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The EU Generalised System of

Preferences: An overview of proposed

reforms

by Eckart Naumann

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www.tralac.orgReaders are encouraged to quote and reproduce this material for educational, non

acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of WO

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Eckart Naumann

tralac

No. D12WP06/2012

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acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of

Working Paper



tralac Working Paper

No. D12WP06/2012

May 2012

Please consider the environment before printing this publication

Twitter @tradelawcentre | Copyright © tralac, 2012.

profit purposes, provided the source is

acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.

Working Paper

Copyright © tralac, 2012.

Readers are encouraged to quote and reproduce this material for educational, non-profit purposes,

provided the source is acknowledged. All views and opinions expressed remain solely those of the

authors and do not purport to reflect the views of tralac

This publication should be cited as: Naumann, E. 2012.

The EU Generalised System of Preferences: An overview of proposed reforms. Stellenbosch: tralac.

tralac gratefully acknowledges the financial support of the Danish International Development

Assistance (Danida) for the publication of this Working Paper.

www.tralac.org | [email protected] | Twitter @tradelawcentre

Readers are encouraged to quote and reproduce this material for educational, non-profit purposes,

provided the source is acknowledged. All views and opinions expressed remain solely those of the authors

and do not purport to reflect the views of tralac.

Table of Contents

1. Introduction ..............................................................................................................................1

2. Reform of the EU: background and legislative framework ......................................................2

2.1 What is the GSP? .................................................................................................................2

2.2 Legislative framework .........................................................................................................3

3. Reform of the EU GSP: the nuts and bolts of the proposal for change ....................................4

3.1 Key facts about GSP trade and coverage ............................................................................4

3.2 The GSP Rules of Origin .......................................................................................................6

3.3 Changes to the eligibility criteria: a narrowing of scale and scope ....................................7

3.4 Revised product graduation mechanism and vulnerability criteria for beneficiary countries

9

3.5 Safeguard mechanisms .....................................................................................................11

3.6 Implication for EU import duties .......................................................................................12

3.7 Administration and changes from 2017 ...........................................................................13

3.8 Summary of GSP changes .................................................................................................17

4. The EU proposal to withdraw trade preferences from certain ACP countries .......................21

4.1 Background and context ...................................................................................................21

4.2 Implications for GSP beneficiaries and possible legal issues ............................................22

Sources and References ..............................................................................................................25

Tables:

Table 1: Key features of the EU GSP .............................................................................................6

Table 2: Current GSP Beneficiaries that will no longer benefit under the new arrangements ...8

Table 3: Categories of EU GSP import duties ..............................................................................13

Table 4: Overview of key changes to the proposed EU GSP .......................................................19

1. Introduction

European countries through the European Commission (EC) have embarked on a reform

process that aims to focus the non

Union (EU) Generalised System of Preferences (GSP)

reforms can be placed within a much broader context not only of lower EU import tariffs and

dwindling preference margins, but also

provision of relatively generous nonreciprocal market access preferences to a large number of

countries. This issue is relevant in the context of its own economic situation,

recent years been affected by the global financial crisis and more recently by

Eurozone debt crisis. Also telling in this respect is a recent EC proposal, discussed later in this

paper, to remove nonreciprocal preferences from

countries that have failed to make progress in implementing a reciprocal trade agreement

with the EU.

The proposed GSP programme

that were implemented at the start of 2011, and which in tur

measures that simplify the applicable origin requirements and reduce the number of product

specific rules. The amended RoO also contain a number of provisions that apply only to

Developed Countries (LDCs).

The EU GSP contains three program

conditions and obligations attached and applicable to countries that meet a

vulnerability test) as well as the Everything

will continue to exist, their respective eligibility criteria will change, especially

to the standard GSP. Countries that have achieved h

which have received preferences up until now would lose their beneficiary s

proposed changes. as would

another EU trade regime, or the Overseas Countries and Territories (OCTs) that have

alternative market access arrangements in place.

The main beneficiaries of the proposed scheme will be LDCs, not so much through changes to

their preferences (they already receive almost full duty

The EU Generalised System of Preferences:

An overview of proposed reforms.

tralac Working Paper | D12WP06/2012

1


process that aims to focus the non-reciprocal trade preferences offered under the

Generalised System of Preferences (GSP) on fewer countries.


dwindling preference margins, but also of the EU's reassessment more generally of its


This issue is relevant in the context of its own economic situation,

ected by the global financial crisis and more recently by

elling in this respect is a recent EC proposal, discussed later in this

paper, to remove nonreciprocal preferences from African Caribbean and Pacific (


me changes follow recent reforms of the GSP Rules of Origin (RoO)

that were implemented at the start of 2011, and which in turn also included a number of

measures that simplify the applicable origin requirements and reduce the number of product

specific rules. The amended RoO also contain a number of provisions that apply only to

ains three programmes: the standard GSP, the GSP

conditions and obligations attached and applicable to countries that meet a

as well as the Everything-But-Arms (EBA) Agreement.

nue to exist, their respective eligibility criteria will change, especially

Countries that have achieved high and upper-middle

have received preferences up until now would lose their beneficiary s

countries that currently benefit from similar preferences under


alternative market access arrangements in place.

ciaries of the proposed scheme will be LDCs, not so much through changes to

their preferences (they already receive almost full duty- and quota-free market access) but


preferences offered under the European

on fewer countries. The proposed


of the EU's reassessment more generally of its


This issue is relevant in the context of its own economic situation, which has in

ected by the global financial crisis and more recently by fallout from the

elling in this respect is a recent EC proposal, discussed later in this

African Caribbean and Pacific (ACP)


recent reforms of the GSP Rules of Origin (RoO)

n also included a number of

measures that simplify the applicable origin requirements and reduce the number of product-

specific rules. The amended RoO also contain a number of provisions that apply only to Least

the standard GSP, the GSP Plus (with various

conditions and obligations attached and applicable to countries that meet an economic

While each of these

nue to exist, their respective eligibility criteria will change, especially those relating

middle-income status and

have received preferences up until now would lose their beneficiary status under the

benefit from similar preferences under


ciaries of the proposed scheme will be LDCs, not so much through changes to

free market access) but

rather through the higher concentration of preferences and perhaps reduced competition i

the EU market. LDCs’ benefits

gains in relative preference margins.

The new scheme would also be open

beneficiaries will enjoy greater econom

Up until now, the GSP was subject to 10

year intervals. The current legislative period covers the 2009

legislation already adopted which

(or to any such earlier date when the

proposed legislation for a new GSP still needs to be debated in the European Parliament and

Council.

2. Reform of the EU: background and legislative framework

2.1 What is the GSP?

The GSP is a nonreciprocal trade program

developed countries to provide t

countries. The programme has its

Favoured Nation (MFN) principle were introduced

and Trade (GATT), and later made permanent under the

differentiated tariff preferences.

The GSP of the EU has long been the

nonreciprocal trade preferences to 176 developing countries and territories. It consists of

three separate but related program

• Standard GSP which covers all developing countries including 35 nonindependent

overseas countries and territories

the EU for qualifying products




2

concentration of preferences and perhaps reduced competition i

benefits under the proposed scheme are therefore

gains in relative preference margins.

The new scheme would also be open-ended which means that traders both in the EU and GSP

beneficiaries will enjoy greater economic certainty with respect to their trading relationship.

Up until now, the GSP was subject to 10-year cycles with periodic renewals mostly in three

The current legislative period covers the 2009–2011 period with roll

which extends the current scheme to the end of 2013 at the latest

any such earlier date when the revised GSP is finalised and implemented).


background and legislative framework

a nonreciprocal trade programme that has been adopted by a number of

developed countries to provide trade preferences to developing and least

has its formal origins in 1971 when exemptions to the Most

Favoured Nation (MFN) principle were introduced under the General Agreement on Tariffs

, and later made permanent under the enabling clause, paving the way

differentiated tariff preferences.

The GSP of the EU has long been the main mechanism through which it extended


separate but related programmes, namely:

which covers all developing countries including 35 nonindependent

overseas countries and territories (the OCTs), and offers reduced tariffs on imports into

the EU for qualifying products

concentration of preferences and perhaps reduced competition in

are therefore primarily through

ended which means that traders both in the EU and GSP

pect to their trading relationship.

year cycles with periodic renewals mostly in three

2011 period with roll-over

extends the current scheme to the end of 2013 at the latest

GSP is finalised and implemented). The


background and legislative framework

that has been adopted by a number of

rade preferences to developing and least developed

when exemptions to the Most

General Agreement on Tariffs

enabling clause, paving the way for

through which it extended


which covers all developing countries including 35 nonindependent

, and offers reduced tariffs on imports into

• Everything-But-Arms Agreement

countries classified as LDCs

for all goods imported into the EU

• The GSP Plus (GSP +) scheme which is available to developing countries that have signed

and implemented 27 international conventions

environmental and good governance rights and rules

In order to obtain GSP preferences, products exported from beneficiary countries are

required to comply with the relevant rules

which a product is classified as originating in the exporting country rather than

country – a question that becomes relevant when goods are made up from both local and

imported materials. The RoO

under the various GSP program

introduced at the end of 2010 and

country. The RoO were also overhauled in various other substantive areas.

(Commission Regulation 1063/2010)

(Naumann, 2011). It should be noted that the GSP scheme and its RoO are distinct legal texts

and as such do not have to be amended at the same time.

2.2 Legislative framework

The EU GSP scheme is renewed and implemented in three

covering the period 2006 to 2008 (GSP Regulation No 980/2005) and the 2009 to 2011 period

(GSP Regulation No 732/2008).

GSP Regulation No 512/2011 and is

and extends the previous regulation 732/2008.

The EU is embarking on a substanti

implications for beneficiary countries.

2011 and the time required to complete

1 Originally adopted as Council Regulation (EC) 416/2001

Regulation (EC) No 2501/2001. 2 See European Union GSP: http://ec.europa.eu

preferences/.




3

Arms Agreement1, an offshoot of the main GSP and which offers

LDCs by the United Nations (UN) duty- and quota

for all goods imported into the EU, except for arms

scheme which is available to developing countries that have signed

plemented 27 international conventions involving ‘respect of labour, human,

environmental and good governance rights and rules’2


required to comply with the relevant rules of origin. These rules set the conditions under

which a product is classified as originating in the exporting country rather than

a question that becomes relevant when goods are made up from both local and

The RoO have until recently been largely consistent with each other

under the various GSP programmes, although a number of aspects of differentiation were

introduced at the end of 2010 and depend on the development status of the beneficiary

lso overhauled in various other substantive areas.

