 29.
A related safeguard clause outlined
product section) to 17.5% of total G
product section, with a lower threshold of
calculation purposes the average value
The above safeguard provisions are not applicable to EBA beneficiaries and also not to
beneficiary countries whose share of GSP exports to the EU is less than 8% of total EU imports
of a covered product. Notwithstand
Commission may suspend preferences for individual products and product sections where
their import to the EU cause, or threaten to cause, serious disturbance to EU markets.
new GSP provisions in addit
products (agriculture and fisheries)
scheme, and for which new procedural rules were published in February 2011
3.6 Implication for EU impor
The new GSP was subjected to a cost analysis by the European Commission as a result of
which possible cost implications
included in the explanatory memorandum
Commission, 2011a) and finds that the proposed
budget but still entails an opportunity cost in the form of loss of customs revenue.
to current customs revenue losses (based on an application
figures), which are estimated at
customs revenue loss of €1.87
incurred by EU member states, the figures
the proposed arrangement. The significantly lower loss in customs revenue is predictable
given that more than half of current GSP eligible countries stand to lose their beneficiary
status under the proposed GSP amendments.
Lower customs revenue loss as a result of the
would be mitigated slightly through
duties. These impacts are summarised in the follo
15
See Regulation (EU) No 182/2011 [Online] Available at
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outlined earlier limits the share of a GSP beneficiary's exports (by
product section) to 17.5% of total GSP exports to the EU from all GSP
product section, with a lower threshold of 14.5% applicable to textile products. For
calculation purposes the average value of imports over three years is applied
The above safeguard provisions are not applicable to EBA beneficiaries and also not to
countries whose share of GSP exports to the EU is less than 8% of total EU imports
Notwithstanding these specific safeguard measures, the European
Commission may suspend preferences for individual products and product sections where
their import to the EU cause, or threaten to cause, serious disturbance to EU markets.
new GSP provisions in addition also retain the surveillance mechanisms for
products (agriculture and fisheries), an arrangement that was introduced with the 2006
procedural rules were published in February 2011
mplication for EU import duties
The new GSP was subjected to a cost analysis by the European Commission as a result of
cost implications of the new scheme were identified. The outcome of
in the explanatory memorandum of the proposed GSP legislatio
and finds that the proposed regulation does not imply costs to the EU
entails an opportunity cost in the form of loss of customs revenue.
to current customs revenue losses (based on an application of the current scheme to 2009
, which are estimated at €2.97 billion, the new scheme could lead to a correspondi
€1.87 billion. After deduction of customs revenue collection costs
incurred by EU member states, the figures translate to €2.23 billion against €1.4 billion under
the proposed arrangement. The significantly lower loss in customs revenue is predictable
given that more than half of current GSP eligible countries stand to lose their beneficiary
posed GSP amendments.
as a result of the proposed new GSP – with fewer beneficiaries
slightly through a reduction and, in some instances, suspension
are summarised in the following table.
egulation (EU) No 182/2011 [Online] Available at http://tinyurl.com/62uboct.
of a GSP beneficiary's exports (by
beneficiaries in that
14.5% applicable to textile products. For
applied.
The above safeguard provisions are not applicable to EBA beneficiaries and also not to GSP
countries whose share of GSP exports to the EU is less than 8% of total EU imports
specific safeguard measures, the European
Commission may suspend preferences for individual products and product sections where
their import to the EU cause, or threaten to cause, serious disturbance to EU markets. The
ion also retain the surveillance mechanisms for Chapter 1-24
, an arrangement that was introduced with the 2006
procedural rules were published in February 2011.15
The new GSP was subjected to a cost analysis by the European Commission as a result of
The outcome of this is
the proposed GSP legislation (European
egulation does not imply costs to the EU
entails an opportunity cost in the form of loss of customs revenue. In contrast
of the current scheme to 2009
€2.97 billion, the new scheme could lead to a corresponding
. After deduction of customs revenue collection costs
€2.23 billion against €1.4 billion under
the proposed arrangement. The significantly lower loss in customs revenue is predictable
given that more than half of current GSP eligible countries stand to lose their beneficiary
with fewer beneficiaries –
suspension of import
Table 3: Categories of EU GSP import duties
Category
- Nonsensitive products listed in Annex V
� nonsensitive products include mineral oils,
certain chemicals, aircraft, boats, headgear,
iron and steel articles and various other
industrial goods and resource goods
- Sensitive products listed in Annex V
� sensitive products include miscellaneous
plastics and chemicals, motor vehicles,
electrical machinery, certain articles of wood,
glass and various other industria
resource-based goods
- Products listed in Annex V – specific duties on
sensitive products
- Products listed in Annex V as sensitive products
and subject to ad valorem and specific duties
3.7 Administration and changes from 2017
Under the revised GSP RoO (
changes are foreseen that will directly impact on the obligations and responsibilities of
traders and customs authorities in both the GSP beneficiary country and
Changes relating to exporters
The main change that will affect exporters i
applied which will require exporters in beneficiary countries to be registered
designated competent authorities in the exporting country
inform the European Commissio
exporters. The exporter registration information requirements are set out in Annex 13c of the
Regulation. The Commission will make available
16
As per Art 92 of Regulation No 1063/2010
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EU GSP import duties
Outcome
Nonsensitive products listed in Annex V
nonsensitive products include mineral oils,
certain chemicals, aircraft, boats, headgear,
iron and steel articles and various other
and resource goods
- Customs tariff suspended completely except for
agricultural components
(GSP+, EBA duty-free)
Sensitive products listed in Annex V
miscellaneous
plastics and chemicals, motor vehicles,
certain articles of wood,
glass and various other industrial and
- Customs duty will be reduced by 3.5%
- For textiles and clothing (section XI) duty will be reduced
by 20%
(GSP+, EBA duty-free)
specific duties on - Specific duties will be reduced by 30% (not applicable to
listed minimum or maximum duties)
(GSP+, EBA duty-free)
Products listed in Annex V as sensitive products
specific duties
- Specific duties will not be reduced
(GSP+ only specific duty applies, EBA duty
changes from 2017
Under the revised GSP RoO (Commission Regulation No 1063/2010) various administrative
n that will directly impact on the obligations and responsibilities of
traders and customs authorities in both the GSP beneficiary country and within
Changes relating to exporters in beneficiary country
The main change that will affect exporters is that a system of exporter registration will be
applied which will require exporters in beneficiary countries to be registered
designated competent authorities in the exporting country. These authorities
inform the European Commission which will manage a central database
The exporter registration information requirements are set out in Annex 13c of the
The Commission will make available nonconfidential company data
No 1063/2010.
