Explanatory Memorandum to COM(2007)857 - Application of a scheme of generalised tariff preferences for the period from 1 January 2009 to 31 December 2011 - Main contents
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This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2007)857 - Application of a scheme of generalised tariff preferences for the period from 1 January 2009 to 31 December 2011. |
|---|---|
| source | COM(2007)857  |
| date | 21-12-2007 |
The Community has granted trade preferences to developing countries in the framework of its Generalised System of Preferences (GSP) since 1971. Trade policy plays a key role in the EU’s relations with the rest of the world. The GSP scheme is part of that policy and must be consistent with and consolidate the objectives of development policy. A key priority is to help developing countries to benefit from globalisation, in particular by linking trade and sustainable development.
In July 2004, the Commission adopted guidelines on the role of the GSP for the ten-year period 2006 to 2015 i. These guidelines established the main objectives of the GSP until 2015 and the instruments to be used to achieve them.
The July 2004 guidelines introduced a number of new objectives which implied substantial changes of the GSP scheme, such as targeting preferences on countries that most need it, enlarging the product coverage of the GSP to products of interest for developing countries, making the graduation system more transparent and stable and introducing a new special incentive scheme to encourage sustainable development and good governance.
The guidelines are put into operation in the form of multi-annual implementing regulations, the first of which was GSP Regulation No 980/2005 i, which entered into force on the 1 January 2006 and will expire on 31 December 2008.
The subsequent GSP Regulation, which will enable the continuation of the GSP scheme in the years 2009-2011, shall enter into force on 1 January 2009. In order to assure predictability of the GSP scheme, as called for by the users of the scheme, the GSP Regulation shall be published well in advance to its entry into force.
The GSP implementing Regulations also cover provisions referring to the special incentive arrangement to encourage sustainable development and good governance (the GSP+) and the special arrangement for least developed countries (EBA). The eligibility for GSP+ is updated regularly for each GSP implementing Regulation. The list of GSP+ beneficiaries for this scheme applying in the years 2009-2011 shall be adopted only in December 2008 to allow for maximum time for potential beneficiaries to comply with eligibility criteria. The EBA arrangement is unlimited in time, in accordance with the provisions of Article 30 of the GSP Regulation.
The July 2004 guidelines have been established in order to satisfy the demand for greater stability and transparency of the EU GSP scheme, expressed by the users of the scheme. They are binding on the objectives of the GSP schemes until 2015.
The provisions contained in the present proposal remain strictly within the remits of the guidelines.
2. Explanation of the provisions
In order to assure stability of the GSP scheme, the basic elements of the GSP scheme are settled until 2015, as laid down in the GSP mandatory guidelines for 2006-2015. Taking into account that the concept of the GSP has thus recently been updated and substantially redefined as from January 2006 to take into account the development needs and WTO requirements, the basic provisions of the proposed GSP Regulation remain unchanged but have been reviewed to ease the reading of the GSP Regulation and to facilitate the application of the scheme.
Furthermore, as new solutions for the GSP scheme, envisaged by the guidelines 2006-2015, have become operational only in January 2006 (partially in July 2005 in case of the GSP+ arrangement) and the year 2006 was the first year of application of the new elements of the GSP, it would be too early to analyse the scope for potential further modification, on the basis of experience gained during only one year of application. Pursuing further substantial changes at this stage could also be to the detriment of the guidelines' objective to assure stability and transparency of the scheme.
Additionally, most recent statistics show that the concept of the GSP introduced in 2006 works well in practice and can be continued, as the value of preferential imports under the GSP scheme increased by 10% over 2005. The GSP proved to be efficent in promoting exports to the EU from countries that most need it, as GSP imports from least developed countries and the GSP+ beneficiaries increased in 2006 respectively by 35% and 15%. Also these countries' utilisation rates of the schemes have risen.
Consequently the substance of the scheme remains unchanged. The modifications introduced are resulting from the regular implementation of the scheme, like the review of the graduation system or the assessment of the countries' eligibility for the scheme and its sub-arrangements. They concentrate on the regular update of the wording of the GSP Regulation. Modifications are therefore introduced to Annex I (graduation) and, as a result of the provisions of the currently applied GSP Regulation, to Art. 8 where beneficiary states interested to benefit from the GSP+ scheme are expected to fulfil, after a 3 year transitional period, the criterion of ratification and implementation of all Conventions listed in Annex III. In Art.19 the period for the Council to adopt a GSP withdrawal Regulation is extended. Further in Art.11, it is envisaged to extend the tariff quota for products of subheading 1701 11 10 (raw cane sugar for refining) as opened under the EBA arrangement of marketing year 2008/2009 for three months until 30 September 2009 with a pro rate increase of its volume. This step is necessary to ensure coherence of the treatment of sugar under EBA with the reformed Common Market Organisation for sugar as well as the market access provisions for sugar in the future Economic Partnership Agreements with ACP countries, which also comprise EBA beneficiaries.
3. Consultation of interested parties
Interest groups have expressed their views and made their own observations and recommendations on the future of the GSP. The Council supported the Commission's approach to the technical review of the GSP Regulation. A civil society dialogue was conducted in May 2007 at which trade unions and various professional associations have expressed their views. Beneficiary countries of the GSP have been active in bringing forward their views. Overall, the main concerns brought forward related to ensuring the predictability of the system.
The proposed Regulation does not incur costs charged to the EC budget. Its application does, however, entail loss of customs revenue. Based on the 2005 figures, the annual loss of customs revenue (total loss of income minus the cost of the de-graduation) resulting from the application of the GSP Regulation was estimated to be EUR 3.6 billion. As a result of the application of the graduation mechanism under the proposed Regulation, the annual loss of customs revenue is estimated to be EUR 3.4 billion.