Explanatory Memorandum to COM(2023)426 - Amendment of Regulation 978/2012 applying a scheme of generalised tariff preferences - Main contents
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This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2023)426 - Amendment of Regulation 978/2012 applying a scheme of generalised tariff preferences. |
|---|---|
| source | COM(2023)426 |
| date | 04-07-2023 |
1. CONTEXT OF THE PROPOSAL
• Reasons for and objectives of the proposal
The European Union (EU) has granted trade preferences to developing countries1 through the Generalised Scheme of Preferences (GSP) since 1971. It is part of its common commercial policy, in accordance with the general provisions governing the EU's external action2.
The GSP is one of the EU’s key instruments to assist developing countries to integrate in the world economy through trade, reduce poverty, and support sustainable development through the promotion of core human and labour rights, environmental protection, and good governance. The GSP consists of three arrangements:
- Standard GSP: for low and lower-middle income countries, providing for a reduction or full removal of customs duties on two thirds of EU tariff lines.
- GSP+: the special incentive arrangement for sustainable development and good governance, which reduces tariffs to 0% for broadly the same tariff lines as Standard GSP. It is granted to vulnerable low and lower-middle income countries that implement 27 international conventions related to human rights, labour rights, protection of the environment and good governance.
- EBA (Everything But Arms): the special arrangement for least developed countries (LDCs), providing them with duty-free, quota-free access to the EU market for all products except arms and ammunition.
The current scheme is based on Regulation (EU) No 978/20123 and applies until 31 December 2023. Unless a new Regulation replacing the existing Regulation is adopted prior to that date, the Standard GSP and the GSP+ arrangements will cease to apply from 1 January 2024. Imports from developing countries under Standard GSP and GSP+ would thus be charged with Most Favoured Nation (MFN) duties. However, imports from LDCs would still be covered by the EBA arrangement, which does not have an expiry date.
On 22 September 2021, the European Commission adopted a Proposal4 for a Regulation of the European Parliament and Council on applying a generalised scheme of tariff preferences. The new Regulation would repeal Regulation (EU) No 978/2012 of the European Parliament and of the Council and enter into force from 1 January 2024. The ordinary legislative procedure is ongoing but has not been concluded and there is a risk that it will not be concluded in time. It is necessary to ensure continuity in the operation of the scheme beyond 31 December 2023. The consequences of any discontinuity for GSP would be that all imports under GSP would revert to standard most favoured nation treatment, except for those from least developed countries which would be covered by the Everything But Arms (EBA) regime, with significant economic shocks for companies in the EU and in beneficiary countries.
This proposal is tabled with a view to ensure continuity and sufficient time for the legislative procedure necessary to prolong the application of the existing rules and avoid the negative consequences outlined above. The Commission is of the view that the new GSP Regulation should apply as soon as possible, at which point this temporary prolongation of the existing scheme should end. It is therefore proposed to maintain the current Regulation beyond 31 December 2023, with no changes, until the moment a successor Regulation is agreed among legislators and enters into force, after an appropriate transition period.
Given the prevailing uncertainties about the time it will take to complete the legislative process on the new GSP Regulation, it is proposed to extend the validity of the current GSP Regulation until 31 December 2027. This will create a window for the successor Regulation to be prepared, agreed, and adopted with sufficient notice for economic operators and beneficiary countries to prepare for any changes made, without running the risk of an open-ended extension which would in effect perpetuate the status quo and delay opportune reforms in the scheme.
This proposal amends only the date of application of Regulation (EU) No 978/2012.
The proposal on the extension of the current GSP Regulation does not incur costs charged to the EU budget. Its application would also not entail any loss of customs revenue compared to the current situation.