The EU’s Generalised System of Preferences - 2009/02/01 - Textiles Intelligence

Report title: The EU’s Generalised System of Preferences

from Textiles Intelligence
29 page report published Feb 01, 2009

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The Generalised System of Preferences (GSP) enables exporters in developing countries to benefit from preferential tariffs in the markets of industrialised countries. Its aim is to help those countries to generate additional export revenue and reduce poverty. The first GSP schemes were launched in Europe, Japan and the USA in the 1970s, followed by schemes in various other countries. However, the EU’s schemes are the most widely used, and 176 countries benefit from them. Imports under the schemes increased by 10% in 2006 and 12% in 2007 to reach Euro57 bn (US$78 bn). There are three types of scheme. The standard GSP is a non-negotiated arrangement under which the EU provides non-reciprocal preferential access. In the case of textiles and clothing, GSP duties amount to 80% of the full common customs tariff. GSP+ aims to encourage sustainable development and good governance in vulnerable developing countries. Beneficiaries must ratify and apply 27 core United Nations (UN) and International Labour Organization (ILO) conventions relating to such matters as human and labour rights, the environment, the fight against drug production and trafficking, and corruption. The Everything But Arms (EBA) GSP scheme offers duty-free and quota-free access to least developed countries (LDCs) for all products except arms and armaments. Leading LDC producers and exporters of textile goods include Bangladesh, Cambodia, Lesotho and Madagascar. The GSP is governed by strict rules of origin—to ensure that the benefits go only to the countries intended. Products “originate” in a country if they were wholly obtained in the country or sufficiently worked upon or processed within it. However, “cumulation” rules enable production processes to take place in certain other locations without affecting the country’s entitlement to GSP benefits. In December 2008 the EU announced that 16 countries would benefit from GSP+ between January 1, 2009, and the end of 2011. However, the eligibility of one of the biggest beneficiaries, Sri Lanka, is subject to a European Commission review following allegations of human rights violations. This is casting a shadow over the Sri Lankan garment export sector, which employs nearly 300,000 people, and there are fears that the entire textile and clothing industry could be put at risk if the benefits under GSP+ come to an end.

