Opinion of the Economic and Social Committee on the "Proposal for a Council Regulation (EC) applying a scheme of generalised tariff preferences for the period 1 January 2002 to 31 December 2004"
Date: 2001-09-12
Institutions: European Economic and Social Committee
Subjects: generalised preferences, trade policy

7.11.2001

EN

Official Journal of the European Communities

C 311/47

Opinion of the Economic and Social Committee on the ‘Proposal for a Council Regulation (EC)
applying a scheme of generalised tariff preferences for the period 1 January 2002 to 31 December
2004’

(2001/C 311/10)

On 11 July 2001 the Council decided to consult the Economic and Social Committee, under Article 262
of the Treaty establishing the European Community, on the above-mentioned proposal.

The Economic and Social Committee decided to appoint Mr Kenneth Walker as rapporteur-general to
prepare its opinion.

At its 384th plenary session on 12 and 13 September 2001 (meeting of 12 September 2001), the
Economic and Social Committee adopted the following opinion by 62 votes in favour and one abstention.

1.

Introduction

therefore seem necessary to adjust the measures which are
meant to put them into practice.

Council Regulation (EC) No 2820/98 of 21 December
1.1.
1998 (1) applying a multi-annual scheme of generalised tariff
preferences will expire on 31 December 2001. In 1994, the
Commission adopted some guidelines on the role of the GSP
for the ten-year period 1995 to 2004 (2). A new regulation is
required in order to implement
those guidelines for the
remainder of the period, i.e. the years 2002 to 2004.

1.2.
The guidelines of 1994 brought about a number of
important changes. Since 1995, GSP schemes of the European
Union replaced the traditional approach of granting duty-free
market access for restricted quantities by the concept of
modulation, which provides limited preferences for unlimited
quantities. At the same time, new rules were introduced on
graduation allowing for the exclusion of specific sectors of
exports from individual beneficiary countries. Subsequently,
additional preferences were offered in the framework of special
incentive arrangements, meant to promote the objectives of
sustainable development, in particular the protection of labour
rights and the environment.

1.3.
As most of those features were genuine innovations, it
was difficult to anticipate their effects. Fortunately, many fears
that had been raised prior to their adoption proved to be
unfounded. Thus, the decision to abandon quotas and ceilings
did not give rise to a major surge of preferential imports. To
the extent that some of the provisions of the present regulation
are obviously too cautious or complicated, they should be
streamlined.

1.4.
On the other hand, some of the expectations, on which
the present rules were shaped, did not materialise. Potential
beneficiaries of the special incentive arrangements were reluc-
tant to take up the opportunities they were offered. It would

(1) OJ L 357, 30.12.1998, p. 1.
(2) COM(94) 212 final.

1.5.
The present GSP regulation is the first one to combine
all different arrangements and sectors, which used to be
governed by different regulations. It falls short, however, of
fully harmonising and unifying all rules and procedures. The
1994 guidelines clearly state a need for simplification. The
better part of the proposed amendments pursues this objective
and does not imply changes in terms of substance.

2. The Commission proposals

2.1. Modulation

2.1.1.
At the time the present GSP regulation was adopted,
the trade-weighted average preferential margin offered by the
GSP was 3,68 %. The present mean tariff reduction for non-
sensitive products is of the same magnitude, which also seems
to be sufficiently attractive. Thus, a flat-rate reduction of the
MFN duty by 3,5 percentage points would seem appropriate
for all sensitive products.

2.1.2.
For most of them, the preferential treatment resulting
from a flat-rate reduction of 3,5 percentage points would be
the same or slightly better than the one they enjoy under the
present regulation, while a limited number of products would
enjoy a less favourable treatment.

2.1.3.
However, the great variations between specific duty
rates rule out reducing them by a flat rate. The present system
of reducing them by a percentage should therefore remain in
place. In order to simplify the scheme, a uniform reduction of
30 % should be applied to all products concerned.

C 311/48

EN

Official Journal of the European Communities

7.11.2001

2.2. Graduation

As far as the exclusion of countries is concerned, one
2.2.1.
of the two criteria — per capita GNP — needs updating. In
order to use a neutral criteria which is regularly revisited,
reference should be made to the threshold according to which
the World Bank classifies countries as high-income countries.

2.2.2.
In order to enhance the objectivity of the regime, the
list of beneficiary countries should be revised on a yearly basis.

2.2.2.1.
This, however, could result in a lack of predict-
ability. It would therefore be preferable to require that a
country meet the criteria for exclusion during three consecutive
years before it should be eliminated from the list of beneficiary
countries.

2.2.2.2.
Finally, for the sake of providing a fair treatment
for all countries, those which had been eliminated should be
re-admitted where they do not meet the criteria for exclusion
in three consecutive years.

2.2.3.
As far as graduation is concerned, both basic rules
— the so-called lion’s share clause and the graduation mechan-
ism — should be maintained. In order to make graduation
more neutral and automatic, it should also be applied on a
more regular basis, i.e. once a year.

