No C 69/36 Official Journal of the European Communities 18. 3. 91 
5. Concluding comment 
5.1. Pursuant to Article 5 the Commission is to 
review the programme and submit a report on the 
results of this review to the Council and the European 
Parliament, together with proposals for any necessary 
changes. The Committee would point out that Article 
7 of the EURATOM Treaty provides that 'the 
Done at Brussels, 31 January 1991. 
1. Preliminary remarks 
1.1. The Community's generalized system of prefer­
ences (GSP) is a measure of trade policy (suspension of 
customs duties on imports into the Community) aimed 
at helping the developing countries. 
1.2. These preferences are non-discriminatory (they 
are granted to all developing countries) and auton­
omous (they do not result from any negotiations with 
the beneficiaries). Apart from certain restrictions for 
sensitive products, they apply to all finished and semi­
finished industrial goods as well as a number of agricul­
tural products. 
1.3. Decided within the United Nations Conference 
on Trade and Development (UNCTAD), the GSP has 
already been implemented for two ten-year periods 
(1971-1980 and 1981-1990) by the Community. The Commission shall keep the Economic and Social 
Committee informed of the broad outlines of Com­
munity research and training programmes'. This 
means that the Commission must send this report 
together with the proposed changes to the ESC. The 
same applies for the final report. Therefore, Article 
5 of the Commission proposal must be modified 
accordingly. 
preferences are adjusted annually and the Community 
also carried out a five-year adjustment in the middle of 
the 1980s. 
1.4. The Community now has to decide on the 
scheme it will apply for the next decade, given that the 
generalized preferences would start on 1 January 1992. 
So the Community, except for a few changes, will have 
to extent the present arrangements for 1990 to apply 
for 1991. 
2. The Commission's views 
2.1. When the GSP was introduced twenty years ago 
the situation was as follows: 
— the industrialized countries had relatively high levels 
of tariff protection, The Chairman 
of the Economic and Social Committee 
Francis STAEDELIN 
Opinion on the generalized system of preferences: guidelines for the 1990s 
(91/C 69/09) 
On 27 July 1990 the Council of the European Communities decided to consult the Economic 
and Social Committee, under Article 198 of the Treaty establishing the European Economic 
Community, to draw up an Opinion on the generalized system of preferences: guidelines for 
the 1990s. 
The Section for External Relations, Trade and Development Policy, which was responsible 
for preparing the Committee's work on the subject, adopted its Opinion on 22 January 1991. 
The Rapporteur was Mr Liverani. 
At its 283rd plenary session (meeting of 30 January 1991) the Economic and Social Committee 
unanimously adopted the following Opinion. 
lD.0.^1 COfficial]oumal of the European Communities l^oC^A^ 
— there were few free trade agreements between indus^ 
trialized countries^ 
— few developing countries participated in theCeneral 
AgreementonTar^ffsandPrade^CAPP) negotiate 
ingmachineryand the resulting multilateral disci 
plines^ 
— the gap between levels of development in the ben 
eficiary countries was smaller than it is now. 
2.2. The situation has changed since then and is now 
marked^ first of all^ by a substantial erosion of the 
margin of preference enjoyed bydeveloping countries 
under the CSR.This erosion is due mainly to^ 
— the tariff reductions resulting from the Tolcyo 
Round and those expected from the Uruguay 
Rounds which should have been concluded in 
Uecemberl^ 
— the setting-up of various customs unions or free 
trade areas between industrialized countries^ and 
— thedevelopmentof the Community's preferential 
relations with developing countries' 
nevertheless^ imports from developing countries 
covered by the Community's CS^cametoi^ billion 
ECU in 1^^ corresponding toareduction in customs 
dutiesoflbillionECU 
2.^. Thepresentsituation isalsocharacterizedby 
theunevendevelopmentof thebeneficiarycountries^ 
which has led the Community to differentiated its 
treatment of the latter. 
The Commission doesmfact note that'the developing 
countries are no longerahomogenous group'. 
