Explanatory Memorandum to COM(2011)241 - Application of a scheme of generalised tariff preferences - Main contents
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This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2011)241 - Application of a scheme of generalised tariff preferences. |
|---|---|
| source | COM(2011)241  |
| date | 10-05-2011 |
The GSP is one of the key EU trade instruments assisting developing countries in their efforts to ensure core human and labour rights, reduce poverty and promote sustainable development and good governance in developing countries.
The current GSP scheme comprises three preferential agreements whereby the EU grants trade benefits reflecting the differing trade, development and financial needs of developing countries in the form of reduced or zero customs tariffs on imports of goods. Council Regulation (EC) No 732/2008 i of 22 July 2008 applying the current GSP scheme, extended by Regulation (EU) No …….[2] of the European Parliament and of the Council, will expire at the latest on 31 December 2013. The proposed GSP Regulation herewith revises, adapts and updates the GSP scheme in replacement of the current regulation, so as to better reflect the contemporary global economic and trade landscape which has changed significantly since the original scheme was put into place.
Thanks to increased trade, many developing countries and export sectors have successfully integrated within the global marketplace. In such cases, they are able to continue to expand unaided and are putting pressure on the exports of much poorer countries that genuinely need help. The draft proposal would focus the GSP preferences on the countries most in need. This is achieved by enhancing GSP modalities related to the GSP eligibility criteria and the GSP graduation mechanism, which identifies competitive imports and suspends unwarranted preferences.
The scheme also expands its support under the special incentive arrangement for sustainable development and good governance (GSP+) for those countries that commit to embracing core universal values on human, labour rights, environment and governance. While offering further opportunities for potential beneficiaries, the scheme will place more responsibility for countries and require stricter scrutiny of eligibility by the EU. There will be a more effective and transparent mechanism for monitoring and evaluating the implementation of relevant international conventions, whereby the EU seeks noticeable stability and improvement over time in countries’ implementation record. This effectively raises the requirements for beneficiary countries, as they have to provide positive and regular proof that thay are indeed implementing conventions.
The special arrangement for least developing countries known as ‘Everything But Arms’, which was added to the GSP scheme in 2004, is unchanged and further supported by new elements in the scheme reflecting the aim of focusing GSP benefits on countries most in need.
The reasons which justify the temporary withdrawal of preferences have also been clarified. In particular, it has been made explicit that unfair trading practices include those affecting the supply of raw materials. Furthermore, it has been underlined that preferences may be temporarily withdrawn if beneficiaries fail to comply with international conventions on anti-terrorism. Finally, the wording on international fishery arrangements was expanded to underline that these arrangements may well be international ones.
Also, to ensure a better safeguarding of the EU’s financial and economic interests and to enhance legal certainty, stability and predictability, the administrative procedures for safeguard mechanisms are improved by developing clear definitions of key legal concepts. The Regulation will no longer be limited in duration, thus promoting a stable framework both for economic operators and beneficiary countries. Decision-making procedures reflect the new institutional balance among the European Commission, the Council and the European Parliament in particular with respect to the application of implementing or delegated acts.
The new Regulation is premised on enhanced transparency and predictability, including applicable procedures and rights of defence. This will better safeguard the EU’s financial and economic interests and will enhance legal certainty and stability. The Regulation indicates the instances where the adoption of delegated acts by the Commission is foreseen following a delegation conferred by the European Parliament and the Council, and also the instances where the Commission will be granted implementing powers.
It is important to bear in mind that preferential access to the EU market is one of several enablers that sustain development through trade. What the new GSP Regulation seeks to achieve is greater simplicity, predictability and better targeting of the EU GSP scheme so as to maximise its effectiveness. All the proposed GSP modalities build on solutions that comply with the requirements – in particular the Enabling Clause – of the World Trade Organisation, and its objective to provide preferences to developing countries. They are also in line with the United Nations’ priorities for combating global poverty.
Also, this Regulation is without prejudice to the full application of the entire body of EU law, notably on the sustainability of biofuels or sanitary and phytosanitary conditions for market access, and the EU's policy objectives, in particular on governance in tax matters for development.
The proposal has been drawn up on the basis of a public consultation held between 27 March to 4 June 2010 and of a detailed impact assessment which studied the effects of a number of different policy options. Drawing on the outcome of the impact assessment, the preferred policy option that determined the substance of the proposed new regulation is Option C1.
The proposed Regulation does not incur costs charged to the EU budget. Its application does, however, entail loss of customs revenue. Based on the 2009 figures, the annual loss of customs revenue resulting from the application of the current GSP Regulation was estimated to be EURO 2.97 billion corresponding to a net amount of EURO 2.23 billion after deduction of Member States’ collection costs. As a result of the application of the proposed Regulation and on the basis of Annex I in its indicative form, the annual loss of customs revenue is estimated to be EURO 1.87 billion (net amount EURO 1.4 billion).