Generalised System of Preferences (GSP)
Since 1971, the EU has granted developing countries preferential tariff treatment under its Generalised System of Preferences (GSP). The common trade policy of the EU must follow and support the goals of the development cooperation policy, in particular the elimination of poverty and the promotion of sustainable development and good governance in developing countries. The system grants preferential tariff treatment (reduced duty or duty-free treatment) unilaterally to products that originate in developing countries. The EU does not require preferential treatment in return from developing countries for products that originate in the EU. From the beginning of 2018, Ukraine, among others, no longer receives GSP preferences in the EU, because it has a reciprocal free trade agreement with the EU.
There are three arrangements in the GSP regulation
- The general arrangement (around 17 countries)
- The special incentive arrangement for sustainable development and good governance, GSP+ (9 countries)
- The special arrangement for least-developed countries, EBA (around 50 countries)
In all, there are around 76 developing countries in the system that actually are granted preferences. The GSP Regulation also lists all such developing countries that do not currently receive preferences in the EU, but have the right to be included in the system.
The right to participate in the general arrangement has been granted to beneficiary countries which the World Bank has not classified as countries with a higher or high average income and whose exports are not diverse enough. The countries that receive overlapping preferences will be removed from among the GSP beneficiary countries, such as Ukraine at the beginning of 2018.
The current GSP Regulation is applied for 10 years, from 1 January 2014 to 31 December 2023. However, country-specific removals of preferences from the product sections concerned are assessed in three-year periods. If the conditions are met, preferences according to the GSP+ arrangement can be applied for at any time.