New EU Generalised System of Preferences (GSP) published in EU Official Journal

The new EU GSP, which will turn into effect on the 1st of January 2014 has been published in the EU Official Journal. The European Commission can now officially execute all calculations necessary to determine whether specific product categories from specific beneficiary countries can (de-)graduate from the system. Further information from the European Commission, including the text of the Regulation, likely beneficiary countries and product coverage is available here: http://trade.ec.europa.eu/doclib/press/index.cfm?id=840

We would like to remind you that the main features of the adopted text are the following: 

Entry into force only in 2014
The revised EU GSP will enter into force on the 1st of January 2014. The Commission had proposed entry into force upon adoption of the new system, but the EP and Council have agreed on a more workable approach. Upon publication in the official journal of the EU, the Commission will make the necessary calculation to understand the exact consequences for country- and sectoral graduation.

Less eligible countries, but main sourcing countries remain in the scheme
As proposed by the European Commission, countries that are classified as an upper-middle income country for 3 subsequent years will, after a one year transition period, not qualify for GSP anymore. Countries that have signed an FTA with the EU will also not benefit from GSP anymore. This would have implied that most notably Thailand and Malaysia would not be eligible for GSP anymore. However, the Commission has stated that, as the current text includes a list of beneficiary countries, a transition period will also apply for Thailand (which might be classified as an upper-middle income country by the WB for three subsequent years in 2013) and Thailand will at least be able to benefit from GSP until 31st of December 2014. Moreover, the final text includes an amendment that will ensure that Malaysia can still benefit from GSP until 31st of December 2015, in case it has concluded negotiation for an FTA with the EU before the 1st of January 2014.

Throughout the revision process, the sporting industry has argued against a further exclusion of sourcing countries, such as India and Indonesia, from GSP and the final EP text confirms this position.

Graduation thresholds
Although numerous MEPs and Member States have called for a further lowering of graduation thresholds for textile and clothing, the final text does not change the initial Commission proposal. It is currently unclear which sectors from which countries might graduate by 2014. The Commission might be able to provide further clarity by end- 2012, but currently some uncertainty remains on apparel from Indonesia, India and Vietnam and footwear from Vietnam.

GSP+: Pakistan and Philippines eligible and no sectoral graduation
The European Commission’s proposal on GSP+ was rather favourable, including the possibility for Pakistan to profit from GSP+ and removing the possibility of sectoral graduation from GSP+. Pakistan has indicated that it has ratified all protocols required for admittance to the EU GSP+ scheme. Many lobbies including Euratex and Business Europe have argued against the Commission’s proposal on GSP+ but the Council and EP have decided to stick to the Commission’s proposal

Increased transparency
Upon request by the sporting industry, the EP Rapporteur has introduced amendments to the Commission’s text, obliging the Commission to ensure that the relevant statistical data for the GSP sections are regularly available in a public database. This might especially be important as we experienced a lack of transparency when footwear from Vietnam was graduated from GSP .

Safeguards for textile products
The EP and Council have decided to stiffen the specific safeguard for textile products. Under the new text GSP will be suspended in case imports of the product from the country in question 1) exceeds 6% of total EU imports of the product for a 12 months period, and 2) exceeds 14,5% of GSP imports of the product for a 12 months period. For now, we have no information on specific countries that might be affected by this.