Outcome
Customs tariff suspended completely except for
Customs duty will be reduced by 3.5%
For textiles and clothing (section XI) duty will be reduced
Specific duties will be reduced by 30% (not applicable to
listed minimum or maximum duties)
Specific duties will not be reduced
(GSP+ only specific duty applies, EBA duty-free)
No 1063/2010) various administrative
n that will directly impact on the obligations and responsibilities of
within the EU.
s that a system of exporter registration will be
applied which will require exporters in beneficiary countries to be registered with the
These authorities in turn will
database of registered
The exporter registration information requirements are set out in Annex 13c of the
nonconfidential company data16
(including
name and nature of business) to be publically accessible from this database via the internet.
Exporters, whether registered or not (in the latter case, when they might be suppliers of raw
materials or semifinished goods to registered exporters) are also obliged to comply with
number of administrative requirements, including keeping commercial accounting records,
evidence relating to materials used, customs documentation
statements on origin and cost accounts relating to materials and production proces
When goods are exported, the exporter is required to make out a
containing particulars specified in Annex 13d,
relevant RoO. This statement
passed on to the customer in the European (importing) country
relevant customs authorities.
up a statement of origin that contains incorrect informatio
exporting (beneficiary) country are required to withdraw the exporter
database. Exporters may be reregistered by the competent authorities provided that certain
procedures are followed and the sit
been satisfactorily remedied.
For purposes of applying the relevant cumulation provisions, similar documentary
requirements apply, for example that cumulated inputs need to be sourced with a similar
statement on origin and, in cases of extended cumulation (as foreseen by the EU GSP,
cumulation with EU FTA partners), be accompanied by the applicable certification as foreseen
by the relevant agreement.
Exemptions apply to small-value items sent between p
at less than €500, as well as products
provided that these items are not imported by way of trade.
Exporters in the EU
The GSP provisions are mainly relevant
intermediate goods are exported to a GSP beneficiary with a view that these materials and
goods are used as originating inputs under the EU GSP (bilateral) cumulation arrangements
with beneficiary countries. In these instances
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siness) to be publically accessible from this database via the internet.
Exporters, whether registered or not (in the latter case, when they might be suppliers of raw
materials or semifinished goods to registered exporters) are also obliged to comply with
number of administrative requirements, including keeping commercial accounting records,
evidence relating to materials used, customs documentation, as well as three years
statements on origin and cost accounts relating to materials and production proces
When goods are exported, the exporter is required to make out a ‘statement on origin
containing particulars specified in Annex 13d, when goods are deemed to comply with the
relevant RoO. This statement – a commercial document which identifies the e
passed on to the customer in the European (importing) country and is also presented to the
. Where a registered exporter intentionally or negligently draws
up a statement of origin that contains incorrect information, the competent authorities in the
exporting (beneficiary) country are required to withdraw the exporter’s registration from the
database. Exporters may be reregistered by the competent authorities provided that certain
procedures are followed and the situation which led to the withdrawal of registration has
been satisfactorily remedied.
For purposes of applying the relevant cumulation provisions, similar documentary
requirements apply, for example that cumulated inputs need to be sourced with a similar
in cases of extended cumulation (as foreseen by the EU GSP,
cumulation with EU FTA partners), be accompanied by the applicable certification as foreseen
value items sent between private persons, where these are valued
, as well as products forming part of travellers' personal luggage (<
provided that these items are not imported by way of trade.
The GSP provisions are mainly relevant to EU exporters in cases where raw materials or
intermediate goods are exported to a GSP beneficiary with a view that these materials and
goods are used as originating inputs under the EU GSP (bilateral) cumulation arrangements
In these instances, imported materials (from EU sources) can be
siness) to be publically accessible from this database via the internet.
Exporters, whether registered or not (in the latter case, when they might be suppliers of raw
materials or semifinished goods to registered exporters) are also obliged to comply with a
number of administrative requirements, including keeping commercial accounting records,
, as well as three years’
statements on origin and cost accounts relating to materials and production processes.
statement on origin’,
when goods are deemed to comply with the
a commercial document which identifies the exporter – is
also presented to the
Where a registered exporter intentionally or negligently draws
n, the competent authorities in the
s registration from the
database. Exporters may be reregistered by the competent authorities provided that certain
uation which led to the withdrawal of registration has
For purposes of applying the relevant cumulation provisions, similar documentary
requirements apply, for example that cumulated inputs need to be sourced with a similar
in cases of extended cumulation (as foreseen by the EU GSP,
cumulation with EU FTA partners), be accompanied by the applicable certification as foreseen
rivate persons, where these are valued
part of travellers' personal luggage (< €1,200),
to EU exporters in cases where raw materials or
intermediate goods are exported to a GSP beneficiary with a view that these materials and
goods are used as originating inputs under the EU GSP (bilateral) cumulation arrangements
imported materials (from EU sources) can be
deemed to be of local origin in the exporting country and in combination with further
processing undertaken in the GSP beneficiary country jointly meet the RoO requirements.
Bilateral cumulation is only applicable to materials and intermediate goods when these have
(or have obtained) originating status in the EU. The EUR.1
required for the materials exported from the EU to the beneficiary country and forms an
essential basis of the origin declaration in turn by the GSP exporters upon export of the
finished product back to the EU.
(intermediate) export goods need to be the same as the GSP RoO.
Importers in the EU
A greater emphasis is being placed on EU importers taking the necessary commercial
precautions (through contractual agreements between importer and exporter
obligating the exporter to reimburse import duties should origin declarations b
incorrect) when relying on
beneficiary country. Preferential status can be denied up to
importation of goods and any import duties that should have been lev
against the EU importer. The legislation explicitly makes provision for so
verification’ where the customs authorities in the importing country (EU)
verification procedure from the competent authorit
importer may also be subject to penalties when relying on false origin claims
claim preferences when any doubt exists as to the validity of the origin declaration in relation
to imported goods.
