European Commission Adopts Proposal to Simplify and Increase Effectiveness of EU GSP for 2006-2008
The European Commission (EC) has issued a press release announcing that it has adopted a proposal setting out the details of the European Union (EU) Generalized System of Preferences (GSP) for 2006-2008. According to the press release, the EC proposal would modify the EU GSP through simplification, expanding product coverage, focusing benefits on those developing countries most in need, and setting up additional benefits known as GSP.
Sign up for a free preview to unlock the rest of this article
If your job depends on informed compliance, you need International Trade Today. Delivered every business day and available any time online, only International Trade Today helps you stay current on the increasingly complex international trade regulatory environment.
The EC states that it is sending the text of its proposal to the EU Member States, European Parliament, and Economic and Social Committee so that it can be adopted in time for entry into force on July 1, 2005.
Highlights of GSP Proposal Adopted by EC
The following are highlights of EC's proposal as listed in its press release (partial list):
Simplification of the EU GSP program. The EC proposal states that the five current EU GSP arrangements would be reduced to three as follows:
a general agreement (reduction of 3.5% over the normal customs duty for sensitive products, reduction of duties to zero for non-sensitive products).
"Everything but Arms" initiative, which entails giving duty-free and quota-free access for all products for the world's 50 poorest countries (with the exception of arms and munitions); and
a new "GSP" giving tariff preferences to vulnerable countries who meet the new objective criteria for sustainable development and good governance (reduction to zero duty for a total of 7,200 products).
(The EC's proposal replaces the three former incentive schemes (drugs, social, and environment arrangements) by a new single scheme, GSP, which would provide special benefits for vulnerable countries (representing less than 1% of EU imports under GSP) that accept the main international conventions on social, human rights, environmental protection and governance, including fighting against drugs.)
Changes to EU GSP graduation process. The proposal states that EU GSP will only be withdrawn for certain product groups for one or several countries when these products are competitive in the EC market and no longer need the EU GSP. Graduation would occur when a group of products from a particular country exceed 15% of total EU imports of the same products (12.5% for textiles) over the last three consecutive years. The EC adds that the proposal calls for the EU GSP to apply for three years without any changes, including graduation which had previously taken place each year.
Greater rules of origin flexibility (cumulation). The EC's proposal states that regional cumulation should be enhanced to allow members of a regional group to make better use of the preferences. In particular, the proposal calls for regional cumulation to be relaxed through elimination of the value added rule criterion. In addition, cumulation across regions will be introduced if interested countries request it (so South Asian Association for Regional Cooperation (SAARC) countries could cumulate origin from Association of Southeast Asian Nations (ASEAN) countries).
EC Press Release on EU GSP proposal (IP/04/1264, dated 10/20/04) available at http://europa.eu.int/rapid/pressReleasesAction.do?reference=IP/04/1264&format=HTML&aged=0&language=EN&guiLanguage=en
Facts and figures on proposed EU GSP for 2006-2008 (MEMO/04/243, dated 10/20/04) available at http://europa.eu.int/rapid/pressReleasesAction.do?reference=MEMO/04/243&format=HTML&aged=0&language=EN&guiLanguage=en
EC's July 2004 outline of its proposals available at http://trade-info.cec.eu.int/doclib/html/117919.htm
EU GSP Web page can be accessed at http://europa.eu.int/comm/trade/issues/global/gsp/index_en.htm
EU "Everything But Arms" Initiative information available athttp://europa.eu.int/comm/trade/issues/global/gsp/eba/index_en.htm