COMMISSION STAFF WORKING DOCUMENT Midterm Evaluation of the Generalised Scheme of Preferences Accompanying the document Report from the European Commission to the European Parliament and the Council on the application of Regulation (EU) No 978/2012 applying a Scheme of Generalised Tariff Preferences and repealing Council Regulation (EC) No 732/2008
Date: 2018-10-04
Institutions: Directorate-General for Trade and Economic Security, European Commission
Subjects: EU market, developing countries, development aid, export, generalised preferences, import (EU), market access, poverty, sustainable development, tariff preference

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 4.10.2018  SWD(2018) 430 final  COMMISSION STAFF WORKING DOCUMENT Midterm Evaluation of the Generalised Scheme of Preferences Accompanying the document Report from the European Commission to the European Parliament and the Council on the application of Regulation (EU) No 978/2012 applying a Scheme of Generalised Tariff Preferences and repealing Council Regulation (EC) No 732/2008 {COM(2018) 665 final}  
 
 
Table of Contents 

Glossary ................................................................................................................................................... 2 

1. 

Introduction ..................................................................................................................................... 3 

2.  Background to the intervention ....................................................................................................... 5 

3. 

Implementation / state of play ......................................................................................................... 9 

4.  Method .......................................................................................................................................... 15 

5.  Analysis and answers to the evaluation questions ......................................................................... 17 

5.1 

Are the objectives of the current GSP on track to be achieved? ........................................... 18 

5.1.1 

2012 GSP reform objectives .......................................................................................... 18 

5.1.2 

Economic impact ........................................................................................................... 25 

5.1.3 

Social and human rights impact .................................................................................... 27 

5.1.4 

Environmental impact ................................................................................................... 29 

5.2  What are the factors (positive and negative) influencing the achievements observed? ........ 30 

5.3 

5.4 

5.5 

5.6 

  What unintended consequences, if any, can be linked to the design, implementation, or use 
of the current GSP? .................................................................................................................. 31 

Efficiency – to what extent is the current GSP efficient? ...................................................... 32 

To what extent is the current GSP coherent with the EU’s relevant policies? ...................... 34 

  To what extent is the current GSP relevant to the development needs which it is intended to 
address? .................................................................................................................................... 36 

6.  Other aspects related to the application of GSP ............................................................................ 37 

6.1 

6.2 

6.3 

Biofuels ................................................................................................................................. 37 

Sanitary and phytosanitary measures .................................................................................... 38 

Fight against terrorism and money laundering ...................................................................... 39 

7.  Conclusions ................................................................................................................................... 39 

Annex I – Procedural Information ......................................................................................................... 42 

Annex II – Methods and analytical models used in preparing the evaluation ....................................... 44 

Annex III – Synopsis report of stakeholder consultations ..................................................................... 63 

1 

 
 
 
 
 
 
 
 
Glossary 

CBD 

CITES  

CPI 

CPIA 
CRC 
DG TRADE 
EBA 

EEAS 

FTA 
GHG 
GSP 
GSP+ 

NGO 

PUR 

SME 
SPS 
TFA 
UN 
UNDP 
WTO 

Convention on Biological Diversity 
Convention on International Trade in Endangered Species of 
Wild Fauna and Flora  
Corruption Perception Index 

Country Policy and Institutional Assessment 
Convention on the Rights of the Child 
The Directorate General for Trade 
Everything but Arms 
European External Action Service 

Free Trade Agreement 
Greenhouse Gas 
Generalised Scheme of Preferences 
Special Incentive Arrangement for Sustainable Development 
and Good Governance 
Non-governmental Organisation 
Preference Utilisation Rate: GSP preferential imports as a 
percentage of eligible imports under the respective GSP 
arrangement 
Small and Medium Sized Enterprise 
Sanitary and Phytosanitary Standards 
Trade for All 
United Nations 
United Nations Development Programme 
World Trade Organization 

2 

 
 
 
 
 
 
 
 
 
 
 
1. 

Introduction 

In  1971,  the  European  Community  introduced  a  Generalised  Scheme  of  Preferences  (GSP) 
following  a  resolution  of  the  United  Nations  Conference  on  Trade  and  Development 
(UNCTAD) to create a system of trade preferences to support developing countries. The GSP 
is  also  based  on  the  World  Trade  Organisation's  enabling  clause,  which  permits  developed 
countries  to  grant  unilateral  and  non-reciprocal  tariff  preferences  to  support  developing 
countries. Since that time, the EU’s GSP has assisted developing countries in their efforts to 
reduce poverty, promote good governance and support sustainable development. By providing 
preferential  access  to  the  EU  market,  the  GSP  helps  developing  countries  to  generate 
additional income growth through international trade. 

Throughout the following decades, the GSP was amended with regards to product coverage, 
eligibility  of  beneficiary  countries,  as  well  as  the  introduction  of  special  arrangements  to 
support  developing  countries  in  their  engagement  concerning  human  and  labour  rights, 
environmental  protection  and  good  governance,  including  combatting  drugs  production  and 
trafficking. 

The current legal framework for the GSP is  Regulation (EU) No 978/2012 of the  European 
Parliament  and  the  Council  of  25  October  2012  applying  a  Scheme  of  Generalised  Tariff 
Preferences  ('the  GSP  Regulation').1  The  tariff  preferences  provided  under  the  GSP 
Regulation are applied from 1 January 2014 and remain in force for a period of ten years. 

According  to  Article  40  of  the  GSP  Regulation  the  Commission  “shall  submit,  to  the 
European Parliament and to the Council a report on the application of this Regulation”. The 
Directorate  General  for  Trade  (DG  Trade)  contracted  an  external  consultant  to  carry  out  a 
study to inform the Commission's report on the application of the GSP Regulation, as well as 
this  Staff  Working  Document  accompanying  the  Commission's  report.  The  final  report 
produced  by  the  external  consultant2  is  made  public  alongside  the  Commission's  report  and 
the accompanying Staff Working Document. 

Recital  34 of the GSP Regulation  states  that the report on the application of the Regulation 
and  the  assessment  of  the  need  to  review  the  GSP  include  the  GSP+  arrangement  and  the 
temporary withdrawal provisions of tariff preferences, taking into consideration, inter alia, the 
fight against terrorism and the field of international standards on transparency and exchange 
of information in tax matters. The implications for development, trade and financial needs of 
beneficiaries should also be taken into account. A detailed analysis of the impact of the GSP 
Regulation  both  on  trade  and  on  the  Union’s  tariff  income,  with  particular  attention  to  the 
effects  on  beneficiary  countries,  should  be  included.  Recital  34  also  foresees  that,  where 
applicable, compliance with Union sanitary and phytosanitary legislation should be assessed. 
Furthermore,  an  analysis  of  the  effects  of  the  GSP  with  regard  to  imports  of  biofuels  and 
sustainability aspect should be included. 

Aspects relating to biofuels, sanitary and phytosanitary measures, which were covered by the 
external  consultant's  study  are  addressed  in  a  separate  section.  Aspects  related  to  the  fight 
against  terrorism  are  also  covered  in  that  section  and  were  reviewed  by  the  Commission 

1Regulation (EU) No. 978/2012 of the European Parliament and of the Council of 25 October 2012 applying a 
scheme  of  generalised  tariff  preferences  and  repealing  Council  Regulation  (EC)  no.  732/2008,  available  at: 
http://trade.ec.europa.eu/doclib/docs/2012/october/tradoc_150025.pdf 
2 http://trade.ec.europa.eu/doclib/html/157270.htm 

3 

 
 
 
 
 
 
 
 
                                                            
services. Issues related to the exchange of information in tax matters have not been addressed. 
The reason being that this issue is not part of the GSP Regulation and has therefore not been 
monitored in the context of its application. Consequently, there is no information or data on 
which an analysis can be based. 

The  Commission  Implementing  Regulation  (EU)  No  1213/2012  of  17  December  2012 
amending the list of graduated products, as well as several delegated acts from 2012 to 2015, 
which amended the lists of beneficiary countries, the graduation  threshold,  the vulnerability 
threshold,  as  well  as  the  procedures  for  the  temporary  withdrawal  of  tariff  preferences  and 
adoption of general safeguard measures were also taken into consideration.3 

The overall purpose of the midterm evaluation was to assess, on the basis of the results to date 
of the GSP, whether the objectives set by the GSP Regulation are on track to be achieved. In 
general  terms,  the  midterm  evaluation  has  sought  to  provide  a  detailed  assessment  of  the 
following issues: 

 
 

the economic, social, human rights and environmental impacts of the GSP; 
the present GSP's effectiveness and efficiency in light of its objectives, including costs 
and benefits; 

  possible unintended consequences associated with the implementation of the GSP; 
 

the  relevance  of  the  GSP  with  respect  to  the  developmental  and  other  needs  of 
developing countries, and in particular, of Least Developed Countries; 
the  GSP’s  coherence  with  EU  foreign,  trade  and  development  policy  and  other 
relevant policies; and 
the  potential  for  regulatory  simplification  and  burden  reduction  both  for  the  EU  and 
the beneficiary countries.  

 

 

The issues listed above are examined in accordance with the evaluation criteria established in 
the evaluation roadmap: effectiveness, efficiency, coherence and relevance.  EU added value 
is not covered, since the scheme falls under the EU’s exclusive competence for the common 
commercial policy (TFEU Art. 3(1)(e)) 4. 

For comparison purposes, two separate time periods were analysed by the external consultant: 
the three-year period prior to the application of the GSP Regulation (referred to as the ‘pre-
reform  period’);  as  well  as  the  three  year  period  following  entry  into  force  of  the  GSP 
Regulation (referred to as the ‘post-reform period’), respectively 2011-2013 and 2014-2016. 

The following countries were examined under the three respective GSP arrangements:5 

i. 

Standard  GSP arrangement (23 countries)  -  Cameroon, Congo, the Cook Islands, 
Cote  d’Ivoire,  Fiji,  Ghana,  India,  Indonesia,  Iraq,  Kenya,  the  Marshall  Islands, 

of 

and 

3    A  list  of  the  Delegated  Acts  and  Implementing  Acts  to  Regulation  (EU)  No  978/2012  of  the  European 
Parliament 
at: 
the 
http://trade.ec.europa.eu/doclib/docs/2017/july/tradoc_155839.pdf 
4  The  Analytical  Framework  for  the  MTE  contained  in  Annex  I  of  this  Report  details  the  six  evaluation 
questions, the judgement criteria employed, the required evidence and analysis/indicators utilised, the sources of 
evidence/methodological tools, as well as coverage in the Final Report.  
5 Refer to page 9 for full descriptions of the three arrangements. 

available 

October 

Council 

2012 

25 

of 

is 

4 

 
 
 
 
 
 
 
 
 
                                                            
Micronesia, Nauru, Nigeria, Niue, Sri Lanka6, eSwatini (formerly Swaziland), Syria, 
Tajikistan, Tonga, Ukraine7, Uzbekistan, and Vietnam.  

ii.  GSP+  arrangement  (8  countries)  -  Armenia,  Bolivia,  Cape  Verde,  Kyrgyzstan, 

Mongolia, Pakistan, Paraguay, and the Philippines.8 

iii.  Everything  but  Arms  arrangement  (49  countries)  -  Afghanistan,  Angola, 
Bangladesh,  Benin,  Bhutan,  Burkina  Faso,  Burundi,  Cambodia,  Central  African 
Republic,  Chad,  Comoros  Islands,  Democratic  Republic  of  Congo,  Djibouti, 
Equatorial Guinea, Eritrea, Ethiopia, Gambia, Guinea, Guinea-Bissau, Haiti, Kiribati, 
People’s  Democratic  Republic  Lao,  Lesotho,  Liberia,  Madagascar,  Malawi,  Mali, 
Mauritania,  Mozambique,  Myanmar/Burma,  Nepal,  Niger,  Rwanda,  Samoa,  Sao 
Tome and Principe, Senegal, Sierra Leone, Solomon Islands, Somalia, South Sudan, 
Sudan,  Tanzania,  Timor-Leste,  Togo,  Tuvalu,  Uganda,  Vanuatu,  Yemen,  and 
Zambia.  

In  total,  80  GSP  beneficiary  countries  are  covered  across  the  three  arrangements.9  These 
countries  consistently  traded  under  one  or  more  of  the  EU’s  GSP  arrangements  in  both  the 
pre-reform and post-reform periods.10 

2. 

Background to the intervention 

Description of the intervention and its objectives 

The  EU's  GSP  has  undergone  several  transformations  over  the  decades  always  with  the 
objective  to  increasingly  promote  sustainable  development.  Most  recently,  Regulation  (EU) 
No. 978/2012 introduced reforms to the scheme with the aim to better focus preferences on 
those countries most in need, in particular, least developed countries and other low and lower-
middle income developing countries. The 2012 GSP reform significantly reduced the number 
of beneficiaries from 178 to 92 countries. Countries which were classified by the World Bank 
as in the upper middle income category and higher were excluded from GSP preferences, as 
well as countries benefitting from other preferential market access arrangements with the EU, 
which grant at least the same level of tariff preferences as the GSP for substantially all trade. 

The objectives of the 2012 GSP reform are threefold: (i) to contribute to poverty eradication 
by  expanding  exports  from  countries  most  in  need;  (ii)  to  promote  sustainable  development 
and  good  governance;  and  (iii)  to  ensure  a  better  safeguard  for  the  EU’s  financial  and 
economic interest.  

