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EU Agrees To Maintain Trade Preferences For Developing Countries

by Ulrika Lomas,, Brussels

28 July 2008

The European Commission on Wednesday welcomed the adoption by EU Member States of a new Regulation applying the EC's Generalised System of Preferences (GSP) for the period from 1st January 2009 until the end of 2011.

This decision will allow the EU to maintain preferential access to its market for 176 developing countries.

The renewed preference system will be updated and improved, ensuring that GSP is targeted at those countries that need it most. GSP provides real economic value to developing countries, with EUR57bn worth of trade under the scheme in 2007, the Commission explained.

EU Trade Commissioner Peter Mandelson commented:

"The continuation of GSP will ensure stability and predictability for beneficiaries and traders in the EU and developing countries. GSP is a vital tool of our pro-development EU trade policy."

As a result of re-calculations to reflect the evolution of trade, preferences for specific product groups will be re-established for six beneficiary countries of GSP (Algeria, India, Indonesia, Russia, South Africa and Thailand). Preferences will be suspended for one country, Vietnam, for Section XII products (footwear and some other products).

These adjustments are triggered automatically when a country's performance on the EU market goes above or below a certain threshold.

This procedure follows strict rules, and helps to ensure that the benefits of GSP preferences are targeted at the countries that need them most. Suspension of preferences, called "graduation", reflects the fact that a particular country is competitive in the EU market for the products in question.

Alongside the standard GSP scheme, the EU also offers a special incentive arrangement for Sustainable Development and Good Governance, known as GSP+. GSP+ offers additional preferences to support vulnerable developing countries in their ratification and implementation of relevant international conventions on human and labour rights, environmental protection, and good governance.

Interested countries have until 31st October this year to apply in order to benefit for GSP+ preferences from January 2009, the EC revealed.

Everything But Arms, the EU's open-ended duty-free, quote-free regime for Least-Developed Countries, which also operates under the GSP Regulation, is also being maintained, it revealed.

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