(Commission Regulation 1063/2010) form the subject of a separate

It should be noted that the GSP scheme and its RoO are distinct legal texts

do not have to be amended at the same time.

framework

The EU GSP scheme is renewed and implemented in three-year cycles, with

2006 to 2008 (GSP Regulation No 980/2005) and the 2009 to 2011 period

P Regulation No 732/2008). The legal framework for the period 2012 to 2013 falls under

GSP Regulation No 512/2011 and is in effect an interim roll-over arrangement that amends

the previous regulation 732/2008.

embarking on a substantial overhaul of its GSP which is likely to have far

beneficiary countries. Given the initial expiry date of the GSP on 31 December

2011 and the time required to complete the consultative and legislative process, the EU

Regulation (EC) 416/2001, and later incorporated into the GSP under

http://ec.europa.eu/trade/wider-agenda/development/generalised

SP and which offers 49

and quota-free treatment

scheme which is available to developing countries that have signed

respect of labour, human,


of origin. These rules set the conditions under

which a product is classified as originating in the exporting country rather than in a third

a question that becomes relevant when goods are made up from both local and

have until recently been largely consistent with each other

, although a number of aspects of differentiation were

the development status of the beneficiary

lso overhauled in various other substantive areas. The revised RoO

separate tralac Trade Brief

It should be noted that the GSP scheme and its RoO are distinct legal texts

year cycles, with recent regulations

2006 to 2008 (GSP Regulation No 980/2005) and the 2009 to 2011 period

for the period 2012 to 2013 falls under

arrangement that amends

al overhaul of its GSP which is likely to have far-reaching

of the GSP on 31 December

consultative and legislative process, the EU

, and later incorporated into the GSP under Council

agenda/development/generalised-system-of-

introduced the interim regulations in May 2011

complete the process of overhauling its GSP. The period of extension was thus

to be open-ended but rather

period than the usual renewals

becomes applicable.

The revised regulation is still in the legislative process and the European Commission's

proposal on this is contained in

basis for this analysis.

3. Reform of the EU GSP

3.1 Key facts about GSP trade and

The EU's GSP reform seeks to substantially revise the eligibility criteria an

preferences on poorer countries that it considers to be

decades of EU GSP has seen

landscape has changed drastically with regard to level

of countries have become economically more advanced during this time period while others

remain poor and marginalised; in many instances developing countries

other less developed countries in the Europ

preferential market access.

Politically, the situation has also changed. A period of global growth earlier in the past decade

changed somewhat with the economic recession and global financial crisis in the la

This not only affected large developed countries, including the

countries of the EU, but had marked effects on poorer countries affected by the downturn in

commodity prices and relying on EU exports.

attitudes towards nonreciprocal preferences

seen, for example, in the United States where its African Growth and Opportunity Act (AGOA)

programme is at risk of not being extended to non

As is discussed later, the proposed

beneficiaries, and it remains largely the prerogative of the preference




4

he interim regulations in May 2011 that would then allow additional time to

complete the process of overhauling its GSP. The period of extension was thus

ended but rather will now expire by 31 December 2013 at the latest

period than the usual renewals – or any such earlier date on which the


proposal on this is contained in European Commission (2011a) which consequently forms the

Reform of the EU GSP: the nuts and bolts of the proposal for change

Key facts about GSP trade and coverage

The EU's GSP reform seeks to substantially revise the eligibility criteria an

preferences on poorer countries that it considers to be ’lagging behind’. While the past few

GSP has seen relatively few changes to country eligibility

landscape has changed drastically with regard to levels of trade and development.


marginalised; in many instances developing countries

less developed countries in the European marketplace, while often receiving similar

the situation has also changed. A period of global growth earlier in the past decade

changed somewhat with the economic recession and global financial crisis in the la

This not only affected large developed countries, including the United States


commodity prices and relying on EU exports. There has generally been

attitudes towards nonreciprocal preferences, particularly non-LDC beneficiaries

in the United States where its African Growth and Opportunity Act (AGOA)

is at risk of not being extended to non-LDC countries in the post

As is discussed later, the proposed EU GSP reform also plans to radically reduce the number of

and it remains largely the prerogative of the preference

that would then allow additional time to

complete the process of overhauling its GSP. The period of extension was thus never intended

at the latest – a shorter

the new GSP Regulation


which consequently forms the

the nuts and bolts of the proposal for change

The EU's GSP reform seeks to substantially revise the eligibility criteria and instead focus

. While the past few

to country eligibility, the international

s of trade and development. A number


marginalised; in many instances developing countries are out-competing

while often receiving similar

the situation has also changed. A period of global growth earlier in the past decade

changed somewhat with the economic recession and global financial crisis in the late 2000s.

United States and the


There has generally been a hardening of

LDC beneficiaries. This can be

in the United States where its African Growth and Opportunity Act (AGOA)

ountries in the post-2015 period.

GSP reform also plans to radically reduce the number of

and it remains largely the prerogative of the preference-giving country to

determine the qualifying criteria as

country level) of their respective program

consultation process on the reform of the

(2010) made the following rem

GSP preference regime:

The current GSP scheme is due to expire at the end of 2011 and this is an opportunity to

conduct a serious and substantive review, to look at its implementation modaliti

ensure that the GSP responds to the changing economic environment and development

needs of poorer countries...

current GSP objectives remain valid and whether GSP preferences are still the be

achieve them. That implies asking the hard questi

available to traders who have in the meantime become major global players in

international trade with very significant and wide

In the context of GSP preference availability it is important to consider the basic aspects of

the GSP and also recent performance

combined 176 countries and territories are GSP eligible. Of these, 49 co

the EBA arrangement for least

for the GSP+ arrangement. Non

in 2009 the basic GSP program

billion total GSP, thus nearly 75%

In terms of product coverage and tariff preferences, the main GSP provides duty

for around 2,400 non-sensitive tariff lines, and tarif

Most Favoured Nation (MFN)

covered by the main GSP: 6,244 products

7,140 for the EBA programme

Of the countries utilising GSP preferences,

is India, which during that year accounted for 27% (

Thailand, Indonesia and Brazil together

that the five leading GSP export

approximately 60% of total GSP trade




5

determine the qualifying criteria as well as graduation mechanisms (at the product and

country level) of their respective programmes. At a speech when launching the public

reform of the EU GSP, EC Commissioner for Trade Karel de Gucht

made the following remarks which provide a pointer to a more restrictive and tailored


conduct a serious and substantive review, to look at its implementation modaliti


needs of poorer countries... The fundamental question for the review is whether the

current GSP objectives remain valid and whether GSP preferences are still the be

achieve them. That implies asking the hard questions: is it right that GSP continues to be


international trade with very significant and wide-ranging exports to the EU?


the GSP and also recent performance (see Table 1 below). Under the current program

combined 176 countries and territories are GSP eligible. Of these, 49 countries qualify under

the EBA arrangement for least developed countries while a further 15 countries have qualified

Non-GSP + and EBA exports form the bulk of GSP preferences, and

in 2009 the basic GSP programme accounted for more than a €35 billion

, thus nearly 75%) of exports from beneficiary countries.

In terms of product coverage and tariff preferences, the main GSP provides duty

sensitive tariff lines, and tariff reductions of typically 3.5%

) tariffs for most of the remaining tariff lines.

6,244 products are included compared to 6,336 for the GSP+

me.

countries utilising GSP preferences, based on 2009 data, by far the largest

which during that year accounted for 27% (€13.1bn) of all GSP trade.

Thailand, Indonesia and Brazil together account for a further 33% of EU GSP trade

GSP exporters under the main GSP program

GSP trade with the EU. The largest exporters under the EBA are

well as graduation mechanisms (at the product and

At a speech when launching the public

EU GSP, EC Commissioner for Trade Karel de Gucht

arks which provide a pointer to a more restrictive and tailored


conduct a serious and substantive review, to look at its implementation modalities and to


The fundamental question for the review is whether the

current GSP objectives remain valid and whether GSP preferences are still the best tool to

ns: is it right that GSP continues to be


ranging exports to the EU?


. Under the current programme, a

untries qualify under

developed countries while a further 15 countries have qualified

GSP + and EBA exports form the bulk of GSP preferences, and

€35 billion share (out of €48

In terms of product coverage and tariff preferences, the main GSP provides duty-free access

ductions of typically 3.5% over regular

the remaining tariff lines. Not all products are

included compared to 6,336 for the GSP+ and

the largest beneficiary

€13.1bn) of all GSP trade. Bangladesh,

33% of EU GSP trade, meaning

ers under the main GSP programme account for

The largest exporters under the EBA are

Bangladesh, Cambodia , Senegal, Malawi and Ethiopia (EBA exports formed 13% of total GSP

exports in 2009) while Sri Lanka, Ecuador, Peru, Venezuela and C

beneficiaries (GSP+ exports account for a combined 11% of total GSP exports).

Product categories accounting for most GSP trade include first and foremost textiles and

clothing (with just under 30% coverage in 2009) mineral products, chemical pro

machinery, plastics and rubber, vegetable products and prepared foodstuffs and live animals.

Table 1: Key features of the EU GSP

GSP (general scheme)

Country coverage 176 countries an

Value of exports

to EU

€48 billion

Key benefits - Duty-free access for non

sensitive products (±

product lines)

- Tariff reductions on other

products (typically 3.5%

preference)

Product lines

included

6,244

Main

beneficiaries

India, Bangladesh, Thailand,

Indonesia, Brazil, Russia

Main products Textiles and clothing, mineral

products, machinery

Source: European Commission (2011

3.2 The GSP Rules of Origin

The EU GSP RoO were amended late in 2010, and the changes implemented on 1 January

2011. Developments in this regard involved a number

defines substantial transformation

especially at the sector level.

provisions (which allow production sharing

RoO) and tolerance rules (de minimis

product sectors for countries classified as LDCs

also added.




6


Sri Lanka, Ecuador, Peru, Venezuela and Costa Rica are the

exports account for a combined 11% of total GSP exports).


clothing (with just under 30% coverage in 2009) mineral products, chemical pro

, plastics and rubber, vegetable products and prepared foodstuffs and live animals.

