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COMMISSION OFTHEEUROPEAN COMMUNITIES
COM(80)104 final
ft..Brussels/7thMarch1980
GUIDELINES FORTHEEUROPEAN COMMUNITY'SSCHEMA
OFGENERALIZED TARIFFPREFERENCES
FORTHEPOST-1980 PERIOD
(Commission Communication totheCouncil)
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COM(80)104final

Guidelines for the European Community 'sscheme ofgeneralized
tariff preferences forthepost–1980 period
1. Introduction
3he ,initial ten-year period ofapplication oftheEEC'sgeneralized preferences
scheme putinto effect on 1July 1971 expires attheendof1980 .
J *
HheCouncil oftheEuropean Communities hasalready stated that itintends to
^ 1extend thescheme "beyond the initial period andthis decision hasbeen conveyed
tothe Community 'sdeveloping country partners invarious forums inrecent years
(Conference onInternational Economic Cooperation ,UNCTAD IVandV).TheParliament
andtheEconomic andSocial Committee have also pronounced infavour ofanextension .
Theextension oftheCommunity 'sscheme forafurther period would therefore
appear tobeapolitical fact .-Accordingly ,inthis communication theCommission
ispresenting tothe Council theguidelines which itconsiders should hefollowed
inimplementing thenewscheme ,inthe light oftheexperience ofthe initial
< -
period andtheprospects for ourrelations with thedeveloping countries .The
Commission intends topresent atalater stage ,ingood time foradecision to
hetaken bytheCouncil notlater than mid-November 1980 ,.formal detailed proposals
forimplementing theGSPfor198C «2heproposals will bebased ontheguidelines
set out inthis communication .
' . ... . .. .. ... ___2 '2.Experience gained from the application ofthe GSP
Themost important points arising out ofthepractical functioning ofthe
Community scheme maybesummarized asfollows : 1 .
(i)thescheme 's " impact hasbeen asmuch psychological
as economic ^astheactual usemade oftheGSPinthe
last three years hasrepresented onaverage only 19%oftotal imports
from thebeneficiary countries subject tocustoms duty ;
1Council Resolution ofMarch 1975 °n"thefuture development oftheCommunity 's
ggeneralized tariff preferences .
SeeAnnex foraninitial assessment ofthe GSP.

(ii)anydanger tothevarious sectors ofproduction intheEEChasbeen
avoided ,notably byvirtue ofthelimiting provisions introduced as
part ofthe'implementation oftherules ofthescheme ;
(iii)thepreferential advantages have been used mainly byalimited number of
beneficiary countries whose economy wasalready relatively more developed
ordiversified andhas involved alimited number ofproducts ,inrespect
ofwhich there wasalready atraditional flow ofexports totheEEC ;
.\
(iv)thefunctioning ofthescheme depends onthedifferent rules implemented
inthe initial period ofapplication -and ontheadjustments made tothem
\' ■
from time totime ;asaresult oftherules ,however ,thecomplexity of
the scheme issuch that ithas tosome extent prevented thebeneficiary
developing countries from making ,fall use oftheadvantages offered ;
A
(v)theactual rate ofuseoftheGSP isstill Limited (55%to60%onaverage );
this ismainly duetothefact that users have concentrated onproducts
subject torelatively strict quantitative limits andalso the fact that
their level oftechnological development hasprevented thebeneficiary
developing countries from exporting non-sensitive products inlarge
quantities .j
3.General guidelines
Theexperience ofthefirst tenyears ofapplication shows that there isnoneed
tomake fundamental changes tothe Community scheme .Notwithstanding certain
faults ,thescheme hasachieved theobjectives setfor it,notably bystriking
abalance between therespective interests ofthedeveloping countries and
Community producers ,against aneconomic ,background which intheEEChaschanged
from asituation ofsustained growth tooneinwhich steep inflation hasbeen
accompanied byhigh levels ofunemployment . ~
TheGSPscheme forthepost-1980 period should take equal account oftheneed to
give effective help toindustrial development inthedeveloping countries ,onthe
onehand ,andthecompelling requirements oftheEEC*s industrial andcommercial
policy ,ontheother .Inaddition ,provision will have tobemade forany
measures that may serve tosimplify theuse ofthesystem .
1This rate represents theproportion of "thepreferential opportunities open each
year which isactually taken up.

