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GSP – Generalised Scheme of Preferences

Summary
Evaluation
Commission Proposal
Legal Act
Implementation

Overall State of play:

Evaluation finalised: 4 October 2018 COM(2018)665 and SWD(2018)430

State of Play, main conclusions, outlook

Regulation No 978/2012 applying the EU's Scheme of Generalised Tariff Preferences ('the GSP Regulation'), represents a unilateral system of trade preferences established in 1971 to support developing countries in their efforts to reduce poverty, promote good governance and support sustainable development. Pursuant to Article 40 of the GSP Regulation, the Commission had the obligation to submit a report on the application of the GSP Regulation to the European Parliament and to the Council. The mid-term evaluation of Regulation No 978/2012 has shown that the EU’s current GSP, which introduced a number of reforms compared to the previous framework, is on track in delivering on its objectives. Therefore, at this stage, there is no need to amend the GSP Regulation before its expiry on 31 December 2023.

However, practical improvements relating to awareness raising, transparency and civil society involvement, which do not require legislative actions, have been considered and led to the official launch of the GSP Hub Project on 29 September 2020 with the GSP Stakeholder Forum. The project aims at increasing the effectiveness and transparency of GSP and the GSP+ monitoring process.

The mid-term evaluation’s findings feed into the Commission’s preparatory work for the legislative review of the GSP that will be required for the extension of the GSP beyond 2023.

The Commission is carrying out preparatory work including an ongoing study that analyses a number of policy options for the EU GSP after the expiry of the current scheme at the end of 2023. The Commission will assess the potential economic, social, human rights and environmental impacts both in GSP beneficiary countries and the EU, while also considering legal, institutional and procedural issues.

Estimated savings and benefits

One of the main objectives of the GSP Regulation is to contribute to poverty eradication by expanding exports from the countries most in need. By tightening the criteria that allows countries to benefit from GSP, the number of GSP beneficiaries was reduced from 178 to 92 beneficiary countries (e.g. China and Russia were excluded). While the reduction in the number of beneficiaries diminished the aggregate trade impact on the EU, it allowed the more vulnerable developing countries, in particular the Least Developed Countries (LDCs) to export substantially more to the EU. EU imports from LDCs increased by 62.1% on the average of the three years post-reform compared to the average of the three pre-reform years. At the same time, the evaluation indicates that import competition faced by certain sectors of EU industry (e.g. textiles, rice and tyres) may have increased. Furthermore, improvements to in particular the monitoring of the special incentive arrangement for sustainable development and good governance (GSP+) are more effective and have also contributed to the furtherance of social development and human rights in the beneficiary countries.

State of Play:

Evaluation finalised: 4 October 2018, COM(2018)665 and SWD(2018)430

Scope:

Regulation 978/2012 applying a Scheme of Generalised Tariff Preferences

Evaluation findings:

The mid-term evaluation of Regulation No 978/2012 has shown that the EU’s current GSP is on track in delivering on its objectives: The 2012 GSP reform succeeded in focusing preferences on countries most in need and has contributed to their sustainable development, while the efficiency of the scheme has remained stable compared to its predecessor during the period of implementation of the current Regulation. Moreover, the GSP continues to bring clear economic benefits to developing countries and to make it relevant to the development needs of beneficiary countries. However, the evaluation also revealed that the implementation of the GSP Regulation could be improved in two important aspects relating to the transparency and the involvement of cilvil society in the monitoring process on one hand and the level of awareness of GSP in beneficiary countries on the other. The Commission will consider a number of practical, non-legislative actions to improve transparency of GSP+ monitoring and to further civil society involvement and to undertake furtter actions to raise awareness for businesses and civil society organisations.

Estimated savings and benefits

The evaluation has shown that as a result of the 2012 GSP reform, GSP imports as a share of all EU imports decreased from 6.1% in 2013 (the last year before the GSP Regulation came into force) to 4.9% in 2016. This is largely because of the 2012 GSP reform reducing the number of beneficiaries eligible for trade preferences under the GSP Regulation from 178 beneficiary countries to 92 beneficiary countries. At the same time, the 2012 GSP reform has enhanced the effectiveness of the GSP by better focusing on the countries most in need of support, notably Least Developed Countries, whose total exports to the EU under the GSP have risen substantially: the total import value from the 49 Least Develop Countries benefiting from the ‘Everything But Arms’ arrangement under the GSP increased by 62.1% on the average of the three years post-reform, compared to the average of the three pre-reform years. Because of more developed countries, such as Brazil, China and Russia, no longer benefiting from the trade preferences under the GSP, the duty loss for the EU resulting from the GSP decreased, although exact figures are not available, as they depend on many variables, complex interdependencies and unknown factors.

As part of the 2012 GSP reform, the monitoring of the GSP+ arrangement was enhanced with the objective of improving the efficiency of the process. While this has led to a more intensified monitoring process, the two-year monitoring cycle has significantly increase the administrative burden on the EU and beneficiary countries and the time available does not always suffice for beneficiary countries to implement meaningful changes.