Scheme of generalised tariff preferences from 2002 to 2005

The European Union is putting in place the scheme of generalised tariff preferences for the period from 1 January 2002 to 31 December 2005. The system simplifies and harmonises the procedures of the various existing arrangements in order to improve the access of developing countries to the Community market while ensuring the promotion of fundamental social standards and environmental standards.

ACT

Council Regulation (EC) No 2501/2001 applying a scheme of generalised tariff preferences for the period from 1 January 2002 to 31 December 2004 [Official Journal L 346 of 31.12.2001] [See amending acts]

SUMMARY

This Regulation extends the Community's scheme of generalised preferences for developing countries to 31 December 2005.

It provides for:

• general arrangements;
• special incentive arrangements for the protection of labour rights;
• special incentive arrangements for the protection of the environment;
• special arrangements for least-developed countries;
• special arrangements to combat drug production and trafficking.

General arrangements

According to the Regulation, products considered to be non-sensitive products, imported into the Community from beneficiary developing countries, are exempt from customs duties. Goods from the textile and clothing sector only receive a 20% reduction in Common Customs Tariff (CCT) duties. Products classified as sensitive benefit from a CCT duty reduction of 3.5 percentage points.

These tariff preferences apply to imports of products from beneficiary developing countries. Regional cumulation of origin is envisaged in order to encourage regional groupings. The beneficiary countries of the generalised system of preferences (GSP) are listed in Annex I to the Regulation.

The Regulation stipulates that countries no longer requiring preferential treatment will be removed from the list of countries benefiting from the GSP. This concerns the countries that, during three consecutive years, have been classified by the World Bank as high-income countries and have achieved a specific level of industrial development calculated according to a formula set out in the Regulation (development index). If, during an equivalent period, these criteria have not been met by the excluded country, it will again be included in the list of countries benefiting from the GSP.

By virtue of the principle of graduation, the tariff preferences set out in the Regulation are removed in respect of beneficiary countries and products belonging to a given sector if, during three consecutive years, the country concerned meets either of the following criteria:

• its development index reaches a specific level set out in the Regulation and Community imports from that country of all products of the sector concerned exceed 25% of Community imports of the same products from all beneficiary countries;
• its development index reaches a specific level set out in the Regulation, the specialisation index of the sector concerned is higher than the threshold corresponding to that country's development index, and Community imports from that country of all products of the sector concerned exceed 2% of Community imports of the same products from all beneficiary countries.

The tariff preferences are re-established if, during three consecutive years, the sector has not met either of the criteria.

Special incentive arrangements

The GSP enables beneficiary countries to be covered by incentive arrangements allowing them to benefit from an additional reduction in customs duties of 5 percentage points for exports to the Community. Thus, the total reduction comes to 8.5 percentage points.

The special incentive arrangements for the protection of labour rights may be granted to countries whose national legislation incorporates the rules adopted in the conventions of the International Labour Organisation (ILO):

• n° 29 and n° 105 on the abolition of forced labour;
• n° 87 and n° 98 on the freedom of association and the right to collective bargaining;
• n° 100 and n° 111 on non-discrimination in respect of employment and occupation;
• and n° 138 and n° 182 on the abolition of child labour.

These arrangements may also be granted to countries whose legislation has incorporated the essential elements of these rules, and which have clearly begun a clear and definite process of applying them. In such cases, the arrangements may be granted for a limited period of time. The country must demonstrate that it has made progress in applying the rules for renewal of the arrangements.

The special incentive arrangements for the protection of the environment benefit imports of products of the tropical forest originating in a country which effectively applies national legislation incorporating the substance of internationally acknowledged standards and guidelines concerning sustainable management of tropical forests (mainly those of the International Tropical Timber Organisation).

Countries wishing to benefit from these arrangements must submit their requests to the Commission, which examines them and verifies that they are effectively applying the social and environmental standards required before taking its decision.

Special arrangements for least developed countries

This Regulation incorporates the 'Everything But Arms' initiative adopted by Regulation (EC) No 416/2001 of 28 February 2001. In fact, the Community extends duty-free access without any quantitative restrictions to products originating in the least developed countries, with the exception of arms and ammunition. However, free access arrangements will be gradually introduced for bananas from 2002 and for rice and sugar between 2006 and 2009. In the meantime, a global tariff quota at zero duty is opened for these products (Regulation (EC) No 1381/2002 of 29 July 2002 and Regulation (EC) No 1401/2002 of 31 July 2002).

Special arrangements to combat drug production and trafficking

Specific arrangements entailing the complete suspension of CCT duties applicable to industrial and agricultural products are established for Andean Pact countries, Central America and Pakistan. These arrangements aim to promote political, economic and social stability in these countries threatened by drug production and trafficking.

The Commission is responsible for monitoring and evaluating the effects of these arrangements on the beneficiary countries and assessing their social development and their environmental policy.

Temporary withdrawal

Tariff preferences may be temporarily withdrawn in respect of all or certain products originating in a beneficiary country under certain circumstances:

• practice of any form of slavery or forced labour;
• serious and systematic violation of fundamental social rights and principles of labour law (freedom of association, collective bargaining, child labour, etc.);
• export of goods made by prison labour;
• shortcomings in customs controls on export or transit of drugs;
• fraud, irregularities or systematic failure to comply with the rules of origin;
• unfair trading practices;
• infringement of the objectives of international conventions concerning the conservation and management of fishery resources.

The Regulation sets out the general substance of the administrative cooperation required on the part of beneficiary countries, particularly with regard to monitoring the origin of goods. It lays down the procedure governing the investigation carried out by the Commission before deciding whether or not to withdraw preferences temporarily together with the arrangements for the participation of the country concerned in this investigation.

Safeguard provisions

The Regulation also includes a safeguard clause enabling the Commission to suspend tariff preferences and reintroduce CCT duties where a product originating in a beneficiary country is imported on terms which cause, or threaten to cause, serious difficulties to a Community producer of like or directly competing products. Following an investigation, the Commission takes its decision within 30 days of consulting the Generalised Preferences Committee. Where immediate action is required, the Commission may take any preventive measure which is necessary.

Last updated: 04.11.2005