Updated: Feb 12, 2020
Last updated 12/02/2020
The EU’s GSP removes import duties from products coming into the EU market from vulnerable developing countries. This helps developing countries to alleviate poverty and create jobs based on international values and principles, including labour and human rights.
The EU's Generalised Scheme of Preferences (GSP) removes import duties from products coming into the EU market (import) from vulnerable developing countries' exports to the EU. By creating additional export opportunities, it helps the countries to tackle poverty and create jobs while also respecting sustainable development principles and international values, including labour and human rights. For instance, a February 2020 EU Bi-annual GSP report shows that, thanks to the GSP, countries like Sri Lanka, Mongolia and Bolivia are more effectively tackling child labour. EU industry is an important partner in making sustainable development a reality by investing and producing in, and sourcing from, GSP countries and by ensuring that international labour and environmental standards are met.
A global story: Background
Almost 50 years ago, the United Nations Conference on Trade and Development asked developed countries to help developing countries integrate into the world economy. The Generalised Scheme of Preferences (GSP) was born and today, about a dozen countries have GSP mechanisms in place.
The European Union’s GSP is widely recognised as the most progressive in terms of coverage and benefits. The EU's trade agenda contributes to the United Nations Sustainable Development Goals around the world. The preferences provide beneficiary countries with an incentive to take further steps towards effectively implementing international conventions related to human rights, labour rights, environment and good governance.
What's on offer?
The EU's GSP has three arrangements:
Standard GSP for low and lower-middle income countries. This means a partial or full removal of customs duties on two-third of tariff lines (in 2020 15 beneficiaries)
GSP+: the special incentive arrangement for sustainable development and good governance. It slashes these same tariffs to 0% for vulnerable low and lower-middle income countries that implement 27 international conventions related to human rights, labour rights, protection of the environment and good governance. (in 2020, 8 beneficiaries);
EBA (Everything But Arms): the special arrangement for least developed countries, providing them unilaterally with duty-free, quota-free access to its Single Market for all products except arms and ammunition. ( in 2020 48 beneficiaries). This is on offer to all the States classified by the United Nations as Least Developed Countries (LDCs).
Tell me more about the Everything But Arms trade arrangement
The EBA arrangement, as the GSP scheme as a whole, aims to assist developing countries in their efforts to reduce poverty, promote good governance, and support sustainable development by helping them to generate additional revenue through international trade.
The access to this arrangement is conditional upon the beneficiary country respecting the principles of 15 core United Nations (UN) and International Labour Organisation (ILO) Conventions on human rights and labour rights (laid down in Annex VIII Part A of the GSP Regulation).
What conditions need to be met for countries to be eligible for GSP?
Developing countries are automatically granted GSP if they:
Are classified as having an income level below "upper middle income" by the World Bank
Do not benefit from another arrangement (like a Free Trade Agreement) granting them preferential access to the EU market
In addition, if granted GSP+, beneficiaries are required to ratify 27 international conventions (see GSP+ above) and to cooperate with the Commission to monitor implementation of these conventions.
Least-developed countries are automatically granted the benefits of the ‘Everything But Arms’ arrangement, even if they have another arrangement in place.
As mentioned above All GSP beneficiary countries have to respect the principles of fifteen core conventions on human rights and labour rights listed in the GSP Regulation.
What happens if countries to NOT respect these principles?
The possibility of temporary, full, or partial withdrawal is foreseen in the event of serious and systematic violations of the core 15 UN and ILO Conventions. Here is how this works:
The Commission can initiate an investigation if it considers that there are sufficient grounds justifying temporary withdrawal.
This is based on a case-by-case analysis and is specific to the context of each country.
In its assessment, the Commission uses as key sources the reports and recommendations of the relevant UN and ILO bodies, as well as additional information from EU Delegations, EU Member States, the European Parliament, civil society, other authoritative international human rights bodies, academia or information transmitted directly by beneficiary countries to the Commission.
UN and ILO documents and findings take into account nature and impact, as well as the scale and prevalence of the violations.
The EU can also organise missions for its own assessment of the situation on the ground.
Annual Review of eligibility
The EU continuously monitors GSP+ beneficiary countries’ effective implementation of the 27 international conventions on human rights, labour rights, environmental protection, and good governance. This monitoring includes exchanges of information, dialogue and visits and involves various stakeholders, including civil society.
Annual changes to GSP
Under the GSP regulations, a country that has been classified by the World Bank as a high-income or an upper-middle-income country for three consecutive years immediately prior to the updating of the list of beneficiary countries should no longer benefit from GSP.
The list of beneficiary countries under the GSP is reviewed by 1 January each year in order to amend the status of the listed countries i
So in 2020, for example, Nauru, Samoa and Tonga have been classified by the World Bank as upper-middle income countries in 2017, 2018 and 2019.
Accordingly, they no longer qualify for GSP beneficiary status und were removed from Annex II of Regulation (EU) No 978/2012.
The GSP arrangement will still continue for one year after publication in the OJ should be removed from this Annex II, so this will apply from 1 January 2021,
What did the 2020 report consider?
The report looks at the extent to which GSP countries make the most of the scheme. It also examines a number of overarching issues such as the freedom of civil society to operate, progress on tackling child labour, and environmental and good governance concerns. The report gives examples of how the EU works with all stakeholders, such as civil society, international organisations – in particular the United Nations and International Labour Organization monitoring bodies – and beneficiary country authorities to make GSP more effective and to make sure that trade and values advance simultaneously.
What did the 2020 report on GSP conclude?
Challenges remain in many of the 71 GSP beneficiary countries, including when it comes to restrictions on civil society and freedom of the media, access to justice, minorities' rights, capital punishment and freedom of association.
Insufficient progress, including in some of the largest beneficiaries, has resulted in the EU increasing its monitoring and enhancing its engagement, in particular regarding human rights and labour rights.
In the case of Cambodia, this has led to the EU initiating the procedure to temporarily withdraw preferences because of the serious and systematic violation of the principles of core United Nations and International Labour Organization conventions.
About the 2020 report: https://ec.europa.eu/commission/presscorner/detail/en/IP_20_136
Example of temporary withdrawal of preferences: https://ec.europa.eu/commission/presscorner/detail/en/MEMO_19_988
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