2B^. The question therefore arises of protection and 
structural adjustment in the Community^ 
The CSR covers not onlyavast range of products ^see 
above) but is also being extended toagrowing number 
of Eastern Europeancountries Hungary and Poland 
since 1^^ perhaps Bulgaria and Chechoslovakia from 
l^Lwith^ugoslavia and Romania having long been 
eligible). 
^hat is more^ as the prospect of the Single Market in 
i^^3 now rules out sufficient regional differentiation of 
certain imports ^see the 1^^ Court of Justice decision 
prohibiting the'allocation'between Member States of 
certain tariff quotas applied to sensitive products^ the 
Commission feels that'the CSP offer will need rotate 
account of the vulnerability of the wealoest sectors^ 
regions'. 2.5. Complexityanduncertaintyarethetwomain 
criticisms that the Commission itself levels at the CSP^ 
— the complexity of administering the CSP results in 
excessive cost'interms of time^ moneys staff and 
administrations 
— the uncertainty of the CSP—with the obvious 
inconveniences which result for traders is due to 
several things^ 
D the annual renewal of the schemed 
^ the rigidity of the system of 'tariff quotas' or 
'^eroduty fixed amounts' ^some of which are 
exhausted during the first three days of the year)^ 
and 
^ the unpredictability ^and sometimes discrimi 
nation whichoccursbetween beneficiaries) due 
to the reimposition of customs duties during the 
year on products subject to 'tariff ceilings' or 
'nonsensitive products under surveillance'which 
are subject toa'reference thresholds 
— the Commission adds that'the margin of preference 
for agricultural products is sometimes relatively 
small'. 
2.^. The Commission concludes by observing that 
as far as industrialisation in the developing countries is 
concerned'the impact of the CSP varies considerably'. 
It has been 'clearly positive' in a small number of 
countries where per capita incomehas grown rapidly 
andin someother countries whichhave competitive 
export industries. 
rdowever^ the CSP has not been positive at all for the 
LL^Cd^ast developed countries as defined by the U^) 
especially as they enjoy special treatment ^widerprod^ 
uct coverage and exemption from the redmposition of 
customs duties whatever the volume of their exports to 
the EEC). Phe Commission considers that rules of 
origin have hadarestrictiveeffectonthese countries 
^see chapter HI below). 
^. Phe guidelines proposed by the Commission 
^3.1. P^o^r^^^^Bo^ 
^.LL The Commission things that the CSP must be 
maintained onprinciple.lt feels that this commercial 
policy instruments which must bedifferentiated depends 
ing on the beneficiary countries^ is an essential comp 
lement to the financial and economic cooperation 
instruments set up by the EEC in its relations with the 
developing countries which are not formally associated 
with it. 
.3.1.2. The Commission also feels that the CSR is no 
longer—as it onces was—an alternative to CATT 
machinery. In its view 'theUruguayRoundprovides 
the best opportunity for progress in integrating the 
No C 69/38 Official Journal of the European Communities 18. 3. 91 
developing countries into international trade'. With this 
in mind the granting of generalized preferences may 
be considered as an anticipation by the EEC of the 
concessions it will make in the Uruguay Round and 
thus as an additional encouragement for the beneficiary 
countries to play the multilateral game, and in particu­
lar to liberalize their imports, as this will help them 
develop. 
The future GSP should be simpler—i.e. clearer—and 
more stable. 
3.2. The main proposals 
3.2.1. The GSP would remain open to the present 
beneficiary countries (see the previous remarks concern­
ing the Eastern European countries), i.e. no countries 
would be excluded. The least developed countries 
would continue to be given more favourable treatment, 
possibly with further improvements. 
3.2.2. The future GSP would cover the same prod­
ucts as now (*) and perhaps be extended to others, as 
far as possible. 