Competent authorities in beneficiary countries
Administrative cooperation19
and the EU (and ultimately
obtaining preferential market access
17
Unless the EU exporter is an 'approved exporter' in which case invoice declarations may be sufficient, as is the
case for shipmets whose total value does not exceed 18
See Article 97(h) of Commission Regulation (EU) No 1063/201019
See Article 97(s) which specifies the methods of administrative cooperation
The EU Generalised System of Preferences:
An overview of proposed reforms.
tralac Working Paper | D12WP06/2012
15
deemed to be of local origin in the exporting country and in combination with further
processing undertaken in the GSP beneficiary country jointly meet the RoO requirements.
ion is only applicable to materials and intermediate goods when these have
(or have obtained) originating status in the EU. The EUR.1 movement certification
for the materials exported from the EU to the beneficiary country and forms an
al basis of the origin declaration in turn by the GSP exporters upon export of the
finished product back to the EU. The applicable RoO to determine the origin status of the EU
(intermediate) export goods need to be the same as the GSP RoO.
A greater emphasis is being placed on EU importers taking the necessary commercial
precautions (through contractual agreements between importer and exporter
obligating the exporter to reimburse import duties should origin declarations b
the origin declarations of the exporter situated in the GSP
beneficiary country. Preferential status can be denied up to three
importation of goods and any import duties that should have been levied at the time claimed
The legislation explicitly makes provision for so
where the customs authorities in the importing country (EU)
verification procedure from the competent authorities in the exporting (GSP) country
importer may also be subject to penalties when relying on false origin claims
claim preferences when any doubt exists as to the validity of the origin declaration in relation
ent authorities in beneficiary countries prior to 2017
between competent authorities in the GSP b
and the EU (and ultimately the traders involved) forms an increasingly important basis in
al market access.
Unless the EU exporter is an 'approved exporter' in which case invoice declarations may be sufficient, as is the
case for shipmets whose total value does not exceed €6,000 as per Art 97(v)(b)
ssion Regulation (EU) No 1063/2010
See Article 97(s) which specifies the methods of administrative cooperation
deemed to be of local origin in the exporting country and in combination with further
processing undertaken in the GSP beneficiary country jointly meet the RoO requirements.
ion is only applicable to materials and intermediate goods when these have
movement certification17
is
for the materials exported from the EU to the beneficiary country and forms an
al basis of the origin declaration in turn by the GSP exporters upon export of the
The applicable RoO to determine the origin status of the EU
A greater emphasis is being placed on EU importers taking the necessary commercial
precautions (through contractual agreements between importer and exporter, for instance,
obligating the exporter to reimburse import duties should origin declarations be found to be
the origin declarations of the exporter situated in the GSP
years following the
ied at the time claimed
The legislation explicitly makes provision for so-called ‘subsequent
where the customs authorities in the importing country (EU) can request a
ies in the exporting (GSP) country.18
The
importer may also be subject to penalties when relying on false origin claims and should not
claim preferences when any doubt exists as to the validity of the origin declaration in relation
between competent authorities in the GSP beneficiary countries
forms an increasingly important basis in
Unless the EU exporter is an 'approved exporter' in which case invoice declarations may be sufficient, as is the
In the GSP beneficiary country, only government authorities (such as customs authorities, the
ministry of trade, and so forth) are empowered to issue and verify certificates of origin. Under
certain circumstances, an authority such as a c
issue the certificates (hence assume the task of administration) provided it takes place under
direct government authority. Control of this process always rests with the government in the
beneficiary country, and gov
preferences be withdrawn for whatever reason.
notifying the European Commission (not individual EU member states) of changes to the
government authorities –- including their name and address
responsibility of verifying certificates of origin.
country must maintain records of any origin certification (Form A) for at least
origin certification system will change substantially in the post
the following section.
The nominated competent authority is also expected to cooperate closely with the EU
authorities on any exporter verification that ma
revert back to the EU competent authorities within
‘subsequent verification’. Subsequent verification may include requests for factory checks and
analysis of documentary evidence relat
cooperation to the EU competent authorities in a timely manner, as set out by the legislation,
and failure to maintain a register of registered exporters
register that no longer comply with the relevant conditions
beneficiary country may be temporarily withdrawn.
Competent authorities in beneficiary countries after 2017
Many of the post-2017 systems of administration of origin are similar
2017 but are adapted to the new system of exporter registration. This entails a shift to
electronic exporter registers available publicly via the internet, and maintained in large parts
by the European Commission.
which replaces the current Form A procedures
materials and intermediate goods used for purposes of
provisions under the GSP.
The EU Generalised System of Preferences:
An overview of proposed reforms.
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16
In the GSP beneficiary country, only government authorities (such as customs authorities, the
and so forth) are empowered to issue and verify certificates of origin. Under
certain circumstances, an authority such as a chamber of commerce may be authorised to
issue the certificates (hence assume the task of administration) provided it takes place under
direct government authority. Control of this process always rests with the government in the
beneficiary country, and governments ultimately remain responsible should a country's
preferences be withdrawn for whatever reason. A beneficiary country is also responsible for
notifying the European Commission (not individual EU member states) of changes to the
including their name and address – that have been tasked with the
responsibility of verifying certificates of origin. Competent authorities in the beneficiary
country must maintain records of any origin certification (Form A) for at least
origin certification system will change substantially in the post-2017 period as described in
The nominated competent authority is also expected to cooperate closely with the EU
authorities on any exporter verification that may be necessary, and they
revert back to the EU competent authorities within six months on any requests for
Subsequent verification may include requests for factory checks and
analysis of documentary evidence relating to shipments and accounts
cooperation to the EU competent authorities in a timely manner, as set out by the legislation,
and failure to maintain a register of registered exporters (and removal of
longer comply with the relevant conditions), means that GSP
country may be temporarily withdrawn.
