REPORT on the proposal for a regulation of the European Parliament and of the Council amending Council Regulation (EC) No 732/2008 applying a scheme of generalised tariff preferences for the period from 1 January 2009 to 31 December 2011

7.3.2011 - (COM(2010)0142 – C7-0135/2010 – 2010/140(COD)) - ***I

Committee on International Trade
Rapporteur: Helmut Scholz

DRAFT EUROPEAN PARLIAMENT LEGISLATIVE RESOLUTION

on the proposal for a regulation of the European Parliament and of the Council amending Council Regulation (EC) No 732/2008 applying a scheme of generalised tariff preferences for the period from 1 January 2009 to 31 December 2011

(COM(2010)0142 – C7-0135/2010 – 2010/140(COD))

(Ordinary legislative procedure: first reading)

The European Parliament,

–   having regard to the Commission proposal to Parliament and the Council (COM(2010)0142),

–   having regard to Article 294(2) and Article 207(2) of the Treaty on the Functioning of the European Union, pursuant to which the Commission submitted the proposal to Parliament (C7-0135/2010),

–   having regard to Article 294(3) of the Treaty on the Functioning of the European Union,

–   having regard to Rule 55 of its Rules of Procedure,

–   having regard to the report of the Committee on International Trade and the opinion of the Committee on Development (A7-0051/2011),

1.  Adopts its position at first reading, taking over the Commission proposal;

2.  Calls on the Commission to refer the matter to Parliament again if it intends to amend its proposal substantially or replace it with another text;

3.  Calls on the Commission to present a proposal for a new Regulation applying a scheme of generalised tariff preferences without delay;

4.  Instructs its President to forward its position to the Council, the Commission and the national parliaments.

EXPLANATORY STATEMENT

In 1968, the United Nations Conference on Trade and Development (UNCTAD) recommended the creation of a "Generalized System of Preferences" (GSP) under which industrialised countries would grant trade preferences to all developing countries on a non-reciprocal basis, not just to former colonies.

The European Community was the first to implement a GSP scheme in 1971. Since its creation, the GSP has been one of the key EU trade and development policy instruments to assist developing countries reduce poverty by generating revenue through international trade. It is the most used of such developed countries systems.

The EU's GSP grants products imported from GSP beneficiary countries either duty-free access or a tariff reduction, depending on which of the GSP arrangements a country enjoys.

There are three types of arrangement in force for beneficiary countries:

1) all beneficiary countries enjoy the benefit of the general arrangement;

2) the special incentive arrangement for sustainable development and good governance (the "GSP+") provides additional benefits for countries ratifying and implementing a list of currently 27 international conventions and protocols on human and labour rights, environmental protection, drugs and the fight against corruption;

3) the special arrangement for the least-developed countries (LDCs), also known as the "Everything But Arms" (EBA) initiative, provides for the most favourable treatment of all, in the aim of granting the LDCs "duty-free and quota-free" access to the EU's market.

Calendar

The GSP is implemented through successive Regulations with a period of application of three years at a time. The first multi-annual implementing regulation was valid from 1 January 2006 to 31 December 2008. The second is valid from 1 January 2009 to 31 December 2011.

In 2008, the proposal for the regulation in force at this moment was referred to the Parliament under the consultation procedure. The basic provisions of the previous GSP Regulation remained unchanged but had been reviewed to facilitate the application of the scheme.

Regrettably, and contrary to the wishes expressed by Parliament, the Commission did not transmit its proposal sufficiently in advance (by 1 June 2007) to enable the European Parliament to be fully consulted within a reasonable timescale. In fact, the Commission presented its proposal only on 21 December 2007. On 31 January 2008 the Council asked the Parliament to give its opinion before 10 April. Therefore, the process of consultation of the European Parliament was over-hasty.

