GSP+ - Report on the status of ratification and recommendations by monitoring bodies concerning conventions of annex III of the Council Regulation (EC) No 980/2005 of 27 June 2005 applying a scheme of generalised tariff preferences (the GSP regulation) in the countries that were granted the Special incentive arrangement for sustainable development and good governance (GSP+) by Commission Decision of 21 December 2005 {SEC(2008) 2647}
Date: 2008-10-21
Institutions: European Commission
Subjects: CCT duties, common commercial policy, developing countries, economic growth, generalised preferences, industrialisation, least-developed country, sustainable development

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 21.10.2008 
COM(2008) 656 final 

GSP+ 

Report on the status of ratification and recommendations by monitoring bodies 
concerning conventions of annex III of the Council Regulation (EC) No 980/2005 of 27 
June 2005 applying a scheme of generalised tariff preferences (the GSP regulation) in 
the countries that were granted the Special incentive arrangement for sustainable 
development and good governance (GSP+) by Commission Decision of 21 December 
2005 

{SEC(2008) 2647} 

(presented by the Commission) 

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GSP+ 

Report on the status of ratification and recommendations by monitoring bodies 
concerning conventions of annex III of the Council Regulation (EC) No 980/2005 of 27 
June 2005 applying a scheme of generalised tariff preferences (the GSP regulation) in 
the countries that were granted the Special incentive arrangement for sustainable 
development and good governance (GSP+) by Commission Decision of 21 December 
2005 

{SEC(2008) 2647} 

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THE EU GENERALISED SYSTEM OF PREFERENCES (GSP) 

The  European  Union’s  Generalised  System  of  Tariff  Preferences  is  a  system  of  preferential 
trading  arrangements  through  which  the  EU  extends  preferential  access  to  its  markets  to 
developing  countries.  It  is  an  important  instrument  of  EU  trade  policy,  which  assists  these 
countries in the reduction of poverty, by helping them to generate revenue through trade. 

The EU has adopted GSP following on the recommendation of the United Nations Conference 
on  Trade  and  Development  (UNCTAD)  of  1968  to  create  a  'Generalized  System  of  Tariff 
Preferences' under which developed countries would grant trade preferences to all developing 
countries.  In  the  WTO/GATT  system,  the  GSP  is  covered  by  the  "Decision  on  Differential 
and  More  Favourable  Treatment,  Reciprocity  and  Fuller  Participation  of  Developing 
Countries" (so called "Enabling clause"). 

The EU's GSP is a generalized, non-reciprocal, non-discriminatory system of preferences in 
favour of the developing countries (DEV), whose objective is: 

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– 

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To increase DEV export earnings 

To promote their industrialization 

To accelerate their rates of economic growth 

The  EU  GSP  is  the  most  generous  of  all  developed-country  GSP  systems.  It  grants  either 
duty-free  access  or  a  tariff  reduction  to  about  6.400  products  imported  from  the  177  GSP 
beneficiary countries and territories. 

The EU's new, revised GSP scheme came into force on 1 January 2006. It is simpler, more 
transparent  and  stable.  The  number  of  arrangements  under  the  GSP  has  been  reduced  from 
five  to  three.  The  coverage  of  the  general  GSP  scheme  was  extended  to  further  products 
mostly in the agriculture and fishery sectors, of interest for developing countries. The period 
of application has been extended to provide greater predictability.  

A new special incentive arrangement for sustainable development and good governance, the 
"GSP  +",  was  created  to  benefit  especially  vulnerable  countries  that  have  ratified  and 
effectively  implemented  key  international  conventions  on  human  and  labour  rights, 
sustainable  development  and  good  governance.  It  covers  6400  products  which  enter  the  EU 
duty  free.  The  GSP+  incentive  scheme  was  fast-tracked  to  enter  into  force  on  a  provisional 
basis on 1 July 2005. The list of GSP+ eligible countries was confirmed before the beginning 
of 2006, by an assessment of their effective implementation of core international conventions 
on human and labour rights, good governance and environment.  

THE  SPECIAL  INCENTIVE  FOR  SUSTAINABLE  DEVELOPMENT  AND  GOOD 
GOVERNANCE (GSP +) 

When setting up the new GSP+ incentive scheme, the objectives of the European Commission 
were: 

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to  use  international  trade  as  a  means  to  foster  economic  growth  and  respond 
positively to the need for sustainable development;  

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– 

to  make  the  "GSP+"  simpler,  easier  to  monitor  and  more  open,  than  the  previous 
GSP  special  incentives,  while  being  also  fully  supportive  of  the  EU  objectives  of 
sustainable development and good governance.  

