Brussels, 24/06/2005 (Agence Europe) - As announced earlier, the Council is expected, on 27 June, to adopt the regulation on the new Generalised System of Preferences (GSP) to be applied as of 1 January 2006 until 31 December 2008. The GPS special regime, however, will take effect as of 1 July 2005. It is to be remembered that, in February this year, the Commission had suggested bringing enforcement of the new GSP forward to 1 April 2005 to help Asian countries affected by the tsunami (EUROPE 8886), but it has not been possible to attain the Council's qualified majority in time.
This is the first GSP regulation based on the new principles established in 2004 by the Commission on the role of GSP for the decade 2006-2015. As for earlier systems, the European Parliament and the Economic and Social Committee were consulted. Diplomats in Council explain that the main characteristics of the new GSP are transparency, stability and simplicity. The proposal comprises a number of innovations including more generous offer covering three hundred additional products, mainly in agriculture and fisheries. It also provides for access to an enlarged market and “graduation” on a “section” basis. In concrete terms, this means that the GSP will be withdrawn from a given country for a group of products, or “section” as soon as those products have become competitive on the European market. The market share will determine whether a product is competitive as soon as a “section” for a given country exceeds 15% of total European imports in the same product section under GSP for three years running, the benefit of GSP will be withdrawn from that country but only for the product section concerned. For textiles and clothing, products that are particularly sensitive (mainly since the abolition of quotas in 1 January 2005), the threshold is not 15% but 12.5%. Textile processing has given rise to lengthy, difficult negotiation in Council, which has delayed adoption of the regulation (see below); - a special incentive regime in favour of sustainable development and good governance (GSP+) to be enjoyed by vulnerable countries if they ratify and implement several international conventions (on human rights, social rights, the environment and good governance). The GSP+ will in time replace all the special incentive regimes currently in force (social and environmental clauses, incentive regime to combat drug trafficking). The “Everything but Arms” (EBA) regime which provides for a zero rate of imports from the less developed countries remains unchanged.
Since the publication of the draft regulation last autumn (EUROPE 8811), Member States have been divided over the question of graduation by GSP beneficiary countries in the field of textiles. While the Commission had suggested that, for textiles, a country should be excluded from the GSP as soon as its market share in that “section” has reached 12.5% of all EU imports for the same section under the GSP regime, a group of countries headed in particular by Italy, France, Greece and Portugal urged for a 10% threshold, which would above all allow India to be excluded from GSP for a large number of textile products. A second group of countries defended a 15% graduation level (the normal threshold). This week, Coreper finally approved by qualified majority a proposal of compromise from the Luxembourg Presidency, which should allow the new regulation to be definitively adopted by the Transport Council on Monday (point A.) According to this compromise, the graduation threshold is fixed at 12.5% (as proposed by the Commission), but it will apply to two separate sections: - section XI(a), textiles (chapters 50-60 of the combined nomenclature); - section XI (b), clothing (chapters 61-63 of the combined nomenclature). The regulation will also contain a specific safeguard clause for clothing.
France, Italy, Spain, Portugal, Greece, Belgium, Poland, the Czech Republic, Hungary and Lithuania stress in a declaration (annexed to the regulation) that the Commission will, in its examination of the effects of the Everything But Arms regime on the new common market organisation for sugar, attach special importance to the risks related to swaps and original fraud. These countries invite the Commission to foresee every means required to prevent the internal market being destabilised by such practices or by the flow of exports from a beneficiary country massively in excess of the traditional export volumes from that country. In another unilateral declaration, the United Kingdom, Germany, Austria, Denmark, Sweden, Finland, and Estonia restate their support for quota free and duty free on the Community market for all developing countries under the EBA regime. This free access, they say, is a “key element” of the EU's trade and development policy. Malta has issued a statement regretting the separation of the textile and clothing sections. Germany also issued a unilateral statement regretting that the Council had not been able to decide on a more “consequential reform” of GSP.
The Luxembourg Presidency welcomed the agreement. Council President Jean Asselborn commented that the “generalised system of preferences is a key instrument for helping developing countries reduce poverty by supporting them as they earn revenue from the global market. This instrument engenders an annual trade flow towards the EU of around EUR 50 billion for all developing countries”. He felt that “by accelerating access to the European market and by reducing customs tariffs for developing countries, the Union shows proof of its unique generosity among the industrialised countries to strengthen the integration of these countries in world trade”.