6 Sri Lanka’s preferential treatment has been reinstated in the GSP+ arrangement as of 19 May 2017. However, 
given that it benefitted from Standard GSP preferences over the period of the investigation, it was included in the 
first group. 
7 While the Ukraine was part of the group of countries examined, it should be noted that Ukraine was removed 
from GSP from 1 January 2018 due to a Deep and Comprehensive Free Trade Agreement with the EU. 
8  Pakistan,  the  Philippines  and  Kyrgyzstan  transitioned  from  the  Standard  GSP  arrangement  to  the  GSP+ 
arrangements in the years 2014, 2015, and 2016, respectively. Georgia graduated from the GSP+ arrangement in 
January 2017 and was not considered as a part of the selected 80 beneficiary countries. 
9 This is based on trade under specific GSP arrangements as at 1 January 2017.  
10 This is with the exception of the Myanmar and South Sudan that started to trade under EBA preferences in 
2013. 

5 

 
 
 
 
 
 
 
 
 
                                                            
These  general  objectives  were  further  translated  into  six  specific  operational  objectives  for 
Regulation 978/2012: 

1.  To better focus the preferences on the countries most in need; 
2.  To remove disincentives towards diversification for the countries most in need; 
3.  To enhance consistency with overall trade objectives, whether bilateral or multilateral; 
4.  To strengthen the support for sustainable development and good governance; 
5.  To improve the efficiency of safeguard mechanisms; and 
6.  To enhance legal certainty, stability and predictability of the scheme. 

The  intervention  hypothesis  which  underpins  the  GSP  as  implemented  under  Regulation 
978/2012  was  revised  and  reconstructed  for  the  purpose  of  the  mid-term  evaluation  and  is 
shown  in  Figure  1  (overleaf).  It  highlights  the  linkages  between  the  Regulation’s 
implementation activities, its operational objectives, the intermediate effects and the expected 
results  for  the  beneficiaries  as  well  as  the  expected  short,  medium  and  long-term  impacts.  
The figure illustrates the channels through which the GSP achieves its objectives and impact. 

6 

 
 
 
 
 
Figure 1: Intervention logic for the GSP Regulation 

7 

 
 
 
 
In order to fulfil its objectives, the GSP has three different preference arrangements: 

1.  A general arrangement (‘Standard GSP’), which grants duty reductions for around 66% 
of all EU tariff lines to low-income or lower-middle income countries that do not benefit 
from other preferential trade access to the EU market; 

2.  A  Special  Incentive  Arrangement  for  Sustainable  Development  and  Good 
Governance  (‘GSP+’)  for  vulnerable  countries,  which  grants  full  duty  suspension  for 
essentially the same 66% of tariff lines as Standard GSP to eligible countries vulnerable in 
terms  of  economic  diversification  and  export  volumes.  In  return,  beneficiary  countries 
must  ratify  and  effectively  implement  27  core  international  conventions,  as  listed  in  the 
GSP  Regulation,  which  cover  human  and  labour  rights,  environmental  protection  and 
good governance (hereafter referred to as 'GSP+ Conventions'); and 

3.  A  Special  Arrangement,  the  Everything  But  Arms  (‘EBA’)  for  Least  Developed 
Countries, which grants full duty-free, quota-free access for all products except arms and 
ammunition to countries classified by the UN  as Least Developed Countries. Unlike the 
case for countries that benefit from Standard GSP and GSP+ preferences, countries do not 
lose EBA status by entering into a Free Trade Agreement (FTA) with the EU. 

Base line / point of comparison 

The  point  of  comparison  is  the  GSP  applied  before  1  January  2014,  established  by  Council 
Regulation (EC) No. 732/2008. That GSP had the following main features: 

Eligibility  to  GSP  was  based  on  two  negative  principles:  1)  high  income  countries  as 
classified by the World Bank were not  eligible unless their economies were  not sufficiently 
diversified  (as  measured  by  the  concentration  of  their  imports  to  the  EU);  and  2)  countries 
with a FTA with the EU were also not eligible. 

There were three preference arrangements: 1) a general arrangement with 111 beneficiaries, a 
product coverage of around 6200 tariff lines and in principle offering full duty suspension for 
non-sensitive  products  and  duty  reductions  for  sensitive  products;  2)  GSP+  with  15 
beneficiaries),  with  essentially  the  same  product  coverage  as  the  general  arrangement  but 
offering  almost  full  duty  suspension  on  all  covered  products;  and  3)  EBA  with  49 
beneficiaries offering full duty suspension for all products except arms and munitions. 

GSP+ eligibility criteria based on a countries import share to the EU and the concentration of 
those imports. GSP+ entry criteria were based on ratification and effective implementation of 
27  international  conventions  related  to  human  rights,  labour  rights,  protection  of  the 
environment and good governance. 

Product graduation, i.e. a set of criteria applied for removal of specific product sections for a 
given  beneficiary  country  because  the  exports  of  those  products  are  deemed  as  competitive 
and thus no longer in need of tariff preferences, which applies to both the general arrangement 

8 

 
 
 
 
 
 
 
 
 
 
 
 
 
and  GSP+.  Several  beneficiaries11  had  been  subject  to  product  graduation,  the  majority  of 
cases related to China.12 

Mechanisms  for  the  withdrawal  of  GSP  in  case  of  the  serious  and  systematic  violations  of 
principles laid down in core human and labour rights conventions and other grounds such as 
unfair  trading  practices  and  shortcomings  in  customs  controls.  In  addition,  GSP+  may  be 
temporarily with drawn in case a beneficiary no longer maintains ratification of a convention 
or it is not effectively implemented. GSP was withdrawn from Belarus in 2006 for serious and 
systematic  violations  of  labour  rights  and  GSP+  from  Sri  Lanka  in  2010  for  non-effective 
implementation of certain human rights conventions. 

Safeguard measures which may be applied where imports from beneficiary countries cause or 
threaten to cause "serious difficulty" to a Union producer. No safeguard measure was taken. 

The 2012 GSP reform introduced major changes to that baseline: 

1.  The eligibility criteria for countries to qualify as a GSP beneficiary were tightened to only 
include  developing  countries  below  upper-middle  income  status  or  that  did  not  have  a 
Free Trade Agreement with the EU. 
2.  Product graduation criteria were revised.  
3.  The product coverage was slightly expanded to offer more generous preference coverage, 

mainly for raw materials. 

4.  The  GSP+  entry  mechanism  was  simplified  and  the  GSP+  monitoring  mechanism 

enhanced. 

5.  The  procedural  requirements  for  temporary  withdrawal  and  the  safeguard  mechanism 

have been amended, empowering the Commission to act rapidly in urgent cases. 

6.  The expiration period was extended from 3 to 10 years for the GSP and GSP+ schemes, 

while the EBA scheme has no expiration date. 

3. 

Implementation / state of play 

The  2012  GSP  reform  came  into  effect  on  1  January  2014,  allowing  for  an  important 
transition period from the moment the GSP Regulation was adopted on 25 October 2012. This 
transition  period  provided  all  relevant  stakeholders, 
including  beneficiary  country 
governments and economic agents, the necessary time to adapt to the new provisions.  

The main goal of the 2012 GSP reform was to better focus the GSP’s tariff preferences on the 
countries  most  in  need  by  graduating  those  countries  and  sectors  which  were  competitive 

11 Commission Implementing Regulation (EU) No 1231/2012 of 17 December 2012 suspending the tariff 
preferences for certain GSP beneficiary countries in respect of certain GSP sections in accordance with 
Regulation (EU) No 978/2012 of the European Parliament and of the Council applying a scheme of generalised 
tariff preferences (for the period 2014-2016): China, Costa Rica, Ecuador, India, Indonesia, Nigeria, Ukraine, 
Thailand 
Commission Implementing Regulation (EU) No 2016/330 of 8 March 2016 suspending the tariff preferences for 
certain GSP beneficiary countries in respect of certain GSP sections in accordance with Regulation (EU) No 
978/2012 applying a scheme of generalised tariff preferences for the period 2017-2019: India, Indonesia, Kenya, 
Ukraine 
12 Commission Implementing Regulation (EU) No 1231/2012 covered 44 product cases out of which 27 related 
to China. Commission Implementing Regulation (EU) No 2016/330 covered 12 product cases. 

9 

 
 
 
 
 
 
 
 
 
                                                            
under  the  previous  GSP.  Through  the  tightening  of  the  eligibility  criteria  of  GSP,  the  total 
number of GSP beneficiaries decreased from 178 to 92. 

Overall import value 

GSP imports as a share of all EU imports decreased from 6.1% in 2013 (the last year before 
the GSP Regulation came into force) to 4.9% in 2016, which fits with the lower number of 
beneficiaries. Three sets of regressions which were undertaken by the external consultant as 
part of the accompanying econometric analysis support the fact that these changes are indeed 
attributable to the 2012 GSP reform. 

Table 1: Pre- and post-reform EU imports by GSP arrangement13 

Total GSP 

Standard 
GSP 23 
countries 

GSP+ 8 
countries 

EBA 49 
countries 

EUR billion 

47.049 
47.542 
48.004 
50.797 
60.213 
62.564 
47.532 
57.858 

30.838 
29.963 
29.636 
27.685 
30.856 
31.588 
30.146 
30.043 

4.906 
4.599 
3.912 
6.071 
7.113 
7.453 
4.472 
6.879 

11.305 
12.980 
14.457 
17.042 
22.244 
23.524 
12.914 
20.936 

21.7% 

-0.3% 

53.8% 

62.1% 

2011 
2012 
2013 
2014 
2015 
2016 
Average pre-reform 
Average post-reform 
Percentage Added 
(post/pre) 

Source: external consultant's calculations based on trade and tariff data supplied by the European Commission. 

Nevertheless, the relevance of the GSP remained  stable or increased for those countries that 
remained  within  the  scheme.  The  table  above  shows  the  import  values  relating  to  the  three 
different arrangements in the pre-reform period and the post-reform period. Most notably, the 
total import value from the 49 EBA beneficiaries increased by 62.1% on the average of the 
three years post-reform, compared to the average of the three pre-reform years. Similarly, the 
import  value  for  GSP+  countries  went  up  by  53.8%.  Import  value  from  Standard  GSP 
countries remained mostly stable, falling by only 0.3%. 

GSP's share of overall imports 

Following  the  GSP  reform,  the  share  of  imports  into  the  EU  under  the  GSP+  and  EBA 
arrangements in relation to total imports into the EU from GSP and EBA countries increased 
substantially. Imports under EBA represented only 37.4% of total EU imports from the EBA 
countries in 2011. By 2016 that figure was up to  65.4%. Similarly  for GSP+, their share of 
duty-free imports benefitting from the scheme went from 9.5% to 51.2% during the period. 

13 Final Report on the Mid-Term Evaluation of the EU's Generalised Scheme of Preferences (GSP) prepared by 
Development Solutions, page 47 

10 

 
 
 
 
 
 
 
 
 
 
 
 
                                                            
 
Table 2: Share of EU imports from GSP beneficiary countries by tariff regime14 

Most 
Favoured 
Nation15 
= 0 
52.7% 
50.8% 
50.3% 
47.6% 
36.7% 
28.8% 

Most 
Favoured 
Nation = 
0 
52.6% 
47.8% 
47.2% 
43.7% 
43.4% 
40.6% 

Most 
Favoured 
Nation > 
0 
3.4% 
2.9% 
2.7% 
2.6% 
2.4% 
2.7% 

Most 
Favoured 
Nation > 
0 
8.1% 
8.6% 
8.4% 
8.0% 
7.7% 
7.5% 

2011 
2012 
2013 
2014 
2015 
2016 

2011 
2012 
2013 
2014 
2015 
2016 

EBA Countries 

EBA = 0 

EBA > 0 

Others 

Total 

37.4% 
40.3% 
41.5% 
45.5% 
59.1% 
65.4% 
GSP+ Countries 

0.0% 
0.0% 
0.0% 
0.0% 
0.0% 
0.0% 

6.6% 
5.9% 
5.5% 
4.3% 
1.8% 
3.1% 

100% 
100% 
100% 
100% 
100% 
100% 

GSP+ = 0  GSP+ > 0 

Others 

Total 

9.5% 
11.3% 
11.3% 
43.2% 
47.9% 
51.2% 

29.5% 
32.0% 
24.1% 
4.6% 
0.2% 
0.2% 

0.3% 
0.3% 
8.9% 
0.5% 
0.8% 
0.6% 

100% 
100% 
100% 
100% 
100% 
100% 

Standard GSP Countries 

GSP = 0 

GSP > 0 

Others 

Total 

Most 
Favoured 
Nation = 
0 
62.9% 
66.7% 
65.4% 
63.5% 
59.7% 
55.9% 

Most 
Favoured 
Nation > 
0 
10.9% 
9.9% 
10.3% 
13.0% 
13.7% 
15.0% 

2011 
2012 
2013 
2014 
2015 
2016 

100% 
100% 
100% 
100% 
100% 
100% 
Source: external consultant’s calculations based on trade and tariff data supplied by the European Commission. 

11.3% 
10.9% 
11.1% 
8.6% 
9.3% 
10.1% 

12.4% 
10.3% 
11.0% 
11.8% 
13.0% 
14.2% 

2.5% 
2.2% 
2.3% 
3.1% 
4.3% 
4.8% 

Erosion of preference margins 

The erosion of preference margins refers to the value of GSP preferences being reduced, for 
example due to the conclusion of trade agreements. The degree of preference erosion after the 

14 Final Report on the Mid-Term Evaluation of the EU's Generalised Scheme of Preferences (GSP) prepared by 
Development Solutions, page 52 
15 Most Favoured Nation (MFN) tariff means tariffs applicable to all countries that are members of the WTO and 
are not subject to preferences. MFN tariffs can either be zero or higher than zero. 

11 

 
 
 
 
 
 
                                                            
 
  
  
  
implementation  of  the  GSP  Regulation  is  very  limited,  with  most  Harmonized  System 
sections under analysis showing a 0% change throughout the period of analysis. According to 
the external consultant, this is mainly due to the fact that there were only minor changes in the 
Most  Favoured  Nation  tariffs  throughout  the  period.  The  table  below  shows  the  main 
Harmonized  System  Sections  analysed  in  the  study,  as  well  as  the  percentage  change  in 
preference margin for each GSP arrangement. 