EU GSP

GSP (general scheme) GSP + EBA

176 countries and territories 15 beneficiary countries

(subset of 176)

49 LDCs (subset of 176)

€5.3 billion €6.2 billion

free access for non-

sensitive products (± 2,400

product lines)

Tariff reductions on other

products (typically 3.5%

Additional, mostly duty-

free preferences for

vulnerable countries who

ratify and implement

prescribed international

standards and

conventions

Duty

all products apart from

arms

6,336 7,

India, Bangladesh, Thailand,

Indonesia, Brazil, Russia

Sri Lanka, Ecuador, Peru,

Venezuela, Costa Rica

Bangladesh, Cambodia,

Senegal, Malawi, Ethiopia

Textiles and clothing, mineral

products, machinery

Vegetable products,

prepared foodstuffs,

textiles, live animals,

mineral products

Textiles, live anima


footwear, vegetable

products

Source: European Commission (2011d)

The GSP Rules of Origin


Developments in this regard involved a number of product-specific changes

defines substantial transformation, as well as a reduction in the number of different rules

especially at the sector level. Amendments were also implemented

provisions (which allow production sharing between countries and joint compliance with the

minimis), while differentiated treatment was introduced in some

product sectors for countries classified as LDCs, and new administrative requirements were


sta Rica are the main GSP+

exports account for a combined 11% of total GSP exports).


clothing (with just under 30% coverage in 2009) mineral products, chemical products,

, plastics and rubber, vegetable products and prepared foodstuffs and live animals.

EBA

49 LDCs (subset of 176)

€6.2 billion

Duty-free, quota-free on

all products apart from

arms

,140

Bangladesh, Cambodia,

Senegal, Malawi, Ethiopia

Textiles, live animals,


footwear, vegetable

products


specific changes to what

a reduction in the number of different rules,

to the cumulation

between countries and joint compliance with the

differentiated treatment was introduced in some

administrative requirements were

The EU's approach to preferential RoO has

criteria are based on a definition of products considered

exporting country, and for all goods not included in this definition a line

sector) approach is followed with origin determined

percentage value (VA), change in tariff heading

detailed overview of changes to the EU GSP RoO

3.3 Changes to the eligibility criteria: a narrowing of

One of the overriding changes to the proposed GSP legislation

for the post-2013 period lies in the changed eligibility criteria.

countries that have attained ‘

a smaller group of countries that share common development needs.

could exclude countries classified by the World Ban

middle-income countries. Although the final list of eligible countries would be determined

later in the EU's decision making process, based on current data the

would drop to around 80. This

currently stands at 176 (see T

In terms of future eligibility criteria,

part of another preferential trade arrangement with the EU

substantially equivalent to the GSP. This would

Trade Agreement (FTA) is in place (for example South Africa) or

arrangement provides market preferences (for example A

Economic Partnership Agreements

However, changes to the list of countries included in the EU Market Access regulations are

likely to have an impact on GSP beneficiaries.

OCTs which have a separate preferential arrangement with the EU

the provisions foresee that countries in the first two categories below would remain eligible

to qualify for GSP benefits, for example when their economic situation no longer

3 See Council Regulation (EC) No 1528/2007. [Online]. Available

4 See also European Commission (2009).




7

roach to preferential RoO has, however, remained largely the same. Origin

criteria are based on a definition of products considered to be ‘wholly obtained

exporting country, and for all goods not included in this definition a line-by

sector) approach is followed with origin determined by applying one or more of the

, change in tariff heading (CTH) or technical requirements

detailed overview of changes to the EU GSP RoO is undertaken separately

Changes to the eligibility criteria: a narrowing of scale and scope

One of the overriding changes to the proposed GSP legislation (European Commission, 2011a)

2013 period lies in the changed eligibility criteria. The intenti

‘higher levels of diversification’ and instead focus preferences on

a smaller group of countries that share common development needs. Specifically, the scheme

ould exclude countries classified by the World Bank as falling into the high

Although the final list of eligible countries would be determined

later in the EU's decision making process, based on current data the number of beneficiaries

would drop to around 80. This is less than half the current number of benefic

Table 1).

criteria, the proposal also seeks to exclude countries that form

part of another preferential trade arrangement with the EU where preferences are

substantially equivalent to the GSP. This would inter alia include situations where a Free

Trade Agreement (FTA) is in place (for example South Africa) or where another autonomous

arrangement provides market preferences (for example ACP countries

Economic Partnership Agreements qualifying under the EU Market Access Regulations

changes to the list of countries included in the EU Market Access regulations are

likely to have an impact on GSP beneficiaries. The new GSP regulations would also exclude the

have a separate preferential arrangement with the EU4. It should be noted that


its, for example when their economic situation no longer

See Council Regulation (EC) No 1528/2007. [Online]. Available: http://tinyurl.com/7wjvla8.

See also European Commission (2009).

remained largely the same. Origin

wholly obtained’ in the

by-line (or sector-by-

one or more of the

or technical requirements (SP). A

is undertaken separately in Naumann (2011).

(European Commission, 2011a)

The intention is to exclude

and instead focus preferences on

Specifically, the scheme

k as falling into the high-income or upper-

Although the final list of eligible countries would be determined

number of beneficiaries

is less than half the current number of beneficiaries, which

proposal also seeks to exclude countries that form

where preferences are

include situations where a Free

where another autonomous

CP countries that signed interim

Market Access Regulations3).

changes to the list of countries included in the EU Market Access regulations are

The new GSP regulations would also exclude the

It should be noted that


its, for example when their economic situation no longer places them

http://tinyurl.com/7wjvla8.

into the high or upper-middle

agreement or other arrangement with the EU lapses.

Table 2: GSP Beneficiaries that would

� High or upper-middle-income

threshold, will no longer benefit

� Countries that have other preferential trade arrangement

arrangements) will no longer benefit

� OCT countries have their own arrangements and will also no longer benefit

The revised GSP sets out country eligibility in Chapters I and II and provides a list of eligible

and beneficiary countries in Annex I and II respectively. The list of eligible countries includes

all developing countries and forms the pool of countries from which b

identified, subject to the exclusions listed above.

smaller group of countries and would be amended annually, with the determination on

beneficiary status made by 1 January of each year.

transitional period of one year means that

rather than at the outset of the revised GSP

from a country on the basis of an a

implemented would only apply two years after such date

eligibility under the income criteria is based on a three

therefore provide some certai

Using African countries as an example, the current list (Annex I) contains 51 countries

whereas the list of eligible countries (Annex II, based on an application of

time the GSP legislation was presented

contains only 29 African countries

countries include Kenya, Tanzania, Ghana,

d'Ivoire and Zimbabwe. Not all of these countries

5 The list is based on the status of countries at the

middle income and high-income countries

benefited from a similar access arrangement on similar or better terms as the GSP




8

middle-income country categories or their preferential trade

agreement or other arrangement with the EU lapses.

GSP Beneficiaries that would no longer benefit under the new arrangements

income countries for the past 3 years, based on a Gross National Income per capita

, will no longer benefit (countries remain eligible should their situation change)

ther preferential trade arrangement with the EU (FTA or autonomous

arrangements) will no longer benefit (countries remain eligible should their situation change)

have their own arrangements and will also no longer benefit

ed GSP sets out country eligibility in Chapters I and II and provides a list of eligible


and forms the pool of countries from which beneficiary countries are

identified, subject to the exclusions listed above. Annex II therefore contains a substantially


beneficiary status made by 1 January of each year. Once the new GSP is implemented, a

transitional period of one year means that eligibility status is determined only a year later

rather than at the outset of the revised GSP, and the decision to remove beneficiary status

from a country on the basis of an alternative preferential trade agreement being

implemented would only apply two years after such date. In turn, the determination on

eligibility under the income criteria is based on a three-year consecutive period, which would

therefore provide some certainty and predictability to economic operators.


e countries (Annex II, based on an application of

was presented to the European Parliament and Council of Ministers

contains only 29 African countries.5 Notable African omissions from the list of

include Kenya, Tanzania, Ghana, Cameroon, South Africa, Botswana,

Not all of these countries have signed an Economic Partnership

The list is based on the status of countries at the time of the revised EU GSP proposal, and includes

income countries, as well as countries that at the time the tentative list was drawn up

benefited from a similar access arrangement on similar or better terms as the GSP

country categories or their preferential trade

benefit under the new arrangements

for the past 3 years, based on a Gross National Income per capita

(countries remain eligible should their situation change)

with the EU (FTA or autonomous trade

(countries remain eligible should their situation change)

ed GSP sets out country eligibility in Chapters I and II and provides a list of eligible


eneficiary countries are

Annex II therefore contains a substantially


Once the new GSP is implemented, a

status is determined only a year later

, and the decision to remove beneficiary status

lternative preferential trade agreement being

In turn, the determination on

year consecutive period, which would

operators.


e countries (Annex II, based on an application of the criteria at the

to the European Parliament and Council of Ministers)

omissions from the list of beneficiary

Botswana, Namibia, Côte

Economic Partnership

time of the revised EU GSP proposal, and includes upper-

, as well as countries that at the time the tentative list was drawn up

Agreement (EPA) with the EU

therefore stand to lose preferential access to the European market.

3.4 Revised product graduation mechanism

countries

Various changes to the graduation mechanism

conditions under which beneficiary countries are excluded from

certain product groups known as 'sections' for customs purposes

graduation takes place when average imports of

country level, exceed 15% of GSP exports within that 'section' to

countries over a period of three years.

and this is specified at 12.5%

the EBA scheme.

Under the revised GSP, a number of changes are proposed

risk of graduation.

• The graduation thresholds (at the section level) are raised

general product sections and 14.5% for

representing a nominal 2% increase over current

• Product 'sections' used for graduation purposes are increased to 32 (currently 21)

are therefore more narrowly defined

• Countries benefiting under the GSP+ scheme are excluded f

mechanism but will face

As described earlier, the GSP+ allows certain countries to qualify for GSP benefits by signing

and implementing various international conventions.

specific conditions relating to GSP+ eligibility

6 'Sections' and 'chapters' are laid down by Regulation (EEC) No 2658/87 of the Common Customs Tariff .