in beneficiary countries after 2017
2017 systems of administration of origin are similar to those applied pre
2017 but are adapted to the new system of exporter registration. This entails a shift to
electronic exporter registers available publicly via the internet, and maintained in large parts
by the European Commission. The new system also changes to one of sta
current Form A procedures; this will likewise apply to EU exporters of
materials and intermediate goods used for purposes of applying the
In the GSP beneficiary country, only government authorities (such as customs authorities, the
and so forth) are empowered to issue and verify certificates of origin. Under
hamber of commerce may be authorised to
issue the certificates (hence assume the task of administration) provided it takes place under
direct government authority. Control of this process always rests with the government in the
ernments ultimately remain responsible should a country's
A beneficiary country is also responsible for
notifying the European Commission (not individual EU member states) of changes to the
that have been tasked with the
Competent authorities in the beneficiary
country must maintain records of any origin certification (Form A) for at least three years. This
2017 period as described in
The nominated competent authority is also expected to cooperate closely with the EU
they are expected to
months on any requests for
Subsequent verification may include requests for factory checks and
and accounts. Failure to provide
cooperation to the EU competent authorities in a timely manner, as set out by the legislation,
removal of exporters from the
GSP preferences to a
to those applied pre-
2017 but are adapted to the new system of exporter registration. This entails a shift to
electronic exporter registers available publicly via the internet, and maintained in large parts
statements on origin
; this will likewise apply to EU exporters of
bilateral cumulation
The main obligations of the competent authorities in the beneficiary country evolve around
maintaining an electronic register of exporters and systems of administration that sufficiently
deal with administrative cooperation
and the European Commission)
record of registered exporters located in the beneficiary country must likewise be
and updated with any changes, such as when exporter
their failure to meet the conditions for any exports under the GSP
incorrect information that may lead to irregular claims of preference
authorities must also introduce
two-digit International Standards Organisation
BW and Malawi is MW).
The post-2017 period sees the introduction of commercial documents, furnished with
statements on origin as the required certification on the originating status of a good. Such
commercial documents may include delivery notes and packing lists, and these can be stored
and transmitted electronically.
been submitted electronically, can be used for purposes of obtaining release of goods for free
circulation in the EU without security having to be provided pending (later) submission of
proof of origin.
The information requirements for the registered expo
13c of the Commission Regulation
3.8 Summary of GSP changes
The proposed GSP changes which are to be implemented by the beginning of 2014 onwards
represent a tightening of the EU nonpreferential trade regime, certa
The most fundamental change
countries may obtain beneficiary status.
176) countries being graduated out of the GSP.
will, however, have alternative preferences into the EU market.
20
This application form is referred to in Article 92 of
The EU Generalised System of Preferences:
An overview of proposed reforms.
tralac Working Paper | D12WP06/2012
17
gations of the competent authorities in the beneficiary country evolve around
maintaining an electronic register of exporters and systems of administration that sufficiently
deal with administrative cooperation (with the competent authorities of EU member
and the European Commission) as well as managing the system of cumulation.
record of registered exporters located in the beneficiary country must likewise be
and updated with any changes, such as when exporters are no longer on the register
meet the conditions for any exports under the GSP, or having presented
incorrect information that may lead to irregular claims of preference
authorities must also introduce a registration numbering system, beginning with the country's
International Standards Organisation (ISO) country code (for example
2017 period sees the introduction of commercial documents, furnished with
as the required certification on the originating status of a good. Such
commercial documents may include delivery notes and packing lists, and these can be stored
and transmitted electronically. A major benefit to importers is that these documents, having
been submitted electronically, can be used for purposes of obtaining release of goods for free
circulation in the EU without security having to be provided pending (later) submission of
The information requirements for the registered exporter database are contained in Annex
13c of the Commission Regulation.20
Summary of GSP changes
The proposed GSP changes which are to be implemented by the beginning of 2014 onwards
represent a tightening of the EU nonpreferential trade regime, certainly when seen in totality.
The most fundamental change, of course, relates to the amended criteria under which
countries may obtain beneficiary status. This will result in approximately 100 (of currently
176) countries being graduated out of the GSP. A large number of those that are graduated
have alternative preferences into the EU market.
This application form is referred to in Article 92 of Commission Regulation (EU) No 1063/2010.
gations of the competent authorities in the beneficiary country evolve around
maintaining an electronic register of exporters and systems of administration that sufficiently
(with the competent authorities of EU member states
as well as managing the system of cumulation. The electronic
record of registered exporters located in the beneficiary country must likewise be maintained
r on the register due to
, or having presented
incorrect information that may lead to irregular claims of preference. The competent
ystem, beginning with the country's
(for example, Botswana is
2017 period sees the introduction of commercial documents, furnished with
as the required certification on the originating status of a good. Such
commercial documents may include delivery notes and packing lists, and these can be stored
A major benefit to importers is that these documents, having
been submitted electronically, can be used for purposes of obtaining release of goods for free
circulation in the EU without security having to be provided pending (later) submission of
rter database are contained in Annex
The proposed GSP changes which are to be implemented by the beginning of 2014 onwards
inly when seen in totality.
criteria under which
will result in approximately 100 (of currently
rge number of those that are graduated
ommission Regulation (EU) No 1063/2010.
The proposed GSP will provide increased certainty to economic operators by effectively
making the GSP permanent and open
within the current ten-year implementation cycles. It will
a review mechanism at least five years after its implementation
intends including a number of discretionary
graduation and surveillance, and
This refocusing of EU preferences
policy changes in this regard, for example the plan to remove
countries considered not to have made sufficient progress in implementing an EPA with the
EU (see the following section for a discussion on this)
recipients where this leads to a situation
under the GSP and EPAs respectively.
relatively attractive, especially now that the EU has also amended some of its RoO provisions
that for a long time could be defined as some of the major differences between Cotonou/EPA
and GSP preferences. For some countries, unless major progress is made on implementing
EPAs, the latest EU proposals will lead to a complete loss of preferences in the EU market.
The changes to the GSP will probably have the least impact on countries classified as LDCs, at
least not directly. These countries
will continue to do so under the revised GSP.
vulnerable to product graduation
them or have been raised slightly.
to be through indirect channels
competing countries that may soon be graduated.
to some extent it is only an analysis of their individual performance and areas of
competitiveness in the EU export
extent to which the relevant
performance.
For LDC+ recipients there are few changes although these relate less to product coverage and
import duties than to stricter monitoring of compliance with the signed social and
environmental conventions that underlie the scheme.
The EU Generalised System of Preferences:
An overview of proposed reforms.
tralac Working Paper | D12WP06/2012
18
The proposed GSP will provide increased certainty to economic operators by effectively
and open-ended without the need for renewal every three years
year implementation cycles. It will, however, continue to be
at least five years after its implementation. However, the legislation also
intends including a number of discretionary powers to the European Commission in terms of
graduation and surveillance, and safeguard mechanisms.