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With this inview the new scheme should :
(i)beadapted totheneweconomic conditions nowprevailing ininternational
relations andtosituations Which canalready beforeseen ;
(ii)take account ofthecompetitive position ofEECproducers with aview to
enabling aprogressive implementation ofthenecessary structural adjustments ;
(iii)take equal account oftheCommunity 'sinterests asanexporter ofprocessed
industrial products tothedeveloping countries andasanimporter ofraw
materials from those countries ;
(iv)beapplied insuch awaythat thedeveloping countries which stand inthe
greatest need ,maybegiven thewidest andmost liberal preferential access
through measures tocorrect theuneven use ofthepreferential advantages , •
whether atthe level ofthebeneficiary countries orasregards the
products onwhich use oftheadvantages isconcentrated ;
(v)bebased onsimplified implementing provisions asregards the .preferential
limits and ,ifpossible ,therules oforigin ,soastoenable theuse of
thepreferential advantages tobespread aswidely aspossible *
4* TVierules andapplication ofthenew scheme
Inthelight ofthegeneral guidelines setoutabove ,thenewscheme 9hould meet
thefollowing implementing criteria :
(a)Le?al status ofthenewscheme * "
Experience hasshown that the "autonomous "nature ofthepreferences –which has
-come inforincreasing criticism from thebeneficiary developing countries –has
enabled theCommunity scheme tomaintain itsprinciple ofoffering thewidest
possible opening andalso toadapt flexibly tochanging situations ininternational
economic relations .Uiese advantages should bemaintained andthenewscheme should
continue tobelegally autonomous rather than contractual *
' : Moreover , "thedeveloping countries nowhave attheir
disposal' consultation procedures which should enable them toexamine with the
donor countries theimplementation ofthedifferent schemes *
("b)Theduration ofthenewschéma
Pro,,alegalpoint ofviewthedoner countries arenolonger tiedtoaperiod of
application linked toaclause derogating from theGATT *Asaresult ofthe
work ofthePraaework Group in "theHTNtheimplementation oftheGSPdoes not

-4-
requireaderogation.Abalanceneedstobefound,therefore,between:
(i)thedesireofthedevelopingcountriestobeabletocountonthescheme
beinginplementedforasufficiently longperiodtoenableindustrialization
programmestobeestablished ;
(ii)theneedtoensurethattheschemedoesnotcontinuetobeapplicablein
completelychangedcircumstances inwhichitwouldnolongerbepolitically
oreconomically justifiable.- •
Furthermore,thereis&nimportantdistinctiontobemadebetweentheactual
principleofmaintainingthegeneralizedtariffpreferences systeminforce
andthequestionoftheperiodduringwhichtheschemeitselfwouldbeapplied
withoutsubstantive changes.
Withregardtotheprincipleofmaintaining thesysteminforce,theGSPcould
beimplementedforamaximumperiodof20years,i.e.uptotheyear2000.This
date,whichissufficientlyfarawaytopermitindustrialdevelopmentplansto
beimplementedbutatthesametimedoesnot'seemtooremote,hasthe
psychological advantageofcoincidingwiththelimitsetbytheLimaConference
ofUNIDOforindustrialproductioninthedevelopingcountriestoreachthe
levelof25^ofworldproduction–seenasatargettoaimatandwherethis
ispossibleo
Sofarastheperiodofapplicationofaschemebasedonunchangedgeneralrules
isconcerned,inviewoftherapidchangeswhichcouldtakeplaceintheworld
economicandpoliticalsituationprovisionshouldbemadefortheschemetobe
subjecttoaperiodicreview(whichcouldevencoverthesubstanceofthescheme)
shouldthesituationmakethi3necessaryorifitseemedadvisableinthelight
ofexperience,althoughtheperiodsinvolvedshouldnotbelessthanfiveyears®
(c)Consideration tobegivento"differential "applicationofthepreferential
advantages " *
llieevidentimbalanceintheuseoftheschemeshouldbecorrectedbyenabling
thelesscompetitivedevelopingcountriestomakebetteruseoftheadvantages
offered.Althoughitisclearthatthisisnotthesolefactorgoverningthe
unevendistribution ofbenefits,neverthelessit'cannotbedeniedthataresult
oftheCommunityschemehasbeen,notablyasregardsindustrialproducts,that
countrieswhichareeconomically moreadvancedandhavemorefullydeveloped
usarketingnetworkstakeupthepreferential advantagesmorequickly,atthe
expenseofeconomically weakerdevelopingcountries.Furthermore,ithasbeen
foundinrecentyearsthatcertainbeneficiarydevelopingcountrieshavedeveloped
rapidlytothepointthatinsomesectorstheircoinpetitivepositionissuchthat
withthepreferential advantageaddedtheirexportscouldcausedifficultyfor
certainsectorsofCoifrunityproduction.