3.2.3. Simplifying the scheme would mean, in the 
Commission's view, replacing the quantitative limits 
for products which are subject to customs duties by a 
modulation of the latter which would take account both 
of the sensitivity of the products from the Community's 
point of view and of the competitiveness of the export­
ing developing countries. This would lead to three 
possible solutions for products subject to customs 
duties: 
— duty-free entry without quantitative restriction for 
the vast majority of products, particularly industrial 
products, 
— a simple reduction in the customs duty without 
quantitative restriction for sensitive products (pro­
vided the duty is not lower than a minimum thres­
hold) varying from one sector to another, or 
— complete application of the customs duty (in fact 
exclusion from the GSP) for product/country pairs 
which are extremely sensitive (or for which the 
foreseeable margin of preference would be too low: 
see previous paragraph). 
3.2.4. The stability of the scheme would be guaran­
teed by having a minimum period of application of 
three years (instead of one as at present). 
(!) As regards fishing the Commission declares that 'all factors 
specific to the fisheries sectors will be taken into consider­
ation'. Use of a suspensive clause 'would be limited to excep­
tional cases justified by criteria relating to real market 
disruption. Confirmation of the re-establishment of the 
duty would be preceded by notification of the benefici­
ary countries' of the GSP. 
33. 'Burden sharing' 
Although the Commission does not explicitly link the 
implementation of these guidelines with an effort on 
the part of other partners in world trade, it still clearly 
refers—for the first time, to our knowledge—to the 
need to 'share the burden' imposed by the GSP. 
3.3.1. Firstly, the Commission feels that the new 
Community policy on this matter will only be fully 
rewarded if it is drawn up jointly with the Community's 
partners of the Organization for Economic Co-oper­
ation and Development (OECD) and 'matched by simi­
lar contributions from them'. 
Moreover, it is inadmissible that some of these countries 
(this is the case of the USA) should exclude from their 
GSP entire sectors, such as textiles and clothing. 
3.3.2. Secondly, the Commission notes 'the growing 
capacity of all the beneficiaries to make their own 
contribution to liberalising trade for developing 
countries'. 
It adds that at the Uruguay Round it expects active 
participation by a large number of these countries other 
than the least developed countries, depending on their 
level of development. It would see in this an 'important 
signal' for drawing up its future GSP, which, whatever 
happened, would remain autonomous. 
Even more specifically the Community intends— 
according to the Commission—'to obtain a commit­
ment from the most developed of the beneficiary 
countries, and from the Eastern European countries, to 
open up their markets to imports from developing 
countries'. 
In addition, and without saying how it intends to do 
so, the Commission declares that the Community will 
'actively seek to ensure that any supplementary con­
cession to non-LDC and non-ACP (African, Caribbean 
and Pacific States) beneficiaries will be compensated by 
a supplementary opening-up of the markets of these 
countries to the LDC. 
18. 3. 91 Official Journal of the European Communities No C 69/39 
3.4. Immediate effects in practice 
While the Commission proposes that the Council con­
firm the guidelines set out, it: 
— declares that 'it will not be possible to present a 
concrete, detailed proposal for a renewed GSP 
before the positive completion of the Uruguay 
Round'; as a result the ESC too will have to be able, 
if necessary, to re-assess its own line on the GSP for 
the 1990s on the basis of the conclusion of the final 
phase of the present GATT negotiations, which, 
instead of ending in December 1990 in Brussels, 
have been postponed until January 1991 in Geneva, 
and 
— announces that 'for the least-developed countries, 
the improved rules of origin will be implemented in 
1991 as a contribution to the Paris Conference held 
in September 1990'. 
4. Rules of origin 
4.1. This is a complex subject which has a noticeable 
influence on the developing countries' trade— 
especially in some sectors such as textiles and clothing. 
To avoid cluttering up the text of the Opinion, a 
summary of the Commission's rules and intentions has 
been included in an appendix. 
5. General comments 
5.1. The Committee shares and, on the whole, 
appreciates the analysis which the Commission has 
carried out on the twenty years that the GSP has been 
in force. This analysis, and the reflections which 
accompany it, among other things, reiterates many of 
the comments which the ESC has had occasion to make 
in its Opinions on the GSP over the past five to six 
years. 