This refocusing of EU preferences is also noteworthy when seen together with other proposed
policy changes in this regard, for example the plan to remove nonreciprocal preferences to
countries considered not to have made sufficient progress in implementing an EPA with the
ection for a discussion on this). The stakes are raised for preference
recipients where this leads to a situation where EU market access is substantially worse than
under the GSP and EPAs respectively. Only for LDCs is the fallback position (under EBA) still
relatively attractive, especially now that the EU has also amended some of its RoO provisions
ime could be defined as some of the major differences between Cotonou/EPA
and GSP preferences. For some countries, unless major progress is made on implementing
EPAs, the latest EU proposals will lead to a complete loss of preferences in the EU market.
e changes to the GSP will probably have the least impact on countries classified as LDCs, at
countries already enjoy duty- and quota-free access to the EU
will continue to do so under the revised GSP. In fact, in some instance
vulnerable to product graduation given that the applicable thresholds either do not apply to
them or have been raised slightly. In fact, the main benefit to LDCs under the new GSP is likely
to be through indirect channels, for example, their relative margin of preference in relation to
competing countries that may soon be graduated. Nevertheless the usual
to some extent it is only an analysis of their individual performance and areas of
export market that allows a better assessment of this and the
relevant RoO impact on and constrain an LDC's particular export
LDC+ recipients there are few changes although these relate less to product coverage and
to stricter monitoring of compliance with the signed social and
environmental conventions that underlie the scheme. The burden of compliance under the
The proposed GSP will provide increased certainty to economic operators by effectively
wal every three years
continue to be subject to
. However, the legislation also
Commission in terms of
is also noteworthy when seen together with other proposed
nonreciprocal preferences to
countries considered not to have made sufficient progress in implementing an EPA with the
The stakes are raised for preference
where EU market access is substantially worse than
Only for LDCs is the fallback position (under EBA) still
relatively attractive, especially now that the EU has also amended some of its RoO provisions
ime could be defined as some of the major differences between Cotonou/EPA
and GSP preferences. For some countries, unless major progress is made on implementing
EPAs, the latest EU proposals will lead to a complete loss of preferences in the EU market.
e changes to the GSP will probably have the least impact on countries classified as LDCs, at
free access to the EU and
In fact, in some instances they are now less
given that the applicable thresholds either do not apply to
In fact, the main benefit to LDCs under the new GSP is likely
their relative margin of preference in relation to
Nevertheless the usual caveats apply and
to some extent it is only an analysis of their individual performance and areas of
allows a better assessment of this and the
an LDC's particular export
LDC+ recipients there are few changes although these relate less to product coverage and
to stricter monitoring of compliance with the signed social and
The burden of compliance under the
proposed regime shifts to the beneficiary countries and may lead to graduation and
suspension of individual beneficiaries in future.
feature prominently as key criteria
import share threshold to 2%
combination need to exceed the 75% concentration threshold.
For non-LDCs and countries that do not
help qualify them for GSP+ preferences, the impact of GSP reform is likely to be
Many of these countries continue to be listed as potentially eligible for preferences but under
the various new criteria and graduation mechanisms would
beneficiary status from the beginning of 2014 onwards.
countries that do not have a separate preferential arrangement with the EU
through the interim Market Access Regulations for ACP countries
EPA process, a concluded EPA
consequently lose their beneficiary status and revert to the EU's MFN tariffs.
Table 4: Overview of key changes to the proposed EU GSP
Area
Legal
framework
2009-2011: GSP Regulation No 732/2008
2012-2013: GSP Regulation No 512/2011
(amends-and extends Regulation 732/2008)
Renewal Renewed every 3 years
Rules of Origin
Some LDC differentiation (
Country
beneficiary
status
176 LDC and developing countries listed as
beneficiaries, including OCT
GSP
programmes
GSP, EBA, GSP+
GSP+
conventions
Compliance with social and environmental
conventions
The EU Generalised System of Preferences:
An overview of proposed reforms.
tralac Working Paper | D12WP06/2012
19
proposed regime shifts to the beneficiary countries and may lead to graduation and
f individual beneficiaries in future. The vulnerability criteria also continue to
as key criteria and are set to be relaxed slightly, with a doubling of the
import share threshold to 2% and an increase in the number of product sector
need to exceed the 75% concentration threshold.
LDCs and countries that do not meet the vulnerability criteria which
qualify them for GSP+ preferences, the impact of GSP reform is likely to be
Many of these countries continue to be listed as potentially eligible for preferences but under
the various new criteria and graduation mechanisms would for the time being
beneficiary status from the beginning of 2014 onwards. High and u
ountries that do not have a separate preferential arrangement with the EU
through the interim Market Access Regulations for ACP countries that have committed to the
a concluded EPA or via a bilateral FTA (for example South Africa),
lose their beneficiary status and revert to the EU's MFN tariffs.
ey changes to the proposed EU GSP
Current GSP Proposed GSP revision
GSP Regulation No 732/2008
GSP Regulation No 512/2011
and extends Regulation 732/2008)
Still in legislative process:
2014 onwards
COM(2011) 241 final
Renewed every 3 years No limit in duration, except as applicable
through graduation/safeguards
Review after 5 years
Applicable from 1 January 2011:
Regulation 1063/2010
Some LDC differentiation (with less restrictive rules in some cases
LDC and developing countries listed as
, including OCTs
Approximately 80 LDC and lower income
developing countries listed as beneficiaries
- beneficiary status depends on income
classification and can change
- countries with FTA or other similar EU market
access are removed as beneficiaries (example:
EPAs)
- high and upper-middle
removed, as are OCTs
GSP, EBA, GSP+ GSP, EBA, GSP+
Compliance with social and environmental Same as before, but substitution of climate
change convention for apartheid con
proposed regime shifts to the beneficiary countries and may lead to graduation and
The vulnerability criteria also continue to
with a doubling of the
product sectors that in
which could otherwise
qualify them for GSP+ preferences, the impact of GSP reform is likely to be the greatest.
Many of these countries continue to be listed as potentially eligible for preferences but under
for the time being lose their GSP
High and upper-middle-income
ountries that do not have a separate preferential arrangement with the EU, for example
that have committed to the
le South Africa), will
lose their beneficiary status and revert to the EU's MFN tariffs.
