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On 21 September 2021, the European Commission published its proposal for a new EU scheme of generalised preferences, also called GSP.

The GSP provides preferential access for products to the EU market originating in developing countries without the need for these countries to open their markets to EU exports in exchange. This preference shall be granted in accordance with the  “Enabling Clause” set in Article 2a of the General Agreement on Tariff and Trade (GATT), which provides a permanent exemption from the Most Favoured Nation (MFN) (non-discrimination) for developed countries to unilaterally grant elimination or reductions of the tariff paid on imports from developing countries which share the same trade, financing and development needs.

Currently, the EU GSP is composed of three pillars:

  • the standard GSP;
  • the GSP+ (consisting of a special incentive arrangement for sustainable development and good governance by which countries eligible to GSP shall meet specific standards on human rights, labour rights, environment and good governance to benefit from additional tariff preferences); and
  • Everything But Arms (EBA) for the least developed countries listed as such by the United Nations.

Two of the three components of the GSP (GSP and GSP+) are set to expire at the end of 2024. The legislative proposal by the European Commission aims to renew them for 10 more years.

By this new legislative proposal, the European Commission aims to reinforce the conditionality of gaining and maintaining tariff preferences (Recital 25), by taking into consideration key policies that the EU wants to promote: environment, labour rights, but also “orderly international migration” (Recital 26). Read together with Recital 27, the European Commission would be able in the future to temporarily withdraw the benefit of the GSP to a country that does not meet “its obligation to readmit its own nationals.”

Through this new proposal and the possible exclusion of Russia from the MFN treatment, envisaged recently, the EU shows once again its intention to use international trade as an instrument to harden its stance on other policy areas towards third countries, in this case security policy and migration.

The international trade committee of the European Parliament will vote on the proposition next week on April 25th. A positive vote in committee will give way to an adoption of the new GSP regulation by the European Parliament in plenary later this year.

Author

Jennifer Revis is a partner in the EU Competition and Trade Practice Group of Baker McKenzie's London office. She is acknowledged for her timely advice and responsiveness by the Legal 500. Jennifer has been on secondment to the UK customs authorities (Her Majesty's Revenue and Customs) in their tax and excise litigation department and to the Firm's European Law Centre in Brussels. Jennifer is frequently invited to speak at external conferences and regularly contributes articles to tax journals on customs matters such as De Voils Indirect Tax Journal.

Author

Sylvain Guelton is a Senior Associate in Baker McKenzie, Brussels office.

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