-5-
There would -therefore beatwofold advantage inlimiting thepreferences
accorded tothese countries inthesectors orfortheproducts concerned :it '
,would provide scope forenlarging thepreferential advantages fortheless
competitive beneficiary countries andwould also prevent excessive pressure
being brought tobear onthesectors ofproduction intheEECwhich arein ■
difficulties andmayneed acertain period oftime forrestructuring .
However ,theproducts andcountries inrespect ofwhich limitations should be
introduced will have tobeidentified onthebasis ofobjective criteria which
take account ofthe economic situation inthe sectors' and countries concerned .
Thecriteria tobeused .should ingeneral bebased
principle that theGSPconcessions should beproportionately more -generous towards
thebeneficiary countries which have made least progress along theroad to
development .Accordingly ,thecriteria should have regard inparticular tothe
following :
~economic andsocial indicators ofthebeneficiary countries ;
- .theuse found tohave been made ofthepreferential advantages inthe
preceding period asregards themaximum country amounts (butoirs );
-thesituation ofagiven product orsector with particular reference to
theshare oftheESC "internal market taken byimports ;
-thesituation ofthecountries concerned asproducers andexporters of
theproducts inquestion . \
Forpolitical andpractical reasons ,theapplication ofa"differential "limitation
ofpreferential advantages should notbesodesigned astoresult intheexclusion
ofbeneficiaiy countries orproducts orsectors .Excluding acountry from
preferential treatment inrespect ofagiven product should beconsidered only
inexceptional cases . '
Toconclude ,theapplication ofpreferential advantages should bebased onthe .
following principles :
-itshould notinvolve thecomplete exclusion neither ofabeneficiary nor of
aproduct nor sector ; ~
-itshould provide foradifferential allocation ofthepreference according
toproduct andcountry ;
-itshould beal^ed ataccording greater liberalization totheleast developed
.. andpoorest countries .-
Itwould also beappropriate tobear inaiind theConraission 'sproposal relating
tocoopliar.ce vith minimum labour standards andtheimplications ofthis principle
theinp-eijO.Aa -^bnofgeneralised preferences should itbeadopted^by the
Council (1).Inthisconnection theCommission wi11putforward morespecific suggestions
J-Qits formal anddetai ledorooosals forthenewscheme .
(1)Doc .CO ,'•1(78)492 final