7 See Section 4 Art. 13(1) of the scheme.

8 The vulnerability criteria are defined under Annex VI of the proposed GSP legislation.




9

with the EU (or they currently face removal from the list

therefore stand to lose preferential access to the European market.

product graduation mechanism and vulnerability criteria

hanges to the graduation mechanism are foreseen and essentially involve

beneficiary countries are excluded from receiving preferenc

known as 'sections' for customs purposes.6 Under the current scheme,

graduation takes place when average imports of products within a 'section', defined at the

country level, exceed 15% of GSP exports within that 'section' to the EU from all beneficiary

over a period of three years. For textiles and clothing, a lower threshold is applied

and this is specified at 12.5%.7 These provisions do not apply to countries that qualify under

a number of changes are proposed which in some

he graduation thresholds (at the section level) are raised from 15%

general product sections and 14.5% for the textiles and clothing

representing a nominal 2% increase over current graduation thresholds

roduct 'sections' used for graduation purposes are increased to 32 (currently 21)

therefore more narrowly defined.

Countries benefiting under the GSP+ scheme are excluded from the graduation

mechanism but will face revised eligibility requirements under the new GSP

, the GSP+ allows certain countries to qualify for GSP benefits by signing

international conventions. The proposed GSP will alter some of the

specific conditions relating to GSP+ eligibility, inter alia by introducing revised vulnerability

'Sections' and 'chapters' are laid down by Regulation (EEC) No 2658/87 of the Common Customs Tariff .

See Section 4 Art. 13(1) of the scheme.

The vulnerability criteria are defined under Annex VI of the proposed GSP legislation.

currently face removal from the list: see Section 3) and

and vulnerability criteria for beneficiary

are foreseen and essentially involve specific

receiving preferences for

Under the current scheme,

a 'section', defined at the

the EU from all beneficiary

For textiles and clothing, a lower threshold is applied

These provisions do not apply to countries that qualify under

in some respects lower the

from 15% to 17.5% for

section respectively,

thresholds.8

roduct 'sections' used for graduation purposes are increased to 32 (currently 21) and

rom the graduation

eligibility requirements under the new GSP.

, the GSP+ allows certain countries to qualify for GSP benefits by signing

SP will alter some of the

by introducing revised vulnerability

'Sections' and 'chapters' are laid down by Regulation (EEC) No 2658/87 of the Common Customs Tariff .

criteria and stipulating stricter conditions relating to compliance

international conventions that form the core of

Vulnerability criteria are a key condition

ensure qualification for GSP+. The new rules specify that

when its total GSP-eligible exports to the EU

from all GSP recipients.10

Previously

significant reduction in the restrictiveness of this criteria.

criterion – countries with highly concentrated exports are generally considered to be more

vulnerable – a country's leading seven product sectors in terms of

represent at least 75% of its total

this threshold was applied to the leading

reduces the restrictiveness of this criterion.

The EU also seeks to tighten enforcement around the compliance with the various

conventions by clarifying the spe

thus reverses the burden of proof around compliance

Commission has had to prove situations where countries were in breach of their obligations in

this regard, under the proposed

is meeting its obligations and commitments.

programme, a beneficiary countries need

• demonstrate its vulnerability

product sectors criteria above)

• have ratified all the conventions required

included United Nations Framework Convention on Climate Change (1992) or

demonstrate effective implementation thereof

9 The new GSP proposes dropping one of the conventions

Convention on Climate Change. The relevant Conventions are listed under Annex VIII of the proposed GSP

regulation. 10

The vulnerability criteria are defined under Annex VII of11

See Chapter III Article 15 (2) of the proposed GSP legislation: ‘

the GSP+ beneficiary country’. 12

See Chapter III Article 9 of the proposed GSP legislation.




10

criteria and stipulating stricter conditions relating to compliance

international conventions that form the core of GSP+ eligibility.9

a key condition, as previously, but in themselves

ensure qualification for GSP+. The new rules specify that a country is considered vulnerable

eligible exports to the EU make up less than 2% of the EU's total imports

Previously, this threshold was set at 1% and thus represents a

significant reduction in the restrictiveness of this criteria. Under a related nondiversification

with highly concentrated exports are generally considered to be more

a country's leading seven product sectors in terms of GSP exports to the EU must

total GSP-covered exports to the EU. Under the current scheme,

this threshold was applied to the leading five product sectors. This change

reduces the restrictiveness of this criterion.

tighten enforcement around the compliance with the various

by clarifying the specific roles and responsibilities for all contributing parties and

reverses the burden of proof around compliance.11

Whereas in the past the European


proposed new GSP the beneficiary country itself needs to prove

obligations and commitments. In order to qualify and rema

beneficiary countries needs to:12

demonstrate its vulnerability status in terms of lack of diversification (refer

product sectors criteria above);

onventions required (as listed in Annex VIII)


demonstrate effective implementation thereof;

one of the conventions - on apartheid - and adds the UN Framewo

The relevant Conventions are listed under Annex VIII of the proposed GSP

The vulnerability criteria are defined under Annex VII of the proposed GSP legislation.

See Chapter III Article 15 (2) of the proposed GSP legislation: ‘The burden of proof for compliance...shall be on

See Chapter III Article 9 of the proposed GSP legislation.

with the various

themselves are insufficient to

a country is considered vulnerable

of the EU's total imports

this threshold was set at 1% and thus represents a

Under a related nondiversification

with highly concentrated exports are generally considered to be more

exports to the EU must

exports to the EU. Under the current scheme,

change likewise somewhat

tighten enforcement around the compliance with the various

cific roles and responsibilities for all contributing parties and

Whereas in the past the European


new GSP the beneficiary country itself needs to prove that it

In order to qualify and remain eligible under this

status in terms of lack of diversification (refer to 75% / 7

including the newly


UN Framework

The relevant Conventions are listed under Annex VIII of the proposed GSP

The burden of proof for compliance...shall be on

• provide a binding undertaking to maintain ratification and ongoing implementation of

these conventions;

• accept and comply with reporting requirements imposed by each

accept regular monitoring and

• provide binding undertakings to cooperate with the European Commission

monitoring compliance.

Where a GSP+ beneficiary no longer meets any of its binding undertakings with respect to

the respective Conventions

from the list of beneficiary countries and preference would revert back to the general GSP

scheme.

3.5 Safeguard mechanisms

The proposed GSP regulation includes measures to

the textiles, agricultural and fisheries sectors.

current and past legislation

(including suspension of preferences) where

volumes and/or at prices which cause, or threaten to cause, serious difficulties to European

Union producers of like or directly competing products

Imports from within a number of product categories are assesse

monitored for increases in trade flows beyond a predetermined threshold.

the EU from a GSP beneficiary increase

in specific categories, compared to the previous

product or section may be withdrawn

but is limited to textile products

stricter regime in this respect

(textiles) and various specific product classifications

certain chemical preparations)

13

See Chapter VI Section I(22) of the proposed GSP legislation.14

HS codes for affected products can be found in the proposed GSP legislation under Section II Art 29.




11

provide a binding undertaking to maintain ratification and ongoing implementation of

with reporting requirements imposed by each

accept regular monitoring and review of its implementation;

provide binding undertakings to cooperate with the European Commission

.


the respective Conventions – or no longer fulfils the vulnerability criteria


chanisms

The proposed GSP regulation includes measures to avoid disruptions to t

the textiles, agricultural and fisheries sectors. It also includes – as has been custom under the

current and past legislation – clauses to permit the EU to implement general safeguards

(including suspension of preferences) where goods from a GSP beneficiary


Union producers of like or directly competing products’.13

Imports from within a number of product categories are assessed on an ongoing basis

monitored for increases in trade flows beyond a predetermined threshold.

from a GSP beneficiary increase by more than 15% by volume in a given

compared to the previous period, then tariff preferences for that

withdrawn. Under the current scheme this threshold is set at 20%

is limited to textile products, which means that the new scheme will follow a

in this respect of safeguard provisions. This provision applies to Section 11(b)

and various specific product classifications14

(ethyl alcohol, solvents,

certain chemical preparations).

VI Section I(22) of the proposed GSP legislation.


provide a binding undertaking to maintain ratification and ongoing implementation of

with reporting requirements imposed by each convention and

provide binding undertakings to cooperate with the European Commission in


ger fulfils the vulnerability criteria –it will be removed


avoid disruptions to the EU's interests in

as has been custom under the

clauses to permit the EU to implement general safeguards

from a GSP beneficiary are ‘ imported in


on an ongoing basis and

monitored for increases in trade flows beyond a predetermined threshold. Where exports to

by more than 15% by volume in a given calendar year,

period, then tariff preferences for that

Under the current scheme this threshold is set at 20%

, which means that the new scheme will follow a slightly

This provision applies to Section 11(b)

ethyl alcohol, solvents, antifreeze and


A related safeguard clause outlined

product section) to 17.5% of total G

product section, with a lower threshold of

calculation purposes the average value

The above safeguard provisions are not applicable to EBA beneficiaries and also not to

beneficiary countries whose share of GSP exports to the EU is less than 8% of total EU imports

of a covered product. Notwithstand

Commission may suspend preferences for individual products and product sections where

their import to the EU cause, or threaten to cause, serious disturbance to EU markets.

new GSP provisions in addit

products (agriculture and fisheries)

scheme, and for which new procedural rules were published in February 2011

3.6 Implication for EU impor

The new GSP was subjected to a cost analysis by the European Commission as a result of

which possible cost implications

included in the explanatory memorandum

Commission, 2011a) and finds that the proposed

budget but still entails an opportunity cost in the form of loss of customs revenue.

to current customs revenue losses (based on an application

figures), which are estimated at

customs revenue loss of €1.87

incurred by EU member states, the figures

the proposed arrangement. The significantly lower loss in customs revenue is predictable

given that more than half of current GSP eligible countries stand to lose their beneficiary

status under the proposed GSP amendments.

