The Standard GSP

All developing countries are automatically accepted as GSP beneficiaries by the EU, unless:

• They benefit from another trade agreement with the EU that grants them equal or better trade preferences, or
• They have been considered as an upper-middle or high-income country by the World Bank, for three years in a row.
  A country can lose its GSP preferences in the very specific case where it violates the principles of human rights and labour conventions it had to adhere to in the context of the Standard GSP mechanism. For more detailed information, see the section on monitoring.

The Standard GSP mechanism supports developing countries by allowing them to export products into the EU single market with reduced tariffs. Contrary to the EBA mechanism, the Standard GSP mechanism does not adapt quotas.
Not all products benefit from reduced tariffs. Out of all products accepted for import into the EU, 66% can fall under the Standard GSP mechanism.

There exist two categories of tariff reduction under the Standard GSP mechanism:

1. The partial removal of tariffs for products considered as sensitive. The products considered as sensitive comprise agricultural, textile, clothing, apparel, carpets, and footwear items. For these products, tariffs are lowered by 3.5 percentage points of the original tariff for that product. For certain specific items listed in section 11a and 11b of Annex V (such as certain types of fabrics
   and clothes), the tariffs are lowered by 20%.
2. The total removal of tariffs for products considered as non-sensitive.

Graduation
Sometimes, certain GSP countries export products in the EU single market that are very popular. As such, they are benefitting from trade help that they do not necessarily need for that particular product. When the Commission notices that for one same product, a country imports more than the allowed share of the total number of similar products into the EU, and this for three years in a row, it can suspend the trade preferences under the Standard GSP mechanism for that product. The list of the graduated products per country is available here on the EU website.

For vegetable products, animal or vegetable oils, fats, and faces and mineral products, the allowed share every year is maximum 17.5%. For textiles, the allowed share is 47.2%. Finally, for all other products, it is 57%.

Example
India is a developing country and automatically benefits from the Standard GSP mechanism. However, for three years in a row, India exported more than 47.2% of all textiles imported by the EU by GSP beneficiary countries. Thereby, Indian textiles were considered ‘competitive’. Indian textiles were a threat to the import of textiles from other countries. Therefore, the Commission decided to suspend the GSP mechanism for textiles coming from India. In other words, India cannot, for a delimited period of time (in this case two years) import textiles into the EU at a reduced tariff rate. However, it can continue to export its textile to the EU under the usual EU tariffs.

Complaint
Other times, certain countries benefitting from the GSP mechanism do not pose a threat to other GSP beneficiaries, but to EU producers. This has been the case with Cambodia. Cambodia is a GSP beneficiary and has been exporting its ‘Indica’ rice to the EU. Italy, supported by various other European countries, warned the Commission that its own rice producers were economically suffering from Cambodia’s rice imports. After investigation, the Commission accepted Italy’s notification, and decided to reintroduce tariffs on the Cambodian ‘Indica’ rice, considering
Cambodia’s exports as causing “serious difficulties to Union producers”. As such, Cambodia keeps its Standard GSP status, which still allows the country to export its products to the EU under reduced tariffs. However, EU rice producers are no longer in serious difficulty due to competition between European and Cambodian rice.

In order to benefit from the Standard GSP preferences, countries have to respect the principles of 15 human rights conventions, listed in Annex VIII (a) of the EU Regulation 978/2012. The Standard GSP status and related trade preferences can be temporarily withdrawn if a country does not respect these principles. If the Commission establishes that:

1. these principles are systematically and seriously violated
2. the exported goods in question are produced under prison labour
3. there is a failure of the GSP beneficiary country to control on drugs at customs or to live up to international conventions on money laundering and anti-terrorism
4. the country in question is practising systematic and serious unfair trading
5. there is a “serious and systematic infringement of conventions concerning the management and conservation of fishery resources”
6. there is a systematic failure, fraud, or irregularities to provide on the origin of products or a failure to fulfil the related obligations to cooperate
   The Commission regularly monitors the situation in GSP beneficiary countries by relying on reports from monitoring bodies of international organisations, from civil society, and more importantly dialogue and meetings with stakeholders in each country.