Proposed GSP revision
Still in legislative process:
COM(2011) 241 final
No limit in duration, except as applicable
through graduation/safeguards
in some cases)
oximately 80 LDC and lower income
developing countries listed as beneficiaries
beneficiary status depends on income
classification and can change
countries with FTA or other similar EU market
access are removed as beneficiaries (example:
middle-income countries also
Same as before, but substitution of climate
change convention for apartheid convention
Area
GSP+
vulnerability
criteria
Dual requirement alongside conventions
- <1% of EU imports from all GSP
beneficiaries
- country's 5 largest product section
exports >75% of its total EU exports
Vulnerability application
every 1.5 years
Graduation
and safeguards
21 product sections used for graduation
- Product section graduation: 15%
(general) and 12.5% (textiles)
-Not applicable to EBA
For textiles, if 20%
in country exports is
triggered
General safeguard provisions when
imports cause or threaten to cause serious
difficulties to EU producers of like
products
Not applicable to EBA beneficiaries and
countries that have share of less than 8%
of EU import market in affected categories
Tariff treatment GSP (Main scheme)
Sensitive products
MFN tariffs
Nonsensitive products: duty
Products where only specific duty applies:
30% reduction
Textiles and clothing: 20% reduction
GSP+ scheme
Sensitive products: duty
specific and ad valorem duty applies:
specific duty only
Nonsensitive products: duty
EBA scheme
All duty-free (except arms, Ch
Administration
and
certification of
origin
Certification: Form A
Exporter registration:
prescribed
Focus on: Responsibility with
authorities
The EU Generalised System of Preferences:
An overview of proposed reforms.
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Current GSP Proposed GSP revision
Dual requirement alongside conventions
of EU imports from all GSP
largest product section
>75% of its total EU exports
application undertaken
very 1.5 years
Dual requirement alongside conventions
- <2% of EU imports from all GSP beneficiaries
- country's 7 largest product section exports
>75% of its total EU exports
Vulnerability application
point in time
uct sections used for graduation
Product section graduation: 15%
(general) and 12.5% (textiles)
Not applicable to EBA
For textiles, if 20% annual volume growth
in country exports is recorded, safeguards
General safeguard provisions when
orts cause or threaten to cause serious
difficulties to EU producers of like
Not applicable to EBA beneficiaries and
countries that have share of less than 8%
of EU import market in affected categories
32 product sections used for graduation
Product section graduation: 17.5% (general)
and 14.5% (textiles)
-Not applicable to EBA
- GSP+ countries no longer graduated
If 15% annual volume growth in country
exports is recorded in certain product
(textiles, others), safeguards triggered
General safeguard provisions when imports
cause or threaten to cause serious difficulties
to EU producers of like products
Not applicable to EBA beneficiaries and
countries that have share of less than 8% of
EU import market in affected categories
GSP (Main scheme)
Sensitive products – 3.5% reduction on
Nonsensitive products: duty-free
Products where only specific duty applies:
Textiles and clothing: 20% reduction
Sensitive products: duty-free; where both
specific and ad valorem duty applies:
specific duty only
Nonsensitive products: duty-free
free (except arms, Ch. 93)
GSP (Main scheme)
Sensitive products – 3.5% reduction on MFN
tariffs
Nonsensitive products: duty
agricultural components
Products where only specific duty applies: 30%
reduction
Textiles and clothing: 20% reduction
GSP+ scheme
Sensitive products: duty
specific and ad valorem duty applies: specific
duty only
Nonsensitive products: duty
EBA scheme
All duty-free (except arms, Ch
Form A
Exporter registration: Systems not
Responsibility with competent
Certification: Statement on origin
Exporter registration:
register, publicly available, maintained by
beneficiary country and European Commission
Focus on: Electronic systems, transparency,
enforcement and control systems, private
contracts to mitigate risk
Proposed GSP revision
al requirement alongside conventions
of EU imports from all GSP beneficiaries
largest product section exports
>75% of its total EU exports
application undertaken at any
32 product sections used for graduation
oduct section graduation: 17.5% (general)
o longer graduated
volume growth in country
in certain products
, safeguards triggered
afeguard provisions when imports
cause or threaten to cause serious difficulties
to EU producers of like products
Not applicable to EBA beneficiaries and
countries that have share of less than 8% of
EU import market in affected categories
3.5% reduction on MFN
Nonsensitive products: duty-free except for
icultural components
Products where only specific duty applies: 30%
Textiles and clothing: 20% reduction
Sensitive products: duty-free; where both
specific and ad valorem duty applies: specific
Nonsensitive products: duty-free
free (except arms, Ch. 93)
Statement on origin
Exporter registration: Post-2017: electronic
register, publicly available, maintained by
beneficiary country and European Commission
Electronic systems, transparency,
enforcement and control systems, private
to mitigate risk
4. The EU proposal to withdraw
countries
4.1 Background and context
On 30 September 2011 the European Commission
to amend the preferential market access provisions for a number of
countries – all GSP beneficiaries
Regulations21
applying nonreciprocal preferences to countries
Economic Partnership Agreement
from nonreciprocal EU preferences in terms of the above regulation are
their preferential status. These
under the new scheme.
According to the proposal's explanatory memorandum, a number of ACP countries have
concluded EPA negotiations with the EU but have not signed their respective agreements.
These countries are listed
Tanzania, Uganda and Zambia.
agreement but not having taken steps towards ratifying it domestically.
Botswana, Cameroon, Côte
Zimbabwe. Therefore in total 18 countries according to the Commission
fulfil the conditions of the December 2007 Market Access provisions and should be removed
from the list of recipients from 1 January 2014
new GSP scheme (with reduced
The proposal, however, makes provision for the
regulations where countries removed from the list have taken the necessary steps to ratify
their respective agreements domestically.
Commission to adopt delegated acts to
from the ACP Group of States which were removed from that Annex by virtue o
regulation)’.
21
See Annex I to Council Regulation (EC) N
The EU Generalised System of Preferences:
An overview of proposed reforms.
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proposal to withdraw trade preferences from
and context
On 30 September 2011 the European Commission (2011b) published a proposal
the preferential market access provisions for a number of ACP countries. These
all GSP beneficiaries – are currently included in the EU's Market Access
applying nonreciprocal preferences to countries having signed
Partnership Agreement (IEPA) with the EU. Half of the 36 countries that benefit
from nonreciprocal EU preferences in terms of the above regulation are
These include countries that are set to lose GSP beneficiary status
osal's explanatory memorandum, a number of ACP countries have
concluded EPA negotiations with the EU but have not signed their respective agreements.
as Burundi, the Comoros, Ghana, Kenya, Namibia, Rwanda,
mbia. Another group of countries is listed as having signed an
agreement but not having taken steps towards ratifying it domestically.