Lower customs revenue loss as a result of the

would be mitigated slightly through

duties. These impacts are summarised in the follo

15

See Regulation (EU) No 182/2011 [Online] Available at




12

outlined earlier limits the share of a GSP beneficiary's exports (by

product section) to 17.5% of total GSP exports to the EU from all GSP

product section, with a lower threshold of 14.5% applicable to textile products. For

calculation purposes the average value of imports over three years is applied

The above safeguard provisions are not applicable to EBA beneficiaries and also not to

countries whose share of GSP exports to the EU is less than 8% of total EU imports

Notwithstanding these specific safeguard measures, the European


their import to the EU cause, or threaten to cause, serious disturbance to EU markets.

new GSP provisions in addition also retain the surveillance mechanisms for

products (agriculture and fisheries), an arrangement that was introduced with the 2006

procedural rules were published in February 2011

mplication for EU import duties


cost implications of the new scheme were identified. The outcome of

in the explanatory memorandum of the proposed GSP legislatio

and finds that the proposed regulation does not imply costs to the EU

entails an opportunity cost in the form of loss of customs revenue.

to current customs revenue losses (based on an application of the current scheme to 2009

, which are estimated at €2.97 billion, the new scheme could lead to a correspondi

€1.87 billion. After deduction of customs revenue collection costs

incurred by EU member states, the figures translate to €2.23 billion against €1.4 billion under



posed GSP amendments.

as a result of the proposed new GSP – with fewer beneficiaries

slightly through a reduction and, in some instances, suspension

are summarised in the following table.

egulation (EU) No 182/2011 [Online] Available at http://tinyurl.com/62uboct.

of a GSP beneficiary's exports (by

beneficiaries in that

14.5% applicable to textile products. For

applied.

The above safeguard provisions are not applicable to EBA beneficiaries and also not to GSP

countries whose share of GSP exports to the EU is less than 8% of total EU imports

specific safeguard measures, the European


their import to the EU cause, or threaten to cause, serious disturbance to EU markets. The

ion also retain the surveillance mechanisms for Chapter 1-24

, an arrangement that was introduced with the 2006

procedural rules were published in February 2011.15


The outcome of this is

the proposed GSP legislation (European

egulation does not imply costs to the EU

entails an opportunity cost in the form of loss of customs revenue. In contrast

of the current scheme to 2009

€2.97 billion, the new scheme could lead to a corresponding

. After deduction of customs revenue collection costs

€2.23 billion against €1.4 billion under



with fewer beneficiaries –

suspension of import

Table 3: Categories of EU GSP import duties

Category

- Nonsensitive products listed in Annex V

� nonsensitive products include mineral oils,

certain chemicals, aircraft, boats, headgear,

iron and steel articles and various other

industrial goods and resource goods

- Sensitive products listed in Annex V

� sensitive products include miscellaneous

plastics and chemicals, motor vehicles,

electrical machinery, certain articles of wood,

glass and various other industria

resource-based goods

- Products listed in Annex V – specific duties on

sensitive products

- Products listed in Annex V as sensitive products

and subject to ad valorem and specific duties

3.7 Administration and changes from 2017

Under the revised GSP RoO (

changes are foreseen that will directly impact on the obligations and responsibilities of

traders and customs authorities in both the GSP beneficiary country and

Changes relating to exporters

The main change that will affect exporters i

applied which will require exporters in beneficiary countries to be registered

designated competent authorities in the exporting country

inform the European Commissio

exporters. The exporter registration information requirements are set out in Annex 13c of the

Regulation. The Commission will make available

16

As per Art 92 of Regulation No 1063/2010




13

EU GSP import duties

Outcome

Nonsensitive products listed in Annex V

nonsensitive products include mineral oils,

certain chemicals, aircraft, boats, headgear,

iron and steel articles and various other

and resource goods

- Customs tariff suspended completely except for

agricultural components

(GSP+, EBA duty-free)

Sensitive products listed in Annex V

miscellaneous

plastics and chemicals, motor vehicles,

certain articles of wood,

glass and various other industrial and

- Customs duty will be reduced by 3.5%

- For textiles and clothing (section XI) duty will be reduced

by 20%


specific duties on - Specific duties will be reduced by 30% (not applicable to

listed minimum or maximum duties)


Products listed in Annex V as sensitive products

specific duties

- Specific duties will not be reduced

(GSP+ only specific duty applies, EBA duty

changes from 2017

Under the revised GSP RoO (Commission Regulation No 1063/2010) various administrative

n that will directly impact on the obligations and responsibilities of

traders and customs authorities in both the GSP beneficiary country and within

Changes relating to exporters in beneficiary country

The main change that will affect exporters is that a system of exporter registration will be

applied which will require exporters in beneficiary countries to be registered

designated competent authorities in the exporting country. These authorities

inform the European Commission which will manage a central database

The exporter registration information requirements are set out in Annex 13c of the

The Commission will make available nonconfidential company data

No 1063/2010.

Outcome

Customs tariff suspended completely except for

Customs duty will be reduced by 3.5%

For textiles and clothing (section XI) duty will be reduced

Specific duties will be reduced by 30% (not applicable to

listed minimum or maximum duties)

Specific duties will not be reduced

(GSP+ only specific duty applies, EBA duty-free)

No 1063/2010) various administrative

n that will directly impact on the obligations and responsibilities of

within the EU.

s that a system of exporter registration will be

applied which will require exporters in beneficiary countries to be registered with the

These authorities in turn will

database of registered

The exporter registration information requirements are set out in Annex 13c of the

nonconfidential company data16

(including

name and nature of business) to be publically accessible from this database via the internet.

Exporters, whether registered or not (in the latter case, when they might be suppliers of raw

materials or semifinished goods to registered exporters) are also obliged to comply with

number of administrative requirements, including keeping commercial accounting records,

evidence relating to materials used, customs documentation

statements on origin and cost accounts relating to materials and production proces

When goods are exported, the exporter is required to make out a

containing particulars specified in Annex 13d,

relevant RoO. This statement

passed on to the customer in the European (importing) country

relevant customs authorities.

up a statement of origin that contains incorrect informatio

exporting (beneficiary) country are required to withdraw the exporter

database. Exporters may be reregistered by the competent authorities provided that certain

procedures are followed and the sit

been satisfactorily remedied.

For purposes of applying the relevant cumulation provisions, similar documentary

requirements apply, for example that cumulated inputs need to be sourced with a similar

statement on origin and, in cases of extended cumulation (as foreseen by the EU GSP,

cumulation with EU FTA partners), be accompanied by the applicable certification as foreseen

by the relevant agreement.

Exemptions apply to small-value items sent between p

at less than €500, as well as products

provided that these items are not imported by way of trade.

Exporters in the EU

The GSP provisions are mainly relevant

intermediate goods are exported to a GSP beneficiary with a view that these materials and

goods are used as originating inputs under the EU GSP (bilateral) cumulation arrangements

with beneficiary countries. In these instances




14

siness) to be publically accessible from this database via the internet.


materials or semifinished goods to registered exporters) are also obliged to comply with


evidence relating to materials used, customs documentation, as well as three years

statements on origin and cost accounts relating to materials and production proces

When goods are exported, the exporter is required to make out a ‘statement on origin

containing particulars specified in Annex 13d, when goods are deemed to comply with the

relevant RoO. This statement – a commercial document which identifies the e

passed on to the customer in the European (importing) country and is also presented to the

. Where a registered exporter intentionally or negligently draws

up a statement of origin that contains incorrect information, the competent authorities in the

exporting (beneficiary) country are required to withdraw the exporter’s registration from the


procedures are followed and the situation which led to the withdrawal of registration has

been satisfactorily remedied.



in cases of extended cumulation (as foreseen by the EU GSP,


value items sent between private persons, where these are valued

, as well as products forming part of travellers' personal luggage (<

provided that these items are not imported by way of trade.

The GSP provisions are mainly relevant to EU exporters in cases where raw materials or



In these instances, imported materials (from EU sources) can be

siness) to be publically accessible from this database via the internet.


materials or semifinished goods to registered exporters) are also obliged to comply with a


, as well as three years’

statements on origin and cost accounts relating to materials and production processes.

statement on origin’,

when goods are deemed to comply with the

a commercial document which identifies the exporter – is

also presented to the

Where a registered exporter intentionally or negligently draws

n, the competent authorities in the

s registration from the


uation which led to the withdrawal of registration has



in cases of extended cumulation (as foreseen by the EU GSP,


rivate persons, where these are valued

part of travellers' personal luggage (< €1,200),

to EU exporters in cases where raw materials or



imported materials (from EU sources) can be

deemed to be of local origin in the exporting country and in combination with further

processing undertaken in the GSP beneficiary country jointly meet the RoO requirements.

Bilateral cumulation is only applicable to materials and intermediate goods when these have

(or have obtained) originating status in the EU. The EUR.1

required for the materials exported from the EU to the beneficiary country and forms an

essential basis of the origin declaration in turn by the GSP exporters upon export of the

finished product back to the EU.

(intermediate) export goods need to be the same as the GSP RoO.

Importers in the EU

A greater emphasis is being placed on EU importers taking the necessary commercial

precautions (through contractual agreements between importer and exporter

obligating the exporter to reimburse import duties should origin declarations b

incorrect) when relying on

beneficiary country. Preferential status can be denied up to

importation of goods and any import duties that should have been lev

against the EU importer. The legislation explicitly makes provision for so

verification’ where the customs authorities in the importing country (EU)

verification procedure from the competent authorit

importer may also be subject to penalties when relying on false origin claims

claim preferences when any doubt exists as to the validity of the origin declaration in relation

to imported goods.

Competent authorities in beneficiary countries

Administrative cooperation19

and the EU (and ultimately

obtaining preferential market access

17

Unless the EU exporter is an 'approved exporter' in which case invoice declarations may be sufficient, as is the

case for shipmets whose total value does not exceed 18

See Article 97(h) of Commission Regulation (EU) No 1063/201019

See Article 97(s) which specifies the methods of administrative cooperation




15



ion is only applicable to materials and intermediate goods when these have

(or have obtained) originating status in the EU. The EUR.1 movement certification

for the materials exported from the EU to the beneficiary country and forms an

al basis of the origin declaration in turn by the GSP exporters upon export of the

finished product back to the EU. The applicable RoO to determine the origin status of the EU

(intermediate) export goods need to be the same as the GSP RoO.


precautions (through contractual agreements between importer and exporter

obligating the exporter to reimburse import duties should origin declarations b

the origin declarations of the exporter situated in the GSP

beneficiary country. Preferential status can be denied up to three

importation of goods and any import duties that should have been levied at the time claimed

The legislation explicitly makes provision for so

where the customs authorities in the importing country (EU)

verification procedure from the competent authorities in the exporting (GSP) country

importer may also be subject to penalties when relying on false origin claims


ent authorities in beneficiary countries prior to 2017

between competent authorities in the GSP b

and the EU (and ultimately the traders involved) forms an increasingly important basis in

al market access.


case for shipmets whose total value does not exceed €6,000 as per Art 97(v)(b)

ssion Regulation (EU) No 1063/2010

See Article 97(s) which specifies the methods of administrative cooperation



ion is only applicable to materials and intermediate goods when these have

movement certification17

is

for the materials exported from the EU to the beneficiary country and forms an

al basis of the origin declaration in turn by the GSP exporters upon export of the

The applicable RoO to determine the origin status of the EU


precautions (through contractual agreements between importer and exporter, for instance,

obligating the exporter to reimburse import duties should origin declarations be found to be

the origin declarations of the exporter situated in the GSP

years following the

ied at the time claimed

The legislation explicitly makes provision for so-called ‘subsequent

where the customs authorities in the importing country (EU) can request a

ies in the exporting (GSP) country.18

The

importer may also be subject to penalties when relying on false origin claims and should not


between competent authorities in the GSP beneficiary countries

forms an increasingly important basis in


In the GSP beneficiary country, only government authorities (such as customs authorities, the

ministry of trade, and so forth) are empowered to issue and verify certificates of origin. Under

certain circumstances, an authority such as a c

issue the certificates (hence assume the task of administration) provided it takes place under

direct government authority. Control of this process always rests with the government in the

beneficiary country, and gov

preferences be withdrawn for whatever reason.

notifying the European Commission (not individual EU member states) of changes to the

government authorities –- including their name and address

responsibility of verifying certificates of origin.

country must maintain records of any origin certification (Form A) for at least

origin certification system will change substantially in the post

the following section.

