Generalised Scheme of Preferences (GSP)
The EU's "Generalised Scheme of Preferences" (GSP) allows developing country exporters to pay less or no duties on their exports to the EU. This gives them vital access to EU markets and contributes to their economic growth.
This reformed GSP focuses support on developing countries most in need.
Generalised Scheme of Preferences in a nutshell
There are three main variants (arrangements) of the scheme:
- the standard/general GSP arrangement, which offers generous tariff reductions to developing countries. Practically, this means partial or entire removal of tariffs on two thirds of all product categories.
- the "GSP+"enhanced preferences means full removal of tariffs on essentially the same product categories as those covered by the general arrangement. These are granted to countries which ratify and implement international conventions relating to human and labour rights, environment and good governance;
- "Everything but Arms" (EBA) arrangement for least developed countries (LDCs), which grants duty-free quota-free access to all products, except for arms and ammunitions.
The EU adopted a reformed GSP law on 31 October 2012 (Regulation No 978/2012). In order to allow ample time for economic operators to adapt smoothly to the new scheme, it was decided that the new preferences would apply as of 1 January 2014.
With a view to ensure a smooth application of the new preferences, the EU issued a number of additional rules and decisions:
- In December 2012, the EU identified a list of products that had become so competitive that they no longer need support to be successfully exported to the EU. These products will no longer receive GSP preferences as from 1 January 2014 until 31 December 2016 when the list will be reviewed. This decision, however, does not apply to countries which qualify for GSP+ status in the period concerned (Costa Rica and Ecuador at this stage).
- In February 2013, the EU released procedural rules on how to treat the applications for the GSP+ arrangementunder the new GSP.
- In February 2013, a decision deferring the GSP preferences from Azerbaijan and Iran due to their economic development level as from 23 February 2014 was published.
- In November 2013, procedural rules for temporary withdrawals of preferences and application of safeguards under the new Scheme were issued.
- In December 2013, a decision identifying the countries which will cease to benefit from the GSP due to their economic development level as from 1 January 2015 was released. Moreover, this decision ensures that South Sudan continues to benefit from the recently acquired EBA arrangement under the new GSP Scheme and that Myanmar/Burma is reinstated also in the new GSP Scheme.
- First ten countries qualified for the enhanced GSP+ preferences and started to benefit from them as from 1 January 2014.
- Three more countries qualified for GSP+ preferences and started to benefit from 28 February 2014.
- In September 2014, a decision identifying the countries which will cease to benefit from the GSP due to their economic development level or application of a free trade agreement with the EU as from 1 January 2016 was published.
- In September 2014, the EU decided to re-introduce into the GSP the partners which would no longer enjoy another preferential access to the EU markets after 1 October 2014.
The codes of the EU Combined Nomenclature can be subject to small adjustments at the end of every year. In case of discrepancy between the CN codes which are included in Annexes V and IX and the adjusted codes included in the TARIC database, the latter will be of application.
EU trade and Generalised Scheme of Preferences
Main features of the reformed GSP:
- Concentrate GSP preferences on developing countries most in need. A number of countries, which do not require GSP preferences to be competitive, no longer benefit from the scheme as from 1 January 2014, including:
- Countries that have another preferential access to the EU which is at least as good as under GSP – for example, under a Free Trade Agreement or a special autonomous trade regime.
- Countries which have achieved a high or upper-middle income per capita during three consecutive years, according to the World Bank classification.
- A number of overseas countries and territories, which are either attached to the EU and so have an alternative EU market access arrangement or are linked to another developed country.
- Reinforce the trade incentives for the respect of core human and labour rights, environmental and good governance standards through the GSP+ arrangement.
- Strengthen the effectiveness of the trade concessions for least-developed countries through the "Everything But Arms" arrangement. Reducing GSP to fewer beneficiaries should reduce competitive pressure and make the preferences for LDCs more meaningful.
- Increase predictability, transparency and stability of the GSP. With the exception of EBA, which has no expiry date, the new Scheme will last 10 years, instead of 3 previously. This will make it easier and more interesting for EU importers to purchase from GSP beneficiary countries. In addition, procedures have become even more transparent, with clearer, better defined legal principles and objective criteria.
More details on The EU’s new Generalised Scheme of Preferences (factsheets)
More on Generalised Scheme of Preferences
- Documents related to the new GSP Regulation
- Press pack to the new GSP Regulation
- Memo "South Sudan granted duty-free, quota-free preferences under the GSP scheme”
- Press release: "EU re-opens its market to Myanmar/Burma"