Brussels, 07/07/2004 (Agence Europe) - On Wednesday, the Commission proposed a modification of the structure and functioning of the generalised system of preferences (GSP) of the EU for the period 2006-2015, making it "simpler, more transparent and more objective", Commissioner Pascal Lamy (Trade) told the press. The communication adopted by the Commission on Wednesday to this end suggests simply limiting the guidelines and a general framework for the new GSP, to enter into force on 1 January 2006, but it still does not go into details. Mr Lamy wants the Council, European Parliament and European Economic and Social Committee to take position first of all on the political approach proposed, before the Commission can do so, "before the end of this Commission's mandate if possible". Mr Lamy also said that the GSP reform would have no impact on the multilateral negotiations underway at the WTO, as these subjects are "mutually independent".
On the methodology, the Commission has proposed the following changes:
- Reduce the number of regimes from five to three. There are currently five systems of GSP: 1) the general system; 2) the special regime for the protection of social rights; 3) the special regime for environmental protection; 4) the special regime to fight drugs production and trafficking; 5) the special regime for the least developed countries (LDCs), also known as the "Everything But Arms" initiative which benefits 50 of the poorest countries. According to the Commission, this multitude of regimes creates confusion, and sometimes complicates access to preferences for the beneficiary countries. This has created a need to simplify and reduce the GSP to just three regimes: a) a general regime; b) a special regime ("Everything But Arms") for 50 LDCs; c) and an incentive-based regime for sustainable development and governance ("GSP+"). The Commission has also proposed removing from the list of beneficiary countries those which already benefit from preferential access to the Community market under a free trade agreement. The countries involved in this last option will not lose out, because all beneficiary products must first be integrated into the free trade agreement in question.
- Concentrate GSPs on countries which really need them, i.e. the LDCs and the most vulnerable developing countries (small economies, landlocked countries or small island States, low-income countries). "The GSP should concentrate on them", said Mr Lamy. The EU is already the world's biggest provider of trade preferences to developing countries (it imports more under this regime than the US, Japan, Canada, Australia, Norway and Switzerland put together); "but we want to do even more", said Mr Lamy.
- To achieve this concentration of preferences on the poorest countries, the Commission proposes a sliding scale of the most competitive products of the beneficiary countries, and to exclude countries which, for specific products, do not need preferences to compete on the EU market. The only criterion for exclusion proposed by the Commission is to take the market share (for which the threshold has not yet been set) achieved by a specific product thanks to the preferences it has enjoyed. "The graduation system is not a sanction", said Mr Lamy, but excluding a country from the GSP for a group of products is rather "a sign that the GSP has done its job". The "product/country combined approach also makes sure that a country is not fully excluded, unless it is effectively competitive for all products. Will China and India have most to lose from this graduation system? It is "too early, as there are no figures of the table yet", to speculate as to whether China and India will lose out under this new system, "as countries are not targeted, but country/product pairs", answered Mr Lamy, who feels strongly that China no longer needs preferences in a number of sectors such as textiles, to have access to the Community market, where China is already competitive.
- Create a new incentive to boost sustainable development and correct management of public affairs. By proposing a new "GSP+" regime, the Commission intends to bring in special incentives for countries for agreeing to the main international conventions on social rights, protection of the environment and governance, including the fight against the production and trafficking of drugs. This "GSP+" will replace the existing social "drugs", "social" and "environment" regimes, which have been used only very occasionally in their current form.
- Improve the functioning of the rules of origin. The Commission proposes to introduce a certain amount of flexibility in managing rules of origin, which still prevent some of the DCs from fully benefiting from the GSP. The idea would be to facilitate the acquisition of the origin, in order to optimise preference use. Basically, the system could be improved by the regional cumulation, thus promoting regional co-operation between the beneficiary countries. The possibility of inter-regional cumulation would have to be examined on the basis of requests from the various regional groupings.