The nominated competent authority is also expected to cooperate closely with the EU

authorities on any exporter verification that ma

revert back to the EU competent authorities within

‘subsequent verification’. Subsequent verification may include requests for factory checks and

analysis of documentary evidence relat

cooperation to the EU competent authorities in a timely manner, as set out by the legislation,

and failure to maintain a register of registered exporters

register that no longer comply with the relevant conditions

beneficiary country may be temporarily withdrawn.

Competent authorities in beneficiary countries after 2017

Many of the post-2017 systems of administration of origin are similar

2017 but are adapted to the new system of exporter registration. This entails a shift to

electronic exporter registers available publicly via the internet, and maintained in large parts

by the European Commission.

which replaces the current Form A procedures

materials and intermediate goods used for purposes of

provisions under the GSP.




16


and so forth) are empowered to issue and verify certificates of origin. Under

certain circumstances, an authority such as a chamber of commerce may be authorised to



beneficiary country, and governments ultimately remain responsible should a country's

preferences be withdrawn for whatever reason. A beneficiary country is also responsible for


including their name and address – that have been tasked with the

responsibility of verifying certificates of origin. Competent authorities in the beneficiary

country must maintain records of any origin certification (Form A) for at least

origin certification system will change substantially in the post-2017 period as described in


authorities on any exporter verification that may be necessary, and they

revert back to the EU competent authorities within six months on any requests for

Subsequent verification may include requests for factory checks and

analysis of documentary evidence relating to shipments and accounts


and failure to maintain a register of registered exporters (and removal of

longer comply with the relevant conditions), means that GSP

country may be temporarily withdrawn.

in beneficiary countries after 2017

2017 systems of administration of origin are similar to those applied pre



by the European Commission. The new system also changes to one of sta

current Form A procedures; this will likewise apply to EU exporters of

materials and intermediate goods used for purposes of applying the


and so forth) are empowered to issue and verify certificates of origin. Under

hamber of commerce may be authorised to



ernments ultimately remain responsible should a country's

A beneficiary country is also responsible for


that have been tasked with the

Competent authorities in the beneficiary

country must maintain records of any origin certification (Form A) for at least three years. This

2017 period as described in


they are expected to

months on any requests for

Subsequent verification may include requests for factory checks and

and accounts. Failure to provide


removal of exporters from the

GSP preferences to a

to those applied pre-



statements on origin

; this will likewise apply to EU exporters of

bilateral cumulation

The main obligations of the competent authorities in the beneficiary country evolve around

maintaining an electronic register of exporters and systems of administration that sufficiently

deal with administrative cooperation

and the European Commission)

record of registered exporters located in the beneficiary country must likewise be

and updated with any changes, such as when exporter

their failure to meet the conditions for any exports under the GSP

incorrect information that may lead to irregular claims of preference

authorities must also introduce

two-digit International Standards Organisation

BW and Malawi is MW).

The post-2017 period sees the introduction of commercial documents, furnished with

statements on origin as the required certification on the originating status of a good. Such

commercial documents may include delivery notes and packing lists, and these can be stored

and transmitted electronically.

been submitted electronically, can be used for purposes of obtaining release of goods for free

circulation in the EU without security having to be provided pending (later) submission of

proof of origin.

The information requirements for the registered expo

13c of the Commission Regulation

3.8 Summary of GSP changes

The proposed GSP changes which are to be implemented by the beginning of 2014 onwards

represent a tightening of the EU nonpreferential trade regime, certa

The most fundamental change

countries may obtain beneficiary status.

176) countries being graduated out of the GSP.

will, however, have alternative preferences into the EU market.

20

This application form is referred to in Article 92 of




17

gations of the competent authorities in the beneficiary country evolve around


deal with administrative cooperation (with the competent authorities of EU member

and the European Commission) as well as managing the system of cumulation.

record of registered exporters located in the beneficiary country must likewise be

and updated with any changes, such as when exporters are no longer on the register

meet the conditions for any exports under the GSP, or having presented

incorrect information that may lead to irregular claims of preference

authorities must also introduce a registration numbering system, beginning with the country's

International Standards Organisation (ISO) country code (for example

2017 period sees the introduction of commercial documents, furnished with

as the required certification on the originating status of a good. Such


and transmitted electronically. A major benefit to importers is that these documents, having



The information requirements for the registered exporter database are contained in Annex

13c of the Commission Regulation.20

Summary of GSP changes


represent a tightening of the EU nonpreferential trade regime, certainly when seen in totality.

The most fundamental change, of course, relates to the amended criteria under which

countries may obtain beneficiary status. This will result in approximately 100 (of currently

176) countries being graduated out of the GSP. A large number of those that are graduated

have alternative preferences into the EU market.

This application form is referred to in Article 92 of Commission Regulation (EU) No 1063/2010.

gations of the competent authorities in the beneficiary country evolve around


(with the competent authorities of EU member states

as well as managing the system of cumulation. The electronic

record of registered exporters located in the beneficiary country must likewise be maintained

r on the register due to

, or having presented

incorrect information that may lead to irregular claims of preference. The competent

ystem, beginning with the country's

(for example, Botswana is

2017 period sees the introduction of commercial documents, furnished with

as the required certification on the originating status of a good. Such


A major benefit to importers is that these documents, having



rter database are contained in Annex


inly when seen in totality.

criteria under which

will result in approximately 100 (of currently

rge number of those that are graduated

ommission Regulation (EU) No 1063/2010.

The proposed GSP will provide increased certainty to economic operators by effectively

making the GSP permanent and open

within the current ten-year implementation cycles. It will

a review mechanism at least five years after its implementation

intends including a number of discretionary

graduation and surveillance, and

This refocusing of EU preferences

policy changes in this regard, for example the plan to remove

countries considered not to have made sufficient progress in implementing an EPA with the

EU (see the following section for a discussion on this)

recipients where this leads to a situation

under the GSP and EPAs respectively.

relatively attractive, especially now that the EU has also amended some of its RoO provisions

that for a long time could be defined as some of the major differences between Cotonou/EPA

and GSP preferences. For some countries, unless major progress is made on implementing

EPAs, the latest EU proposals will lead to a complete loss of preferences in the EU market.

The changes to the GSP will probably have the least impact on countries classified as LDCs, at

least not directly. These countries

will continue to do so under the revised GSP.

vulnerable to product graduation

them or have been raised slightly.

to be through indirect channels

competing countries that may soon be graduated.

to some extent it is only an analysis of their individual performance and areas of

competitiveness in the EU export

extent to which the relevant

performance.

For LDC+ recipients there are few changes although these relate less to product coverage and

import duties than to stricter monitoring of compliance with the signed social and

environmental conventions that underlie the scheme.




18


and open-ended without the need for renewal every three years

year implementation cycles. It will, however, continue to be

at least five years after its implementation. However, the legislation also

intends including a number of discretionary powers to the European Commission in terms of

graduation and surveillance, and safeguard mechanisms.

This refocusing of EU preferences is also noteworthy when seen together with other proposed

policy changes in this regard, for example the plan to remove nonreciprocal preferences to


ection for a discussion on this). The stakes are raised for preference

recipients where this leads to a situation where EU market access is substantially worse than

under the GSP and EPAs respectively. Only for LDCs is the fallback position (under EBA) still


ime could be defined as some of the major differences between Cotonou/EPA



e changes to the GSP will probably have the least impact on countries classified as LDCs, at

countries already enjoy duty- and quota-free access to the EU

will continue to do so under the revised GSP. In fact, in some instance

vulnerable to product graduation given that the applicable thresholds either do not apply to

them or have been raised slightly. In fact, the main benefit to LDCs under the new GSP is likely

to be through indirect channels, for example, their relative margin of preference in relation to

competing countries that may soon be graduated. Nevertheless the usual


export market that allows a better assessment of this and the

relevant RoO impact on and constrain an LDC's particular export

LDC+ recipients there are few changes although these relate less to product coverage and

to stricter monitoring of compliance with the signed social and

environmental conventions that underlie the scheme. The burden of compliance under the


wal every three years

continue to be subject to

. However, the legislation also

Commission in terms of

is also noteworthy when seen together with other proposed

nonreciprocal preferences to


The stakes are raised for preference

where EU market access is substantially worse than

Only for LDCs is the fallback position (under EBA) still


ime could be defined as some of the major differences between Cotonou/EPA



e changes to the GSP will probably have the least impact on countries classified as LDCs, at

free access to the EU and

In fact, in some instances they are now less

given that the applicable thresholds either do not apply to

In fact, the main benefit to LDCs under the new GSP is likely

their relative margin of preference in relation to

Nevertheless the usual caveats apply and


allows a better assessment of this and the

an LDC's particular export

LDC+ recipients there are few changes although these relate less to product coverage and

to stricter monitoring of compliance with the signed social and

The burden of compliance under the

proposed regime shifts to the beneficiary countries and may lead to graduation and

suspension of individual beneficiaries in future.

feature prominently as key criteria

import share threshold to 2%

combination need to exceed the 75% concentration threshold.