It  is  to  this  end  that  the  new  "GSP  +"  incentive  scheme  is  designed  to  benefit  vulnerable 
countries  that  have  ratified  and  effectively  implemented  key  international  conventions  on 
sustainable  development,  human  and  labour  rights  and  good  governance.  The  trade 
preferences envisaged in the GSP+ are granted to a developing country, which has ratified and 
effectively implemented the conventions listed in Part A of Annex III of Council Regulation 
(EC)  No  980/2005  (GSP  Regulation)  (UN  human  rights  conventions  and  ILO  core  labour 
standards), and at least seven of the 11 conventions listed in Part B of Annex III (sustainable 
development and good governance), and commits itself to ratify and effectively implement by 
31 December 2008 those conventions listed in Part B of Annex III which it has not yet ratified 
and effectively implemented. 

The simplification of GSP+ is assured by basing the eligibility criteria on the ratification and 
proper implementation of internationally agreed conventions. The GSP+ is easier to monitor 
because  reliable  evaluation/assessment  mechanisms  to  monitor  the  implementation  of  these 
conventions  exist.  It  is  as  well  more  open  because  the  monitoring  and  evaluation  of 
compliance  with  the  requirements  of  the  scheme  are  based  on  the  public  reports  and 
observations of the relevant international organisations. It must be borne in mind however that 
the assessment is dependent on the availability of reports covering the period considered for 
the application of the Regulation.  

As  set  out  in  the  GSP  Regulation,  the  special  incentive  arrangement  for  sustainable 
development and good governance is based on an integral concept of sustainable development 
as recognized by international conventions and instruments such as the UN Declaration on the 
Right  to  Development  of  1986,  the  Rio  Declaration  on  Environment  and  Development  of 
1992,  the  ILO  Declaration  on  Fundamental  Principles  and  Rights  at  Work  of  1998,  the  UN 
Millennium  Declaration  of  2000  and  the  Johannesburg  Declaration  on  Sustainable 
Development  of  2002.  Consequently,  developing  countries  which  due  to  a  lack  of 
diversification and insufficient integration into the international trading system are vulnerable 
–an aspect that is assessed on the basis of objective criteria, mentioned further below- while 
assuming obligations and responsibilities due to the ratification and effective implementation 
of  key  international  conventions  on  human  and  labour  rights,  environmental  protection  and 
good  governance  should  benefit  from  additional  tariff  preferences.  These  preferences  are 
designed to promote further economic growth and thereby to respond positively to the need 
for sustainable development.  

The GSP+ incentive scheme was fast-tracked to enter into force on a provisional basis on 1 
July  2005.  Thus,  and  as  set  out  in  the  GSP  Regulation,  developing  countries  which  already 
fulfilled  the  criteria  under  the  special  arrangement  for  sustainable  development  and  good 
governance at the time of entry into force of the GSP Regulation began to benefit from this 
arrangement  from  July  2005.  They  were  therefore  provisionally  listed  as  beneficiary 
countries. They continued to benefit from the preferences when upon their formal application 
the Commission confirmed their eligibility by 15 December 2005. 

In accordance with the eligibility criteria for "GSP +", as set out in Article 9(1) of the GSP 
Regulation, preferences under the special incentive arrangement for sustainable development 
and good governance may be granted to a country which: 

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– 

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Has ratified and effectively implemented the conventions listed in Part A of Annex 
III, and 

Has ratified  and effectively  implemented at  least seven of the  conventions listed in 
Part B of Annex III, and 

Commits  itself  to  ratify  and  effectively  implement  by  31  December  2008  those 
conventions listed in Part B of Annex III which it has not yet ratified and effectively 
implemented, and 

Gives  an  undertaking  to  maintain  the  ratification  of  the  conventions  and  their 
implementing  legislation  and  measures  and  which  accepts  regular  monitoring  and 
review  of  its  implementation  record  in  accordance  with  the  implementation 
provisions of the conventions it has ratified, and 

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Is considered as a vulnerable country. 

