Trade and sustainability: Commission proposes new EU Generalised Scheme of Preferences to promote sustainable development in low-income countries
The Commission recently (22 September 2021) adopted the legislative proposal for the new EU's Generalised Scheme of Preferences (GSP) for the period 2024-2034. The Commission is proposing to improve some of the key features of the scheme to better respond to the evolving needs and challenges of GSP countries as well as reinforce the scheme's social, labour environmental and climate dimension.
The GSP Regulation is a unilateral trade tool that removes or reduces import duties from products coming into the EU from vulnerable low-income countries, supporting poverty eradication, sustainable development, and their participation in the global economy. The Commission's proposal makes the EU's GSP more focused on reducing poverty and increasing export opportunities for low-income countries. It aims to incentivise sustainable economic growth in low-income countries and offers new room for engagement on environmental and good governance issues.
The new GSP framework strengthens the EU's possibilities to use trade preferences to create economic opportunities and to advance sustainable development. The modernised framework also expands the grounds for the withdrawal of EU GSP preferences in case of serious and systematic violations. Beyond the core human rights and labour conventions already covered, the proposal incorporates environmental and good governance conventions.
Focus on those most in need
The GSP has several features to make sure trade preferences go to countries that need them the most and to support their sustainable development.
The new proposal further improves the current scheme by:
- Ensuring a smooth transition for all countries set to graduate from Least Developed Country (LDC) status in the next decade. They will be able to apply for the special incentive arrangement for sustainable development and good governance (GSP+) if they commit to strong sustainability standards and can thus retain generous tariff preferences to access to the EU market;
- Maximising the opportunities for low-income countries to benefit from the GSP by lowering product graduation thresholds (that is, the temporary suspension of tariff preferences for highly competitive products) by ten percentage points so that the large industrialised producers leave more space in sectors where they are very competitive;
- Expanding the list of international conventions that need to be complied with by adding two additional human rights instruments on the rights of people with disabilities and the rights of the child, two labour rights conventions on labour inspections and tripartite dialogue, and one governance convention on transnational organised crime;
- Setting up a well-defined framework for the current GSP+ beneficiaries to adapt to the new requirements, offering an adequate transition period and requiring the presentation of implementation plans.
A greener GSP
To reinforce the importance of meeting climate change and environmental protection standards, the new GSP proposal:
- Introduces the possibility to withdraw GSP benefits for serious and systematic violations of the principles of the conventions on climate change and environmental protection;
- Extends the list of international conventions that GSP+ countries must ratify beyond the current seven environmental and climate instruments, now including the Paris Agreement.
A more flexible GSP
Lessons learned through the application of the current GSP are reflected through:
- Improvements to the monitoring of compliance with GSP+ requirements, and increased transparency and involvement of civil society in its application;
- A new urgent withdrawal of preferences procedure when a rapid response is needed in exceptionally grave circumstances in a beneficiary country, such as grave violations of international standards;
- An assessment of the socio-economic effects of any proposed withdrawal, to consider any negative impact on vulnerable populations.
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