For non-LDCs and countries that do not

help qualify them for GSP+ preferences, the impact of GSP reform is likely to be

Many of these countries continue to be listed as potentially eligible for preferences but under

the various new criteria and graduation mechanisms would

beneficiary status from the beginning of 2014 onwards.

countries that do not have a separate preferential arrangement with the EU

through the interim Market Access Regulations for ACP countries

EPA process, a concluded EPA

consequently lose their beneficiary status and revert to the EU's MFN tariffs.

Table 4: Overview of key changes to the proposed EU GSP

Area

Legal

framework

2009-2011: GSP Regulation No 732/2008

2012-2013: GSP Regulation No 512/2011

(amends-and extends Regulation 732/2008)

Renewal Renewed every 3 years

Rules of Origin

Some LDC differentiation (

Country

beneficiary

status

176 LDC and developing countries listed as

beneficiaries, including OCT

GSP

programmes

GSP, EBA, GSP+

GSP+

conventions

Compliance with social and environmental

conventions




19


f individual beneficiaries in future. The vulnerability criteria also continue to

as key criteria and are set to be relaxed slightly, with a doubling of the

import share threshold to 2% and an increase in the number of product sector

need to exceed the 75% concentration threshold.

LDCs and countries that do not meet the vulnerability criteria which

qualify them for GSP+ preferences, the impact of GSP reform is likely to be


the various new criteria and graduation mechanisms would for the time being

beneficiary status from the beginning of 2014 onwards. High and u

ountries that do not have a separate preferential arrangement with the EU

through the interim Market Access Regulations for ACP countries that have committed to the

a concluded EPA or via a bilateral FTA (for example South Africa),

lose their beneficiary status and revert to the EU's MFN tariffs.

ey changes to the proposed EU GSP

Current GSP Proposed GSP revision

GSP Regulation No 732/2008

GSP Regulation No 512/2011

and extends Regulation 732/2008)

Still in legislative process:

2014 onwards

COM(2011) 241 final

Renewed every 3 years No limit in duration, except as applicable

through graduation/safeguards

Review after 5 years

Applicable from 1 January 2011:

Regulation 1063/2010

Some LDC differentiation (with less restrictive rules in some cases

LDC and developing countries listed as

, including OCTs

Approximately 80 LDC and lower income

developing countries listed as beneficiaries

- beneficiary status depends on income

classification and can change

- countries with FTA or other similar EU market

access are removed as beneficiaries (example:

EPAs)

- high and upper-middle

removed, as are OCTs

GSP, EBA, GSP+ GSP, EBA, GSP+

Compliance with social and environmental Same as before, but substitution of climate

change convention for apartheid con


The vulnerability criteria also continue to

with a doubling of the

product sectors that in

which could otherwise

qualify them for GSP+ preferences, the impact of GSP reform is likely to be the greatest.


for the time being lose their GSP

High and upper-middle-income

ountries that do not have a separate preferential arrangement with the EU, for example

that have committed to the

le South Africa), will

lose their beneficiary status and revert to the EU's MFN tariffs.

Proposed GSP revision

Still in legislative process:

COM(2011) 241 final

No limit in duration, except as applicable

through graduation/safeguards

in some cases)

oximately 80 LDC and lower income

developing countries listed as beneficiaries

beneficiary status depends on income

classification and can change

countries with FTA or other similar EU market

access are removed as beneficiaries (example:

middle-income countries also

Same as before, but substitution of climate

change convention for apartheid convention

Area

GSP+

vulnerability

criteria

Dual requirement alongside conventions

- <1% of EU imports from all GSP

beneficiaries

- country's 5 largest product section

exports >75% of its total EU exports

Vulnerability application

every 1.5 years

Graduation

and safeguards

21 product sections used for graduation

- Product section graduation: 15%

(general) and 12.5% (textiles)

-Not applicable to EBA

For textiles, if 20%

in country exports is

triggered

General safeguard provisions when

imports cause or threaten to cause serious

difficulties to EU producers of like

products

Not applicable to EBA beneficiaries and

countries that have share of less than 8%

of EU import market in affected categories

Tariff treatment GSP (Main scheme)

Sensitive products

MFN tariffs

Nonsensitive products: duty

Products where only specific duty applies:

30% reduction

Textiles and clothing: 20% reduction

GSP+ scheme

Sensitive products: duty

specific and ad valorem duty applies:

specific duty only


EBA scheme

All duty-free (except arms, Ch

Administration

and

certification of

origin

Certification: Form A

Exporter registration:

prescribed

Focus on: Responsibility with

authorities




20

Current GSP Proposed GSP revision


of EU imports from all GSP

largest product section

>75% of its total EU exports

application undertaken

very 1.5 years


- <2% of EU imports from all GSP beneficiaries

- country's 7 largest product section exports


Vulnerability application

point in time

uct sections used for graduation

Product section graduation: 15%

(general) and 12.5% (textiles)

Not applicable to EBA

For textiles, if 20% annual volume growth

in country exports is recorded, safeguards

General safeguard provisions when

orts cause or threaten to cause serious

difficulties to EU producers of like


countries that have share of less than 8%

of EU import market in affected categories


Product section graduation: 17.5% (general)

and 14.5% (textiles)

-Not applicable to EBA

- GSP+ countries no longer graduated

If 15% annual volume growth in country

exports is recorded in certain product

(textiles, others), safeguards triggered

General safeguard provisions when imports

cause or threaten to cause serious difficulties

to EU producers of like products


countries that have share of less than 8% of

EU import market in affected categories

GSP (Main scheme)

Sensitive products – 3.5% reduction on

Nonsensitive products: duty-free

Products where only specific duty applies:


Sensitive products: duty-free; where both

specific and ad valorem duty applies:

specific duty only


free (except arms, Ch. 93)

GSP (Main scheme)

Sensitive products – 3.5% reduction on MFN

tariffs


agricultural components

Products where only specific duty applies: 30%

reduction


GSP+ scheme

Sensitive products: duty

specific and ad valorem duty applies: specific

duty only


EBA scheme

All duty-free (except arms, Ch

Form A

Exporter registration: Systems not

Responsibility with competent

Certification: Statement on origin

Exporter registration:

register, publicly available, maintained by

beneficiary country and European Commission

Focus on: Electronic systems, transparency,

enforcement and control systems, private

contracts to mitigate risk

Proposed GSP revision

al requirement alongside conventions

of EU imports from all GSP beneficiaries

largest product section exports


application undertaken at any


oduct section graduation: 17.5% (general)

o longer graduated

volume growth in country

in certain products

, safeguards triggered

afeguard provisions when imports

cause or threaten to cause serious difficulties

to EU producers of like products


countries that have share of less than 8% of

EU import market in affected categories

3.5% reduction on MFN

Nonsensitive products: duty-free except for

icultural components

Products where only specific duty applies: 30%


Sensitive products: duty-free; where both

specific and ad valorem duty applies: specific


free (except arms, Ch. 93)

Statement on origin

Exporter registration: Post-2017: electronic

register, publicly available, maintained by

beneficiary country and European Commission

Electronic systems, transparency,

enforcement and control systems, private

to mitigate risk

4. The EU proposal to withdraw

countries

4.1 Background and context

On 30 September 2011 the European Commission

to amend the preferential market access provisions for a number of

countries – all GSP beneficiaries

Regulations21

applying nonreciprocal preferences to countries

Economic Partnership Agreement

from nonreciprocal EU preferences in terms of the above regulation are

their preferential status. These

under the new scheme.

According to the proposal's explanatory memorandum, a number of ACP countries have

concluded EPA negotiations with the EU but have not signed their respective agreements.

These countries are listed

Tanzania, Uganda and Zambia.

agreement but not having taken steps towards ratifying it domestically.

Botswana, Cameroon, Côte

Zimbabwe. Therefore in total 18 countries according to the Commission

fulfil the conditions of the December 2007 Market Access provisions and should be removed

from the list of recipients from 1 January 2014

new GSP scheme (with reduced

The proposal, however, makes provision for the

regulations where countries removed from the list have taken the necessary steps to ratify

their respective agreements domestically.

Commission to adopt delegated acts to

from the ACP Group of States which were removed from that Annex by virtue o

regulation)’.

21

See Annex I to Council Regulation (EC) N




21

proposal to withdraw trade preferences from

and context

On 30 September 2011 the European Commission (2011b) published a proposal

the preferential market access provisions for a number of ACP countries. These

all GSP beneficiaries – are currently included in the EU's Market Access

applying nonreciprocal preferences to countries having signed

Partnership Agreement (IEPA) with the EU. Half of the 36 countries that benefit

from nonreciprocal EU preferences in terms of the above regulation are

These include countries that are set to lose GSP beneficiary status

osal's explanatory memorandum, a number of ACP countries have


as Burundi, the Comoros, Ghana, Kenya, Namibia, Rwanda,

mbia. Another group of countries is listed as having signed an

agreement but not having taken steps towards ratifying it domestically.

Botswana, Cameroon, Côte d’Ivoire, Fiji, Haiti, Lesotho, Mozambique,

n total 18 countries according to the Commission’s


from the list of recipients from 1 January 2014 – incidentally also the same date on which the

(with reduced number of beneficiaries) will take effect.

makes provision for the ‘swift reinstatement’

egulations where countries removed from the list have taken the necessary steps to ratify

domestically. For this the proposal seeks power for the

Commission to adopt delegated acts to ‘amend Annex I by reinstating those regions or states

from the ACP Group of States which were removed from that Annex by virtue o

Annex I to Council Regulation (EC) No 1528/2007 of 20 December 2007.

from certain ACP

published a proposal which seeks

ACP countries. These

the EU's Market Access

having signed an Interim

6 countries that benefit

from nonreciprocal EU preferences in terms of the above regulation are now at risk of losing

include countries that are set to lose GSP beneficiary status

osal's explanatory memorandum, a number of ACP countries have


as Burundi, the Comoros, Ghana, Kenya, Namibia, Rwanda,

Another group of countries is listed as having signed an

agreement but not having taken steps towards ratifying it domestically. In this group fall

’Ivoire, Fiji, Haiti, Lesotho, Mozambique, Swaziland and

’s proposal no longer


incidentally also the same date on which the

’ in Annex I to the

egulations where countries removed from the list have taken the necessary steps to ratify

seeks power for the European

amend Annex I by reinstating those regions or states

from the ACP Group of States which were removed from that Annex by virtue of (this

4.2 Implications for GSP beneficiaries

From the perspective of GSP-

available through bilateral trade agreements (for example South Afri

Partnership Agreement (for example the Caribbean EPA

non-reciprocal Market Access regulations in the case of IEPA signatories.

countries that are party to a reciprocal arrangement with t

away under the new scheme after 2013.

necessarily have major negative impacts

place. However, the list of countries identif

includes GSP beneficiaries that will likely lose their GSP status under the new scheme.

means that the possibility exists for countries having neither preferential market access in

terms of the regulation22

nor access under the GSP,

instead.