In its resolution of 5 June 2008, Parliament made clear that this was not satisfactory, that in the future more time would be necessary for the Parliament to play its role and asked that "The proposal for a revised regulation covering the period from 1 January 2012 to 31 December 2014 shall be transmitted by the Commission to the European Parliament, the Council and the European Economic and Social Committee by 1 June 2010."

The current scheme will expire on 31 December 2011. On 26 May 2010 the Commission presented a proposal.

Extension

However, this proposal is not the requested proposal for a new regulation, but only an extension of the existing one.

With a view to the preparation of a new proposal, the Commission only launched a public consultation in March 2010. The results had to be examined, the statistics to be collected and an impact assessment study to be done.

Therefore, according to the Commission, the extension is necessary as the remaining period of application of the GSP Regulation is insufficient to permit to the Commission to introduce a proposal for a new regulation and to the Parliament and the Council to reach an agreement on a successor regulation through the ordinary legislative procedure before the expiry of the current GSP Regulation.

Your Rapporteur can agree that this extension is necessary to ensure legal certainty and guarantee the interests of both the EU and the beneficiary countries. Nevertheless, your Rapporteur stresses that the extension shall not imply that the current - unsatisfactory - situation is extended for two more years.

Lisbon Treaty

Being an extension, the proposal, although published long after the entry into force of the Lisbon Treaty, did not take into account the information sharing and decision making procedures required by the Treaty, which enhanced powers of the European Parliament in trade issues.

The current regulation expires two years after the entry into force of the Lisbon Treaty. With the extension proposed, this situation would continue for two more years, until 31 December 2013, four years after the entry into force of the Lisbon Treaty.

Under the current regulation, the Parliament has no say on the criteria for eligibility, on the list of the beneficiary countries, on the list of GSP+ beneficiaries, on the effective implementation of the conventions, on the temporary withdrawal of preferential arrangements, etc.

In fact, it is the duty of the Members of the Parliament to ensure that rights and powers which the elected representatives of the people of the European Union acquired with the Lisbon Treaty are respected.

Pursuant to Article 207(2) TFEU, the procedure for the adoption and amendment of the GSP Regulation is now the ordinary legislative procedure, which has consequences for the rights Parliament must enjoy in the democratic control of the regulation.

Your Rapporteur believes that there are elements of Regulation (EC) No 732/2008 which are necessary to amend in order to respect the new powers acquired by the Parliament with the Lisbon Treaty, in particular to ensure that Parliament's new powers under Article 290 TFEU on delegated acts are respected. In fact, your Rapporteur identifies the measures under the GSP Regulation that are to be considered delegated acts: Article 10(2), Article 11 (7) and (8), Article 16(3), Article 19 (3), (4) and (5), and Article 25, giving Parliament a veto right and thus much stronger scrutiny powers than under the procedure currently applied.

In order to establish rules for the exercise, control and eventual revocation of delegated acts, Articles 27a, 27b, 27c, 27d and 27e should be inserted..

In view of the urgency of adopting this regulation, to ensure the legal certainty for the beneficiaries, and in order to avoid parallel negotiations, it has however been agreed that the concerns of the European Parliament will be addressed within the negotiations on the horizontal legislative proposals to align all procedures for the adoption of acts within the Common Commercial Policy with the Lisbon Treaty, the "omnibuses". The European Commission has in the meantime committed itself to meet many of the legitimate requests of increased information sharing with the European Parliament.

New regulation

No changes are therefore proposed at this point in time, although your Rapporteur believes that a general redrafting of the GSP and GSP+ schemes is necessary.

Your Rapporteur agrees that the general review of the Regulation should be dealt with in the proposal for a new Regulation that the Parliament wants to be presented without delay.

Nevertheless, your Rapporteur would like to stress that the new proposal for a regulation should have the following basic objectives: (1) to produce an effective system more responsive to the interests of beneficiary countries and economic operators; (2) to develop rules that will provide for a better regulated reform process in which the involvement of the beneficiaries is guaranteed; (3) to ensure that the regulation gives due weight to the task of democratic control which Parliament is required to perform.

