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EU member states’ ambassadors approves reinforced rules on granting trade preferences to developing countries
Press release-20 December 2022
EU member states’ ambassadors today agreed the Council’s negotiating mandate on the revised Generalised Scheme of Preferences (GSP) regulation that grants trade preferences to developing countries.
The new framework maintains the main features of the current system, but includes some improvements, such as stronger links to respect for human rights and the environment, and a better monitoring and transparency of the scheme. There will also be a new link between the trade preferences granted to beneficiary countries and their cooperation on migration and the readmission of own nationals illegally present in the EU.
The EU will continue supporting vulnerable countries by giving them preferential access to the single market. The objective of the reinforced regulation is to help these countries grow in a sustainable manner and to encourage good governance, including respect for human rights and the environment.
Jozef Síkela, Minister of Industry and Trade of the Czech Republic
The current GSP framework
The EU’s GSP, in place since 1971, is a unilateral trade and development policy instrument used to eliminate or reduce import tariffs for goods exported from developing countries. Lower duties facilitate access to the EU market and increase exports to the Union, which contribute to economic growth and job creation in the beneficiary countries.
The EU’s GSP supports sustainable development, as tariff preferences are conditional on respect for human rights, labour rights, environmental protection and good governance.
The EU offers three GSP arrangements covering a total of 67 countries:
Standard GSP for low and lower-middle income countries, which are granted a partial or full removal of customs duties on two-thirds of the tariff lines GSP+, the special incentive arrangement for sustainable development and good governance, which slashes tariffs to 0 % for the same tariff lines as for those Standard GSP for Standard GSP beneficiaries which accept additional sustainability requirements (granted on the basis of an application)
Everything But Arms (EBA) for least developed countries (LDCs), which benefit from duty-free (0 % duties) and quota-free access to the EU market for all products except arms and ammunition Improvements of the new framework
The objective of the new legislation is to continue working for poverty eradication and to support sustainable development and good governance, without jeopardising EU interests. While maintaining the division into three strands – Everything But Arms, Standard GSP and GSP+ – some improvements were proposed by the Commission and accepted by the Council in order to increase efficiency and effectiveness of the new framework:
- extends negative conditionality to prevent all beneficiaries from committing serious and systematic violations of environmental and good governance agreements, in addition to the core human and labour rights agreements
- facilitates access to the GSP+ arrangement for the growing number of least developed countries (LDCs) graduating from GSP’s EBA arrangement
- provides transitional arrangements for current GSP+ beneficiaries, which would have to reapply in order to fulfil new requirements for GSP+, such as ratifying the additional agreements, and adds a requirement for countries applying for GSP+ status to submit a plan of action to demonstrate their effective implementation of the relevant agreements
- extends the GSP reporting period from two to three years, in order to align it with the monitoring reports of the United Nations’ international bodies and organisations
- adds new international agreements to the list
- makes the preferences withdrawal process faster and more responsive in cases of exceptionally serious violations
- when proposing a temporary withdrawal of GSP preferences, the Commission will consider the socio-economic impact of the withdrawal in the GSP beneficiary country
- introduces a withdrawal criterion related to the readmission of own nationals by beneficiary countries
- changes the calculation method for safeguard thresholds so that import values (rather than volumes) are used, in order to align it with the calculation method used for the graduation threshold
- introduces a specific process to ensure that the cumulation of rules of origin responds to the requesting country’s development, financing and trade needs
- adjusts product graduation thresholds (that is, the temporary suspension of tariff preferences for highly competitive products) for the Standard GSP arrangement in order to focus better on preferences on less competitive products and create more opportunities for other GSP beneficiaries, in particular the LDCs
- improves the monitoring and implementation of GSP+ commitments; for instance, through increased transparency and participation of the relevant stakeholders, including through the recently created Single Entry Point (SEP) mechanism for non-compliance complaints
In addition, the Council has introduced a number of improvements in the Commission proposal:
- an enhanced engagement procedure between the EU and the beneficiary countries in order to address any concerns in a constructive manner
- an improved system for the application of the general safeguards procedure when necessary
- a stronger special surveillance mechanism for imports of agricultural products from GSP beneficiaries to the EU, which could, if necessary, lead to the withdrawal of tariff preferences
- increased transparency of the procedure to beneficiary countries, the creation of a structured dialogue with civil society and better communication between the Commission and the Council
Today’s mandate was approved by the Council’s Permanent Representatives Committee (Coreper). It will allow the Council presidency to start negotiations with the European Parliament.
The new rules are intended to enter into force in January 2024, when the existing regulation expires, and will cover the next decade.