Table 3: Preference margins by Harmonized System section compared to Most 
Favoured Nation tariffs (2011 and 2016)16 

Harmonized 
System 
Section 

Description 

Change in Preference 
Margin 

EBA 

GSP+ 

Live Animals; animal products 
Section I 
Vegetable products 
Section II 
Animal or Vegetable fats and oils 
Section III 
Prepared foodstuffs 
Section IV 
Mineral products 
Section V 
Products of the chem. & allied industries 
Section VI 
Plastics and Articles thereof 
Section VII 
Raw hides and skins, leather, fur skins 
Section VIII 
Wood and articles of wood 
Section IX 
Pulp of wood or other fibrous  
Section X 
Textiles 
Section XI 
Footwear, headgear, umbrellas 
Section XII 
Articles of stone, plaster, cement 
Section XIII 
Pearls, precious, semi-precious stones 
Section XIV 
Base metals and articles of base metal 
Section XV 
Section XVI  Machinery and mechanical appliances 
Section XVII  Vehicles, aircraft, vessels, transport 
Section XVIII  Optical, photographic instruments 
Section XIX 
Section XX 
Section XXI  Works Of Art, collectors' pieces 
Source: external consultant’s calculations on the basis of data provided by the European Commission. 

0.7 
0.1 
-0.1 
0.4 
1.7 
-3.5 
-0.3 
1.6 
0.8 
0.0 
0.0 
0.2 
0.0 
0.0 
-1.8 
-0.6 
-2.6 
2.4 
0.2 
0.0 
0.0 

-0.2 
0.0 
-0.1 
0.3 
1.7 
-3.5 
-0.5 
1.6 
0.6 
0.0 
0.0 
0.2 
0.0 
0.0 
-1.8 
-0.7 
-2.6 
2.4 
0.2 
0.0 
0.0 

Arms and ammunition 
Miscellaneous manufactured articles 

Standard 
GSP 
-0.7 
-0.5 
-0.1 
-0.6 
1.1 
-3.0 
-0.3 
1.6 
0.3 
0.0 
0.0 
0.0 
0.0 
0.0 
-1.5 
-0.7 
-1.0 
0.8 
0.1 
0.0 
0.0 

Preference utilisation rates 

Preference utilisation rates are defined as the percentage of GSP preferential imports out of all 
eligible imports under the respective GSP arrangement. 

GSP+  and  EBA  groups  recorded  overall  increases  in  their  utilisation  rates,  while  Standard 
GSP countries saw a small decline. 

16 Final Report on the Mid-Term Evaluation of the EU's Generalised Scheme of Preferences (GSP) prepared by 
Development Solutions, page 55 

12 

 
 
 
 
 
 
 
 
 
 
 
                                                            
Figure 2: Utilisation rate per GSP arrangement17 

Within each group, however, results showed a large degree of variance. 

Under  the  Standard  GSP  group,  9  out  of  the  23  beneficiary  countries  recorded  increases  in 
their  preference  utilisation  rates.  It  is  noted  that  several  of  those  countries  had  very  low 
preference utilisation rates  prior  to the 2012 GSP reform because  they were  using the EU’s 
Market Access Regulation (MAR) programme for African countries instead of GSP. 

GSP+  beneficiaries  show  much  higher  preference  utilisation  rates  both  before  and  after  the 
2012  GSP  reform.  Most  notably,  the  two  countries  which  recorded  the  largest  changes  in 
preference utilisation were Kyrgyzstan and Pakistan, which transitioned from Standard GSP 
to GSP+ during the period (2016 and 2014 respectively); the former saw a 30.1% increase in 
its utilisation of preferences, while Pakistan increased by 10.8%. 

Within the EBA group, results were very mixed, with 21 countries under analysis recording 
increases  and  26  recording  declines  in  their  preference  utilisation  rates.  Nevertheless, 
utilisation of preferences remains highest amongst EBA countries compared to the other GSP 
arrangements, showing the continued importance of EBA. 

17 Final Report on the Mid-Term Evaluation of the EU's Generalised Scheme of Preferences (GSP) prepared by 
Development Solutions, page 61 

13 

 
 
 
 
 
 
 
 
 
 
                                                            
Table 4: Utilisation rate per GSP+ beneficiary (2011-2016)18 

Country 

Kyrgyz Republic 
Pakistan 
Paraguay 
Philippines 
Cape Verde 
Bolivia 
Armenia 
Mongolia 

a. Average 
(2011-2013) 
34.0% 
84.9% 
88.3% 
66.3% 
96.7% 
95.3% 
94.0% 
92.7% 

b. Average 
(2014 -2016) 
64.1% 
95.8% 
91.9% 
68.9% 
96.9% 
95.4% 
91.0% 
85.0% 

Change 
(b-a) 
30.1 
10.8 
3.6 
2.6 
0.2 
0.0 
-3.0 
-7.7 

       Source: external consultant’s calculations based on trade data supplied by the European Commission 

Export diversification 

The  external  consultant’s  analysis  of  export  diversification  consisted  of  two  metrics:  the 
number of tariff lines reporting actual trade ("non-zero trade") and the Herfindahl Index.19 

Similarly to the results found in the preference utilisation analysis, the results with regards to 
export diversification are mixed. The best results were obtained by EBA countries, which as a 
group  recorded  an  increase  of  19%  in  the  number  of  tariff  lines  reporting  positive levels  of 
trade.  Out  of  the  49  countries  in  that  group,  only  10  recorded  declines  in  this  figure. 
Herfindahl  Index  results  on  the  other  hand  varied  too  much  to  yield  a  clear  trend.  In  some 
cases  (such  as  Cambodia  and  Bangladesh),  diversification  at  the  product  level  was  not 
accompanied at the sectoral level, indicating that new tariff lines reporting trade came mostly 
in the same sectors. It is also noted that, whilst EBA countries saw the best results in terms of 
diversification of trade, they came from a much lower starting point compared to the Standard 
GSP  and  GSP+  groups.  Standard  GSP  beneficiary  countries  recorded  on  the  whole  a  4% 
increase  in  the  number  of  tariff  lines  reporting  trade,  with  only  three  countries  displaying 
negative  results  (one  of  which  was  Syria,  whose  sharp  decline  coincided  with  the 
intensification of conflict in the country). GSP+ also saw a modest 6% increase in this figure. 

The external consultant identified modest overall improvements in export diversification but 
could  not  establish  a  clear  link  with  the  GSP  Regulation.  Changes  in  export  diversification 
could  also  largely  be  due  to  domestic  level  policies  and  supply-side  constraints  in  the 
beneficiary countries, and not to the GSP Regulation itself. 

18 Final Report on the Mid-Term Evaluation of the EU's Generalised Scheme of Preferences (GSP) prepared by 
Development Solutions, page 55 
19 The Herfindahl Index is an indicator which measures the diversification of a country’s export portfolio.19 The 
HI measures the sum of squared shares of each product in total export. A country with a highly diversified export 
portfolio will have an index close to zero, whereas a country which exports only one export will have a value of 
1 (least diversified export portfolio). It is important to note that the Herfindahl Index does not only record the 
incidence of trade flows, but also takes into account the value of the trade taking place. 

14 

 
 
 
 
 
 
 
 
 
                                                            
 
4.  Method 

The external consultant used three complementary approaches to analyse the functioning and 
impact  of  the  GSP  in  the  beneficiary  countries  and  the  EU,  namely:  (i)  quantitative  and 
qualitative  desk  research  and  data  analyses;  (ii)  an  inclusive  and  extensive  stakeholder 
consultation process; and (iii) country and sector case studies. 

For the economic analyses  of the GSP Regulation, the most  up-to-date economic, trade and 
tariff data provided by Eurostat was used. Tabulation was undertaken to assess the evolution 
of trade for the EU’s trading partner in the post-reform period (2014-2016) as compared to the 
pre-reform  period  (2011-2014),  as  well  as  to  assess  to  what  extent  eligible  trading  partners 
have  utilised  trade  preferences  throughout  the  period  2011-2016.    Additionally,  indicators 
were  compiled  to  analyse  the  social,  environmental  and  human  rights  impact  in  the 
beneficiary  countries.  This  research  was  complemented  by  qualitative  research  based  on 
literature sources as well as econometric estimation of the determinants of trade flows using 
gravity modelling. 

The analytical framework for the midterm evaluation is presented in Annex I. It outlines the 
approach  to  assess  the  application  and  impact  of  the  current  GSP  scheme  from  economic, 
social,  human  rights,  and  environmental  standpoints.  The  analytical  framework  includes  six 
evaluation  questions,  the  judgment  criteria  for  each  question,  the  required  evidence  and 
indicators  for  the  analysis,  and  the  sources  of  evidence  and  methodological  tools  to  be 
utilised.  It  also  specifically  outlines  the  sections  in  the  Final  Report  where  the  analytical 
questions have been addressed. 

The methodology used by the external consultant for the economic, social, human rights and 
environmental  impact  analyses  is  as  follows.  A  similar  approach  was  also  taken  to  the  four 
country case studies and the two sectoral case studies: 

  Economic impact analysis: The extent to which the GSP could have positive economic 
impacts on developing countries depends on multiple factors, including the importance of 
the  EU  market  in  the  country’s  overall  exports  and  level  of  preferential  market  access 
utilization. Additionally, the GSP’s effectiveness and efficiency will also depend on other 
factors including the domestic institutional environment and appropriate domestic policies 
to stimulate exports. Taking these factors into account, the external consultant conducted 
an  analysis  of  the  economic  impacts  of  the  different  GSP  arrangements  on  beneficiary 
countries using up-to-date economic, trade and tariff data from Eurostat. This analysis was 
complemented  by  qualitative  analyses  in  the  form  of  case  studies,  where  more  in-depth 
quantitative  work  focused  on  the  determinants  of  preference  non-utilisation  as  well  as 
decomposing the economic and welfare effects of participation in the GSP. 

The empirical quantitative economic analysis consists of two main parts: (i) a diagnostic 
and  descriptive  analysis  of  data  at  the  Combined  Nomenclature  8-digit  level  from  trade 
databases such as Eurostat, and UN ComTrade; and (ii) an econometric analysis of trade 
data from 2011 to 2016, at a Combined Nomenclature 8-digit level disaggregation, using 
the gravity model in various specifications. For effective econometric modelling, the trade 
data  was  cleaned  and  matched  with  tariff  data  by  country  and  by  product  class  at  the 
Combined  Nomenclature-8  digit  level  in  order  to  analyse  the  impact  of  the  2012  GSP 
reform as precisely as possible. Trade data from three years before to three years after the 
2012 GSP reform was analysed to obtain a ‘before’ and ‘after’ comparison. Any analysis 

15 

 
 
 
 
 
 
 
 
over  a  longer  period  of  time  would  create  significant  data  distortions  as  a  result  of 
influences  from  different  factors  and  changes  in  policy  over  the  years.  The  comparative 
approach adopted allows an accurate assessment of the impact of the GSP Regulation. To 
ensure  consistency  of  data,  EU  import  data  was  used  instead  of  export  data  from  the 
different beneficiary countries as EU import data records are more reliable and accessible 
for  all  the  beneficiary  countries  under  assessment.  This  has  enhanced  the  overall 
consistency and comparability of the findings. 

  Social and human rights impact analyses: The external consultant examined the impact 
of the GSP on the following elements pertaining to social and human rights impacts using 
a  wide  range  of  indicators:  employment;  Decent  Work  Agenda  (job  creation,  labour 
standards,  social  protection  and  social  dialogue);  working  conditions;  wage  levels  and 
their  changes  over  time;  poverty  reduction;  gender  equality;  human  rights;  and  good 
governance. 

  Environmental impact analysis: To carry out the environmental analysis section of the 
evaluation,  extensive  research  was  conducted  on  the  pre-determined  indicators  and  with 
substantial input from stakeholder engagement activities, to identify the most significant 
environmental  issues  that  emanate  from  participation  in  the  GSP.  Additionally,  the 
country-specific  case  studies  provide  a  more  in-depth  overview  of  the  impact  of  the 
scheme  on  the  environment.  A  wide  range  of  environmental  impacts  were  examined, 
which include: air and water purity/pollution; waste; natural resources, including forests, 
wildlife and fisheries; biodiversity; and climate change. 

Limitations to the Methodology and Mitigation Measures 

Since the GSP Regulation has only been in force for three years as of the start of the mid-term 
evaluation  process,  the  number  of  readily  available  and  up-to-date  social,  human  rights  and 
environmental impact indicators is limited. The financial, institutional and human capacities 
necessary  for  monitoring  and  collecting  such  data  are  limited  for  developing  countries. 
Moreover, it takes substantial time and resources for agencies to collect data on indicators and 
there  are  long  time-lags  before  statistics  become  available.    As  a  result,  there  is  often  only 
outdated  or  incomplete  information  available.  Additionally,  it  can  take  considerable  time 
before the effect of changes in trade become visible in these indicators. Furthermore, there are 
methodological difficulties to isolate the contribution of trade from a number of other factors 
affecting specific aspects measured in indicators related to, for example, poverty, employment 
and the environment. 

As  a  result,  international  databases  and  indices  (such  as  the  Social  Progress  Index  and  the 
ND-GAIN Index) were used to create cross-country comparative assessment. 

Also  to  account  for  these  limitations  and  to  reveal  what  is  happening  on  the  ground  in  the 
beneficiary  countries,  the  external  consultant  conducted  case  studies  to  provide  a  more  in-
depth analysis of the environmental impact. The case studies rely heavily on literature review 
to  account  for  the  impact  not  covered  by  the  abovementioned  environmental  indicators, 
national statistics and reports, and monitoring reports by international monitoring bodies, such 
as  the  UN.  Additionally,  the  analysis  in  the  case  studies  is  based  on  a  wide  array  of 
stakeholder consultations and concrete developments in the countries. 

