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European Commission publishes revised preferential import scheme for developing countries

  • European Union publishes revised preferential import scheme for developing countries

    by Market Insider

    Wednesday, 04 Dec. 2013

    On 31 October, the European Union (EU) published the reformed "Generalised Scheme of Preferences" (GSP) allowing developing country exporters to pay lower duties on their exports to the EU. Three arrangements of the reformed GSP will apply as from 1 January 2014. These are:  

    •  "Standard GSP" scheme offering generous tariff reductions to developing countries. Practically, this means partial or entire removal of tariffs on two thirds of all product categories to countries which ratify and implement international conventions relating to human and labour rights, environment and good governance; 
    • "GSP+" scheme of enhanced preferences, providing for full removal of tariffs on essentially the same product categories as those covered by the general arrangement; 
    • "Everything But Arms (EBA)" scheme for least developed countries, granting duty-free quota-free access to all products, except for arms and ammunitions 

    With the exception of EBA, which has no expiry date, the reformed GSP will last 10 years, instead of three previously. This will make it easier and more interesting for EU importers to purchase from GSP beneficiary countries.

    The previous GSP law has been adopted by EU on 31 October 2012 (Regulation No 978/2012 - http://trade.ec.europa.eu/doclib/docs/2012/october/tradoc_150025.pdf). Until the end of 2013, the preferences under this law will continue to apply on the basis of Regulation No 732/2008 (http://trade.ec.europa.eu/doclib/docs/2012/october/tradoc_150025.pdf) extended by the GSP "Roll - over Regulation" (http://trade.ec.europa.eu/doclib/docs/2011/may/tradoc_147958.pdf).  

    In December 2012, EU identified products exported by some of the beneficiaries of the reformed GSP that had become so competitive that they no longer need support to be successfully exported to the EU. These products, including nuts from China, will not receive GSP preferences as from 1 January 2014 to 31 December 2016, when the list will be reviewed.

    In February 2013, EU released procedural rules on how to treat the applications for the "GSP +" arrangement under the reformed GSP. 

    Forty nine least developed countries in the Everything But Arms (EBA) scheme and forty other low and lower-middle income partners will benefit from the newly reformed GSP scheme. They will enjoy more opportunities to export to EU, as some of their competitors exit the scheme. All products but arms covered in the Everything But Arms scheme receive duty-free, quota-free access already. The countries trading in nuts which participate in the EBA scheme, for which the reform will have a positive incidence are: Burkina Faso, Benin, Chad, Gambia, Guinea, Equatorial Guinea, Guinea-Bissau, Mali, Mauritania, Mozambique, Niger, Sudan, Senegal, Somalia, Togo, Tanzania, Uganda, Cambodia and Myanmar/Burma (preferences currently withdrawn are going to be indrawn).

    Several low and lower middle income exporters to EU, including the nut-trading countries China, Ecuador, Honduras, India, Indonesia, Nigeria, the Philippines, Thailand, and Viet Nam will also enjoy more opportunities to export - as competitors exit the scheme. Their export trade in nuts will be positively affected by the reformed scheme, with the exception of China - for which nut products will not receive GSP preferences as from 1 January 2014 to 31 December 2016.

    A number of countries not requiring any more GSP preferences to be competitive, will no longer benefit from the scheme as from 1 January 2014. Meanwhile, reducing GSP to fewer beneficiaries will reduce competitive pressure and make the preferences for LDCs more meaningful.

    Some of the countries no longer benefiting from the GSP scheme enjoy already other trade arrangements with the EU, providing substantially equivalent coverage as compared to GSP. Côte d'Ivoire, Egypt, Ghana, Cameroon, Kenya, Mexico and South Africa, which are trading in nuts, are included in this category. The effects of the reformed scheme should in general be neutral for them, because their use of GSP is marginal

    Several countries among the ones listed by the World Bank as high or upper middle income economies for the past three years, including Argentina, Brazil, and Malaysia, will no longer benefit from the GSP scheme as well. However, they are expected to face some limited drops in their exports to EU (typically in the 1% range). It is important to note that although no longer beneficiaries of the GSP scheme, these countries remain eligible, i.e. their situation can change if they are no longer listed as high or middle upper income countries by the World Bank, or if their trade arrangements expire. 

    See complete text of the new GSP regulation at http://trade.ec.europa.eu/doclib/html/150025.htm, background on the current GSP scheme at http://ec.europa.eu/trade/wider-agenda/development/generalised-system-of-preferences, and the Information notice: countries eligible to apply for GSP+     

    Source: http://ec.europa.eu/trade/policy/countries-and-regions/development/generalised-scheme-of-preferences/

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