5.2. But what the Committee considers as uncon­
vincing is the framework for the criteria which the 
Commission indicates are the guidelines for the decade 
1991-2000. The Committee thinks that these are an 
indictment of the uncertainty which is perhaps motiv­
ated by the difficulty of fulfilling the needs of the 
countries concerned and which may ultimately backfire 
on the Community and the Member States. 
The GSP must be shaped—or rather improved—in 
such a way as to provide a background which is sure, 
consistent and effective. 
53. To this end, restricting the field of application 
and the number of countries involved is an act of 
concentration which is essential to ensuring greater effectiveness and certainty both in the system as a whole 
and among its users—the developing countries and 
Community traders. 
Above all, greater concentration would also have the 
psychological effect of spreading confidence among the 
beneficiary countries. 
The Committee recognizes that this is a difficult choice, 
but urges that it be made with courage and determi­
nation, even if it may initially lead to grumbling or 
incomprehension. 
5.4. The Committee regrets here that, without hav­
ing consulted the Committee the Commission and 
Council have recently extended the GSP to cover 
countries which are not part of the developing countries 
group. 
5.5. The GSP must not be considered as the only 
means of providing tangible help for development or 
as a miracle cure-all: such a policy, especially if it is 
allied to the complex and flexible standards of manage­
ment which have prevailed to date, can lead to favourit­
ism, arbitrary acts and probably other things: and this, 
in the long term, cannot be in the interest of anyone, 
least of all the Community. 
5.6. The more that the GSP is concentrated, the more 
it will have to be accompanied by other policies to 
provide active support for the developing countries. 
Such policies would have to be the subject of bilateral 
and/or multilateral negotiations and receive substantial 
funding. 
For this purpose consideration should be given, among 
other things, to reviewing the international Coffee 
Agreement. Similarly, it is increasingly essential that 
the development aid policy of the Member States should 
be better coordinated so as to ensure maximum effec­
tiveness. 
5.7. However, the Committee finds it unacceptable 
that the industrialized countries should maintain the 
present imbalance from which they benefit in trade in 
coffee, other tropical products such as tea, spices and 
bananas, and many commodities such as timber, cotton 
and other minerals. 
They should move towards a policy—like the EEC— 
with the twin objectives of adding more value locally, 
with the first stage in the processing of raw materials 
being carried out in the country of origin, and of 
ploughing back aid to investors, through detailed pro­
jects and programmes conducive to the development of 
such countries. 
No C 69/40 Official Journal of the European Communities 18. 3. 91 
The Committee is aware that such a policy involves 
considerable investment: it is an expensive choice, but 
there is no alternative if one wishes to create the con­
ditions for a real increase in trade between rich and 
poor countries and bring about balanced and stable 
development. 
5.8. As a general rule, whenever aid is given to 
developing countries, including through the GSP, the 
Committee urges that the necessary monitoring be car­
ried out, so as to prevent any violation or distortion of 
the aim of making society as a whole benefit in the 
country to which aid js channelled. 
5.9. As regards agricultural products, the Committee 
refers to what was said in the Information Report of 
June 1989 and the Opinion of September 1990 on the 
present GATT talks; but it would add that, irrespective 
of the conclusion of the talks, the Community must 
continue to think about this highly delicate sector, the 
strategic, environmental and social aspects of which 
can never be emphasized enough. 
5.10. It is essential for the Community to act right 
now, through specific cooperation policies, on the struc­
tures in beneficiary countries so as to eliminate, or at 
least reduce, the unjustified guaranteed incomes which 
are a feature of the processing and marketing of numer­
ous agricultural products. 
Such a policy would lead either to lower prices for the 
consumer or to the resources at present absorbed by 
the distribution sector—particularly middlemen— 
being transferred to producers, both inside and outside 
the Community. 