-6-
5.Structuralchangesinthenewscheme
ExperiencehasshownthattheCommunityschemehasbecomefairlycomplexand.
thatconsequentlyitisadvisabletoputtheapplication oftheprincipleof
"differentiation "inaccordingpreferential advantages onanewbasis.The
changemustthereforemeetthetworequirements ofsimplification and"differential "
applicationofpreferential treatment.Studyofotherdonorcountries' schemes
revealsnosatisfactory featurethatcouldbeappliedasanimprovement tothe
Communityscheme.Eithertheyapplyexcessivelyinflexibleorautomaticrules
withregardtotheexclusionofbeneficiaries or-products(e.g.theUnitedStates
scheme)orthemoregenerousadvantagestheyofferrelatetoproductsandsectors-
notablyinagriculture-which,ifincluded,couldendangerCommunityproduction.
Consequentlyitwouldappeartobeadvisable ,whileretainingtheoverall
structureoftheEECscheme,toadaptitalongthefollowinglines.
/ • '
(a)Productcoverage
*
Withregardtoagricultural products,thelistofproductscoveredbythe \
preferences hasbeensteadilyenlargedandnowextendsto310tariffheadings
coveringpracticallyalltheproductswhichdonotrepresentathreatof
injuriouscompetition toEECproduction.Giventheconstraints ofthecommon
agricultural policyandtheneedtosafeguard "opportunities foraccessforthe
ACPcountries-or,inthecaseofcertainproducts,opportunities forthe
Mediterranean countries-andthepossibility oftheaccessionofnewcountries,
itwouldbeinappropriate towidenthepresentproductcoverage,althoughconsi­
derationcouldhoweverbeaiven_tocertainimprovements tothepresentarrange­
mentsifthiscouldbejustified,especiallyfortheLeastDevelopedcountries.
Inthecaseofindustrialproducts,thecoverageprovidedbytheEECschemeis
amongthemostcomplete.Certainsemi–manufactures orproductsoffirst-stage
av<?r,oi.vioV.'.de-d,•ViOvcver,:vtsV;,yrawhidesivr.ds.kir.s,.cert.air.
primaryproductsandcertainmetalsuptotheingotstage.Consideration
couldbegiventothepossibilityofadmittingthemtopreferential treatment,
assuchameasurewouldbeofparticularhelptotheleastdevelopedcountries.
Inviewoftherestrictivepoliciesappliedbydifferentbeneficiaries inrespect
ofexportsoftheproductsinquestion,however,thequestionoftheirinclusion
wouldhavetobegoneintoverythoroughlyandaccountwouldhavetobetakenof
theneedtosafeguardsuppliesfortheEEC.

(b)Thebeneficiarycountries
Itispossibletodividebeneficiarycountriesintothreecategories,
dependingontheirpresentlevelofdevelopment :
(i)Newlyindustrializing andhighlycompetitivedevelopingcountries:for
someproductsthesecountrieshaveachievedacompetitivepositiononthe
Communitymarketwhich.lessenstheneedforpreferences .Moreover,their
aggressiveexportpoliciesinakeitimpossibleforotherbeneficiaries toget
thefullpreferential advantageofferedonthoseproducts.Objective
criteriamustthereforebeusedtorestrictthepreferential advantagegoing
tocountriesinthiscategory.
(ii)PoorestcountriesandLLDCs:theEECschemealreadyincludesvirtually
completeliberalization fortheleastadvanceddevelopingcountriesaslisted
bytheUN."Thisisessentialifthesecountriesaretohaveanychanceof
exportingtheirproducts.Thepresentarrangements shouldthereforebe
continuedandfurtherimproved(e.g.inthematterofproductcover)where
possible.Thelistofbeneficiaries shouldalsobeupdatedinthelightof
furtherUNadditions,andindeedreviewedtoseewhethertheCommunityshould,
notincludeothercountrieswithparticularly weakeconomiesandalowlevel
ofdevelopment .
(iii)Developingcountriesnotfallingintoeitheroftheabovetwocategories
these,arethecountrieswhichcouldpotentiallybenefitthemostfrom
preferences ,sincetheyalreadypossess,albeitatamodestlevel,the
financialandtechnicalbasisonwhichtobuildprocessingindustrieswithan
exportcapacity.Forthesecountriestheschemeshouldbeliberalized asfar
aspossibletoallowthemtomakethemostofthepreferences onofferbyv
developingtheirexportsofnewproducts.
(c)Simplification ofthearrangementsforindustrialproducts
TheCommunity'snewschemewouldexcludeneither
certainparticularly sensitiveproductsnorsomehighly-competitive
beneficiarycountries.Butthenewrulesshouldmakeitpossibletoexercise
selectivecontroloverexportsofsensitiveindustrialproductsoriginating
incertainbeneficiarycountries.
Industrialgoodsotherthantextilesarecurrentlydividedintofourcategories
sensitiveproducts(15tariffheadings),hybridsemi-sensitive products(28
headings),semi-sensitive products(81headings)andnon-sensitive products-
(around1*JQOheadings). ,