As underlined by the European Parliament in 2008 in the report by Helmuth Markov, greater transparency and legal certainty must be a hallmark of the EU. The new proposal should aim at making the GSP a clearer and more transparent system.

Rules of origin

Rules of origin and the administrative procedures that accompany them are one of the main reasons for the under-utilisation of the trade preferences granted by the GSP, particularly by the least developed countries. Rules of origin can prevent a preference that exists on paper having a positive impact and the danger is that they form a barrier to trade setting commercially unattainable targets, so that the preference is under- or un-utilised.

New, revised, rules of origin should enter into force at least in parallel to the new GSP scheme.

The reform should allow regional cumulation and also include the possibility of horizontal cumulation between regions or global cumulation for the countries benefiting from special arrangements under the GSP. Along the same lines, consideration should be given to introducing more favourable rules on the requirements for granting recognition of origin to a product. It is proposed that the European Union voice its desire to give priority to the GSP in the context of the work being undertaken within the WTO on the harmonisation of rules of origin.

Country coverage

Country coverage has been subject to criticism both from the beneficiary countries and NGOs, as well as researchers. Often, we have situations where poor countries with diversified economies are immediately excluded from the most advantageous schemes.

The import threshold could be substituted by other criteria, more straightforward and, especially, more directly related to the level of development (the Gini coefficient is a good example of such a criterion). Countries that could benefit the most of tariff preferences are often those that do not pass the vulnerability test necessary to be eligible for GSP+.

In addition and in order to prevent the erosion of preferences, the options for transferring products currently classified as "sensitive" to the "non-sensitive" category need to be evaluated for the next regulation.

Technical assistance

Your Rapporteur believes that it is necessary to increase the impact of the present system and improve the rate of utilisation of the GSP through the provision of technical assistance specifically designed to build the institutional and regulatory capacity required to allow the countries most in need to take maximum advantage of the benefits of international trade and the GSP.

Assistance must also be provided, for instance in the form of twinning programmes, to help GSP+ beneficiaries with the effective implementation of the international conventions required by this incentive arrangement and their commitments.

The Commission should actively seek to check that such commitments are upheld. It should automatically open an inquiry in any case where the ILO Committee on the Application of Standards devotes a "Special paragraph" to a beneficiary country which does not comply with fundamental labour standards. Inquiries should always include co-operation with the European Parliament and representatives of civil society, including the social partners, of the respective country.

OPINION of the Committee on Development (10.11.2010)

for the Committee on International Trade

on the proposal for a regulation of the European Parliament and of the Council amending Council Regulation (EC) No 732/2008 applying a scheme of generalised tariff preferences for the period from 1 January 2009 to 31 December 2011
(COM(2010)0142 – C7‑0135/2010 – 2010/0140(COD))

Rapporteur: Eva Joly

SHORT JUSTIFICATION

GSP

The EU Generalised System of Preferences (GSP) is a trade mechanism allowing the EU to offer preferential non-reciprocal market access to developing countries through reduced tariffs.

In addition to 'standard' GSP access, open to all developing countries, a number qualify for GSP+. This means additional tariff cuts for developing countries that meet certain conditions.

GSP eligibility criteria vulnerability/dependence — where the country's five largest GSP-covered EU exports account for more than three quarters of its total GSP exports — and where the country's GSP-covered EU exports represent less than 1% of total EU GSP imports. GSP+ beneficiaries must also have ratified and implemented some 27 international conventions in the fields of human rights, core labour standards, sustainable development and good governance. When a country fails to satisfy these criteria, GSP+ can be suspended.

All 49 least-developed countries are eligible for the Everything but Arms scheme which offers them duty-free quota-free EU market access for all exports.

Timeframe

The current GSP scheme was established under Council Regulation EC 732/2008. It expires at the end of 2011, after which GSP will lapse unless a substitute scheme is in place.