16 

 
 
 
 
 
 
 
 
 
 
The case studies incorporate analysis of locally produced data sources, comparing wherever 
possible with corresponding figures from the EU or international organisations. Transparency 
and reliability of domestic institutions are a consistent theme across case studies in this regard 
as  improvement  of  domestic  institutional  capacity  is  closely  aligned  with  the  primary 
objectives of the EU’s external sustainable development platform. 

The  analytical  approach  to  the  case  studies  takes  into  account  country  and  sector-specific 
conditions,  and  it  addresses  common  research  questions  using  available  indicators  and 
methodologies. The case studies follow a similar outline to ensure comparability between the 
countries and sectors. The analysis focuses on the GSP’s economic, social, environmental and 
human  rights  impacts.  Each  case  study  further  contains  sections  detailing  any  unanticipated 
effects  of  the  GSP  encountered  during  the  course  of  research,  and  also  characterises  and 
disaggregates  the  reference  country’s  trade  profile  with  the  EU  from  the  rest  of  the  GSP 
group. 

According  to  the  external  consultant,  consistency  across  the  case  studies  allows  for  the 
constitution of a final qualitative dataset from which systemic conclusions can be drawn. The 
Commission  notes,  however,  that  it  is  sceptical  of  the  extent  to  which  four  country  case 
studies can be used to drawn systemic conclusions applicable to a group as large and diverse 
as that of the 80+ GSP beneficiary countries. 

Case studies can only give indications  and are not necessarily representative. Therefore, the 
conclusions  drawn  on  the  basis  of  case  studies  at  this  point  in  time  are  only  indicative. 
Moreover,  the  2012  GSP  reform  revised  certain  elements  of  the  GSP,  which  have  not  been 
used  yet,  such  as  the  withdrawal  mechanism  and  the  safeguard  mechanism.  Therefore,  no 
clear conclusions could be reached on their appropriateness yet. Likewise, there is insufficient 
data  on  the  effects  from  leaving  the  GSP  arrangements  to  enter  into  reciprocal  preferential 
trade arrangements.   

5. 

Analysis and answers to the evaluation questions 

In  order  to  guide  the  analysis  of  the  performance  of  the  GSP,  the  mid-term  evaluation  has 
sought to provide answers to six specific questions:  

1.  To what extent are the objectives of the current GSP on track to be achieved? What has 
been  the  impact  of  the  present  scheme  on  developing  countries  and  Least  Developed 
Countries?  

2.  What are the factors (positive and negative) influencing the achievements observed?  
3.  What unintended consequences, if any, can be linked to the design, implementation, or use 

of the current GSP? 

4.  To what extent is the current GSP efficient? 
5.  To what extent is the current GSP coherent with the EU’s relevant policies?  
6.  To  what  extent  is  the  current  GSP  scheme  relevant  to  the  development  needs  which  it 

intended to address?  

17 

 
 
 
 
 
 
 
 
 
5.1  Are the objectives of the current GSP on track to be achieved? 

5.1.1  2012 GSP reform objectives 

The  operational  objectives  of  the  GSP  Regulation  as  presented  in  the  intervention  logic  are 
the following: 

i. 
ii. 
iii. 
iv. 
v. 
vi. 
vii. 

to revise the beneficiary country list;  
to target the graduation of competitive beneficiaries;  
to redefine product sections; 
to simplify the GSP+ entry mechanism;  
to develop a more effective and transparent monitoring mechanism for GSP+; 
to develop a credible and efficient temporary withdrawal procedure; 
to improve the administrative procedures of safeguard mechanism.  

The point of comparison of the current GSP Regulation is the GSP applied before 1 January 
2014, established by Council Regulation (EC) No. 732/2008. 

Revised beneficiary country list and more targeted graduation 

The GSP Regulation tightened the eligibility criteria for a country to qualify as a beneficiary 
and  improved  the  functioning  of  the  mechanism  by  which,  in  the  case  of  Standard  GSP 
countries  only,  an  individual  product  section  can  graduate  from  the  GSP  if  it  has  become 
highly competitive. 

GSP participation was restricted to countries classified below upper-middle income status by 
the World Bank (in the previous GSP regulation only high income status countries were not 
eligible for GSP). Also excluded were countries that benefit from a preferential market access 
arrangement  with  the  EU,  which  grants  at  least  the  same  level  of  tariff  preferences  for 
substantially  all  trade.  The  tightening  of  the  eligibility  criteria  was  aimed  to  reduce  the 
number of GSP beneficiaries in order to better focus the preferences on those countries most 
in  need.  And  indeed,  the  2012  GSP  reform  lowered  the  total  number  of  GSP  beneficiaries 
from 178 countries to 92 countries. 

With regard to product graduation, which applies to Standard GSP countries only, individual 
product  sections  which  have  achieved  a  high  level  of  competitiveness  are  graduated  (i.e. 
removed) from the GSP, whilst the country remains on the list of beneficiaries for all  other 
product sections for which it is eligible. To reflect the smaller number of beneficiaries on the 
list,  the  threshold20  for  product  graduation  was  increased  from  15%  to  17.5%  (except  for 
textiles, for which it went from 12.5% to 14.5%).21 Currently, four beneficiaries are graduated 
for  12  product  sections22,  thus  out  of  736  country-sectors23  12  are  graduated.  This  can  be 

20 Product graduation thresholds are calculated in terms of GSP imports of the particular product section from the 
country in question out of the total value of imports of the same product from all GSP beneficiary countries. 
21 Following China’s graduation from the GSP, the thresholds for product graduation were once again revised, 
increasing from 17.5% to 57% (except for textiles, where the thresholds moved from 14.5% to 47.2%). 
22 See Commission implementing Regulation (EU) 2016/330 

18 

 
 
 
 
 
 
 
 
 
 
 
 
                                                            
compared to the 2,400 country-sectors and 20 graduated under the previous GSP Regulation. 
In relative terms the revised product graduation criteria has led to more product sections being 
graduated for specific beneficiaries. 

The  revision  of  the  eligibility  criteria  and  the  reformed  product  graduation  has  led  to  the 
graduation of countries and sectors which were competitive beneficiaries under the previous 
GSP, such as China and Thailand, as well as India with regards to the textiles sector, from the 
current GSP. 

By removing more advanced developing countries and more competitive exporters from GSP, 
their strong positions are no longer enhanced through the preferential EU market access and 
thus  the  competitive  pressures  faced  by  other  developing  countries  are  reduced.  In  turn,  the 
remaining  GSP  beneficiary  countries  have  been  able  to  take  more  advantage  of  preferential 
market  access  opportunities  under  the  GSP.  As  shown  in  Section  3  of  this  Staff  Working 
Document,  the  scheme’s  relevance  for  the  countries  that  remain  beneficiaries  has  increased 
substantially. This is reflected in the increasing overall import value relating to GSP and the 
role of GSP in the export share of beneficiary countries – particularly those in the EBA and 
GSP+ groups. The total import value from the EBA and the GSP+ beneficiaries increased by 
62.1% and 53.8% respectively on the average of the three years post-reform, compared to the 
average  of  the  three  pre-reform  years,  while  the  import  value  of  Standard  GSP  countries 
remained  mostly  stable.    The  share  of  GSP  imports  in  overall  imports  into  the  EU  has 
increased from 37.4% for EBA and 9.5% for GSP+ in 2011 to 65.4% and 51.2% respectively 
in 2014. 

These  findings  are  in  line  with  the  2012  GSP  reform’s  goal  of  focusing  preferences  on  a 
narrower  set  of  countries,  which  are  more  in  need  of  development,  especially  the  Least 
Developed  Countries.  Moreover,  the  increase  in  value  of  GSP+  imports  into  the  EU  may 
provide  further  incentive  for  countries  to  apply  for  GSP+  status  in  the  future.  While  some 
stakeholders  who  participated  in  the  interview  process  highlighted  the  risk  of  the  value  of 
GSP  preferences  being  reduced  due  to  the  conclusion  of  trade  agreements,  the  external 
consultant found that the extent of preference erosion following the 2012 GSP reform is very 
small.  As a  result, there are significant preferential  market access benefits  to  be  derived for 
countries most in need, particularly Least Developed Countries. 

Redefined product sections 

With the exception of the EBA arrangement – which already covered all products except arms 
and ammunition – product coverage under the reformed GSP has been slightly expanded. At 
the  same  time,  the  GSP  reform  expanded  the  number  of  product  sections  from  21  to  32  to 
create more homogeneous product categories.  The product sections under the previous GSP 
Regulation  of  contained  some  cases  heterogeneous  products,  for  example,  umbrella  and 
footwear industry were treated as one, and so were rubbers and plastics, fish and meat, edible 
and  non-edible  vegetables.  This  could  lead  to  a  situation  where  products  that  are  not 
necessarily competitive are excluded just because they fall in a category where products from 
a totally different, highly competitive industry predominate. 

23 23 non-EBA countries (EBA and GSP+ countries are not subject to graduation) times 32 product sections. 

19 

 
 
 
 
 
 
 
 
 
                                                                                                                                                                                          
While  the  larger  coverage  of  product  sections  is  largely  uncontested,  provided  adequate 
safeguard  mechanisms  are  in  place,  the  redefined  product  sections  are  criticised  by 
representatives  from  some  industrial  sectors  for  potentially  undermining  the  product 
graduation  mechanism.  For  example,  stakeholders  from  the  EU  tyre  industry  argue  that  the 
graduation  mechanism  does  not  sufficiently  protect  their  interests  because  the  graduation 
mechanism is only applied at the product section level and, as such, does not target product-
specific  graduation.  Business  representatives  therefore  propose  a  review  of  the  graduation 
mechanism whereby graduation should be carried out at a more disaggregated product level, 
rather than at the much more aggregated level of product sections. 

In this respect, the Commission notes that product graduation by sections that are neither too 
wide nor too narrow provide a good balance between providing predictable trade preferences 
(imports under individual tariff lines are more likely to fluctuate than broader categories) and 
reasonably addressing the concerns of particular industries. 

Simplified GSP+ entry mechanism 

The GSP+ entry mechanism and eligibility criteria were simplified with the aim to make the 
arrangement more attractive for Standard GSP beneficiary countries. Firstly, GSP+ countries 
are no longer subject to product graduation – a particularly important provision given that, by 
definition,  GSP+  countries  must  be  considered  “vulnerable”  in  terms  export  diversification, 
relying excessively on a small number of competitive products. Secondly, the threshold of the 
vulnerability  criterion  for  beneficiaries  to  be  eligible  for  GSP+  was  increased  so  that  a 
beneficiary's  GSP  covered  imports  can  now  represent  up  to  6.5%  in  value  of  the  total  GSP 
imports to the EU, rather than 1% under the previous GSP Regulation. Additionally, the GSP 
Regulation accepts applications for GSP+ at any time, as opposed to only every 1.5 years in 
the past. 

At the same time, the condition to ratify and implement 27 international conventions related 
to human and labour rights, the environment and good governance (the 'GSP+ Conventions'), 
as well as to fully cooperate with international monitoring bodies and to fulfil the reporting 
requirements,  in  order  to  qualify  for  the  GSP+  arrangement,  has  triggered  a  number  of 
candidate  countries  to  ratify  those  conventions  leading  up  to  their  GSP+  admission.  For 
example Pakistan, in its efforts to obtain GSP+ status, ratified the Convention against Torture 
and the International Covenant on Civil and Political Rights in 2010. Furthermore, Pakistan 
removed  reservations  to  certain  human  rights  conventions  in  October  2011,  reservations 
which were regarded as incompatible with the objectives of the conventions and if maintained 
would have disqualified Pakistan from GSP+. Pakistan gained GSP+ status as of 2014. This 
illustrates that the EU, through conditionality, can have a positive impact on the promotion of 
labour  and  human  rights,  good  governance  and  environmental  protection  in  the  beneficiary 
and candidate countries. 

GSP+  has  had  a  total  of  16  beneficiary  countries  (compared  to  15  under  the  previous  GSP 
Regulation).  On  1  January  2018  there  were  9  beneficiaries  (this  includes  Sri  Lanka  which 
became a GSP+ beneficiary in May 2017, but for the purposes of in particular the economic 
analysis of this evaluation was considered a Standard GSP country). Six GSP+ countries have 
been  removed  from  GSP  altogether  since  they  concluded  FTAs  with  the  EU  (Costa  Rica, 
Ecuador, El Salvador, Georgia, Guatemala and Panama). Paraguay will be removed from GSP 
altogether from 1 January 2019 since it has been classified by the World Bank as an upper-

20 

 
 
 
 
 
 
 
 
middle  income  country  during  three  consecutive  years.  Most  countries  applied  for  GSP+ 
status  in  the  run-up  to  the  entry  into  force  of  the  GSP  Regulation.  The  Philippines  and 
Kyrgyzstan applied for GSP+ in 2014 and Sri Lanka in 2016. 

Improved GSP+ monitoring mechanism 

Significant  changes  were  made  to  the  GSP+  monitoring  mechanism.  Firstly,  the  reporting 
cycle  was  shortened:  status  reports  to  the  European  Parliament  and  the  Council  on  the 
compliance  of  GSP+  countries  are  now  required  every  two  rather  than  every  three  years.  
Furthermore,  GSP+  beneficiaries  must  sign  a  binding  undertaking  to,  inter  alia,  maintain 
ratification of the GSP+ Conventions, respect the reporting obligations under the conventions 
and fully cooperate with the Commission in GSP+ monitoring. The new monitoring process 
also  instructs  the  Commission  to  use  other  reliable  sources  of  information  (such  as  civil 
society, including social partners, the European Parliament and the EU Council). Finally, the 
GSP  Regulation  reversed  the  burden  of  proof,  requiring  GSP+  beneficiaries  to  demonstrate 
compliance with the 'binding undertakings' set out in Article 9(1) of the GSP Regulation. 

