The EU Extends Duty-Free Access To 15 Developing Countries

by Ulrika Lomas, for LawAndTax-News.com, Brussels

28 December 2005

The European Commission announced last week that it had granted duty and quota preferences to an additional 15 vulnerable developing countries that have implemented sustainable development and good governance policies under the "GSP+" incentive.

Commissioner Mandelson said that "this was further proof of the EU’s efforts to help developing countries at the same time as promoting sustainable development and Human rights".

The Commission said:

'On the basis of findings from international organisations including the UN and ILO, the Commission has decided to grant GSP+ benefits to the five Andean countries (Bolivia, Columbia, Ecuador, Peru & Venezuela), six Central America countries (Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua & Panama), Moldova, Georgia, Mongolia and Sri Lanka.

'In order to benefit from "GSP+", countries must have:

  • ratified and implemented 23 of the most important international conventions relating to core political, human and labour rights, including:the elimination of discrimination against women; the prohibition of torture; the right to strike; the banning of child labour, the environment, good governance and the fight against drug production and trafficking.
  • ratified other conventions within the lifetime of the regulations i.e. by December 2008. These conventions include the Kyoto Protocol, the Convention on International Trade in Endangered Species and the UN Convention against Corruption.
  • provided comprehensive information concerning ratification of the conventions, the legislation and measures to implement the conventions required for GSP+, and made a formal request to qualify for GSP+ before 31 October 2005.
  • demonstrated that their economies are "dependent and vulnerable". Dependence is defined as meaning that the five largest sections of its GSP-covered exports to the Community must represent more than 75% of its total GSP-covered exports. In addition, GSP-covered exports from that country must also represent less than 1% of total EU imports under GSP.

The EU Generalised System of Preferences is the system of preferential trading arrangements through which the European Union extends preferential access to its markets to developing countries and economies in transition.

The EU says that the volume of imports to the EU from developing countries under the GSP is greater than the volume of imports under the US, Canadian and Japanese GSP systems combined. In 2004 EU imports under GSP totalled €40 billion. Spending under the equivalent American scheme, which is the world’s second most widely used GSP imports, totalled comparably less at €22 billion.

Under the "Everything But Arms" initiative the world’s 50 poorest countries - out of which 34 are Sub-Saharan - export to the EU duty-free and quota-free. Among the GSP beneficiaries, India (17%), the People’s Republic of China (11%) and Brazil (6%) were the main exporters to the EU in 2004. Bangladesh had 6% of the total volume of EU GSP imports and ranked 7th as the first representative of the beneficiaries of the EBA initiative.

The new GSP scheme will come into force on 1 January 2006, although the GSP+ was put in place until the end of this year in a provisional form. The new GSP will remain unchanged until the end of 2008 and provide stability and predictability for importers and exporters. At the end of this period, the allocation of preferences will be reviewed in order to better meet the evolving strengths and development needs of each country.

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