-8-
Er.ch .category iscubject todifferent rules regarding control andobservance of
preferential limits ,atthelevel either ofthebeneficiaries asawhole
orofindividual countries .Thewhole system hasbecome socomplicated that it
isnowdifficult forusers tograsp indetail ,orapply correctly .This
complexity istheresult ofmeasures designed totake account ofthedegree of ,
sensitivity oftheproduct itself ,oroftheexistence ofbeneficiary countries
which arcsuper –competitive incertain products ,oragain ofthedifferent
degrees ofsensitivity ofasingle product indifferent Member States .However ,
proceeding ontheassumption –shown byexperience tobecorrect –that the
"sensitivity "ofaproduct can almost always betraced toone two oratmost
three beneficiary countries ,itought tobepossible todeal with theproblem
created bythose countries while atthe same time simplifying administration of
the6cheme byallowing freer access forother beneficiaries .
This could bedone byusing only two product categories :
-"nor.-ron-itive products ,simply monitored statistically }these cox^ld be
reclassified atthestart ofanewperiod under thescheme ,ifexports by
thebeneficiary countries were likel ;-Substantially toinjure EECproducers ;
-sensitive products (initially goods falling within oneofthethree categories
subject tosurveillance ).Forsuch products ,themost competitive beneficiary
countries would beidentified onthebasis ofobjective criteria reflecting
theeconomic position ofthebeneficiaries ,thesituation ofESCproducers and
thestate oftrade relations between theESCandthecountries involved *.For
such countries andforeach product concerned Community quotas ortariff ceilincs
yould befixed andapplied inmost cases toeach individual country identified as
competitive and inexceptional cases toall countries so"iaenti fied .For all other
beneficiary developing countries ,thepreferences would beadministered just asthey arefor
thenon-sensitive products now ;a'theoretical ceiling would besetand,in
theevent ofduly-established market disturbance ,exceeding this limit could
, trigger thereintroduction ofcustoms duties (decided onacase–by–casebasis ).
Consideration ofthecurrent C3Putilization rate shows that suchastreamlining
isboth possible ar.dnecessary .Strict controls would affect only alimited number
ofcountries inall,normally nomorethan oneortwobeneficiaries foranyone
product .Thesimplified system would also make itpossible tomonitor about
v "thecurrent actual utilization ofquotas andhybrid ceilings ,appreciably
lowering therisk toCommunity industries .

Asfar astextile products areconcerned ,itwould seeminadvisableatthis
stagetothinkofmakingsubstantive changestothearrangements introduced
asrecentlyas1Januaryofthisyear.Therewillnotbesufficient -
informationavailabletojudgetheeffectsofthenewsystem,which
incorporates anentirelynewsetofimplementing rules.Thecurrentscheme,
moreover,islinkedtotheoperationoftheagreementsconcludedunderthe
MFA.Theseareduetoexpirein1982anditwouldbelogicaltoawaitthe
decisionstobetakeninthisconnectionratherthantamperwitharrangements
setupafterlengthydiscussions .Evenhere,however,anumberofadjustments
couldbecontemplated withtheaimofeliminating unnecessary controlsand
improvingaccessforthelesscompetitive countries.•
Withregardtotherulesoforigin,therehavebeennumerouscriticisms froYa
beneficiarycountriesfindingthemrestrictive and.over^-complex .While
holdingtotheunderlyingprinciples ,itmightbepossibletolookatwaysof.
streamlining therulesandmakingthemmoreliberal,particularly onthe
questionof"cumulative"originincountriesbelongingtoregionalgroupings
andonthe"donor,scontent"principle.
- V' "
(d)Administrative changes *.
Theadrmm'strationofthepreferences systemshouldalsobesimplified .An
adequatesolutionwouldbetointroduceadistinctionbetweenontheonehand
decisionsofday-to-dayadministration concerningtheapplication oftariff
measures,supervision of,theutilisation ofthesystemandtheannualup-dating
ofthesystem,andontheotherhandimportantdecisionsconcerninggeneral
directivesand"therevisionofthesystematregularintervals.Decisionsofthe
lattertypewouldhavetobetakenasinthepastbytheCouncilactingona
proposalfromtheCommission;bycontrast,asfarasday-to-dayadministration
isconcerned,itistheviewoftheCommissionthatitshoulditselftakethe
decisionsinthisarea,afterconsulting MemberStatesaccordingtosomemanagement
proceduretobecreatedforthispurposeandinregardtowhichitwillwhenthe
comesputforwardformalproposals.