5.11. The Committee cannot but appreciate the 
option of involving the most advanced developing 
countries in the opening-up of trade with the poorest 
developing countries; however, this should form part 
of a comprehensive negotiation of all trade agreements 
covering development aid, including the GSP, within 
the framework of GATT. 
5.12. The Committee also agrees with the intention 
to come to an understanding with other countries or 
groups of countries offering GSP, but thinks such a 
move is scarcely practical at a time when this subject 
is brought up to no purpose either in the numerous 
bilateral contacts with the USA or in the even more 
frequent contacts with the countries of the European 
Free Trade Association (EFTA). The time for defining 
a Community position on the GSP up to the year 2000 
is very limited, and so such a declaration seems to be 
more of a reflex than a practical proposal with an 
effective political commitment. 5.13. This hoped-for joint examination of GSP in 
order to achieve wide-ranging harmonization, and in 
any case the Community's approach, should lead to the 
introduction of negotiated systems, at least as regards 
their broad lines, which seek to incorporate, to the 
satisfaction of all sides, key problems such as the guide­
lines for development into an overall plan for a new 
international division of labour, the defence of the 
planet's natural resources, and its environment, the 
recognition and enjoyment of basic human and social 
rights, and population control. 
5.14. Consequently the Committee considers the 
conclusions of the Commission's communication to 
have little substance. Greater clarity and consistency 
are essential, in everybody's interest. 
5.15. It is this question of consistency, of moving 
more rigorously and systematically from analysis to 
synthesis and logical decisions, which has to be dealt 
with as a matter of urgency by our Community. 
6. Specific comments 
6.1. The Committee declares that it fully agrees with 
the Commission's requirements in point 21, namely 
that the GSP should be 'attractive, i.e. meaningful, but 
also simpler, more stable and more transparent'; it 
would also add: 'effective'. 
6.2. This means, among other things, that there 
should be some degree of concentration, and not, as 
the Commission says in the first indent of point 21, 
that 'the scheme should remain open, in principle, to 
the current beneficiaries'. 
6.3. The Committee would reaffirm here its own 
proposals that any country with a per capita Gross 
Domestic Product (GDP) higher than that of an EC 
country should in principle, be excluded from the GSP. 
6.4. Such a step would already have an initial effect 
of concentration, but this should not be considered as 
sufficient. Further criteria for exclusion should there­
fore be laid down, and the Committee suggests the 
following for doing this: 
— reduce substantially the thresholds at present laid 
down for assessing product/country pairs for 
exclusion from the GSP, 
— introduce minimum social clauses similar to those 
in the USA's GSP, independently of the hoped-for 
agreements in this field, to be worked towards with 
all the other countries granting GSP. 
6.5. Thought could be given straightaway to limiting 
the GSP to the least-developed countries (LDC); while 
this idea should not be ruled out once and for all, 
the ESC considers that such a step is not practical at 
present. 
18. 3. 91 Official Journal of the European Communities No C 69/41 
preferences: guidelines for the 1990s'; it has put forward 
its own comments and suggestions in this Opinion, 
which are almost entirely consistent and interdependent 
with the Opinions issued from 1985 onwards, especially 
that on the revision of the GSP for the period 1986-
1990 and with the Opinion for 1991, regarding which 
it is necessary to repeat the call to the Commission 
to reconsider its exclusion of the Eastern European 
countries from the GSP. The Committee hopes that the 
Council's decisions and the Commission's proposals for 
the three-yearly rules of the Community's GSP will be 
more courageous, consistent and in keeping with the 
principles set out. 
The Chairman 
of the Economic and Social Committee 
Francois STAEDELIN 
APPENDIX 
to the Opinion of the Economic and Social Committee 
1. Basic data 
The rules of origin lay down the conditions to be fulfilled by a product from a given country but obtained 
from components which do not all originate from that country in order to benefit from certain import 
arrangements. 
A distinction is made between non-preferential rules of origin, which, for the Community, apply to the USA 
or Japan, and preferential rules of origin. 
