Generalised Scheme of Preferences (GSP) | Brussels, 30 December 2013
10 countries to benefit from EU preferential trade scheme GSP+ as of 1 January 2014
The European Union will continue to offer enhanced access to the EU market for vulnerable developing countries as of 1 January 2014.: Armenia, Bolivia, Cape Verde, Costa Rica, Ecuador, Georgia, Mongolia, Paraguay, Pakistan and Peru. Pakistan will enter the scheme for the first time. The so-called ’GSP+’ scheme provides a strong incentive to respect core human and labour rights, the environment and good governance principle. The scheme is part of the revised GSP scheme that enters into force on 1 January 2014.
What is GSP+?
The GSP+ is a component of the EU Generalised Scheme of Preferences (‘GSP’) for developing countries. It offers additional trade incentives to developing countries already benefitting from GSP to implement core international conventions on human and labour rights, sustainable development and good governance.
GSP+ is a scheme that rewards developing countries that shows a credible commitment to implementing those conventions by granting duty reductions on exports to the EU on some 6,000 tariff lines (66% of the EU common customs tariff). In 2012, this represented approximately €4.9 billion of imported goods.
Nine of the GSP+ countries on the list (Armenia, Bolivia, Cape Verde, Costa Rica, Ecuador, Georgia, Mongolia, Paraguay and Peru) already benefit from the current GSP+ scheme, which expires on 31 December 2013. They will now continue benefitting from the generous enhanced market access under the GSP+ status also after 1 January 2014.
As for Pakistan, it has been currently benefitting from the autonomous tariff preferences that were granted following the floods in Pakistan in 2010 and which expire on 31 December 2013. Pakistan will now be able to continue benefitting from an improved access to the EU market as a GSP+ beneficiary.
Moreover, some of the countries covered by the Commission Delegated Act (Costa Rica, Peru and Georgia) have in the meantime negotiated a Free Trade Agreement with the EU. The GSP+ will only cover the transition period to the new trade regime.
Will other countries get GSP+?
On 17 December 2013, the European Commission adopted a proposal to grant GSP+ status to three other developing countries: El Salvador, Guatemala and Panama. The proposal was been sent to the European Parliament and to the Council which have two months (this period can be extended to four months on request) to approve or reject the proposal.
What is the legal framework?
The GSP and GSP+ schemes were recently reformed by Regulation 978/2012 (‘GSP Regulation’) and apply as of 1 January 2014*.
The specific rules of procedures for GSP+ are set out in Regulation 155/2013**.
How can a country join GSP+?
Entry into GSP+ is not automatic. GSP+ is granted to a developing country if:
- it fulfils the vulnerability criteria (economic criteria),
- it submits a successful application showing it fulfils certain criteria linked to ratifying and implementing 27 core international conventions on human and labour rights, sustainable development and good governance (sustainable development criteria).
These criteria apply equally to all potential applicant countries. An application for GSP+ can be submitted at any time.
After receiving a GSP+ application, the Commission has up to six months to analyse it, to discuss it with the EU's Member States and to reach a conclusion. If the Commission reaches a positive conclusion, it will adopt a proposal to grant GSP+ and sends it to the European Parliament and the Council. Both institutions have a period of two months, with the possibility to extend it to four months, to approve or reject the Commission's proposal.
What are the vulnerability criteria?
A country is qualified as vulnerable and hence eligible for GSP+ if: i) it is not competitive enough on the EU market (defined as an import-share ratio) and ii) it does not have a diversified export base (defined as a non-diversification ratio).
The applicable thresholds are spelled out in Annex VII of the GSP Regulation. The import-share ratio defines a country as being eligible only if its GSP-covered imports represent less than 2% of the EU's imports from all GSP beneficiaries. For the non-diversification ratio, the country's seven largest GSP-covered product sections (a section is a group of products) must cover at least 75% of its total GSP-covered exports to the EU.
What are the core international conventions?
Meeting the vulnerability criteria is not in itself sufficient to benefit from GSP+. Applicants will have to ratify 27 core international conventions and subscribe to binding commitments to implement them effectively. These are mainly UN and International Labour Organisation (ILO) conventions, conventions on environment and on good governance. Examples of such conventions are: the Convention on the elimination of all Forms of Racial Discrimination; the International Convention on the Rights of the Child; the Freedom of Association and Protection of the Right to Organise Convention; and the Convention on International Trade in Endangered Species etc.