Annex
INITIAL ASSESSMENT OF .THE OPERATIC 7'!OFTHE
COMMUNITY 'SSCHEME OFGENERALIZED TARIFF PREFERENCES
1.TheCommunity ofSixintroduced ,itsscheme on1July 1971 »i"twassubsequently
applied by "theNine with effect from 1January 1974® Successive schemes have
seen constant increases inthepreferential opportunities for all categories of
product and ,since '1975 >"th®Community hasangled itsscheme toachieve amore
balanced spread ofthebenefits offered® Thus access hasbeen progressively
liberalized forthe least developed countries ,while various steps have been
taken tolimit thepreferences taken upbythemost competitive countries .In
order togive other beneficiaries amore equitable share .
Theglobal Community offer ,excluding textiles ,rose by75^from 1974 to1979*
from 3700million u.a .to6500million EUA .
Thenumber ofagricultural products covered bytheGSProse from 187in1974
to3-10 in1979 andthevolume oftrade involved has trebled ,from 45®million u.a .
tothepresent level of 1350million EUA .This notable advance islargely due
totheimplementation ofthe Joint Declaration ofIntent andthe offer on ■♦
tropical products made intheframework oftheMultilateral Trade Negotiations .
Inaddition ,some products have been added totheagricultural list totake account
ofbilateral relations between theCommunity andcertain beneficiary countries ,
forexample soluble coffee andcocoa butter from Brazil andVirginia –type tobacco
from India .
/
Theoffer ft>rindustrial goods other than textiles ,Which stood at2800million u.a .
in1974 »isnowworth 5100million EUA ,aninerpase of82%.Over thesame period
thenumber ofindustrial products subject toquota orstrictly-monitored ceilings
hasrisen from 152to182,outofatotal of185Otariff headings covered ,bythe
GSP . '

Itshould "bepointedoutthatthetheoretical "basisforcalculatingtheofferhas
notalways "beenobservedinthecaseofproductsundersurveillance.Thishas
beenthecaseinparticularfrom1975onwards,owingtotherepercussions of
theenergycrisisontheCommunity'strade.Atthemoment,thetheoretical
methodisactuallyappliedforabout50%productsundersurveillance.For
theremainder,fixed-rateincreaseslowerthanthosewhichwouldhaveresulted
fromcalculationbythenormalmethodhavegenerallybeenoffered,althoughin
afewcasesthevolumeoftheofferhasbeen"frozen"atthepreviousyear's
level(theofferforECSCproductshasbeenheldatthesamelevelsince1976).
Thispracticewasintroducedtostrikeabalancebetweentheinterestsofthe
beneficiarycountriesandthoseofCommunityindustries;similaractionhas
beentakentopreservetheinterestsoftheACPStates,particularly inthecase
ofplywood.
Theofferontextilesroseinvolumetermsovertheperiod1974-79from68200tonnes
toabout87300tonnes,anincreaseof29$.
"Utilization ofpreferential advantagesisconcentrated onafairlysmallnumber
ofbeneficiarycountries,some70%goingtothirteencountries;in1977»
17countriesaccountedfor85%ofutilization.Thisphenomenonoccursintheschemes
ofotherdonorcountriesaswell,andisnotreallysurprising,sincetheGSP
mainlycoversmanufactured industrialproductsandthusisessentially of
benefittocountrieshavingattainedacertainlevelofeconomicdevelopment and
thosewithtraditionaltradeflowstotheCommunityorafairlywiderangeof
industrialproducts.Thismeansthatthechiefbeneficiaries includenotonly
anumberofthefairlyadvanceddevelopingcountries,butalsocountrieslike
India,Pakistan,Peru,IndonesiaandthePhilippines,whichbelongtothe
low-incomegroup.Itshouldbenoted,however,thatforanumberofcountries
thehighutilizationrateisbasedonasinglegroupofproducts:palmoil
accountsfor62%ofMalaysia'stotal,tobaccofor44%of.Indonesia'sand
petroleumproductsfor"J3>%and94%respectivelyofthetotalforRomaniaand
Venezuela. ,