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Textiles Intelligence

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TOI 137 GSP

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Title	Starting Page	Number of Pages
Sections
SUMMARY	5	1
SUMMARY	5	1
INTRODUCTION	5	1
INTRODUCTION	5	1
DEVELOPMENT OF THE GENERALISED SYSTEM OF PREFERENCES (GSP)	6	1
DEVELOPMENT OF THE GENERALISED SYSTEM OF PREFERENCES (GSP)	6	1
THE EU S GENERALISED SYSTEM OF PREFERENCES (GSP) SCHEME	7	3
THE EU S GENERALISED SYSTEM OF PREFERENCES (GSP) SCHEME	7	3
THREE CATEGORIES OF EU TRADE PARTNERS	9	1
THREE CATEGORIES OF EU TRADE PARTNERS	9	1
DIFFERENCES BETWEEN STANDARD GSP, GSP+ AND EVERYTHING BUT ARMS (EBA) SCHEMES	10	5
DIFFERENCES BETWEEN STANDARD GSP, GSP+ AND EVERYTHING BUT ARMS (EBA) SCHEMES	10	5
THE STANDARD GENERALISED SYSTEM OF PREFERENCES (GSP) SCHEME	11	1
THE STANDARD GENERALISED SYSTEM OF PREFERENCES (GSP) SCHEME	11	1
GSP+ SCHEME	11	1
GSP+ SCHEME	11	1
The case of Sri Lanka	12	1
The case of Sri Lanka	12	1
THE EVERYTHING BUT ARMS (EBA) SCHEME	13	1
THE EVERYTHING BUT ARMS (EBA) SCHEME	13	1
Table 1: List of countries which benefit from GSP by regional grouping and stage of development	14	1
Table 1: List of countries which benefit from GSP by regional grouping and stage of development	14	1
EU RULES OF ORIGIN AND CUMULATION	14	7
EU RULES OF ORIGIN AND CUMULATION	14	7
CRITERIA USED WHEN DETERMINING THE ORIGIN OF A PRODUCT	15	1
CRITERIA USED WHEN DETERMINING THE ORIGIN OF A PRODUCT	15	1
Change of Harmonised System (HS) tariff heading or tariff jump criterion	15	1
Change of Harmonised System (HS) tariff heading or tariff jump criterion	15	1
Value or ad valorem criterion	15	1
Value or ad valorem criterion	15	1
Specific process criterion	16	1
Specific process criterion	16	1
INSUFFICIENT OPERATIONS	16	1
INSUFFICIENT OPERATIONS	16	1
THE DIRECT TRANSPORT RULE	16	1
THE DIRECT TRANSPORT RULE	16	1
RELAXATIONS OF THE RULES THROUGH CUMULATION OF ORIGIN	17	1
RELAXATIONS OF THE RULES THROUGH CUMULATION OF ORIGIN	17	1
Bilateral cumulation	17	1
Bilateral cumulation	17	1
Regional cumulation	18	1
Regional cumulation	18	1
Diagonal cumulation	19	1
Diagonal cumulation	19	1
Table 2: Protocols of origin facilitating diagonal cumulation in the Euro-Mediterranean region, 2005-07	19	1
Table 2: Protocols of origin facilitating diagonal cumulation in the Euro-Mediterranean region, 2005-07	19	1
Cumulation in the case of goods originating in Norway and Switzerland	20	1
Cumulation in the case of goods originating in Norway and Switzerland	20	1
Determining the origin of a set of goods	20	1
Determining the origin of a set of goods	20	1
THE EU S NEW GENERALISED SYSTEM OF PREFERENCES (GSP) REGULATION FOR 2009-11	20	3
THE EU S NEW GENERALISED SYSTEM OF PREFERENCES (GSP) REGULATION FOR 2009-11	20	3
GRADUATION AND DEGRADUATION FOR THE PERIOD 2009-11	21	1
GRADUATION AND DEGRADUATION FOR THE PERIOD 2009-11	21	1
AN ADDITIONAL OPPORTUNITY TO APPLY FOR GSP+	21	1
AN ADDITIONAL OPPORTUNITY TO APPLY FOR GSP+	21	1
RESPONSES TO THE NEW GSP REGULATIONS	21	1
RESPONSES TO THE NEW GSP REGULATIONS	21	1
Response of the Foreign Trade Association (FTA), Brussels	21	1
Response of the Foreign Trade Association (FTA), Brussels	21	1
Response of the International Textiles and Clothing Bureau (ITCB), Geneva	22	1
Response of the International Textiles and Clothing Bureau (ITCB), Geneva	22	1
IMPACT OF THE EU S GENERALISED SYSTEM OF PREFERENCES (GSP) ON THE DEVELOPMENT OF POOR COUNTRIES	23	3
IMPACT OF THE EU S GENERALISED SYSTEM OF PREFERENCES (GSP) ON THE DEVELOPMENT OF POOR COUNTRIES	23	3
Table 3: EU preferential imports of textiles and textile articles from selected regions, 2007	24	1
Table 3: EU preferential imports of textiles and textile articles from selected regions, 2007	24	1
Table 4: Preference utilisation rates for exports of textiles and textile articles to the EU from selected supplying countries, 2003-07	25	1
Table 4: Preference utilisation rates for exports of textiles and textile articles to the EU from selected supplying countries, 2003-07	25	1
GLOSSARY OF TERMS USED IN THE EU S PREFERENTIAL ARRANGEMENTS	26	4
GLOSSARY OF TERMS USED IN THE EU S PREFERENTIAL ARRANGEMENTS	26	4

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Textiles Intelligence specialises in providing business information on the global fibre, textile and apparel industries. It was formed in 1992 as a spin-off from the Economist Intelligence Unit and the company now publishes more than 100 reports a year on the textile and apparel industry. Reports contain authoritative research-based information and statistical data – including details of markets for, and developments in, niche sectors such as technical textiles and performance apparel – and are used by senior executives, investors and strategists who need to understand all areas of the supply chain.

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