EU extends GSP to poor countries

MANILA, Philippines – The European Union is extending the grant of its Generalized System of Preferences (GSP) to 2013 with special focus on countries in need.

The European Commission (EC) intends to limit its GSP to about 80 beneficiary countries including the Philippines, due to the emergence of more advanced developing countries which are now globally competitive.

EU Trade Commissioner Karel De Gucht, in an export helpdesk newsletter, said global economic balances have shifted tremendously in the last decades. World tariffs are at all-time lows.

“If we grant tariff preferences in this competitive environment, those countries most in need must reap the most benefits. Trade and development go hand in hand and tariff preferences are a small part of our wider agenda to help poorer economies scale up their presence in the global markets,” he noted.

“The income of some developing countries is now similar or even higher than that of some European countries. As a result, tariff preferences for those countries today are not a “need” anymore. At the same time, other countries have fallen behind,” he explained.

The GSP, which grants specific tariff preferences to developing countries like the Philippines in the form of reduced or zero tariff rates or quotas, allows these countries to participate more fully in international trade and generate additional export revenue.

While the generous product coverage and preference margins would remain unchanged under the new GSP, a number of countries would no longer be eligible to benefit.

These countries are those that have achieved a high or upper middle income per capita based on the internationally-accepted World Bank (WB) classification.

According to Arangkada Philippines, the WB uses $12,000 per capita as the current threshold a country must cross to reach high-income status in its country income classification. Per the WB, the Philippines has been classified as a “low middle income” economy at least since 1975.

Also no longer eligible to benefit the GSP are countries that have preferential access to the EU which is as good as GSP privileges, like those under a free trade agreement (FTA) or a special autonomous trade regime.

EU overseas countries and territories which have an alternative market access arrangement for developed markets would no longer benefit from the GSP scheme as well.

At the same time, the EC would reinforce the incentives for the respect of human and labor rights, environmental and good governance standards through trade by facilitating access to the GSP+ scheme which grants additional, mostly duty-free preference to vulnerable countries.

The new GSP also ensures increased predictability, transparency and stability. “This will make it easier and more attractive for EU importers to purchase from GSP beneficiary countries. Besides, procedures will become more transparent, with clear, better defined legal principles and objective criteria,” the report noted. – Philexport News and Features, (The Philippine Star)