Generalised System of Preferences
EP approves new GSP scheme focusing on poorest states
By Lénaïc Vaudin d’Imécourt | Wednesday 13 June 2012
The European Parliament backed the Commission’s plan to shift trade preferences to countries most in need, in a resolution adopted on 13 June. With this new Generalised System of Preferences (GSP), high and upper-middle income countries (UMICs) will be taken out of the scheme.
According to the updated GSP, tariff preferences will be removed for EU imports from countries where per capita income has exceeded US$4,000 for four years in a row. Countries that will lose their preferences include Russia, Brazil, Kuwait, Saudi Arabia and Qatar, as they are part of the UMICs. However, the fact that a certain number of other countries will lose their trading preferences with the EU as they have already concluded or are in the process of concluding bilateral trade agreements with the Union has triggered concerns among MEPs. They agreed on the need to amend the proposed transitional period to allow new free trade agreements (FTAs) to enter into force.
These new criteria will reduce the number of beneficiaries from 176 to around 75, and the total value of imports that qualify for EU preferences will drop to €37.7 billion in 2014 from €60 billion in 2009 (4% of total EU imports).
MEPs also agreed to the Commission’s plan to reduce the number of beneficiaries of the GSP special incentive scheme, or GSP+, with the stated objectives of further promoting core human and labour rights as well as good governance. Under the GSP+ scheme, countries were offered additional tariff reductions. But with the new system, only three countries will be able to apply for zero EU duties to be charged on their exports – Pakistan, the Philippines and Ukraine – instead of the current 15 beneficiaries.
According to the Commission, the new criteria applied to the scheme – exports under GSP+ would have to account for less than 2% of the EU’s total GSP imports, instead of the 1% applied today – will encourage countries to join and commit to 27 different conventions on human rights and sustainable development, necessary to obtain said trade preferences.
In their resolution, MEPs have also adopted a certain number of safeguards to the Commission’s initial proposal. To ensure that a GSP concession does not lead to import surges that harm the EU’s textile and clothing producers, they negotiated with the Council a rule that tariff preferences for these products will be suspended for a given country if EU imports from that country grow by 13.5% or more in a single year, or if imports of specific products exceed 6% of total EU imports of these products, down from the Commission’s proposal of 15% and 8%, respectively.
MEPs also backed the idea that the new GSP scheme should be limited to ten years, this being the first time the regulation is adopted through the ordinary legislative procedure. A review of the scheme is foreseen after five years of its entry into force.