Preferential rules are stricter than non-preferential rules of origin because their aim is to ensure that only the 
partner countries benefit from a preferential agreement (or an autonomous set of rules). 
The rules of origin applicable under the GSP are preferential, but they differ, for instance, from the preferential 
rules applied in relations with the ACP or Mediterranean countries. 
2. GSP rules of origin 
Origin is conferred through 'sufficient processing' in the GSP beneficiary, which generally means a 'change 
in tariff heading'. In other words, an 'originating product' is one whose tariff heading is different from those 
of its 'non-originating' components. 
This general rule is subject to two exceptions, henceforth grouped together in a 'single list'. These are: 
— either supplementary conditions (origin is not conferred merely by a change in tariff heading), 
— or different conditions (origin is conferred not by a change in tariff heading which is not necessary but 
by the carrying-out of certain working or processing operations in the GSP beneficiary country). 
To these rules are added those concerning 'regional cumulation'. These allow a product to be considered as 
originating in a member country of a regional grouping if it is made up of components from, or has been 
subject to operations carried out in, another member country of the same grouping. Such rules apply to 
member countries of the Association of South-East Asian Nations (ASEAN), the ANDEAN Pact and the 
Central American Common Market. 6.6. As far as the duration of the rules is concerned, 
the Committee agrees with the Commission's intention 
to move from an annual to a three-yearly review and 
to limit recourse to safeguard clauses to really excep­
tional and verified cases, possibly varying from product 
to product. 
7. Conclusion 
7.1. The Committee stands by its assessment of the 
Commission document entitled 'Generalized system of 
Done at Brussels, 30 January 1991. 
No C 69/42 Official Journal of the European Communities 18. 3. 91 
3. Economic aspects of GSP rules of origin 
The aim of these preferential rules, which are based on the concept of sufficient processing, is to encourage 
industrialization in GSP beneficiaries. It is also to reserve for those countries the preferences granted by the 
GSP. But rules which were too strict might lead to this aim not being achieved; some beneficiaries may find 
it more difficult than others to achieve the degree of processing laid down, especially as there is a growing 
internationalization of production. 
The GSP rules of origin, except those on regional cumulation (see above) are practically identical for all 
beneficiaries. This particularly applies to the nine non-ACP LDC, and the rules of origin in the Lome 
Convention favour beneficiaries more than in the GSP. 
4. Guidelines envisaged by the Commission 
Although the Commission wants a debate on GSP rules of origin, it stresses that it alone has the power of 
decision. To improve access to the EC market, it is thinking of relaxing the GSP rules of origin. 
This would mean, for all GSP beneficiaries: 
— revising the list of operations conferring originating status (the exceptions) which in certain cases replace 
the change in tariff heading rule (see point III.2 above), 
— introducing some 'tolerance' of the use of trimmings and decorations on textiles (in the Community's 
relations with the ACP Overseas Countries and Territories (OCT) there is a general tolerance regarding 
materials originating in third countries), 
— introducing the concept of 'bilateral cumulation' (or 'donor country component') between products 
originating in the EEC and those from a GSP beneficiary^), 
— extending 'regional cumulation' (see point III.2 above) to other regional groupings than those to which it 
applies already. 
For the LDC the Commission proposes the following additional changes: 
— allowing the countries a general tolerance of 10% of products originating from non-EEC countries, 
— revising the rules on requests for waivers so that the Community accedes to all requests for waivers from 
LDC beneficiaries of the GSP which are duly justified and which cannot cause serious damage to an 
established Community industry. 
The Community and the EFTA countries currently apply the same GSP rules of origin, so the question of 
greater flexibility should be discussed with EFTA. 
i1) 'Bilateral cumulation' allows components (or operations) 
originating in the EEC and forming part of a product manu­
factured in a GSP beneficiary to be considered as originating 
in that country. Such cumulation is already allowed for 
each of the Mediterranean countries (other than those of the 
Maghreb) which are EEC Associates. Cumulation is not only 
bilateral but also complete between all ACP/OCT and the 
EEC.