The Commission expects to table a new proposal in early 2011, which would mean the replacement GSP scheme would only come into force in mid-2012 at the earliest, i.e. a legal void of over six months.

Therefore, the current proposal looks to extend the existing GSP scheme for a maximum two further years, until such time as the new Regulation enters into force.

Your rapporteur is of the view that this solution is not ideal — it means that EP has a say on the scheme only four years after the entry into force of the Lisbon Treaty. However, is a satisfactory approach inasmuch as it obviates unwanted discontinuity in the GSP programme. It would obviously be harmful for developing countries if they were obliged to revert to the EU's MFN tariffs and ceased to enjoy preferential treatment, albeit temporarily.

Having said this, it is important that the Commission produces its new GSP proposal within the shortest possible timeframe and that the legislative procedure is concluded as speedily as possible. However, the new GSP scheme, unlike its predecessor, will be co-decided by Council and Parliament; time pressure must not be allowed to usurp Parliament's democratic prerogatives. Parliament must make use of its new post-Lisbon powers in the trade arena.

Current proposal

A more substantial review of the GSP scheme is likely when the new GSP Regulation is drafted next year. Your rapporteur has nonetheless tabled several amendments to the GSP Regulation as it stands.

First and foremost, the principle of preferential and differential treatment where our trading relationships with developing countries are concerned is a key one. The share of developing countries' exports in overall EU imports is negligible. Yet trade preferences give them the chance to break free from the vicious circle of aid dependency. Proposals to move towards EU-developing country trade relationships on an equal footing, when the EU's current capacity and comparative advantages are far superior, are not realistic.

Article 208 of the Lisbon treaty of course obliges the EU to "take account of the objectives of development cooperation in the policies that it implements which are likely to affect developing countries." This means a commitment from the EU to avoid policy choices that undermine its work in the field of development cooperation and, indeed, to pursue actions, across the policy spectrum, that will benefit developing countries. This applies par excellence to trade.

It is also essential that the Commission, under Parliament's scrutiny, monitors closely and strictly beneficiary countries' ongoing adherence to the criteria rendering them eligible for GSP+.

The Commission currently carries out a Sustainable Impact Assessment for GSP. Parliament should ask the Commission to inform it on the terms of reference, the results and lessons learnt from this assessment, as well as its future intentions as regard the implementation of SIA under the new GSP scheme. 

Your rapporteur believes firmly in the need for a global trading system based on ethics, democracy and transparency not solely profit, a system which benefits society as a whole and not just a limited number of businesses. Upholding internationally-agreed standards on human rights, labour standards, the environment and governance is a vital element of GSP+, one which may indeed need to be tightened up in future. Therefore, close supervision of sectors such as fisheries, forestry and mining, to name but a few, as well as the treatment of women and minorities as regards access to labour markets and working conditions is extremely necessary.

In the interests of democracy and transparency, it is also important that any consultations with beneficiary countries regarding ongoing respect of the GSP+ criteria include a dialogue with national parliaments and local civil society actors.

AMENDMENTS

The Committee on Development calls on the Committee on International Trade, as the committee responsible, to incorporate the following amendments in its report:

Amendment  1 Proposal for a regulation– amending act Article 1 - point 1 a (new) Regulation (EC) No 732/2008 Recital 2 a (new)

Text proposed by the Commission Amendment   (1a) A new recital is inserted after recital 2:   (2a) The EU is obliged to take account of the objectives of development cooperation in the policies that it implements which are likely to affect developing countries and therefore the GSP scheme must contribute to the EU's development objectives, including attainment of the MDGs.

Amendment  2 Proposal for a regulation– amending act Article 1 – point 1 a (new)

Regulation (EC) No 732/2008

Article 5 - paragraph 2

Text proposed by the Commission Amendment   (1a) Article 5(2) is replaced by the following:   “For the purposes of the arrangements referred to in Article 1(2), the rules of origin concerning the definition of the concept of originating products, the procedures and the methods of administrative cooperation related thereto, shall be those laid down in Regulation (EEC) No 2454/93. The form, substance and procedures of the system of rules of origin shall be subject to regular revision in order to evaluate its effect on GSP utilisation rates and to better serve the purpose of promoting economic development.”