Monitoring compliance under GSP+
GSP+ scheme is designed to encourage beneficiary countries to show a genuine commitment to implementing core human and labour rights, sustainable development and good governance. To achieve this aim, the EU has put in place a strengthened monitoring mechanism to ensure that those rights are respected by the GSP+ beneficiary countries.
All applicant countries are required, when submitting their GSP+ application, to sign a ‘binding undertaking’ and to commit themselves:
- to maintaining the ratification of the 27 relevant international conventions and ensuring their effective implementation,
- to accepting without reservation reporting requirements and monitoring imposed by those conventions,
- to accepting and cooperating with the EU monitoring procedure.
If the entry criteria in GSP+ are equal for all applicants, the monitoring will particularly focus on areas where each beneficiary country has shown deficiencies.
The monitoring mechanism is built on two pillars: a system of scorecards and a GSP+ dialogue with the beneficiary country.
Beneficiaries will receive their individual scorecard upon notification of their GSP+ entry or immediately thereafter. The Commission will then establish a dialogue on GSP+ compliance with the authorities of the beneficiary countries, drawing their attention to the areas identified in the scorecards.
The new GSP+ system is in place for ten years. This means that scorecards will measure the evolution of beneficiaries' performance over the long term and will be updated regularly to reflect new developments on the ground such as the issuing of new reports by the monitoring bodies established under the conventions, information submitted by third parties and the countries' progress in implementation.
Finally, the GSP+ scheme provides for more frequent reporting to the Council and the Parliament. The Commission will issue comprehensive reports on the GSP+ countries every two years and will build on the result of a systematic monitoring exercise.
What information will the European Commission use to monitor GSP+?
The EU Commission will monitor reports emanating from the relevant monitoring bodies under each convention. It will also assess information from other sources, including the European Parliament or EU Member States.
Other sources of information may also be considered provided they are accurate and reliable. Without prejudice to other sources, this could include information from civil society or social partners.
What are the incentives to join the GSP+?
The GSP+ system has been made more attractive by the recent reform:
- There is less competition from advanced developing economies (high and upper-middle countries) and from competitive sections which no longer benefit from the GSP scheme.
- Graduation of product section does not apply to GSP+ beneficiaries because they are vulnerable countries with a non-diversified base.
- The vulnerability criterion is relaxed to 2% versus 1% under the previous scheme, so more countries can apply.
- Applications will be taken into consideration at any time (rather than once every 18 months as in the past).
- The criteria to join the GSP+ scheme are clear and transparent. The two key criteria are: i) vulnerability and ii) ratification and effective implementation of core international conventions.
What are the reinforcing mechanisms under GSP+?
The EU will have more leverage to achieve the GSP+ goals:
- Where binding commitments are not met, a (temporary) withdrawal mechanism may be triggered.
- Monitoring procedures will be reinforced, culminating with the publication of a report every two years.
- The Council of Ministers and the European Parliament will exert more scrutiny by closely following the monitoring process.
- Crucially, beneficiaries will have to build a positive record of compliance with their obligations. The burden to prove compliance lies with the beneficiaries themselves, whereas in the past the Commission had to prove the beneficiaries were in breach.
Can a country lose the GSP+ status?
GSP+ preferences may be withdrawn where a country does not meet its engagements, following an investigation carried out by the European Commission. The burden of proof for compliance rests on the country itself. This "reversal of the burden of proof" will be a particularly strong tool to ensure GSP+ beneficiaries show progress in terms of human, labour, environmental and governance standards.
The EU will have access to more sources of information, not limited to UN/International Labour Organisation reporting systems, including information from civil society organisations and social partners.
Detailed procedural rules have been drawn up regarding the specific roles for all contributing parties: European Commission, EU Member States, beneficiary country concerned, third parties etc. (Commission Delegated Regulation 1083/2013).
For further information
Revised EU trade scheme to help developing countries applies on 1 January 2014 - MEMO
The Generalised Scheme of Preferences
List of countries eligible to apply for GSP+
List of 27 Conventions under GSP+
* OJ L 303, 31.10.2012, p.1
** OJ L 48, 21.2.2013, p.5