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EU Revises GSP for Developing Countries

The EU revised its import preference system, known as the Generalized Scheme of Preferences (GSP), for developing countries most in need, the European Commission said Oct. 31. The GSP is intended to help developing countries by making it easier to export their products to the EU, it said. The document sets out specific tariff preferences granted under the GSP in the form of reduced or zero tariff rates, as well as the final criteria under which developing economies will benefit, it said.

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There will be fewer beneficiaries than under the current system to ensure greater help for countries most in need, it said. The new rates, which won't be effective until Jan. 1, 2014, will affect 89 beneficiaries: 49 least developed countries in the Everything But Arms (EBA) scheme (33 in Africa) and 40 other low and lower-middle income partners such as China, Iran and Iraq, the EC said. Countries that will no longer benefit from the preferences include 33 overseas economies such as Bermuda and the U.S. Virgin Islands; 34 nations with other trade arrangements as free trade agreements; and economies which the World Bank has listed as high or upper-middle income for the past three years, such as Saudi Arabia and Argentina.

Export drops in the range of 1 percent are expected for many of those trading partners, but even such marginal decreases could potentially offer significant opportunities for the poorest nations, the EC said. Only 9 percent of tariff lines are outside the GSP now, it said. The new GSP expands products and preference margins for 23 tariff lines, mostly dealing with raw materials, it said. The products have been carefully chosen to avoid hurting the poorest, least-developed countries, which already enjoy duty-free, quota-free access for all products, it said.

The GSP covers three separate regimes: (1) A “standard” GSP which currently gives 176 developing countries and territories preferential access to the EU. (2) A special incentive deal, “GSP+,” which offers additional tariff reductions to support vulnerable developing countries as they adopt international conventions on sustainable development and good governance. (3) The EBA, under which all products from least developed countries are free from any import duties in the EU. The revised GSP makes changes to the “graduation” mechanism under which imports of certain groups of products that originate in a given GSP beneficiary lose GSP and GSP+ preference if they're deemed competitive, the EC said. It also provides more incentives for nations to join the GSP+ system while boosting the EU's ability to ensure core human and labor rights are protected, it said.

The revised scheme is good for importers and exporters because it will last 10 years instead of the current three-year time frame, it said. There will be transition periods of at least a year for changes in the original beneficiaries list, and countries will only be struck from that list if they're deemed high or middle-income three years in a row, it said. The new GSP also makes procedures affecting importers and exporters more detailed and transparent. The EU will publish legislation next year setting out those procures and other aspects relating to the revisions, the EC said.