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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 Baker McKenzie's London office and co-leads our EMEA Customs Team.
Jennifer focuses her practice on the public regulation of international trade, particularly in a wide range of customs compliance issues. She regularly advises clients on import matters, including customs valuation, rules of origin, and classification. She has worked with clients designing and implementing their compliance programs, policies, procedures and risk assessments, and assisting them in customs audits. She has significant experience in managing global customs projects and disputes, particularly in the area of customs valuation (transfer pricing; assists; royalties). Jennifer also advises on FTAs and trade remedies matters.
Jennifer has been consistently recognised as a "Leading Individual" for Customs & Excise and “Next Generation Partner” for Trade, WTO Anti-Dumping And Customs. Clients describe her as "an outstanding customs lawyer and litigator with fantastic experience. She is also easy to work with and leads her team with aplomb", "without a doubt, one of the best customs lawyers in the business (…) with an exceptionally deep knowledge of customs valuation concepts, as well as considerable experience applying those concepts in a variety of jurisdictions."
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.

Author

Sylvain Guelton is a senior associate in the Tax Practice Group in the Brussels office. He joined Baker McKenzie in 2022. He was previously a senior manager at PwC Belgium for six years and a lawyer in a French law firm based in Paris and Brussels.

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