That amendment

2.2.3.1.
should be balanced by an
additional requirement according to which graduation should
only take place where beneficiary countries meet one of the
criteria during three consecutive years. This condition should
be considered to be fulfilled also where it is not the same
criterion that is met during each of the three years.

2.2.4.
Neither the 1994 guidelines nor the present regu-
lation foresee the possibility of reversing graduation in cases
where the criteria are no longer met. Such a possibility should
be provided for the same reason as in the case of the exclusion
of countries.

2.2.5.
As soon as the new GSP regulation is adopted by the
Council, the Commission will prepare a revision of the sectors
that will have to be graduated according to the new regime.
The results of that revision will enter into force on 1 January
2003.

2.3. The special incentive arrangements

2.3.1.
In order to give momentum to the present trend
under which the acceptance of the arrangements by potential
beneficiary countries gains ground, it would seem imperative
to make them more attractive. In line with the present scheme,
but in order to simplify it, additional preferences should
double the general preferences — i.e. they should provide an
additional flat reduction by 3,5 percentage points on ad valorem
MFN duties and an additional reduction specific duties by
another 30 %. Such a rule would also have the advantage of
being easily understood.

2.3.2.
The benefit of the special incentive arrangements is,
at present, also available for sectors in which the country
concerned is graduated but only where graduation took place
under the graduation mechanism (and not under the lion’s
share clause).
In order to make the arrangements more
attractive for more-advanced developing countries (which are
more likely to be graduated and to fulfil the requirements of
the social clause) the benefit should also be given where
graduation took place on grounds of the lion’s share clause.

2.3.3.
In its present shape, the social incentive arrangements
establish a double conditionality, where a country has to
qualify for being granted the status of a beneficiary country of
the arrangements and where exports from that country have
to be certified as being manufactured in accordance with the
inputs, even
labour standards concerned. This includes all
imported ones. Such a requirement is not viable, since the
beneficiary country is not in a position to control compliance
in that respect. Therefore, the requirement should be dropped.

2.3.4.
The special incentive arrangements for the protection
of labour rights initially referred to ILO conventions Nos 87,
98 and 138. In order to bring the special incentive arrange-
ments into line with the concept of ‘core labour standards’,
beneficiary countries should also be asked to comply effectively
with ILO conventions Nos 29, 100, 105, 111 and 182.

the environment are concerned,

As far as the special arrangements for the protection
2.3.5.
of
internationally-agreed
standards and an internationally-recognised system of certifi-
cation are still not
in place. On the other hand, some
national certification schemes have acquired a certain degree
of international recognition. In order to take this into account,
the wording of the draft proposal uses more general terms
than the present regulation.

2.4.

Special arrangements supporting Least Developed Countries

The present draft proposal takes into account the
2.4.1.
new regulation granting duty-free access for essentially all
products from Least Developed Countries.

2.5.

Special arrangements to combat drug production and traf-
ficking

2.5.1.
The Commission should have a clear picture of the
extent to which these arrangements actually achieve their
objectives. It should therefore monitor the application of the
arrangements, as well as their effects, taking into account the
assessments conducted by independent international organis-
ations and agencies, and it should have an exchange of views
with the beneficiary countries on those assessments. While the
evaluations should not lead to discontinuing the arrangements
before 2004, they should help to answer the question whether
it is appropriate to maintain the arrangements beyond that
date.

7.11.2001

EN

Official Journal of the European Communities

C 311/49

2.6. Withdrawal

should be made more neutral and automatic by being placed
on an annual basis.

2.6.1.
In general, the GSP should be used to a larger extent
as a means for promoting the protection of core labour
standards. It is therefore proposed to include serious and
those standards as a reason for
systematic violation of
temporary withdrawal of GSP benefits. Similarly, it is proposed
to include significant detrimental effects on the environment
arising from the production of certain products as such reason.

3.5.1.
The Committee supports the concept that graduation
should only take place where beneficiary countries meet one
of the criteria in three consecutive years, which need not
necessarily be the same criterion in each of those years.

3. Comments

3.1.
The Committee welcomes the Commission’s proposals
for a regulation modifying the scheme of generalised tariff
preferences to extend the implementation of the 1994 guide-
lines on the role of the GSP for the period 1995 — 2004 to
the end of that period. In the light of the experience gained in
the interim, some refining of these guidelines is manifestly
required.

3.2.
The Committee accepts that preferences which are
determined as a percentage of the MFN duty are bound to
shrink where the MFN duty rate is lowered.
It therefore
supports the concept of a flat reduction of the MFN duty rate
by 3,5 percentage points for all sensitive products.

The Committee agrees that

3.2.1.
the great variations
between specific duty rates makes it impractical to apply a flat
rate in these cases and that a uniform reduction of 30 % should
apply to all products concerned.

3.3. With reference to the exclusion of countries,
the
Committee notes that the criterion of per capita GNP needs to
be updated; it approves the principle of using a criterion which
is neutral and regularly revisited and accepts that the World
Bank threshold meets these requirements.

that

the special

The Committee notes

incentive
3.6.
arrangements have not fulfilled their expectations and agrees
that it would seem imperative to make them more attractive.
In view of the lack of success with this initiative to date, it
wonders whether the Commission has gone far enough in this
direction.

