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European Union: New Rules on the Generalized System of Preferences

(Jan. 16, 2014) On January 1, 2015, a revised Generalized System of Preferences (GSP) came into force in the European Union. The GSP, originally established in 1971, basically determines which countries will pay less or no duty when exporting their products to the EU. (European Commission, Memo, Revised EU Trade Scheme to Help Developing Countries Applies on 1 January 2014 (Dec. 19, 2013).)

The scheme, which has been updated a number of times to adjust to changes in international trade, is primarily designed to facilitate the economic development of the poorest countries around the world, by granting them preferential access to the EU market. The last revision occurred in 2012, following a detailed review of the GSP by the European Commission in order to ensure that the system assists those countries most in need and to promote the principles of sustainable development and good governance. (Id.)

The new GSP limits the number of beneficiary countries covered by the GSP to 90, down from the 177 countries currently covered. Sixty-seven countries will no longer be part of the GSP system, but they will benefit from having privileged access to the EU markets. Moreover, 20 countries whose living standards are much higher than they had been will not receive any benefits, and as a result, their products will enter the EU under the same tariffs that apply to developed countries. (Id.)

The GSP includes three regimes:

a) the standard GSP, which calls for duty reductions on close to 66% of tariffs;

b) the specific incentive arrangement GSP+, which provides deep tariff cuts for vulnerable countries that meet certain vulnerability criteria and that have implemented international agreements on human rights, labor rights, and the environment, together with good governance practices. It provides additional tariff cuts for the same 66% of tariffs; and

c) the “everything but arms arrangement” (EBA), which provides full duty-free and quota-free access for all products except arms and ammunition for the 49 least developed countries on 99% of all tariffs. (Id.)

The Commission has prepared a Practical GSP Guide to assist companies that export products to follow the new rules. (A Practical Guide to the Reformed GSP Trade Regimes for Developing Countries (Dec. 2013), EUROPA.)