On  the  basis  of  the  new  provisions,  the  Commission  has  developed  a  practice  of  GSP+ 
monitoring  which  is  based  on  two  interrelated  tools:  (i)  a  list  of  issues  (also  called 
‘scorecard’)  covering  shortcomings  in  implementation  of  the  international  conventions  that 
the beneficiary country must respond to; and (ii) the GSP+ dialogue, whereby the EU engages 
with  the  respective  beneficiary  countries,  focusing  on  the  beneficiary’s  shortcomings  in 
implementing  the  GSP  Conventions,  achieving  progress  on  these  shortcomings  and  on 
overcoming  challenges.  This  dialogue  process  also  involves  and  complements  existing 
bilateral human rights dialogues. It also comprises regular on-site monitoring missions to each 
GSP+ beneficiary (at least once during each monitoring cycle). 

The  GSP+  monitoring  mechanism  supports  –  through  the  enhanced  and  constructive 
interaction  and  dialogue  –  the  development  of  a  close  partnership  between  the  EU  and  the 
GSP+  beneficiaries  and  allows  for  the  better  tracking  of  progress  on  the  effective 
implementation  the  GSP+  Conventions.  As  indicated  by  the  latest  biennial  GSP+  report, 
covering  the  period  2016-2017,  the  GSP+  beneficiaries  overall  made  progress  on  the 
implementation of the GSP+ Conventions. This in turn can be considered to have contributed 
overall to sustainable development and good governance in the GSP+ countries (see sections 
on Economic Impact, Social and Human Rights Impact and Environmental Impact below). 

For example, Pakistani stakeholders expressed their appreciation for the partnership between 
the EU and the Government of Pakistan on sustainable development and confirmed that the 
ratification and implementation of the GSP+ Conventions was not  considered as onerous or 
intrusive,  but  rather  seen  as  a  driver  of  the  country’s  development  processes.  It  is  also 
noteworthy that the GSP+ arrangement has led to the establishment of Treaty Implementation 
Cells in Pakistan, which serve as a mechanism to ensure the effective implementation of the 
GSP+  Conventions.  Notably,  this  mechanism  helps  in  bridging  the  divide  between  Federal 
and Provincial level actors, as well as inter-ministerial, in the effective implementation of the 
GSP+ Conventions.  

The  transparency,  inclusiveness  and  accountability  of  the  monitoring  mechanism  have  also 
been improved following the 2012 GSP reform. Regular and broad stakeholder consultations 
are  held  in  order  to  allow  all  relevant  civil  society  to  engage  in  the  process.  This  is 

21 

 
 
 
 
 
 
 
 
 
complemented by meetings with civil society actors in the beneficiary countries during GSP+ 
monitoring missions, which have the goal of giving the Commission broad and diverse views 
on the state-of-play of implementation of the GSP+ Conventions on the ground. Furthermore, 
the Commission has invited civil society organisations to a meeting to solicit their views in 
preparing the second biennial GSP+ implementation report. 

Despite  the  new  measures  in  place  to  ensure  transparency  and  inclusiveness  in  the  GSP+ 
monitoring  process,  civil  society  stakeholders  across  beneficiary  countries  called  for  more 
information and transparency in the GSP+ monitoring process and criticised in particular the 
written communication between the Commission and the beneficiary countries24. They argued 
that  greater  transparency,  accountability  and  standardization  of  the  scorecard  mechanism 
could lead to improved effectiveness of the monitoring process. Indeed, based on input from 
the  stakeholder  consultations,  the  external  consultant  recommended  that  transparency  in  the 
GSP+ monitoring process could be improved.  

The  Commission  highlights  the  necessity  to  preserve  a  certain  degree  of  confidentiality  in 
conducting international relations with GSP beneficiary countries. This is  crucial to foster a 
process  built  on  mutual  trust.  This  can  also  be  seen  as  contributing  to  the  efficiency  of  the 
monitoring process by giving space for open and frank discussion  on many sensitive issues. 
At the same time transparency, inclusiveness and accountability in the monitoring process is 
ensured through, inter alia, regular stakeholder consultations and the public biennial report to 
the European Parliament and the EU Council. Nevertheless, transparency is a key tenet of the 
Commission's  Trade  for  All  strategy  and  the  Commission  will  examine  what  practical 
measures  could  be  taken  to  further  improve  transparency  and  inclusiveness  of  the  GSP+ 
monitoring process. 

As part of the 2012 GSP reform, reducing the GSP+ monitoring cycle from three to two years 
had  the  objective  of  improving  the  efficiency  of  the  process.  While  this  has  led  to  a  more 
intensified  monitoring  process,  the  Commission  agrees  with  the  findings  of  the  external 
consultant  that  the  two-year  monitoring  cycle  has  some  limitations.  This  period  does  not 
always  suffice  for  beneficiary  countries  to  implement  meaningful  changes.  There  may 
therefore  be  scope  to  extend  the  monitoring  cycle  from  two  years  to  three  or  four  years,  in 
order to better reflect progress in beneficiary countries, and also as a measure to reduce the 
administrative burden on the EU and beneficiary countries.  

The  responsibility  for  implementing  the  rights  and  obligations  emanating  from  conventions 
lies  with  the  ratifying  State  party.  This  also  includes  enforcement  of  those  rights  and 
obligations, including in relation to the private sector where appropriate. Nevertheless, some 
stakeholders in local workshops, particularly in Pakistan which gathered 66 participants from 
government,  industry  and  civil  society,  noted  that  there  was  a  need  to  focus  more  on  the 
private  sector  and  on  compliance  at  the  company  level,  rather  than  primarily  focusing  on 
public  institutions.  However,  focusing  compliance  reviews  by  the  Commission  on  the 
company level would not only be resource-inefficient, but more importantly could be seen as 
duplicating or even prejudicing the enforcement responsibilities of the ratifying State party. 

24  The  Commission  transmits  regularly  written  questionnaires  to  GSP+  beneficiary  countries  asking  them  to 
respond  on  what  actions  they  are  taken  to  address  shortcomings  in  implementing  the  27  international 
conventions. The primary source of information for the preparation of these documents is the reports from the 
UN and the International Labour Organization monitoring bodies, which are publicly available. 

22 

 
 
 
 
 
 
 
 
 
                                                            
Credible and efficient temporary withdrawal mechanism 

Any of the three GSP arrangements may be temporarily withdrawn for all or certain products 
for serious and systematic violations of principles laid down in core human and labour rights 
conventions,  and  on  a  number  of  other  grounds  such  as  unfair  trading  practices  and  serious 
shortcomings  in  customs  controls.  These  provisions  existed  already  in  the  previous  GSP 
regulation.  

The 2012 GSP reform introduced specific withdrawal procedures for GSP+. This arrangement 
can be withdrawn where a beneficiary no longer satisfies the GSP+ conditions, for example, 
the vulnerability criteria are no longer met or the beneficiary does not maintain ratification of 
one  of  the  GSP+  Conventions.  Furthermore,  GSP+  can  be  withdrawn  for  all  or  certain 
products where a beneficiary country in practice no longer respects the binding undertaking 
to,  for  example,  ensure  effective  implementation  of  the  GSP+  Conventions  or  introduces 
reservations  to  the  GSP+  Conventions  that  are  prohibited  or  incompatible  with  the 
Conventions.  

The  impact  of  the  revised  withdrawal  mechanism  remains  unclear,  as  it  has  not  yet  been 
triggered  under  this  GSP  Regulation.  This  is  not  evidence  of  the  mechanism  not  working 
efficiently.  The  two  biennial  reports  the  Commission  so  far  submitted  to  the  European 
Parliament and the Council on the implementation of GSP+ (covering the periods 2014-2015 
and  2016-2017)  indicate  that  all  GSP+  beneficiaries  overall  made  progress  on  the 
implementation  of  the  GSP+  Conventions.  Of  course,  this  does  not  mean  that  problematic 
implementation issues do not remain. In this respect, it should not be forgotten that GSP+ acts 
as  an  incentive  for  beneficiaries  to  make  continuous  progress  in  achieving  effective 
implementation  of  the  GSP+  Conventions.  In  contrast,  serious  shortcomings  in  respecting 
fundamental  human  and  labour  rights  were  identified  in  three  EBA  beneficiary  countries: 
Bangladesh,  Cambodia  and  Myanmar/Burma.  Consequently,  the  EU  has  enhanced  its 
engagement with them.  

GSP+, but also Standard GSP and EBA, give the Commission leverage vis-à-vis beneficiary 
countries in pushing for the promotion and protection of fundamental rights. In this respect, 
the  study  also  found  that  GSP  had  an  overall  positive  impact  on  social  development  and 
human rights in beneficiary countries.  

In  order  to  further  facilitate  the launching  of  the  withdrawal  procedure and  thereby  make  it 
more efficient,  some  stakeholders from civil society  organisations  proposed that  withdrawal 
of preferences is triggered as soon as evidence is brought forward by third actors/stakeholders 
and  monitoring  bodies  on  systematic  human  rights  and  labour  rights  violations,  as  well  as 
regarding environmentally harmful practices in a beneficiary country.  In order to ensure that 
such  withdrawal  of  GSP  benefits  is  targeted  to  the  sectors  concerned,  they  recommend  that 
withdrawal of preferences is confined to non-compliant sectors only. 

As  noted  above,  GSP  and  in  particular  GSP+  has  as  the  objective  of  promoting  sustainable 
economic development in beneficiary countries. Not every problem in implementation, even 
if  sometimes  serious,  should  lead  to  the  withdrawal  of  GSP,  as  long  as  there  is  a  concrete 
commitment and actions from the country to improve the situation. It is for the Commission 
to  conduct  a  case-by-case  analysis  and  it  is  at  the  discretion  of  the  Commission  to  assess 
whether the conditions for withdrawal are met. If the dialogue and enhanced engagement fail 

23 

 
 
 
 
 
 
 
 
 
to  produce  results,  the  EU  is  ready  to  launch  the  GSP  withdrawal  procedure  with  due 
consideration for the economic and social impact. However, the Commission is always open 
to receiving information on countries and issues from civil society and other stakeholders. 

Improved Safeguard Mechanism 

The aim of the safeguard mechanism is to prevent serious difficulties for EU producers as a 
result of GSP by allowing for the re-introduction of normal Common Customs Tariff duties. 
The  process  for  applying  safeguard  measures  may  be  initiated  independently  by  the 
Commission or after a request by an EU Member State, any legal person or any association. 
The 2012 GSP reform introduced procedural improvements to tackle issues that were seen as 
hindering the use of the safeguard mechanism. For example, certain key legal concepts were 
clarified (e.g. 'serious difficulty'), as well as rights and obligations of parties in the context of 
the  opening  of  investigations  and  more  detailed  rules  to  enhance  transparency  and 
predictability were introduced. 

Following  the  2012  GSP  reform,  the  Commission  can  issue  delegated  acts  to  immediately 
reinstate  Common  Customs  Tariff  duties  in  urgent  cases.  In  addition,  specific  safeguard 
clauses  were  introduced  by  the  GSP  Regulation  for  textile,  agriculture  and  fishery  products 
(Article  29  of  the  GSP  Regulation).  These  are  additional  to  the  surveillance  mechanism  for 
agriculture  and  fishery  products,  which  already  existed  in  the  previous  Regulation.  The 
Commission  has  regularly  monitored  imports  as  called  for  under  the  specific  safeguard 
mechanism,  but  so  far  the  criteria  identified  for  triggering  this  safeguard  have  not  been 
fulfilled.  

Many  of  the  stakeholders  that  participated  in  the  Online  Public  Consultation  called  for  a 
review  of  the  safeguard  mechanism,  in  light  of  perceptions  of  inadequate  coverage  of 
sensitive  sectors,  particularly  the rice  sector.   Stakeholders  associated  with  the rice  industry 
claim that rice imports under the EBA regime cause disruptions in the European rice industry 
due  to  the  large  import  volumes  of  cheap  rice  from  some  EBA  beneficiaries,  such  as 
Cambodia  and  Myanmar/Burma.  They  therefore  argued  that  the  current  design  of  the 
safeguard  clause  does  not  allow  for  adequate  protection  of  EU  interests  in  sensitive  sectors 
and  called  for  the  need  to  institute  an  automatic  safeguard  as  is  the  case  for  other  sensitive 
products.    

The Commission notes that the safeguard provisions were revised under the GSP Regulation 
for a more efficient use in duly justified cases. While it is true that the safeguard mechanism 
has not yet been triggered under the GSP Regulation, it cannot be concluded from this that the 
safeguard mechanism is inadequate, since the GSP Regulation has only been in force for three 
years as of the start of the mid-term evaluation process. It should also be noted that in March 
2018,  the  European  Commission,  upon  the  request  from  Italy,  initiated  a  GSP-related 
safeguard investigation on imports of Indica rice from Cambodia and Myanmar/Burma. The 
investigation will be concluded by March 2019 and will determine whether the product under 
investigation  is  imported  in  volumes  and/or  at  prices  which  cause  serious  difficulties  to  the 
Union producers of like or directly competing products and thus justifies the triggering of the 
safeguard  mechanism.25  The  ongoing  investigations  and  its  findings  will  be  important  for 

25 https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52018XC0316(02)#search=%22%22  

24 

 
 
 
 
 
 
 
 
                                                            
 
assessing  the  functioning  of  the  reformed  safeguard  mechanism  in  the  future,  as  well  as  its 
appropriateness for the rice sector or other sectors that can be considered as sensitive. 

5.1.2  Economic impact 

As already indicated in section 3 of this Staff Working Document, the 2012 GSP reform had 
an  overall  positive  economic  impact  on  GSP  beneficiaries.  The  full  extent  in  terms  of 
coverage,  utilisation  and  export  diversification  differs  per  beneficiary  country  and  per 
arrangement. 