3.6.1.
the element of double conditionality.

The Committee approves the principle of removing

The Committee welcomes the proposal that benefici-
3.6.2.
ary countries should be required to effectively comply with
ILO Conventions Nos 29, 100, 105, 111 and 182, in addition
to the existing requirements.

3.7.
The Committee notes with approval that the present
draft regulation takes into account the new regulation granting
from Least
duty-free access for essentially all products
Developed Countries but would point out that this is subject
to a number of conditions and exceptions.

3.8.
The Committee welcomes the fact that the Commission
is reviewing the special arrangements to combat drug pro-
duction and trafficking in order to gauge their effectiveness. It
hopes that the results of this exercise will be incorporated into
the Commission’s proposals for the continuation of the GSP
system after 2004.

3.4.
The Committee shares the Commission’s concern that
revising the list of beneficiary countries on an annual basis
could lead to a lack of predictability which could undermine
support for the process. It therefore agrees that it would be
preferable that countries should have to meet the criteria for
exclusion for three consecutive years before being eliminated
from the list of beneficiary countries and that they should be
readmitted where they have not met the criteria for exclusion
during three consecutive years.

3.9.
The Committee notes that the Commission proposes
that, in future, serious and systematic violation of core labour
standards or significant detrimental effects on the environment
will be made grounds for the temporary withdrawal of GSP
benefits. While it understands and approves of the reasoning
behind this proposal,
it is concerned that an element of
subjectivity may be brought into play; who, for instance, is to
define the terms,
‘systematic’ and ‘significant’ and
how will it be possible to ensure that these criteria are applied
with equal rigour in each case?

‘serious’,

The Committee approves the proposal to retain both
3.5.
of the basic rules for graduation — the lion’s share clause and
It also agrees that graduation
the graduation mechanism.

The Committee welcomes the fact that the Com-
3.10.
mission has taken the opportunity afforded by this regulation
to pursue the objective of simplification but notes that it has

C 311/50

EN

Official Journal of the European Communities

7.11.2001

stopped short of fully harmonising and unifying all rules and
procedures. While it accepts that the imminence of a major
revision in 2004 would militate against making drastic changes

at this juncture, it hopes that on that occasion full prominence
will be given to the need to simplify, harmonise, streamline,
codify, reduce and unify the entire system.

Brussels, 12 September 2001.

The President

of the Economic and Social Committee

Göke FRERICHS

Opinion of the Economic and Social Committee on the ‘Assessment of the state of preparedness
for the introduction of the euro to highlight the main gaps and the necessary remedial action’

(2001/C 311/11)

On 31 May 2001 the Economic and Social Committee, acting under the second paragraph of Rule 23 of
its Rules of Procedure, decided to draw up an Opinion on the ‘Assessment of the state of preparedness
for the introduction of the euro to highlight the main gaps and the necessary remedial action’.

The Section for Economic and Monetary Union and Economic and Social Cohesion, which was
responsible for preparing the Committee’s work on the subject, adopted its opinion on 24 July 2001. The
rapporteur was Mr Burani.

At its 384th plenary session of 12 and 13 September 2001 (meeting of 12 September), the Economic
and Social Committee adopted the following opinion by 74 votes in favour with two abstentions.

1.

Introduction

In its opinion of 29 March 2001 (1), the Economic and
1.1.
Social Committee made comments and suggestions concerning
the Communication from the Commission to the European
Parliament, the Council, the Economic and Social Committee,
the Committee of the Regions and the European Central Bank
on the Practical aspects of the euro: state of play and tasks
ahead (2). The introduction of the euro is rapidly approaching,
but the many initiatives in progress or planned by a wide
range of public and private bodies give the impression that not
all the problems have been fully thought through. In any case,
the need for systematic coordination of such initiatives is
becoming increasingly evident: not an easy task, despite the
good will displayed by all those concerned.

1.2. With these points in mind, the Committee held a
hearing with the relevant social actors on 14 May 2001,

(1) OJ C 155 of 29.5.2001, p. 57.
(2) COM(2000) 443 final.

attended by representatives of
the Commission and the
European Central Bank, who provided valuable comments and
information. The views expressed by the participants provided
an overall picture of the situation: the brief notes below are
intended to contribute further to discussion on possible further
action. The Committee points out that the comments and
proposals made in its earlier opinion, referred to in point 1.1
above, remain fully valid.

1.3.
The Committee has no intention of encroaching upon
the authorities in charge of these initiatives, but simply of
highlighting a number of aspects which, although apparently
minor, might give rise to practical or psychological obstacles
to the shift from eleven different currencies to the single
currency. There is no historical precedent for such an oper-
ation: some lessons may be learned from past experiences, but
otherwise the starting point must be data on the current
situation, combined with a substantial dose of imagination
and common sense.