European countries through the European Commission (EC) have embarked on a reform process that aims to focus the non-reciprocal trade preferences offered under the European Union (EU) Generalised System of Preferences (GSP) on fewer countries. The proposed reforms can be placed within a much broader context, not only of lower EU import tariffs and dwindling preference margins, but also of the EU’s reassessment more generally of its provision of relatively generous nonreciprocal market access preferences to a large number of countries.

The proposed GSP programme changes follow recent reforms of the GSP Rules of Origin (RoO) that were implemented at the start of 2011, and which in turn also included a number of measures that simplify the applicable origin requirements and reduce the number of product-specific rules. The amended RoO also contain a number of provisions that apply only to Least Developed Countries (LDCs).

The main beneficiaries of the proposed GSP scheme will be LDCs, not so much through changes to their preferences (they already receive almost full duty- and quota-free market access) but rather through the higher concentration of preferences and perhaps reduced competition in the EU market. LDCs’ benefits under the proposed scheme are therefore primarily through gains in relative preference margins.

The new scheme would also be open-ended, which means that traders both in the EU and GSP beneficiary countries will enjoy greater economic certainty with respect to their trading relationship. Up until now, the GSP was subject to 10-year cycles with periodic renewals mostly in three year intervals. The current legislative period covers the 2009-2011 period with roll-over legislation already adopted which extends the current scheme to the end of 2013 at the latest (or to any such earlier date when the revised GSP is finalised and implemented). The proposed legislation for a new GSP still needs to be debated in the European Parliament and Council. 

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