Amendment  3 Proposal for a regulation– amending act Article 1 – point 4

Regulation (EC) No 732/2008

Article 10

Text proposed by the Commission Amendment (4) In Article 10(3), the full stop at the end of point (b) is replaced by a semicolon, and the following is added after point (b): (4) Article 10 is amended as follows:   (a) Article 10(1) is replaced by the following:   “1. The Commission shall examine the request accompanied by the information referred to in Article 9(2). When examining the request the Commission shall take account of the findings of the relevant international organisations and agencies. It may ask the requesting country any questions which it considers relevant, and may verify the information received with the requesting country or with any other relevant sources, including the European Parliament and representatives of civil society such as the social partners.”   (b) In paragraph 3, the full stop at the end of point (b) is replaced by a semicolon, and the following is added after point (b): "or or (c) by 15 December 2011, for a request under Article 9(1)(a)(iii), (c) by 15 December 2011, for a request under Article 9(1)(a)(iii), or or (d) by 15 June 2013 for a request under Article 9(1)(a)(iv).” (d) by 15 June 2013 for a request under Article 9(1)(a)(iv).”

Amendment  4 Proposal for a regulation – amending act Article 1 - point 4 a (new) Regulation (EC) No 732/2008 Article 10 a (new)

Text proposed by the Commission Amendment   (4a) A new article is inserted after Article 10:   Article 10a   "The Commission shall inform the European Parliament of the outcome of all Sustainable Impact Assessments carried out under the GSP.";

Amendment  5 Proposal for a regulation– amending act Article 1 - point 4 b (new) Regulation (EC) No 732/2008 Article 17 – paragraph-1 (new)

Text proposed by the Commission Amendment   (4b) In Article 17, a new paragraph is inserted before point 1:   "-1. The Commission shall regularly check that the commitments of beneficiary countries are being honoured and that none of the reasons set out in Article 15(1) and (2) and Article 16 (1) and (2) for the temporary withdrawal of preferential arrangements applies. It shall publish an annual report on temporary withdrawals and send it to the Council, the European Parliament and the Member States."

Amendment  6 Proposal for a regulation– amending act Article 1 - point 4 c (new) Regulation (EC) No 732/2008 Article 18 - paragraph 3

Text proposed by the Commission Amendment   (4c) Article 18 (3) is amended as follows:   "3. The Commission shall seek all information it considers necessary, including the available assessments, comments, decisions, recommendations and conclusions of the other European institutions and of the relevant supervisory bodies of the UN, the ILO and other competent international organisations. These shall serve as the starting point for the investigation into whether temporary withdrawal is justified for the reason referred to in Article 15(1)(a). The Commission may verify the information received with economic operators, civil society actors, beneficiary country parliaments and the beneficiary country concerned."

Amendment  7 Proposal for a regulation – amending act Article 1 - point 4 a (new) Regulation (EC) No 732/2008 Article 18 - paragraph 3

Text proposed by the Commission Amendment   (4a) Article 18(3) is replaced by the following:   “3. The Commission shall seek all information it considers necessary, including the available assessments, comments, decisions, recommendations and conclusions of the relevant supervisory bodies of the UN, the ILO and other competent international organisations. These submissions shall be made public, in the interests of transparency, and shall serve as the starting point for the investigation into whether temporary withdrawal is justified for the reason referred to in Article 15(1)(a). The Commission may verify the information received with economic operators and the beneficiary country concerned.”

Amendment  8 Proposal for a regulation– amending act Article 1 – point 4 a (new) Regulation (EC) No 732/2008 Article 19 - paragraph 1

Text proposed by the Commission Amendment   (4a) Article 19(1) is replaced by the following:   “1. The Commission shall submit a report on its findings to the Committee referred to in Article 27 and to the European Parliament.”