Botswana, Cameroon, Côte d’Ivoire, Fiji, Haiti, Lesotho, Mozambique,
n total 18 countries according to the Commission’s
fulfil the conditions of the December 2007 Market Access provisions and should be removed
from the list of recipients from 1 January 2014 – incidentally also the same date on which the
(with reduced number of beneficiaries) will take effect.
makes provision for the ‘swift reinstatement’
egulations where countries removed from the list have taken the necessary steps to ratify
domestically. For this the proposal seeks power for the
Commission to adopt delegated acts to ‘amend Annex I by reinstating those regions or states
from the ACP Group of States which were removed from that Annex by virtue o
Annex I to Council Regulation (EC) No 1528/2007 of 20 December 2007.
from certain ACP
published a proposal which seeks
ACP countries. These
the EU's Market Access
having signed an Interim
6 countries that benefit
from nonreciprocal EU preferences in terms of the above regulation are now at risk of losing
include countries that are set to lose GSP beneficiary status
osal's explanatory memorandum, a number of ACP countries have
concluded EPA negotiations with the EU but have not signed their respective agreements.
as Burundi, the Comoros, Ghana, Kenya, Namibia, Rwanda,
Another group of countries is listed as having signed an
agreement but not having taken steps towards ratifying it domestically. In this group fall
’Ivoire, Fiji, Haiti, Lesotho, Mozambique, Swaziland and
’s proposal no longer
fulfil the conditions of the December 2007 Market Access provisions and should be removed
incidentally also the same date on which the
’ in Annex I to the
egulations where countries removed from the list have taken the necessary steps to ratify
seeks power for the European
amend Annex I by reinstating those regions or states
from the ACP Group of States which were removed from that Annex by virtue of (this
4.2 Implications for GSP beneficiaries
From the perspective of GSP-
available through bilateral trade agreements (for example South Afri
Partnership Agreement (for example the Caribbean EPA
non-reciprocal Market Access regulations in the case of IEPA signatories.
countries that are party to a reciprocal arrangement with t
away under the new scheme after 2013.
necessarily have major negative impacts
place. However, the list of countries identif
includes GSP beneficiaries that will likely lose their GSP status under the new scheme.
means that the possibility exists for countries having neither preferential market access in
terms of the regulation22
nor access under the GSP,
instead.
Nine countries included in the list are classified as LDCs
EU market access under the access regulations. These countries would continue
under the EU GSP EBA arrangement
what they have under the market access regulation. It should be noted
duty preferences would be similar, the access regulations con
favourable than those contained in the GSP EBA.
LDC status are Burundi, the Comoros, Haiti, Lesotho, Mozambique, Rwanda,
and Zambia.
A further seven countries are
under the new GSP scheme albeit
offers better-than -MFN market access to beneficiaries but is
compared to the preferences offered under the EBA or
that matter. The seven countries
proposal of removal from Annex I
and Zimbabwe. But this status is misleading.
22
See Council Regulation (EC) No 1528/2007 of 20 December 2007
The EU Generalised System of Preferences:
An overview of proposed reforms.
tralac Working Paper | D12WP06/2012
22
Implications for GSP beneficiaries and possible legal issues
-eligible countries, preferential EU market access
available through bilateral trade agreements (for example South Africa
(for example the Caribbean EPA configuration) or through the EU's
reciprocal Market Access regulations in the case of IEPA signatories.
countries that are party to a reciprocal arrangement with the EU, GSP preferences may fall
away under the new scheme after 2013. For many countries the loss of GSP status may not
necessarily have major negative impacts, especially when another similar arrangement is in
the list of countries identified for removal from Annex I of the regulation also
includes GSP beneficiaries that will likely lose their GSP status under the new scheme.
means that the possibility exists for countries having neither preferential market access in
nor access under the GSP, to be subject to MFN tariff treatment
Nine countries included in the list are classified as LDCs, which mitigates the impact of losing
EU market access under the access regulations. These countries would continue
arrangement and will therefore in effect have similar
what they have under the market access regulation. It should be noted, however,
preferences would be similar, the access regulations contain certain RoO that are more
favourable than those contained in the GSP EBA. The countries included in the list
LDC status are Burundi, the Comoros, Haiti, Lesotho, Mozambique, Rwanda,
A further seven countries are classified low- or lower-income and would therefore still qualify
under the new GSP scheme albeit primarily under the main GSP program
MFN market access to beneficiaries but is nevertheless
the preferences offered under the EBA or the market access regulation/EPA for
The seven countries that at face value might not be as affected by the
proposal of removal from Annex I are Cameroon, Fiji, Ghana, Ivory Coast, Kenya, Swaz
But this status is misleading. Again, impact depends to a large extent on the
Council Regulation (EC) No 1528/2007 of 20 December 2007.
countries, preferential EU market access is currently also
ca-EU), an Economic
) or through the EU's
reciprocal Market Access regulations in the case of IEPA signatories. For developing
he EU, GSP preferences may fall
For many countries the loss of GSP status may not
especially when another similar arrangement is in
ied for removal from Annex I of the regulation also
includes GSP beneficiaries that will likely lose their GSP status under the new scheme. This
means that the possibility exists for countries having neither preferential market access in
be subject to MFN tariff treatment
which mitigates the impact of losing
EU market access under the access regulations. These countries would continue to benefit
similar market access to
, however, that while
tain certain RoO that are more
The countries included in the list that have
LDC status are Burundi, the Comoros, Haiti, Lesotho, Mozambique, Rwanda, Tanzania, Uganda
and would therefore still qualify
programme. This naturally
nevertheless far less beneficial
market access regulation/EPA for
might not be as affected by the EC’s
, Ivory Coast, Kenya, Swaziland
Again, impact depends to a large extent on the
range of goods being exported to the EU, the impact on investment flows as a result of this
uncertainty, the implications for (higher) EU import duties and to
are affected by the relevant RoO.
