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Review of the Generalised Scheme of Preferences (GSP) Regulation

In “A global Europe: Leveraging our power and partnerships”

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After examining the Commission legislative proposal for a new Generalised System of Preferences, to enter into force from 2024, the Parliament decided to open interinstitutional negotiations in June 2022. The proposed regulation requires the approval of the Parliament and the Council through the ordinary legislative procedure.

Background

The GSP scheme provides free access for least developed countries, and lowers custom duties on two thirds of tariff lines for low and lower-middle income countries. A special incentive arrangement called GSP+ removes customs duties completely on the same two thirds of tariff lines for countries that fulfil certain economic vulnerability criteria and ratify and implement 27 international convention on human and labour rights, the environment and good governance. Various stakeholders have expressed support for the system but civil society organisations and labour unions have highlighted that serious human and labour rights shortcomings in some beneficiary countries persist, calling on the EU to improve its monitoring and if needed to take steps to withdraw preferences.

The new GSP

The Commission held public consultations with stakeholders in the first half of 2020 and commissioned an external study. The Commission's impact assessment concluded in favour of upholding the scheme's three strands given their benefits in terms of poverty eradication and job creation. 

The new proposal was announced in Commission President von der Leyen's Letter of Intent accompanying the State of the Union speech in September 2020, and in the Commission 2021 Work Programme, published in October 2020.

The College of the Commissioners adopted the legislative proposal for a new GSP system in September 2021. The new GSP preserves the broader features of the current system - including the division into three strands: Everything But Arms, Standard GSP and GSP+. It proposes a number of chnages with respect to trade and economic benefits, human rights and environmental conditionality, as well as the monitoring and transparency of the scheme. It aims to better adapt to the needs of beneficiary countries, particularly as several of the Least Developed Countries (which benefit of the most generous arrangement Everything but Arms) are expected to lose this status and therefore to graduate from the scheme during the decade of the next scheme's validity (2024-2033). Some of the proposed changes (this is a non-exhaustive list) include:

1)  Graduation threshold: lowering by 10% the share of imports in a specific sector beyond which a Standard GSP country looses preferences from 57% currently, to 47% in the new scheme so as to decrease competition from large industrial producers.

2) Adding several international conventions to the list of conventions which GSP+ countries have to ratify and other GSP beneficiaries have to generally respect without necessarily ratifying e.g. the Paris Agreement on Climate Change (2015). Moreover, compliance with the principles of all included environmental and good governance conventions becomes now mandatory for all GSP beneficiaries. Should they not comply, the benefits can be withdrawn.

3) Improving compliance with these international norms for GSP+ beneficiaries, which will have a transition period of two years to ratify newly added conventions, and will have to submit a detailed implementation plan for all conventions included in the system. The proposal provides for an urgency procedure for the rapid withdrawal of preferences in case of violations of the principles of these conventions. 

4) Improved transparency and involvement of the civil society. 

5)  (safeguard mechanism), in case of sudden and significant rises of importations.

The position of the European Parliament

The INTA Committee appointed Heidi Hautala, member of the Greens/EFA Group as rapporteur for this file. On 3 May 2022, the INTA committee adopted with a large majority their position on the Commission's GSP proposal. The adopted report provides for an obligation also for standard GSP beneficiaries to ratify all the conventions under the system in five years. The report proposes to add three conventions to the list proposed by the European Commission: the Rome Statute of the International Criminal Court and the First and Second Optional Protocols to the International Covenant on Civil and Political Rights (introducing an individual complaint mechanism for breaches of rights under the Convention, and on the abolition of the death penalty respectively). MEPs from INTA rejected the Commission's proposal to link trade preferences awarded by GSP to cooperation by beneficiary countries on migration and the readmission of rejected asylum seekers. INTA proposed that the Parliament enters interinstitutional negotiations on the proposal, a decision that was endorsed by the Parliament in the June Plenary Session.

The Council adopted its negotiating mandate on the revised GSP regulation on 20 December 2022 which allowed the Council presidency to start negotiations with the EP on 31 January 2023. Amongst others the Council aims for a stronger special surveillance mechanism for imports of agricultural products from GSP beneficiaries to the EU, which could, if necessary, lead to the withdrawal of tariff preferences. However, as after several rounds of trilogues, negotiations haven´t been been concluded. The main problem that stalled the negotiations is the link between preferences granted to third countries and the readmission of illegal migrants. Therefore, INTA Committee voted on 19 September 2023 on the Commission proposal to extend the current GSP rules until 31 December 2027. The EP adopted the regulation prolonging the current GSP Regulation on 5 October. The INTA Chair, Bernd Lange (S&D, DE) and rapporteur Heidi Hautala (Greens/EFA, FI) issued a statement on 22 November 2023 stressing that the Parliament and the Council need to get back to the negotiation table. 

References:

Further readings:

Author: Marc Jütten, Members' Research Service, legislative-train@europarl.europa.eu

As of 20/02/2025.