EU Reshaping the Import Preference Scheme (GSP)

The European Commission has announced that it wants to reshape the current General System of Preference (GSP) regime that allows imports from developing countries to benefit from lower or zero rates of customs duty.  The proposed reform, due to come in for 1 January 2014, seeks to reduce the number of countries benefiting from GSP and allow those that continue to qualify greater potential reductions.  These changes are likely to have a significant impact on importing companies' customs costs.

Fewer Beneficiaries

The current GSP arrangements allow preferential duty rates on imports from 176 developing countries.  The proposals seek to cut the list of GSP beneficiaries by 96 leaving a core of 80 qualifying countries.  Countries that have achieved a high upper or middle income per capita will be excluded.  This will include countries such as Russia, Kuwait, Saudi Arabia, Qatar, Argentina and Brazil).  The final list of countries being axed from GSP will only be identified at the end of December.

Other countries will be excluded from GSP because they benefit under other trade agreements although the qualifying criteria may not be the same.

Increasing Preferential Benefits

The current GSP arrangements cover approximately 90% of tariff lines.  The proposed new system aims to leave product coverage unchanged although there will be some changed to the graduation mechanism (the limit on volume of trade in a given sector before goods from that country are excluded from preference).

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