There has been a significant increase of imports from the GSP beneficiaries into the EU on 
the  average  of  the  three  years  post-reform  compared  to  the  average  of  the  three  pre-reform 
years. This has been especially the case for the 49 EBA countries (+62.1%) and the 8 GSP+ 
countries  (+53.8%).  There  has  been  a  small  decrease  in  imports  from  the  23  Standard  GSP 
countries which remained eligible (-0.3%). 

In  relation  to  export  diversification,  overall  improvements  could  be  identified  when 
comparing  the  post-reform  period  with  the  pre-reform  period.  Export  diversification  is 
measured  by  number  of  tariff  lines  for  which  actual  trade  has  been  recorded.  The  Standard 
GSP  and  GSP+  countries  in  the  aggregate  experienced  an  increase  in  diversification,  with 
Standard GSP recording a 4% and GSP+ a 6% increase in the number of tariff lines. The EBA 
countries in the aggregate also experienced an increase of 19%, from a very low initial base, 
but it was also found that diversification of trade originating from 29 EBA countries did not 
improve.  It  must  be  noted  that  important  determinants  of  diversification  are  macro-  and 
micro-economic  policies  in  the  exporting  countries,  relating  to  investment  and  business 
climate and support to innovation at the enterprise level. These domestic policy determinants 
are beyond the scope of the GSP Regulation and were not affected by the 2012 GSP reform. 
The GSP Regulation provides market access, but cannot determine the domestic policies to be 
put in place to realise market entry. 

Preference  utilisation  is  one  of  the  most  important  indicators  of  a  trade  arrangement’s 
efficiency, as it indicates to what extent a country is taking advantage of the tariff preferences 
for which it is eligible. Regarding preference utilisation, progress has been witnessed for the 
EBA countries. On average, EBA countries have higher utilisation rates than the other GSP 
beneficiaries.  In  the  pre-reform  period,  the  average  utilisation  rate  was  slightly  over  80%. 
During the post-reform period, the average utilisation rate increased by around 10 percentage 
points  for  the  EBA  countries.  This  was  primarily  due  to  an  increase  in  preferential  imports 
from the EBA beneficiaries Bangladesh, Cambodia and Mozambique during this period. EBA 
countries have also increased their utilisation of duty-free preferences compared to the other 
GSP arrangements. The extent of the increase in the usage of preferential duty-free rates for 
EBA countries reveals the growing importance of such preferences in their overall exports to 
the EU. 

Several challenges have been noted by the external consultant that can have prevented the full 
utilisation of preferential  access under the GSP in  the case study countries. For  example, in 
Ethiopia non-tariff barriers and increased competition from other GSP beneficiary countries in 
the EU market have negatively impacted exports. Stakeholders have noted that the obstacles 
to the full utilisation of EBA preferences are technical barriers to trade (TBTs) and rules of 

25 

 
 
 
 
 
 
 
 
 
origin  requirements,  compounded  by  other  supply-side  constraints,  which  include  limited 
production capacity, a lack of diversification, low industrial development and severe logistics 
barriers facing the land-locked country. Ethiopia also faces increased competition from Latin 
American  and  Asian  agricultural  exports  in  the  EU  market.  Furthermore,  the  section  below 
related to sanitary and phytosanitary (SPS) measures indicate that they can act as barriers to 
trade and can thus inhibit the full utilisation of GSP, in particular for agricultural products. 

EU product regulations in the form of technical regulations or SPS measures, serve legitimate 
public policy objectives to protect consumer safety and protect human, animal and plant life. 
While  they  can  be  seen  as  affecting  trade  (so  called  non-tariff  barriers  to  trade),  the  policy 
response  is  not  remove  them  but  to  assist  developing  countries  to  meet  such  requirements. 
This has also been the approach of the EU. 

The  exact  relevance  of  the  current  GSP  on  poverty  eradication  is  difficult  to  establish.  
While  increased  exports  and  subsequent  economic  growth  could  contribute  to  social 
development and poverty reduction, the positive impact depends on whether the beneficiary 
countries  have  policies  in  place  to  effectively  channel  the  extra  resources  to  social  and 
distribution-improving  policies  as  well  as  adaptation  and  mitigation  measures  to  limit  the 
potential  detrimental  effects  of  increased  production  on  the  environment.  A  comprehensive 
analysis  of  the  impact  on  poverty  eradication  is  hampered  by  an  overall  lack  of  data  on 
indicators,  as  well  as  long  time-lags  before  statistics  become  available.  Additionally,  it  can 
take considerable time before the effect of changes in trade become visible in these indicators. 
In the case studies conducted by the external consultant in the midterm evaluation, it could be 
shown  that  the  four  countries  (Pakistan,  Bangladesh,  Bolivia  and  Ethiopia)  have  been 
successful  in  their  poverty  reduction  efforts,  due  to  the  increased  economic  growth  and  the 
subsequent improved employment opportunities.  

The external consultant also assessed the possible economic impact of GSP on EU industry 
through two case studies, one related to the textile and clothing industry and another on the 
machinery sector26. 

Imports  into  the  EU  of  textiles  and  clothing  under  GSP  accounted  for  50%  of  total  GSP 
imports and 36.6% of total imports of textiles and clothing into the EU in 2016. The external 
consultant found that as the textile and clothing industry is diverse and the production chain is 
varied,  the  impact  of  GSP  on  producers  in  the  EU  differs.  EU  clothing  industry  generally 
benefits  from  low-cost  import  of  textiles  through  the  global  value  chain  and  incorporates 
textiles as inputs in the production process, while the textile industry is negatively affected by 
increasing competitive pressure as a result of increased imports. This was also confirmed by 
stakeholder consultations. European Union producers are both competing with and benefiting 
from imports under the GSP.  

Among  the  instruments  GSP  has  to  safeguard  the  EU's  economic  interests  are  product 
graduation (i.e. removing product sections from GSP for specific beneficiaries when they are 
deemed to be competitive) and the safeguard mechanisms (a general safeguard and a special 
safeguard mechanism under Articles 22 and 29 respectively of the GSP Regulation. While the 
safeguard mechanisms have not been initiated, India, as a competitive supplier of textiles, was 
graduated for this product section in 2014. In this respect, one of the reforms introduced in the 
GSP  Regulations  was  to  remove  GSP+  beneficiaries  from  product  graduation.  Among  the 

26 Final Report on the Mid-Term Evaluation of the EU's Generalised Scheme of Preferences (GSP) prepared by 
Development Solutions, sections 5.1 and 5.2. 

26 

 
 
 
 
 
 
 
                                                            
main  reasons  for  this  reform  was  to  increase  the  incentive  of  applying  for  GSP+  status  and 
thus increasing the potential impact of GSP on sustainable development. Furthermore, there 
was  a  wish  to  ensure  equal  treatment  between  EBA  and  GSP+  countries,  which  share  a 
similar economic profile (i.e. vulnerability because of low and non-diversified export base). 

Five GSP beneficiaries (Bangladesh, India, Pakistan, Cambodia and Vietnam) are among the 
top ten global exporters of textiles and clothing to the EU. In this respect, it should be noted 
that China, despite being removed from GSP in 2014 due to its income level, remains the top 
supplier to the EU. Imports of textiles from India continued to increase even after the sector 
was graduated from GSP in 2014. This indicates that while tariff preferences certainly play an 
important market access role (as is shown by the increase of imports from Pakistan when it 
changed  from  Standard  GSP  to  GSP+  status  in  2014),  other  competitive  factors  (e.g.  wage 
levels and productivity) also play an important role. 

Imports of machinery into the EU under GSP were relatively small and accounted for 7.6% of 
total  EU  machinery  imports  in  2016.  They  have  also  seen  a  declining  trend  and  their 
composition  is  different  from  those  imported  from  the  rest  of  the  world.  The  external 
consultant found that the negative impact of GSP on EU producers is expected to be relatively 
small  for  a  number  of  reasons.  These  reasons  relate  to  the  small  and  decreasing  share  of 
machinery imports under GSP, relatively low preference margins and the low utilisation rate 
by GSP beneficiaries, in particular for GSP+ and EBA beneficiaries. On the other hand, GSP 
also provides benefits to EU industry, which relies on imports of machinery parts for its own 
production process. 

5.1.3  Social and human rights impact 

The  GSP  Regulation  aims  to  strengthen  the  support  for  social  development  and  good 
governance  in  the  beneficiary  countries.  International  trade  and  economic  growth  can 
contribute  to  social  development  if  the  beneficiary  countries  have  policies  in  place  to 
effectively direct their resources to support social development for all layers of society. The 
social and human rights impact of the GSP will differ per beneficiary country, depending on 
its national policies and priorities. 

In most instances, GSP can be considered to have made, overall, a positive contribution to the 
furtherance  of  social  and  human  rights  in  the  beneficiary  countries,  while  noting  the 
possibility that in some countries it may unintendedly have had also some negative impacts. 
There  are  indications  that  the  increase  in  exports  has  supported  economic  growth, 
employment and social development in the beneficiary countries. 

The  external  consultant  examined  social  progress  by  using  the  Social  Progress  Index  (SPI) 
which  measures  changes  in  social  rights  and  entitlements  across  a  wide  range  of  countries 
(does not cover all GSP beneficiaries), enabling comparisons across countries and over time27. 
The  external  consultant  acknowledges  that  it  is  challenging  to  formulate  direct  linkages 
between GSP and social progress. However, several GSP beneficiaries are making slow but 
steady progress. The overall development among GSP+ countries is positive, with 5 out of 7 
countries improving their rankings with an average of 5.4 places when comparing 2017 and 
2014  rankings.  However,  it  should be  noted  that,  for  example,  Pakistan  which  improved  its 

27 Final Report on the Mid-Term Evaluation of the EU's Generalised Scheme of Preferences (GSP) prepared by 
Development Solutions, section 3.5 for a more detailed description of the SPI and results of assessment made. 

27 

 
 
 
 
 
 
 
 
                                                            
SPI ranking still faces considerable challenges in social progress and underperforms in certain 
areas measured by the SPI (e.g. personal safety issues, inclusion and tolerance for immigrants, 
LGBTI  people  and  minorities  and  inadequate  access  to  basic  knowledge,  as  well  as  poor 
environmental quality). Of all Standard GSP beneficiaries included in the rankings, 9 out of 
13  improved  their  rankings,  3  decreased  in  ranking  and  1  did  not  move  in  ranking.  Among 
EBA beneficiaries, of the 28 countries that were ranked, 18 countries improved their ranking, 
while 6 declined in ranking and the remaining 4 performed according to expectations. 

Furthermore,  the  country  case  studies  (Pakistan,  Bangladesh,  Bolivia  and  Ethiopia)  suggest 
that all four beneficiary countries have made progress on a number of social and human rights 
indicators. However, the case studies also reported that GSP+ beneficiaries are not necessarily 
improving at a faster rate than EBA beneficiaries, although they are already further ahead in 
the development process.  

GSP  can  contribute  to  the  ratification  and  effective  implementation  of  fundamental 
international  conventions  on  labour  and  human  rights.  In  particular  the  GSP+  arrangement 
provides  an  incentive  to  Standard  GSP  beneficiaries  to  ratify  and  effectively  implement  the 
conventions on labour and human rights in exchange for a better access to the EU market. For 
example, GSP contributed to Sri Lanka's implementation of UN Human Rights Conventions. 
Sri  Lanka  was  temporarily  removed  from  GSP+  in  February  2010  due  to  serious 
shortcomings in implementing certain UN Human Rights Conventions. The loss of GSP+ had 
a certain negative impact on the Sri Lankan economy with the loss of jobs, especially in the 
clothing industry. A new Sri Lankan government was elected in January 2015 with a stated 
commitment to promote reconciliation, democracy, human rights and good governance. The 
new government applied for GSP+ in July 2016. The Commission assessed that Sri Lanka's 
application met all GSP+ entry conditions and after scrutiny by the European Parliament and 
the  Council,  Sri  Lanka  was  granted  GSP+  in  May  2017.  In  its  monitoring  of  Sri  Lanka's 
implementation  of  its  GSP+  obligations,  the  Commission  has  found  that  overall  the  human 
rights situation has improved through concrete actions by the new government. Nevertheless, 
a number of important reforms remain to be completed, which will continue to be subject to 
the GSP+ monitoring process. Similarly for Pakistan, the prospect of gaining GSP+ status led 
the country to ratify the Convention against Torture and the International Covenant on Civil 
and  Political  Rights  in  2010  and  remove  a  number  of  reservations  to  those  conventions  in 
2011. 

The EU may decide to withdraw trade preferences in case of serious and systematic violations 
of  fundamental  rights,  which  is  an  incentive  for  all  GSP  beneficiary  governments  to  better 
guarantee  these  rights  for  their  people.  The  EU  withdrew  EBA  preferences  from 
Myanmar/Burma in 1997 as a result of the country's serious and systematic violations of core 
international  conventions  on  forced  labour.  When  the  International  Labour  Organisation 
recognised  progress  in  the  labour  rights  situation  in  Myanmar/Burma,  the  Commission 
reinstated EBA preference in July 2013, applied retroactively as of June 2012. Similarly, the 
EU  withdrew  GSP  trade  preference  from  Belarus  due  to  its  non-compliance  with  the 
obligations  under  the  International  Labour  Organisation's  Conventions  on  freedom  of 
assembly and collective bargaining. 

