New EU GSP: What businesses need to know to leverage cheaper trade with developing countries
GSP allows businesses to cut import duties of imported products from vulnerable countries if conditions are met, argues Arne Mielken of Customs Manager Ltd
This unilateral trade tool by the EU wants to support poverty eradication, sustainable development, and their participation in the global economy.
The current Generalised Scheme of Preferences (GSP) Regulation expires at the end of 2023. The revised GSP Regulation (2024-2034) proposal builds on the achievements of the GSP so far and its continued contribution to the EU’s development and sustainability agenda.
New Proposals
In September 2021, the European Commission has adopted the legislative proposal for the new EU's Generalised Scheme of Preferences (GSP) for the period 2024-2034. This would adopt some key features of the scheme to better
respond to the evolving needs and challenges of GSP countries, as well as
reinforce the scheme's social, labour environmental and climate dimensions.
What is GSP?
The GSP Regulation is a unilateral trade tool that removes or reduces import duties from products coming into the EU from vulnerable low-income countries, supporting poverty eradication, sustainable development, and their participation in the global economy.
GSP framework
The new GSP framework
strengthens the EU's possibilities to use trade preferences to create economic opportunities and to advance sustainable development.
expands the grounds for the withdrawal of EU GSP preferences in case of serious and systematic violations.
Beyond the core human rights and labour conventions already covered, the proposal incorporates environmental and good governance conventions.
Focus on those most in need
The GSP has several features to make sure trade preferences go to countries that need them the most and to support their sustainable development.
The new proposal further improves the current scheme by:
Ensuring a smooth transition for all countries set to graduate from the Least Developed Country (LDC) status in the next decade.
They will be able to apply for the special incentive arrangement for sustainable development and good governance (GSP+) if they commit to strong sustainability standards and can thus retain generous tariff preferences to access to the EU market;
There are thee types of GSPs:
Standard GSP
For low and lower-middle income countries with no Free Trade Agreements (FTAs). It covers 66% of tariff lines and 26% of these are duty-free as they are for non-sensitive products; the remaining 40% are for sensitive products and have reduced tariffs Automatic for eligible countries
GSP+
Special incentive arrangement for sustainable development and good governance
For Standard GSP beneficiaries
No tariffs for 66% of tariff lines
Upon application; no automaticity
Everything But Arms (EBA)
For least developed countries (LDCs)
No tariffs for any product except arms and ammunition
Automatic for countries on the United Nations LDC list
Focus on those most in need
Maximising the opportunities for low-income countries to benefit from the GSP by lowering product graduation thresholds (that is, the temporary suspension of tariff preferences for highly competitive products) by ten percentage points so that the large industrialised producers leave more space in sectors where they are very competitive;
Expanding the list of international conventions that need to be complied with by adding two additional human rights instruments on the rights of people with disabilities and the rights of the child, two labour rights conventions on labour inspections and tripartite dialogue, and one governance convention on transnational organised crime;
Setting up a well-defined framework for the current GSP+ beneficiaries to adapt to the new requirements, offering an adequate transition period and requiring the presentation of implementation plans.
A greener GSP
To reinforce the importance of meeting climate change and environmental protection standards, the new GSP proposal:
Introduces the possibility to withdraw GSP benefits for serious and systematic violations of the principles of the conventions on climate change and environmental protection;
Extends the list of international conventions that GSP+ countries must ratify beyond the current seven environmental and climate instruments, now including the Paris Agreement.
A more flexible GSP
Lessons learned through the application of the current GSP are reflected through:
Improvements to the monitoring of compliance with GSP+ requirements, and increased transparency and involvement of civil society in its application;
A new urgent withdrawal of preferences procedure when a rapid response is needed in exceptionally grave circumstances in a beneficiary country, such as grave violations of international standards;
An assessment of the socio-economic effects of any proposed withdrawal, to consider any negative impact on vulnerable populations.
EU GSP Hub
Downloads
Trade_and_sustainability__Commission_proposes_new_EU_Generalised_Scheme_of_Preferences_to_
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GSP_Factsheet_-_EN.pdf
.pdf
Download PDF • 2.41MB
Proposal by EU Commission
Applying a Generalised Scheme of Tariff Preferences Scheme 2023-2034
.pdf
Download PDF • 715KB
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