Nine countries included in the list are classified as LDCs

EU market access under the access regulations. These countries would continue

under the EU GSP EBA arrangement

what they have under the market access regulation. It should be noted

duty preferences would be similar, the access regulations con

favourable than those contained in the GSP EBA.

LDC status are Burundi, the Comoros, Haiti, Lesotho, Mozambique, Rwanda,

and Zambia.

A further seven countries are

under the new GSP scheme albeit

offers better-than -MFN market access to beneficiaries but is

compared to the preferences offered under the EBA or

that matter. The seven countries

proposal of removal from Annex I

and Zimbabwe. But this status is misleading.

22

See Council Regulation (EC) No 1528/2007 of 20 December 2007




22

Implications for GSP beneficiaries and possible legal issues

-eligible countries, preferential EU market access

available through bilateral trade agreements (for example South Africa

(for example the Caribbean EPA configuration) or through the EU's

reciprocal Market Access regulations in the case of IEPA signatories.

countries that are party to a reciprocal arrangement with the EU, GSP preferences may fall

away under the new scheme after 2013. For many countries the loss of GSP status may not

necessarily have major negative impacts, especially when another similar arrangement is in

the list of countries identified for removal from Annex I of the regulation also

includes GSP beneficiaries that will likely lose their GSP status under the new scheme.


nor access under the GSP, to be subject to MFN tariff treatment

Nine countries included in the list are classified as LDCs, which mitigates the impact of losing

EU market access under the access regulations. These countries would continue

arrangement and will therefore in effect have similar

what they have under the market access regulation. It should be noted, however,

preferences would be similar, the access regulations contain certain RoO that are more

favourable than those contained in the GSP EBA. The countries included in the list

LDC status are Burundi, the Comoros, Haiti, Lesotho, Mozambique, Rwanda,

A further seven countries are classified low- or lower-income and would therefore still qualify

under the new GSP scheme albeit primarily under the main GSP program

MFN market access to beneficiaries but is nevertheless

the preferences offered under the EBA or the market access regulation/EPA for

The seven countries that at face value might not be as affected by the

proposal of removal from Annex I are Cameroon, Fiji, Ghana, Ivory Coast, Kenya, Swaz

But this status is misleading. Again, impact depends to a large extent on the

Council Regulation (EC) No 1528/2007 of 20 December 2007.

countries, preferential EU market access is currently also

ca-EU), an Economic

) or through the EU's

reciprocal Market Access regulations in the case of IEPA signatories. For developing

he EU, GSP preferences may fall

For many countries the loss of GSP status may not

especially when another similar arrangement is in

ied for removal from Annex I of the regulation also

includes GSP beneficiaries that will likely lose their GSP status under the new scheme. This


be subject to MFN tariff treatment

which mitigates the impact of losing

EU market access under the access regulations. These countries would continue to benefit

similar market access to

, however, that while

tain certain RoO that are more

The countries included in the list that have

LDC status are Burundi, the Comoros, Haiti, Lesotho, Mozambique, Rwanda, Tanzania, Uganda

and would therefore still qualify

programme. This naturally

nevertheless far less beneficial

market access regulation/EPA for

might not be as affected by the EC’s

, Ivory Coast, Kenya, Swaziland

Again, impact depends to a large extent on the

range of goods being exported to the EU, the impact on investment flows as a result of this

uncertainty, the implications for (higher) EU import duties and to

are affected by the relevant RoO.

When the EU revised its GSP RoO at the beginning of 2011 various rules contained special

provisions that were applicable only to exports from LDCs and not from non

beneficiaries. This includes, for example, the vastly more flexible RoO for apparel (single

transformation requirement).

nominal additional cost of less

d'Ivoire, €68 million for Fiji, €65 million for

for Swaziland, and so forth.23

Two countries, Namibia and Botswana,

are likely to be impacted substantially in the

market access regulation developments.

receive preferences unless their income class

the IEPA ratification process means that under the recent EU proposal on this both countries

would be removed as beneficiaries

them subject to MFN treatment which would likely have major impacts

export sectors such as beef, table grapes and fish.

duty payments – additional duties as a re

and €29 million respectively.24

Some uncertainty attaches to the legal standing of the proposal

from the list is based on the affected countries not having

ratification of their respective Agreements

requirement for 'proper reasoning'

The proposal to remove countries from the list of beneficiaries also brings into question

23

As per COM(2011) 598 final. Proposal for a Regulation of the European Parliament and of the Council

amending Annex I to Council Regulation (EC) No 1528/200

from the list of regions or states which have concluded negotiations. Calculations by the European Commission

(DG Trade) represent average additional duties based on dutiable imports.24

As per COM(2011) 598 final 25

This section leans heavily on Bartels and Goodison (2011). 26

Article 296 of the Treaty on the functioning of the European Union. [Online]. Available at

lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2010:083:0047:0200:en:PDF




23


uncertainty, the implications for (higher) EU import duties and to what extent these countries

are affected by the relevant RoO.


provisions that were applicable only to exports from LDCs and not from non

udes, for example, the vastly more flexible RoO for apparel (single

transformation requirement). EU calculations show that based on current exports, the

nominal additional cost of less-preferential GSP coverage could be over €100 million

€65 million for Swaziland, €50 million for Cameroon ,

Two countries, Namibia and Botswana, are classified as upper-middle-income countries and

substantially in the combined context of the proposed GSP and

market access regulation developments. Under the revised GSP, neither

receive preferences unless their income classification changed, while their lack of progress on

means that under the recent EU proposal on this both countries

would be removed as beneficiaries from the market access regulations.

them subject to MFN treatment which would likely have major impacts

export sectors such as beef, table grapes and fish. For Namibia and Botswana

additional duties as a result of the loss of preferences –

24

to the legal standing of the proposal.25

The proposed removal

the affected countries not having ‘taken the necessary steps towards

eir respective Agreements’ (see Article 3) although by some accounts the

for 'proper reasoning' as required by the EU Treaty26

may not have been met.


. Proposal for a Regulation of the European Parliament and of the Council

amending Annex I to Council Regulation (EC) No 1528/2007 as regards the exclusion of a number of countries


(DG Trade) represent average additional duties based on dutiable imports.

This section leans heavily on Bartels and Goodison (2011).

Article 296 of the Treaty on the functioning of the European Union. [Online]. Available at

lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2010:083:0047:0200:en:PDF.


what extent these countries


provisions that were applicable only to exports from LDCs and not from non-LDC

udes, for example, the vastly more flexible RoO for apparel (single

show that based on current exports, the

€100 million for Côte

Cameroon , €50 million

income countries and

combined context of the proposed GSP and EU

neither country would

ification changed, while their lack of progress on

means that under the recent EU proposal on this both countries

cess regulations. This would leave

them subject to MFN treatment which would likely have major impacts inter alia on key

or Namibia and Botswana, the impact on

could be €58 million

The proposed removal

taken the necessary steps towards

although by some accounts the

ay not have been met.


. Proposal for a Regulation of the European Parliament and of the Council

7 as regards the exclusion of a number of countries


Article 296 of the Treaty on the functioning of the European Union. [Online]. Available at http://eur-

whether the market access regulations are in fact a

EPAs and thus falls under the requirements of the Vienna Convention on the Law of

Treaties27

. Article 25 of the Convention limits the right of parties to withdraw from

and sets the conditions (in Art

the treaty itself, (b) by agreement between the negotiating

informs the other party of its intention not to beco

Bartels and Goodison (2011), questions might arise around the applicability of the above and

whether the EPAs were provisionally or voluntarily implemented on the part of the EU,

although "’his distinction is unk

Notwithstanding any legal uncertai

of its frustration with the perceived lack of progress towards concluding EPAs with ACP

countries but also its intention to

arrangements on the poorest

certain amount of leverage with respect to these negotiations

broader context of EU GSP reform

27

See UN (1969).




24

er the market access regulations are in fact a provisional application of the

and thus falls under the requirements of the Vienna Convention on the Law of

of the Convention limits the right of parties to withdraw from

and sets the conditions (in Articles 25(1) and 25(2) respectively) as follows: (a) according to

the treaty itself, (b) by agreement between the negotiating states and (c) if one of the parties

of its intention not to become a party to the treaty.

, questions might arise around the applicability of the above and


his distinction is unknown to the Vienna Convention’.

Notwithstanding any legal uncertainty, the EC's proposal provides a clear indication not only

perceived lack of progress towards concluding EPAs with ACP

but also its intention to further concentrate its nonreciprocal preference

est countries. Without doubt, the proposal provides the

certain amount of leverage with respect to these negotiations, especially when seen in the

reform.

application of the respective

and thus falls under the requirements of the Vienna Convention on the Law of

of the Convention limits the right of parties to withdraw from a treaty,

25(1) and 25(2) respectively) as follows: (a) according to

tates and (c) if one of the parties

me a party to the treaty. As pointed out by

, questions might arise around the applicability of the above and


provides a clear indication not only

perceived lack of progress towards concluding EPAs with ACP

its nonreciprocal preference

the proposal provides the EC with a

especially when seen in the

References

Bartels, and Goodison, 2011. EU

an assessment. Trade Hot Topics

De Gucht, K. 2010. EU Trade Policy

March 2010. [Online]. Available:

http://europa.eu/rapid/pressReleasesAction.do?reference=SPEECH/10/96&type=HTML

European Commission. 2007.

applying the arrangements for produc

African, Caribbean and Pacific (ACP) Group of States provided for in agreements establishing,

or leading to the establishment of, Economic Partnership Agreements

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2007:348:0001:0154:EN:PDF

European Commission. 2009. Elements for a new partnership between the EU and the

overseas countries and territories (OCTs)

http://tinyurl.com/7ggz2kh.

European Commission. 2010.

(New GSP Rules of Origin). [Online] Available

http://ec.europa.eu/taxation_customs/common/legislation/legislation/customs/index_en.htm

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2010:307:FULL:EN:PDF

European Commission. 2011a

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