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TWN Info Service on WTO and Trade Issues (April10/06)
22 April 2010
Third World Network

Deadline approaches for GSP+ alternative to EU EPAs and FTAs
Published in SUNS #6906 dated 19 April 2010

Geneva, 16 Apr (Sanya Smith) -- Developing countries that are currently negotiating an economic partnership agreement (EPA) or a free trade agreement (FTA) with the European Union (EU), as well as other interested countries, have a deadline of 30 April 2010 to apply instead for "GSP+" status with the EU.

The 30 April deadline is for applying the GSP+ for the period 1 July 2010 to 31 December 2011.

In an effort to obtain market access to the EU, approximately 108 developing countries are presently negotiating regional trade agreements or economic partnership agreements with the EU.

These agreements require reciprocal market access and it appears that the EU, in these negotiations, is requiring developing countries to eliminate tariffs on about 80% of EU products by import value.

These agreements may also require developing countries to take on commitments in other areas such as government procurement, competition policy and investment, which developing countries have been resisting at the World Trade Organization (WTO), as well as in services and intellectual property protection going beyond the WTO requirements.

On the other hand, the GSP+ status does not require developing countries to take on these extra commitments.

The GSP (Generalised System of Preferences) is an autonomous WTO-compatible trade arrangement where the EU provides non-reciprocal preferential access to its market to 176 developing countries and territories in the form of reduced tariffs for their goods when entering the EU. It is implemented by a Council Regulation applicable for a period of three years at a time.

The EU's GSP covers three separate preference regimes:

-- (1) The standard GSP provides preferences on 6,244 products. This basically eliminates duties on "non-sensitive" products (about 3,200 tariff lines, except for agricultural components), while for "sensitive" products, tariff reduction is by specified amounts below normal MFN tariff rates (in respect of ad valorem duties, by 3.5 percentage points or 20%; in respect of specific duties, by 30%).

-- (2) GSP+ (the special incentive arrangement for sustainable development and good governance) provides what the European Commission describes as "essentially duty free" market access under Council Regulation (EC) No 732/2008 to 6,336 products.

-- (3) The Everything But Arms (EBA) arrangement provides duty-free market access to 7,140 products (i. e., all except for Chapter 93 of the Harmonised System, which are arms and armaments) for the Least Developed Countries (LDCs).

GSP+ would primarily be of interest to non-LDCs because, according to the EU, the EBA provides more extensive preferential market access to the LDCs than that available under the GSP+.

According to the EU, the main qualifying criteria for GSP+ are that any beneficiary country:

-- must not be classified by the World Bank as a high-income country for three consecutive years;

-- must have ratified and effectively implemented 27 specified international conventions in the fields of human rights, core labour standards, sustainable development and good governance;

-- is one for which the five largest sections of its GSP-covered imports into the EU represent more than 75% in value of its total GSP-covered imports; and

-- is one for which the GSP-covered imports into the EU represent less than 1% in value of the total GSP-covered imports into the EU.

These preferences can be temporarily withdrawn or safeguard measures imposed in a variety of situations.

GSP and GSP+ preferences will be removed from products once they become competitive (constitute more than 12.5% or 15% - depending on the product - of the value of European Community imports of those products from all beneficiary countries and territories over three consecutive years), unless that section is an important export for the developing country (more than 50% in value of its GSP-covered exports to the EU).

GSP, GSP+ and EBA preferences may also be temporarily withdrawn from a country for a number of reasons set out in EC Council Regulation No. 732/2008. These include serious and systematic violation of the principles laid down in the 27 Conventions that GSP+ beneficiaries must ratify and implement.

[On 15 February 2010, the EU announced that it has decided to temporarily withdrew preferential tariff benefits to Sri Lanka under the GSP+ scheme. According to an EU press release announcing the withdrawal, the decision followed an exhaustive investigation by the European Commission which identified significant shortcomings in respect of Sri Lanka's implementation of three UN human rights conventions relevant to receive benefits under the scheme.

[The three human rights conventions violated, the EU said, were the International Covenant on Civil and Political Rights, the Convention against Torture and the Convention on the Rights of the Child. The EU said that "the investigations relied heavily on reports and statements by UN Special Rapporteurs and Representatives, other UN bodies and reputable human rights NGOs..." The suspension takes effect in six months' time (from the announcement date) - SUNS]

The Council Regulation also allows the EU to take safeguard measures. These measures include allowing the reintroduction of normal tariffs at the request of an EU Member State or under the initiative of the European Commission, if a product is being imported on terms that cause or threaten to cause serious difficulties to an EU producer of like or directly competing products.

An additional safeguard for certain textiles and clothing allows the removal of preferences if imports of that product from a particular beneficiary country have increased by at least 20% in quantity in the last year or exceed 12.5% of all EU imports of those products from beneficiary countries over 12 months.

For countries that have already initialled EPAs, it is believed by some legal experts that applying now for GSP+ could be grounds under Article 2 of the EU Council Regulation 1528/2007 for the EU to revoke its current provisional application of the EPA (which has been providing market access to countries that have initialled EPAs even before they come into force).

This is an issue that merits further careful consideration.

The European Commission is currently seeking comments on its GSP, GSP+ and EBA arrangements as inputs to its proposal for the next round of these preferences after 31 December 2011. Anyone (including beneficiary countries, developing country producers, exporters and their associations) can make comments until 31 May 2010 at

http://ec.europa.eu/yourvoice/ipm/forms/dispatch?form=NEXTGSPSCHEME&lang=en).

Further information on how to apply for GSP+ is available at http://ec.europa.eu/trade/wider-agenda/development/generalised-system-of-prefere nces/.

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