As  mentioned  above,  some  stakeholders  argue  that  EU  should  more  readily  apply  the 
temporary  withdrawal  mechanism  to  address  instances  of  severe  and  systematic  violations. 
But  not  every  problem  in  implementation,  even  if  sometimes  serious,  should  lead  to  the 
withdrawal of GSP, as long as there is a concrete commitment from the country to improve 

28 

 
 
 
 
 
 
the situation. Therefore, the Commission considers that in a first instance, the EU should push 
for  concrete  actions  and  sustainable  solutions  to  human  rights  and  labour  rights  violations 
through dialogue and enhanced engagement.  
The increase in exports and economic opportunities can have unintended negative impacts on 
fundamental  rights  and  social  development,  such  as  land  grabbing  for  the  purpose  of 
industrial  development.  For  example  in  Ethiopia,  there  have  been  reported  cases  of  land 
grabbing  or  inadequate  compensation  for  granting  land  to  companies  in  the  floriculture 
industry. In Cambodia there have been many reports of human rights abuses in relation to the 
granting of sugar land concessions, which were supposed to be used to export sugar to the EU 
under  EBA.  As  described  elsewhere  in  this  document,  the  Commission  has  taken  action  in 
this  respect  in  the  context  of  its  enhanced  engagement  with  certain  GSP  and  EBA 
beneficiaries. This engagement has led to some results with a process (albeit still in the need 
of improvement) that has resulted in compensation being made to some land right holders. At 
the  same  time,  land  grabbing  is  something  that  can  occur  in  relation  to  the  expansion  of 
economic activities and which is not necessarily always related to trade or GSP. 

5.1.4  Environmental impact 

The  GSP  Regulation  aims  to  strengthen  the  support  for  sustainable  development  in  the 
beneficiary  countries,  including  protection  of  the  environment.  International  trade  and 
economic growth can contribute to sustainable development if the beneficiary countries have 
policies  in  place  to  effectively  mitigate  the  negative  effects  of  intensification  of  economic 
activities  and  to  allocate  part  of  their  additional  resources  to  support  and  promote 
environmental protection and address environmental degradation. 

Overall,  the  external  consultant  argues  that  the  GSP  Regulation  has  had  only  a  limited  and 
tangential  impact  on  environmental  aspects  of  sustainable  development  in  the  beneficiary 
countries.  Under  the  Standard  GSP  and  EBA  arrangements,  there  is  no  conditionality  for 
beneficiary  countries  to  comply  with  international  conventions  on  climate  change  and 
environmental  protection.  The  external  consultant  concludes  that  the  EU  has  very  limited 
leverage  through  Standard  GSP  and  EBA  to  directly  contribute  to  environmental 
sustainability in the beneficiary countries. 

Under the GSP+ arrangement, beneficiary countries need to effectively implement eight UN 
conventions  on  climate  change  and  environmental  protection.  Out  of  these  eight  United 
Nations  Conventions,  only  three  directly  regulate  the  international  trade  of  products  (the 
CITES, Montreal, and Basel Conventions). Stakeholders at the national workshop in Pakistan 
observed  that  traders  and  industrialists  are  not  aware  about  the  link  between  GSP+ 
preferences and the implementation of the environmental conventions. Therefore, the external 
consultant  found  that  there  was  a  need  for  more  awareness  amongst  relevant  stakeholders 
about the relationship between the GSP+ and implementation of essential UN conventions.  

The case studies suggest a difference in the level of adherence and implementation, depending 
on  the  country’s  reliance  on  the  EU  market.  Furthermore,  through  the  additional  tariff 
preferences  provided  under  the  GSP+  arrangement,  the  EU  can  motivate  Standard  GSP 
beneficiaries  to  ratify  and  effectively  implement  the  conventions  on  climate  change  and 
environmental protection. This has led, for example, to the ratification and implementation of 
environmental conventions by Tajikistan in view of possibly applying for GSP+ status.  

29 

 
 
 
 
 
 
 
 
The  case  studies  and  national  stakeholder  workshops  indicate  that  the  theme  of  sustainable 
development has become increasingly important in the national policy dialogue. There seems 
to  be  increased  awareness  about  the  need  to  find  the  right  balance  between  economic 
development  and  environmental  protection,  especially  because  most  of  these  countries  are 
dependent on their natural resources for economic growth. An important indicator of political 
commitment  is  the  strong  focus  on  sustainable  development  in  the  case  study  countries’ 
development strategies and the recent establishment of responsible ministries and agencies. 

5.2  What are the factors (positive and negative) influencing the achievements 

observed? 

The  external  consultant  found  from  the  case  studies  they  conducted  that  the  conditionality 
associated  with  participation  in  GSP+  as  well  as  the  resulting  export  expansion  have 
contributed  to increased adherence to fundamental labour and human rights conventions. This 
is  also  shown  by  the  latest  biennial  GSP  report,  covering  the  period  2016-1-2017,  which 
indicated  that  GSP+  beneficiaries  overall  made  progress  on  the  implementation  of  the  27 
GSP+  conventions.  It  is  also  suggested  from  the  case  studies  carried  out  by  the  external 
consultant, as well as the biennial GSP report that the conditionality for the GSP+ countries, 
including  the  requirement  to  adhere  to  reporting  obligations  under  the  conventions,  and  the 
reformed  GSP+  monitoring  mechanisms  has  –  through  the  better  informed  and  deeper 
structural  dialogues  with  the  EU  –  contributed  to  improving  the  implementation  of  and 
compliance with the conventions, which has in turn improved the associated positive impacts 
in  the  country  concerned.  Thus,  the  external  consultant  concluded  that  the  GSP  Regulation 
has  positively  influenced  the  achievements  and  contributed  to  sustainable  development  and 
good governance.   

The external consultant highlighted that the GSP has been lauded by many stakeholders as an 
engine for growth in several beneficiary countries, creating dynamism in the corporate sector 
and  resulting  in  the  increased  employment  for  different  categories  of  workers.  A  notable 
example  is  Bangladesh,  the  largest  beneficiary  of  the  EBA  arrangement,  where  significant 
export revenues have been generated by the ready-made garment industry, as recognised by 
government  and  industry  representatives  during  the  workshop  organised  by  the  consultant. 
This has in turn led to the employment of a significant number of women in the sector (of the 
around  4  million  people  directly  employed  in  Bangladesh's  clothing  industry,  60-80%  are 
estimated  to  be  women).  Hence  the  scaling  up  and  expansion  of  exports  has  been  a  factor 
positively influencing the prevalent gender inequality and the lack of access of women to paid 
employment. However, as noted elsewhere in this document, there are serious issues related 
to labour rights that still need to be addressed in Bangladesh. 

Based on the available evidence, largely from case studies, the external consultant concluded 
that trade has had some positive effects on the environment in beneficiary countries through 
changes  in  production  technologies  and  supply  chain  sustainability.  These  changes  were 
attributed  to  initiatives  of  private  corporations  to  adopt  cleaner  and  safer  technologies.  The 
external evaluation found this to have directly benefitted workers through better occupational 
safety and health provisions. The external consultant also noted that the changes in production 
technologies and supply chain sustainability had an indirect impact on the environment.  
However,  the  external  consultant  remarked  that  the  positive  impact  of  technology  (greater 
energy  efficiency  and  sustainable  use  of  natural  resources)  was  often  offset  by  the  negative 
impact of the scale factors (more pollution and emissions of greenhouse gases) and thus did 

30 

 
 
 
 
 
 
not  allow  for  a  conclusion  that  the  GSP  has  had  significant  positive  impacts  on  the 
environment in beneficiary countries, even in countries which have ratified and implemented 
environmental conventions in order to qualify for GSP+ status. 

The  impact  of  GSP  on  the  environment  is  more  difficult to  assess  for  a  number  of  reasons, 
e.g. lack of relevant and up-to-date data and indicators, and isolating the effect of GSP from 
other  factors  affecting  the  environment.  In  practice,  the  environmental  impact  of  any  new 
economic  activity  will  depend  on  the  policies  in  place  in  beneficiary  countries  to  limit  any 
potentially detrimental effects. Textiles and clothing are the main import products under the 
GSP. There is evidence to suggest that their production can have a detrimental effect on the 
environment in the absence of adequate environmental and waste management mechanisms.  

The difficulty in establishing a clear link between GSP and its impact on the environment is 
recognised by the external consultant. The Commission therefore considers it could be useful 
to examine what methodologies, indicators and data could better underpin analysis related to 
the environment. One avenue could be to look at specific indicators, such as CO2 emissions 
or  levels  of  pollution,  per  unit  of  production  in  key  economic  sectors  (especially  those 
responsible for high environmental impact, such as textiles). 

5.3  What unintended consequences, if any, can be linked to the design, 

implementation, or use of the current GSP? 

In the case studies performed by the external consultant, there is an indication that GSP had 
contributed  to  reducing  poverty  in  the  four  countries  (Pakistan,  Bangladesh,  Bolivia  and 
Ethiopia),  due  to  the  increased  economic  growth  and  the  subsequent  enlarged  employment 
opportunities. This in turn had an important impact on the role of women in society through 
an  increase in  female  employment,  in  particular  in  the  textile  and  clothing  sectors,  amongst 
others, in the case study countries Bangladesh and Pakistan. Improved female participation in 
the  labour  force,  albeit  not  one  of  the  direct  objectives  of  the  GSP,  contributes  to  poverty 
eradication and  sustainable  development.  This  is  an  unintended  positive  consequence  of  the 
GSP, to be welcomed.28 

Another positive spill-over effect is technology transfer. While the extent of this effect is not 
clear, there are indications in the external study which suggest that EU GSP has facilitated the 
development of manufacturing sectors, including ready-made garments, leather products, light 
engineering etc. Due to the strong demand for high-quality products in the EU market, these 
sectors  have  adopted  the  latest  technologies  to  ensure  consumer  safety  in  order  to  remain 
competitive in the global market. Systems of quality assurance, good manufacturing practices 
as  well  as  voluntary  and  mandatory  certification,  backed  up  by  ISO-certified  laboratory 
facilities,  are  being  developed  in  GSP  beneficiary  countries.  Furthermore,  automated 
production techniques and new machinery imported in beneficiary countries have contributed 
to technological development in these countries. 

Negative  unintended  consequences  have  also  been  observed  by  the  external  consultant. 
During  stakeholder  consultations,  the  external  consultant  found  that  EU  industries  face 

28Final Report on the Mid-Term Evaluation of the EU's Generalised Scheme of Preferences (GSP) prepared by 
Development Solutions, in particular Chapter 6 sections 6.1.5 and 6.2.5.  

31 

 
 
 
 
 
 
 
 
                                                            
increased competition from imports that benefit from GSP, thereby threatening the stability of 
certain sectors in the EU (namely the tyre industry and rice production, see above). 

Land grabbing, for example in Cambodia (see above), can be seen as a negative unintended 
effect of GSP when directly associated with economic activity associated to trade under GSP. 
One  of  the  finding  from  the  open  public  consultation  conducted  by  the  external  consultant 
was that many respondents were of the view that the current GSP does not fulfil the objective 
of reducing poverty in the beneficiary countries since it mainly benefits large industries and 
not small business. It is not clear on what basis this view is expressed, but the country case 
studies  revealed  that  there  was  a  lack  of  awareness  of  GSP  among  a  broader  segment  of 
businesses  that  could  benefit  from  it.  It  was  mainly  the  larger  and traditional export  sectors 
that mainly made use of GSP. Continued efforts to create awareness seem called for. 

From  a  conceptual  point  of  view,  the  external  consultant  assesses  that  the  negative 
environmental  impacts  of  the  GSP  due  to  scale  effects  can  be  considered  as  unintended. 
Nevertheless, the external consultant assesses that these impacts could be reduced and better 
managed  through  initiatives  supporting  beneficiary  countries  in  monitoring  and  mitigating 
adverse environmental effects. The external consultant notes that, although not linked to the 
GSP  Regulation,  technical  assistance  and  greater  involvement  of  the  private  sector  (e.g. 
building  on  positive  examples  of  environmentally  beneficial  technology  transfer  and  supply 
chain sustainability initiatives) could be further used to improve environmental protection in 
the implementation of each of the three GSP arrangements. 

5.4  Efficiency – to what extent is the current GSP efficient? 

The  2012  GSP  reform  aimed  to  improve  the  efficiency  and  effectiveness  of  the  scheme 
through a number of changes. 

The  reformed  eligibility  and  product  graduation  criteria  has  allowed  to  better  target  the 
preferences to the countries and sectors most in need, while reducing the overall costs for the 
EU  in  terms  of  duties  lost  because  of  the  GSP.  Indeed,  GSP  imports  as  a  share  of  all  EU 
imports decreased from 6.1% in 2013 to 4.9% in 2016,  reflecting the lower number of GSP 
beneficiaries.  The  2012  GSP  reform  reduced  the  total  number  of  GSP  beneficiaries  and 
thereby  removed  competitive  beneficiaries  under  the  previous  GSP.  In  turn,  the  remaining 
GSP  beneficiary  countries  can  take  better  advantage  of  preferential  market  access 
opportunities under the GSP. As described in Sections 3 and 5.a the following trends can be 
associated  to  the  reformed  GSP:  1)  a  significant  increase  in  imports  from  remaining  GSP 
beneficiaries  into  the  EU,  in  particular  for  the  EBA  and  GSP+  countries;  2)  overall 
improvements  in  export  diversification  under  all  the  three  arrangements;  and  3)  preference 
utilization  rates  and  preference  margins  have  overall  increased  or  remained  largely 
unchanged.  Taken  together,  these  indicators  point  to  a  greater  efficiency  of  the  GSP 
Regulation in terms of generating more diversified preferential exports to the EU at a lower 
cost to the EU budget. 