-3-
Consideration oftheincidenceofdutiesreintroduced underthemaximum
countryamountsystemindicatesagrowinguseoftheGSPforproducts
undersurveillance ,sincethenumberwasupfrom109in1974to172in
1979.Atotaloftwenty-eight "beneficiaries wereaffected "by 1
restorations ofduties,withYugoslavia ,HongKongandSouthKorea
alonetotalling102in1978. v
Undertheceilings,therewere21casesofduties "beingrestoredin1974
and35in1978*
Thelistof"beneficiarycountrieshasnot"beensubstantially alteredsince
theintroduction oftheGSPandthepreferences havegenerallybeengranted
todevelopingcountrieswhicharemembersoftheGroupof77*Sofarthe%
onlyexceptionhasbeenRomania,whichwasnotamemberofthatGroupwhen
thedecisionwastakentoincludeitamongthebeneficiaries ofthescheme
(ChinawillbenefitfromtheGSPforthefirsttimein1980).
2.Theaboveconsiderations suggestthefollowinggeneralconclusions as
totheoperationoftheCommunityGSPduringitsinitialperiod:
(a)Onthewholetheincreaseofthepreferentialofferbetween1974and.
1979canberegardedasfairlysatisfactory ,evenifitismoretheresult
ofspecificfactors(offerontropicalproducts,JointDeclarationofIntent)
thanofadeliberately conceivedpolicy;
(b)Utilizationofpreferentialadvantagesisstilllimitedtoafairlysmall
numberofproducts,mainlyconcentrated insectorswherethecompetitive .
positionofthebeneficiaries inrelationtoCommunityindustryisfavourable
inanycase;
(c)Therateofutilizationofpreferencesofferedisstillmodest,
particularly becauseofthefactthatstrictquantitative limitsareimposed
ontheproductsmostexportedbythedevelopingcountries,whileinthecase
ofmanynon-sensitive products,'beneficiaries areunabletotakeupthe
preferencesforlackofthefinancialandtechnicalresourcestodevelop
productionofthoseproducts:

-4-
(d)Arelative?^ysmallnumberofcountriestakeupthebulkofpreferences\
offered.Thesecountries ,however,includenotonlysomewithafairly
advancedlevelofdevelopment ,butalsomuchless–developedcountrieswhich
haveotherfactorsintheirfavour:traditionaltradepatternsfgeographical
proximityormajorexportsofasmallnumber.-ofproducts;
(e)WhileGSPcoverhasbeenconstantlyincreased,thevolumeofpreferential
importsisstillextremelylowinrelationtototalCommunityimportsfrom
thebeneficiarycountries;theproportionvarieswidelyfromsectortosector
and,withoneortwolimitedexceptions ,itcannotbemaintainedthat
preferential importsaloneconstituteathreattoindustriesinthe
Community,sincetheirshareoftotalCommunityimportsissolow(in1976
and1977»sensitiveproductsenteringundertheGSPaccountedforbetween
yfoand4%oftotalimportsof.thoseproducts).