Amendment  9 Proposal for a regulation– amending act Article 1 – point 4 b (new) Regulation (EC) No 732/2008 Article 19 - paragraph 4

Text proposed by the Commission Amendment   (4b) Article 19(4) is replaced by the following:   “4. Where the Commission considers temporary withdrawal to be necessary, it shall submit - after having informed the European Parliament - an appropriate proposal to the Council which shall decide on it within two months by a qualified majority. In the case referred to in paragraph 3, the Commission shall submit its proposal at the end of the period referred to in that paragraph.”

Amendment  10 Proposal for a regulation– amending act Article 1 – point 4 c (new)

Regulation (EC) No 732/2008

Article 20 - paragraph 7

Text proposed by the Commission Amendment   (4c) Article 20(7) is replaced by the following:   “7. Where exceptional circumstances requiring immediate action make an investigation impossible, the Commission may, after informing the Committee referred to in Article 27 and the European Parliament, take any preventive measure which is strictly necessary.”

Amendment  11 Proposal for a regulation– amending act Article 1 – point 4 d (new)

Regulation (EC) No 732/2008

Article 22 - paragraph 1

Text proposed by the Commission Amendment   (4d) Article 22(1) is replaced by the following:   “1.The Commission shall inform the beneficiary country concerned as soon as possible of any decision taken in accordance with Article 20 or 21 before it becomes effective. The Commission shall also notify the Council, the European Parliament and the Member States thereof.”

PROCEDURE

Title	Amendment to Council Regulation (EC) No 732/2008 applying a scheme of generalised tariff preferences for the period from 1 January 2009 to 31 December 2011
References	COM(2010)0142 – C7-0135/2010 – 2010/0140(COD)
Committee responsible	INTA
Opinion by        Date announced in plenary	DEVE 15.6.2010
Rapporteur        Date appointed	Eva Joly 22.6.2010
Date adopted	9.11.2010
Result of final vote	+: –: 0:	20 0 0
Members present for the final vote	Thijs Berman, Corina Creţu, Nirj Deva, Charles Goerens, Catherine Grèze, András Gyürk, Eva Joly, Filip Kaczmarek, Gay Mitchell, Norbert Neuser, Bill Newton Dunn, Maurice Ponga, Birgit Schnieber-Jastram, Michèle Striffler, Alf Svensson, Eleni Theocharous, Ivo Vajgl, Anna Záborská, Iva Zanicchi
Substitute(s) present for the final vote	Judith Sargentini

PROCEDURE

Title	Amendment to Council Regulation (EC) No 732/2008 applying a scheme of generalised tariff preferences for the period from 1 January 2009 to 31 December 2011
References	COM(2010)0142 – C7-0135/2010 – 2010/0140(COD)
Date submitted to Parliament	26.5.2010
Committee responsible        Date announced in plenary	INTA 15.6.2010
Committee(s) asked for opinion(s)        Date announced in plenary	DEVE 15.6.2010
Rapporteur(s)        Date appointed	Helmut Scholz 1.6.2010
Discussed in committee	2.12.2010
Date adopted	3.3.2011
Result of final vote	+: –: 0:	22 0 0
Members present for the final vote	Laima Liucija Andrikienė, Daniel Caspary, Christofer Fjellner, Metin Kazak, David Martin, Vital Moreira, Cristiana Muscardini, Niccolò Rinaldi, Helmut Scholz, Peter Šťastný, Keith Taylor, Paweł Zalewski
Substitute(s) present for the final vote	Josefa Andrés Barea, George Sabin Cutaş, Béla Glattfelder, Elisabeth Köstinger, Georgios Papastamkos, Carl Schlyter, Jarosław Leszek Wałęsa
Substitute(s) under Rule 187(2) present for the final vote	Derk Jan Eppink, Eider Gardiazábal Rubial, Kartika Tamara Liotard, Bart Staes