When the EU revised its GSP RoO at the beginning of 2011 various rules contained special
provisions that were applicable only to exports from LDCs and not from non
beneficiaries. This includes, for example, the vastly more flexible RoO for apparel (single
transformation requirement).
nominal additional cost of less
d'Ivoire, €68 million for Fiji, €65 million for
for Swaziland, and so forth.23
Two countries, Namibia and Botswana,
are likely to be impacted substantially in the
market access regulation developments.
receive preferences unless their income class
the IEPA ratification process means that under the recent EU proposal on this both countries
would be removed as beneficiaries
them subject to MFN treatment which would likely have major impacts
export sectors such as beef, table grapes and fish.
duty payments – additional duties as a re
and €29 million respectively.24
Some uncertainty attaches to the legal standing of the proposal
from the list is based on the affected countries not having
ratification of their respective Agreements
requirement for 'proper reasoning'
The proposal to remove countries from the list of beneficiaries also brings into question
23
As per COM(2011) 598 final. Proposal for a Regulation of the European Parliament and of the Council
amending Annex I to Council Regulation (EC) No 1528/200
from the list of regions or states which have concluded negotiations. Calculations by the European Commission
(DG Trade) represent average additional duties based on dutiable imports.24
As per COM(2011) 598 final 25
This section leans heavily on Bartels and Goodison (2011). 26
Article 296 of the Treaty on the functioning of the European Union. [Online]. Available at
lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2010:083:0047:0200:en:PDF
The EU Generalised System of Preferences:
An overview of proposed reforms.
tralac Working Paper | D12WP06/2012
23
range of goods being exported to the EU, the impact on investment flows as a result of this
uncertainty, the implications for (higher) EU import duties and to what extent these countries
are affected by the relevant RoO.
When the EU revised its GSP RoO at the beginning of 2011 various rules contained special
provisions that were applicable only to exports from LDCs and not from non
udes, for example, the vastly more flexible RoO for apparel (single
transformation requirement). EU calculations show that based on current exports, the
nominal additional cost of less-preferential GSP coverage could be over €100 million
€65 million for Swaziland, €50 million for Cameroon ,
Two countries, Namibia and Botswana, are classified as upper-middle-income countries and
substantially in the combined context of the proposed GSP and
market access regulation developments. Under the revised GSP, neither
receive preferences unless their income classification changed, while their lack of progress on
means that under the recent EU proposal on this both countries
would be removed as beneficiaries from the market access regulations.
them subject to MFN treatment which would likely have major impacts
export sectors such as beef, table grapes and fish. For Namibia and Botswana
additional duties as a result of the loss of preferences –
24
to the legal standing of the proposal.25
The proposed removal
the affected countries not having ‘taken the necessary steps towards
eir respective Agreements’ (see Article 3) although by some accounts the
for 'proper reasoning' as required by the EU Treaty26
may not have been met.
The proposal to remove countries from the list of beneficiaries also brings into question
. Proposal for a Regulation of the European Parliament and of the Council
amending Annex I to Council Regulation (EC) No 1528/2007 as regards the exclusion of a number of countries
from the list of regions or states which have concluded negotiations. Calculations by the European Commission
(DG Trade) represent average additional duties based on dutiable imports.
This section leans heavily on Bartels and Goodison (2011).
Article 296 of the Treaty on the functioning of the European Union. [Online]. Available at
lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2010:083:0047:0200:en:PDF.
range of goods being exported to the EU, the impact on investment flows as a result of this
what extent these countries
When the EU revised its GSP RoO at the beginning of 2011 various rules contained special
provisions that were applicable only to exports from LDCs and not from non-LDC
udes, for example, the vastly more flexible RoO for apparel (single
show that based on current exports, the
€100 million for Côte
Cameroon , €50 million
income countries and
combined context of the proposed GSP and EU
neither country would
ification changed, while their lack of progress on
means that under the recent EU proposal on this both countries
cess regulations. This would leave
them subject to MFN treatment which would likely have major impacts inter alia on key
or Namibia and Botswana, the impact on
could be €58 million
The proposed removal
taken the necessary steps towards
although by some accounts the
ay not have been met.
The proposal to remove countries from the list of beneficiaries also brings into question
. Proposal for a Regulation of the European Parliament and of the Council
7 as regards the exclusion of a number of countries
from the list of regions or states which have concluded negotiations. Calculations by the European Commission
Article 296 of the Treaty on the functioning of the European Union. [Online]. Available at http://eur-
whether the market access regulations are in fact a
EPAs and thus falls under the requirements of the Vienna Convention on the Law of
Treaties27
. Article 25 of the Convention limits the right of parties to withdraw from
and sets the conditions (in Art
the treaty itself, (b) by agreement between the negotiating
informs the other party of its intention not to beco
Bartels and Goodison (2011), questions might arise around the applicability of the above and
whether the EPAs were provisionally or voluntarily implemented on the part of the EU,
although "’his distinction is unk
Notwithstanding any legal uncertai
of its frustration with the perceived lack of progress towards concluding EPAs with ACP
countries but also its intention to
arrangements on the poorest
certain amount of leverage with respect to these negotiations
broader context of EU GSP reform
27
See UN (1969).
The EU Generalised System of Preferences:
An overview of proposed reforms.
tralac Working Paper | D12WP06/2012
24
er the market access regulations are in fact a provisional application of the
and thus falls under the requirements of the Vienna Convention on the Law of
of the Convention limits the right of parties to withdraw from
and sets the conditions (in Articles 25(1) and 25(2) respectively) as follows: (a) according to
the treaty itself, (b) by agreement between the negotiating states and (c) if one of the parties
of its intention not to become a party to the treaty.
, questions might arise around the applicability of the above and
whether the EPAs were provisionally or voluntarily implemented on the part of the EU,
his distinction is unknown to the Vienna Convention’.
Notwithstanding any legal uncertainty, the EC's proposal provides a clear indication not only
perceived lack of progress towards concluding EPAs with ACP
but also its intention to further concentrate its nonreciprocal preference
est countries. Without doubt, the proposal provides the
certain amount of leverage with respect to these negotiations, especially when seen in the
reform.
application of the respective
and thus falls under the requirements of the Vienna Convention on the Law of
of the Convention limits the right of parties to withdraw from a treaty,
25(1) and 25(2) respectively) as follows: (a) according to
tates and (c) if one of the parties
me a party to the treaty. As pointed out by
, questions might arise around the applicability of the above and
whether the EPAs were provisionally or voluntarily implemented on the part of the EU,
provides a clear indication not only
perceived lack of progress towards concluding EPAs with ACP
its nonreciprocal preference
the proposal provides the EC with a
especially when seen in the
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