The vulnerability criteria are set out in the Article 9(3) of the GSP regulation and provide that 
a vulnerable country is one:  

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That  is  not  classified  by  the  World  Bank  as  a  high  income  country  during  three 
consecutive years, and whose five largest sections of its GSP-covered imports to the 
Community represent more than 75 % in value of its total GSP-covered imports, and  

Whose GSP-covered imports to the Community represent less than 1 % in value of 
total GSP-covered imports to the Community 

The  data  used  to  establish  vulnerability  were  those  available  on  1  September  2004,  as  an 
average over three consecutive years. 

STATE OF PLAY IN APRIL 2008 

Under Article 9(4) of the GSP Regulation, the Commission shall keep under review the status 
of ratification and effective implementation of the conventions listed in Annex III. Before the 
end of the period of application of this Regulation and in time for the discussion on the next 
Regulation,  the  Commission  shall  present  to  the  Council  a  report  concerning  the  status  of 
ratification of such conventions, including recommendations by monitoring bodies. 

Therefore, the present report envisages reflecting the actual status (April 2008) of ratification 
and effective implementation of the Conventions listed in Annex III of the GSP Regulation by 
the 15 beneficiary countries of the GSP+ arrangement. 

The monitoring and evaluation of effective implementation of the GSP+ arrangement should 
be based on the findings of the monitoring mechanisms established under the auspices of the 
relevant international organisations such as the UN, ILO and other agencies as well as on the 
monitoring mechanisms envisaged in the conventions themselves and made publicly available 
by  these  agencies.  This  provides  for  an  unambiguous  and  impartial  review  process.  This 
review is based on reports issued by such bodies between December 2005 and April 2008.  

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The Commission issued on 21st December 2005 a decision establishing the list of the GSP+ 
beneficiaries1. The GSP+  incentive was granted, for the  period  from 2006  to 2008, to those 
countries that lodged the required formal application for GSP+ eligibility by the deadline of 
31 October 2005 and fulfilled the requirements set out in the GSP Regulation.  

The list included 15 countries from: 

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Latin  America:  four  Andean  Community  countries  (Bolivia,  Colombia,  Ecuador, 
Peru);  six  Central  American  countries  (Costa  Rica,  El  Salvador2,  Guatemala, 
Honduras, Nicaragua, Panama) and Venezuela; 

Eastern Europe (Republic of Moldova3, Georgia) 

Asia (Sri Lanka, Mongolia). 

A. State of play on ratification 

Almost  three  years  after  these  countries  began  to  benefit  from  the  GSP+;  the  status  of  the 
ratification is the following: 

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All the beneficiaries have now ratified all conventions listed in part A of Annex III.  

Some  countries  which  had  not  ratified  the  conventions  of  part  B  of  Annex  III  are 
doing so. In July 2005 none of the 15 GSP+ beneficiary countries had ratified all of 
the  11  part  B  conventions;  by  April  2008  ten  countries  (Bolivia,  Costa  Rica, 
Ecuador, Sri Lanka, Mongolia, Nicaragua, Panama, Peru, El Salvador and Moldova) 
have ratified all part B conventions; four countries (Colombia, Guatemala, Honduras, 
and Venezuela) have ratified all but one convention, while Georgia has yet to ratify 
two conventions. 

B. State of play on effective implementation 

As  far  as  effective  implementation  is  concerned  the  recommendations  of  the  ILO  and  UN 
monitoring  bodies,  as  presented  in  Annex  IV  of  the  Commission  Staff  Working  Document 
accompanying  this  GSP+Report  reveal  various  shortcomings  in  the  implementation  process 
but in general demonstrate a satisfactory state of play. 

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Commission Decision of 21 December 2005 on the list of the beneficiary countries which qualify for the special 
incentive arrangement for sustainable development and good governance, provided for by Article 26(e) of Council 
Regulation (EC) No 980/2005 applying a scheme of generalised tariff preferences. 
When submitting its request on 24 October 2005 to be included in the definitive list of countries benefiting from 
the GSP +, El Salvador was the only country to invoke - as set out in the GSP Regulation - incompatibility with its 
Constitution of provisions included in ILO conventions No 87 and 98. It has in September 2006 ratified the missing 
conventions. 
On 21 January 2008 the Council adopted Regulation (EC) No 55/2008 introducing autonomous trade preferences 
for  the  Republic  of  Moldova  (henceforth  referred  to  as  Moldova)  and  replacing  the  GSP  preferences  to  which 
Moldova  was  previously  entitled.  The  obligations  relating  to  the  ratification  and  effective  implementation  of  the 
covenants, conventions and protocols listed in Annex III to the GSP Regulation were overtaken by Regulation (EC) 
No 55/2008. 

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