Executive Summary Sheet (Max 2 pages)

IMPACT ASSESSMENT on Proposal for a Regulation of the European Parliament and of the Council applying a scheme of generalised tariff preferences for the period from 1 January 2024

A. Need for action

What is the problem and why is it a problem at EU level?

GSP Regulation (EU) No 978/2012 will expire at the end of 2023. If no new GSP regulation is adopted, the Standard GSP and the GSP+ arrangements of the GSP would be discontinued and the EU would need to charge imports from the current beneficiary countries (developing low and lower-middle income countries) with most favoured national (MFN) tariffs. Only the Everything But Arms (EBA) arrangement for the least developed countries (LDCs), which is open-ended, would continue to be applied. This would negatively affect exports and investments, hence economic growth and jobs in the current 15 Standard GSP and nine GSP+ beneficiary countries.

What should be achieved?

The analysis has identified three general objectives and five specific objectives to achieve. 1)To further contribute to poverty eradication by -Expanding exports from beneficiary countries, especially those most in need, -Enhancing export diversification of beneficiary countries. 2)To further contribute to sustainable development and good governance in beneficiary countries by: -Strengthening GSP support to sustainable development in the beneficiary countries, -Increasing awareness about GSP opportunities and increasing transparency on the GSP+ monitoring. 3)To ensure EU economic interests are better protected in the functioning of the scheme by - further protecting competing EU industries.

What is the value added of action at the EU level (subsidiarity)?

The common commercial policy is listed in Article 3 of the TFEU among the areas of exclusive competence of the Union. Pursuant to Art. 5(3) of the Treaty on European Union (TEU), the subsidiarity principle does not apply in areas of exclusive EU competence.

B. Solutions

What are the various options to achieve the objectives? Is there a preferred option or not? If not, why?

We have identified 11 policy options and 19 sub-options, detailed in the enclosed table. The overall conclusion, following from the supporting Study and the Mid-term Evaluation, is that the three general objectives of the GSP are best served by pursuing continuity and maintaining the current GSP architecture with its three arrangements. The GSP framework should be updated by introducing technical changes to improve the GSP’s effectiveness and efficiency. Therefore, the preferred set of options are: -Abolish the existing limited export competitiveness vulnerability criterion to ensure that all countries graduating from EBA could become eligible for GSP+ (Sub-option 3Ba) -Extend the negative conditionality (i.e. the possibility to withdraw tariff preferences in cases of serious and systematic violations) to the international conventions on climate/environment and good governance listed in Annex VIII to the Regulation (Option 6B) -Update the list of conventions in Annex VIII to the Regulation (Sub-option 8Bc) -Introduce additional steps after the formal launch of a withdrawal procedure (Sub-option 9Bb), shorten the duration of the procedure in exceptional circumstances (Sub-option 9Bd) and introduce withdrawal for migration (Sub-option 9Bc) -Adopt practical measures to improve the monitoring of GSP implementation: provide a detailed description of the monitoring process and clarify involvement of civil society (Option 10B). -Expand the monitoring cycle to three years (Option 10D). For all remaining options, we broadly maintain the baseline.

What are different stakeholders' views? Who supports which option?

The vast majority of stakeholders support maintaining the current GSP framework, including the three arrangements, on grounds that the scheme helps eradicate poverty, create jobs and support economic growth, while contributing to sustainable development. A major overhaul of the GSP’s architecture is not needed but rather improving its efficiency and effectiveness. Stakeholders supported the idea of including environmental/climate change conventions into GSP conditionality as well as introducing additional measures to improve transparency and civil society involvement. EU industry is broadly supportive of the GSP, although some sectors (e.g. agri-food and textile producers) call for more protection of EU economic interests. Civil society organisations call for more transparency of the GSP monitoring process and increasing the scheme’s impact on improving labour and environmental standards in beneficiary countries.

C. Impacts of the preferred option

What are the benefits of the preferred option (if any, otherwise of main ones)?

The overall impact is limited as the Generalised Scheme of Preferences remains broadly stable, without introducing major changes and additional complexities for GSP beneficiaries, business, and civil society. Proposed changes aim to facilitate the poorest countries’ access to the EU market, in particular countries expected to graduate from LDC status, and their integration in international trade, to diversify their economies and promote sustainable economic growth, in particular through increased environmental protection. Continuing GSP with the targeted changes proposed will be a key encouraging signal from the EU to developing partners, maintaining a key platform to engage with beneficiary countries to bring about change consistent with the EU’s values agenda and policy coherence for development.

What are the costs of the preferred option (if any, otherwise of main ones)?

Additional costs (resources) are linked to increased monitoring of GSP beneficiaries’ compliance with the new international conventions (which will be added in view of the European Green Deal and migration-related governance) and, after extension of negative conditionality, of the conventions on environment protection, climate change and good governance.

What are the impacts on SMEs and competitiveness?

The transparency measures improve understanding of how GSP operates in practice to the benefit of, in particular, SMEs. No negative impacts for SMEs are expected.

Will there be significant impacts on national budgets and administrations?

No significant impacts on national budgets and administrations are expected.

Will there be other significant impacts?

The proposed options will support the GSP and trade policy contribution to the European Green Deal (in particular implementation of the Paris Agreement on Climate Change), to the fight against forced labour and the worst forms of child labour, and migration-related policies.

Proportionality?

The principle of proportionality is satisfied in as much as a GSP regulation is the only appropriate type of action that the Union can take to establish unilateral preferential access to its market for exports from developing countries.

D. Follow up

When will the policy be reviewed?