|
The Generalised System of Preferences (GSP)
Trade has proved to be one the effective ways of fostering economic development around the world.
Increased trade with developing countries enhances their export earnings, promotes their industrialisation and encourages the diversification of their economies. The classical instrument for achieving these objectives is tariff preferences, whereby goods imported from developing countries are exempt from the normal customs duties. Tariff preferences provide traders with an incentive to import from developing countries.
In 1968, the United Nations Conference on Trade and Development (UNCTAD) recommended the creation of a Generalised System of Tariff Preferences (GSP) under which industrialised countries would grant trade preferences to all developing countries. The European community was first to implement a GSP scheme in 1971.
The current cycle of GSP applies from 1 January 2009 to 31 December 2011. The legal basis of this GSP cycle is provided in EC Regulation No 732/2008 of 22 July 2008 (EU Official Journal L 211 of 6 August 2008). Guidelines for the period 2006-2015 set out in EC Communication COM (2004) 461 of 7 July 2004.
The Commission has proposed some
simplification and relaxation in the rules of origin for GSP. Until the new rules are approved by the Member States of the EU, the existing rules will continue to apply.
The present GSP includes:
 GSP Links |
|
|
A general arrangement: reductions of 3.5% over the normal customs duty for sensitive products, reductions of duties to zero for non-sensitive products, and reduction of 20% for textile products.
The “Everything but Arms” initiative, which gives duty-free and quota-free access for all products from the Least Developed Countries (LDCs). Bangladesh continues to benefit from this initiative for an indefinite period.
A new “GSP+” giving tariff preferences to vulnerable countries which meet the new objective criteria for sustainable development and good governance (reduction to zero duty for a total of 7200 products);
Graduation: GSP will only be withdrawn for certain product groups for one or several countries if these products are competitive on the Community market and no longer need the GSP. Such "graduation" will be triggered if a group of products (“section” of the custom code) from a particular country exceeds 15% of total EU imports of the same products under GSP over the last three consecutive years. For textiles, the threshold would be 12.5%. Graduation is not a penalty but a sign that the GSP has successfully performed its function of triggering exports flows; and thus the GSP will better benefit to the weakest and the most vulnerable countries. |