The  improved  GSP+  monitoring  mechanism  has  increased  the  effectiveness  of  the  scheme. 
Indeed,  the  monitoring  of  the  implementation  of  the  GSP+  Conventions  in  the  beneficiary 
countries  has  been  substantially  upgraded  and  intensified  in  terms  of  frequency  and  scope. 
Most  notably,  the  GSP  Regulation  shortened  the  monitoring  cycle  from  three  to  two  years, 

32 

 
 
 
 
 
 
 
 
 
with the status reports from the Commission to the European Parliament and the Council now 
covering  all  three  preferential  arrangements.  The  report  is  accompanied  by  country-specific 
analyses for the GSP+ beneficiaries. GSP+ monitoring implies regular dialogues and visits to 
the  beneficiary  countries.  The  external  consultant  also  found  that  EU  monitoring  of  GSP+ 
countries has positively contributed to social and human rights impact in the countries under 
that  arrangement.  In  this  respect,  the  present  GSP  should  be  considered  more  effective  as 
compared with its predecessors. 

One  of  the  recommendations  made  by  the  external  consultant  is  that  the  EU  monitoring 
should be enhanced beyond the present GSP+ arrangement, in view of the positive impact of 
the  EU  monitoring  could  have  on  social  and  human  rights  in  EBA  and  Standard  GSP 
beneficiary countries. This would inevitably require considerably more human resources and 
have significant cost implications. With that in mind, the external consultant suggests that the 
feasibility of this recommendation needs to be reviewed with regards to benefits (in terms of 
effectiveness and impact) as well as its cost (in terms of efficiency and financial expenditure). 
The  external  consultant  noted  that  the  costs  of  such  enhanced  monitoring,  undertaken  by 
dedicated  Commission  staff  in  cooperation  with  the  EEAS  and  EU  Delegations,  were  not 
negligible and extending monitoring to EBA countries could even be considered as inefficient 
and unduly burdensome. Having said that the Commission is carrying out targeted enhanced 
monitoring  in  certain  cases,  e.g.  Bangladesh  and  Cambodia.  This  is  however  under  tight 
resource constraints. 

The Commission considers that besides the vast human resource implications, in particular in 
a  situation  of  budgetary  cuts  in  EU  institutions,  such  extended  monitoring  also  raises 
questions  related  to  international  obligations  (e.g.  limitations  under  the  WTO  Enabling 
Clause) and consistency with the role of the multilateral supervisory system under the UN and 
ILO. 

At  the  same  time  the  external  consultant  noted  that  the  two-year  monitoring  cycle  (to  the 
European  Parliament  and  the  Council)  was  often  too  short  for  beneficiary  countries  to 
implement  meaningful  changes  and  that  it  might  be  therefore  more  efficient  to  extend  the 
monitoring cycle from two years to three or four years, in order to better reflect progress in 
beneficiary countries and also as a measure to reduce the administrative burden on the EU and 
beneficiary countries. This is a proposal that should be considered in view of simplifying the 
GSP Regulation. 

Another pertinent indicator of the efficiency of the GSP is how decisions on changes in the 
implementation  of  the  GSP  Regulation  are  made.  The  GSP  Regulation,  similarly  to  its 
predecessor, relies very extensively on assessments carried out by relevant monitoring bodies, 
independent  of  the  EU.  For  example,  whether  a  particular  convention  on  labour  rights  has 
been  ratified  and  is  effectively  implemented  will  be  assessed  by  the  International  Labour 
Organisation.  Similarly,  whether  a  country  qualifies  to  graduate  from  the  Least  Developed 
Country  category  and  loses  its  EBA  eligibility  is  assessed  by  the  UN  Committee  for 
Development  Policy,  an  expert  committee  appointed  by  the  Secretary-General  of  the  UN. 
Whether  a  country  is  to  be  regarded  as  an  upper  middle  income  country,  without  GSP 
eligibility,  is  determined  by  data  from  the  World  Bank  Group  on  an  annual  basis.  As  these 
GSP  implementation  modalities  have  not  changed,  the  external  consultant  argues  that  the 
efficiency of the GSP has therefore has also remained unchanged.    

33 

 
 
 
 
 
 
 
Certain stakeholders have noted that there is a lack of awareness of the GSP in the beneficiary 
countries. Even in cases where there is considerable knowledge, this tends to be concentrated 
to the main sector that utilise preferences to export to the EU market. This lack of awareness 
decreases the efficiency of the GSP, for example, GSP preferences may not be utilised or civil 
society organisation may be unable to cooperate to/contribute in the monitoring process. The 
Commission observes that there are already actions and programmes financed or undertaken 
by the EU that have the objective of raising awareness of the GSP (for example in the trade-
related  technical  assistance  programmes  of  the  EU  in  Pakistan  and  in  Sri  Lanka,  as  well  as 
support  to  local  civil  society  organisations  under  a  programme  funded  under  the  European 
Instrument for Democracy and Human Rights).  However, there is scope for more action by 
the  EU  to  raise  awareness  of  GSP  not  just  for  businesses,  but  also  for  civil  society 
organisations  as  they  play  an  important  role  in  the  implementation  of  the  international 
conventions.  The  EU  cooperates  closely  with  civil  society  organisations  in  the  beneficiary 
countries  to  tackle  shortcomings  and  to  discuss  achieved  progress  in  the  implementation  of 
the conventions.  The Commission  does  note, however,  that the beneficiary countries have a 
primary  role  and  responsibility  in  promoting  awareness  of  GSP  and  that  any  actions 
undertaken by the EU require the engagement and cooperation from beneficiary countries in 
order to generate maximum impact. 

While  noting  the  desirability  of  further  detailed  cost-estimates,  the  preliminary  conclusions 
that can be drawn from the above is that the efficiency of the scheme has improved, or at least 
remained stable during the period of application of the GSP Regulation.   

5.5  To what extent is the current GSP coherent with the EU’s relevant 

policies? 

The external consultant finds the current GSP to be largely coherent with and complementary 
to the EU’s trade, development and foreign policies. The Commission shares this assessment 
as the GSP scheme is precisely designed as a key tool to ensure that trade policy contributes 
to promoting the social and environmental pillars of sustainable development. 

In  the  trade  field  first,  as  set  out  in  EU's  Trade  for  All  Strategy29,  trade  policy  can  be  a 
powerful tool to further the advancement of human rights in third countries  in  conjunction  
with  other  EU  policies,  in  particular  foreign  policy  and  development  cooperation. The 
GSP plays a key role in this regard. Unilateral trade arrangements such as the GSP can assist 
countries most in need while the GSP+ scheme is an innovative tool that offers incentives and 
support  for  human  rights,  sustainable  development  and  good  governance  in  countries 
committed  to    implementing  core  international  conventions  in  those  areas.  This  is  seen  as 
essential to encourage fairness in global trade. On this, it is important to recall that one of the 
main  objectives  of  the  2012  GSP  reform  was  to  focus  on  the  countries  most  in  need.  The 
graduation  of  competitive  beneficiary  countries  with  effect  of  2014  has  led  to  an  increased 
focus on the most vulnerable developing countries as well as the Least Developed Countries. 

Human rights breaches that may be found in global supply chains such as the worst forms of 
child labour, forced prison labour, forced labour as a result of trafficking in human beings and 
land  grabbing  deserve  particular  attention.  Human  rights  considerations  have  increasingly 

29 http://trade.ec.europa.eu/doclib/docs/2015/october/tradoc_153846.pdf  

34 

 
 
 
 
 
 
 
 
                                                            
been incorporated into unilateral preferences (especially in the GSP+ scheme) there has been 
for example cases of serious and systematic violations of human rights, beneficiary countries 
have lost their preferences under the GSP scheme (e.g. Sri Lanka, Belarus, Myanmar/Burma) 
until  the  situation  improved  sufficiently.  In  addition,  the  Commission  has  also  developed 
guidelines to help examine the impact of trade policy initiatives on human rights in both the 
EU and partner countries. 

The  Trade  for  All  Strategy  also  highlights  the  needs  of  consumers,  workers  and  SMEs  as 
priorities in the formulation of trade policy in the EU. It recognises that trade openness can 
result in major economic benefits for them. However, according to the consultants, it has been 
noted that the GSP may not in all cases benefit consumers, workers or small companies. For 
instance,  tariff  reductions  under  the  GSP  may  result  in  highly  competitive  imports  that  are 
sold on the EU market at very competitive prices. Whereas EU consumers may benefit from a 
wide  range  of  products  that  are  available  at  relatively  more  affordable  prices,  this 
intensification  of  competition  may  negatively  impact  some  EU  small  businesses  in  the 
affected sectors. Over the course of consultations, stakeholders from the EU textile, rice and 
tyres  industries  have  articulated  such  concerns.  Here  is  should  be  noted  that  the  graduation 
system of the GSP is aimed precisely at countering these potential negative effects. 

Finally,  with  regards  to  the  European  Union's  policy  to  move  towards  concluding  an 
increasing  number  of  free  trade  agreements,  the  external  consultant  noted  that  countries 
leaving the GSP arrangements to enter into reciprocal preferential trade arrangements did not 
necessarily experience an increased value of EU imports as they already enjoyed preferential 
access to the EU market. 

With  regard  to  the  coherence  of  EU’s  policies  in  the  area  of  development,  the  external 
consultant  found  that  the  EU  actively  incorporates  development  objectives  in  all  of  its 
policies, including GSP, that are likely to impact developing countries. This is done primarily 
through  the  Policy  Coherence  for  Development  Initiative,  where  the  aim  is  to  minimise 
contradictions  and  build  synergies  between  different  EU  policies  to  benefit  developing 
countries  and  increase  the  effectiveness  of  development  cooperation.30  The  EU’s  GSP  has 
been found to be coherent with the overall EU development policies in the following ways: 

 

 

 

It  ensures  alignment  with  poverty  reduction  initiatives  through  trade  and  sustainable 
development; 
It provides appropriate treatment for Least Developed Countries by responding to their 
specific development needs through the EBA arrangement; and 
It  uses  trade  as  an  instrument  to  promote  development,  especially  through  the 
incentive-based  GSP+  programme,  which  promotes  compliance  with  core  human 
rights and international labour and environmental conventions. 

Furthermore, one of the main objectives of the 2012 GSP reform was to focus preferences on 
developing countries most in need, which in turn was expected to further boost exports from 
these  developing  countries  and  promote  export  diversification.  This  objective  has  been 
achieved to a great extent, especially for the EBA beneficiary countries. 

30European 
https://ec.europa.eu/europeaid/sectors/economic-growth/trade/trade-policy-coherence-development_en 

Development. 

Commission. 

Coherence 

Policy 

Available 

for 

at: 

35 

 
 
 
 
 
 
 
 
                                                            
The 2012 GSP reform is also coherent with the EU’s foreign and security policies, especially 
as  it  relates  to  respect  for  human  rights  and  fundamental  freedoms.  The  promotion  and 
protection  of  human  rights  have  been  actively  pursued  under  the  GSP,  especially  under  the 
GSP+  arrangement  where  beneficiary  countries  are  obliged  to  ratify  and  effectively 
implement several human rights conventions. In the case of serious and systematic violations 
of human rights,  beneficiary countries may also be withdrawn altogether from the GSP.   In 
this  sense,  the  GSP  seeks  to  promote  an  important  objective  of  the  EU’s  Common  Foreign 
and Security Policy (CFSP), placing emphasis on human rights and fundamental freedoms. 

5.6  To what extent is the current GSP relevant to the development needs which 

it is intended to address? 

The Commission agrees with  the findings  of the external consultant  that the current  GSP is 
highly  relevant  to  the  development  needs  of  beneficiary  countries  and  contributes  to 
promoting sustainable development and poverty eradication objectives. 

Indications  and  insights  about  the  relevance  of  the  GSP  is  gained  from,  inter  alia,  the 
stakeholder interviews conducted in the four case study countries in the midterm evaluation. 
The  overwhelming  majority  of  stakeholders  agreed  that  the  GSP  is  relevant  to  the 
development  needs  of  their  countries.  In  Bangladesh,  stakeholders  agreed  that  the  EBA  has 
been an enormous support for the growth of the economy. It has also been noted that the EBA 
has helped Bangladesh to solidify its export base, and has helped the country to prepare for 
graduation from the Least Developed Countries category. 

Bolivian stakeholders also concur that the GSP+ is relevant to the development needs of their 
country, but more efforts need to be put in place to encourage exporters to utilize the scheme. 
They also propose that more strategic relationships be developed between local producers and 
EU  producers  to  better  understand  and  meet  EU  consumer  demand.  Closer  integration  of 
Bolivian  producers  within  EU  value  chains  would  provide  additional  benefits  to  Bolivia, 
including its small-scale producers. 

Ethiopian stakeholders also recognise that the GSP is relevant to their country’s development 
needs. However, these gains may be hampered by poor governance structures in the country. 
Therefore, it is  important  that assessments are carried out at various intervals to  ensure that 
the  Scheme  is  meeting  its  specific  objectives.  Similarly,  stakeholders  in  Pakistan  have 
witnessed the impact of the GSP+ on the general development of the country. However, they 
recommended  that  the  EU  improve  its  support  to  the  private  sector  through  technical 
assistance and training. 

The external consultant has found that the extent of the GSP’s relevance to the developmental 
needs of the beneficiary countries depends on the extent of utilisation of preferences, as well 
as  the  national  plans  and  priorities  that  have  been  formulated  to  take  advantage  of  the 
opportunities of the scheme. For the GSP+ countries, it also depends on the measures put in 
place  by  the  national  authorities  to  effectively  implement  the  conventions  and  to  address 
pertinent social and environmental concerns. 

36 

 
 
 
 
 
 
 
 
 
 
6. 

Other aspects related to the application of GSP 

6.1  Biofuels 

The large majority of biofuels used in the EU is produced from EU feedstocks (for biodiesel 
more than 60% and more than 90% for bioethanol)31. Biodiesel, in particular, is mainly made 
from rapeseed, though the use of imported palm oil has increased since 2010. About 26% of 
biodiesel  and  10%  of  bioethanol  are  imported,  mainly  from  Malaysia  (biodiesel)  and 
Guatemala, Bolivia, Pakistan, Russia and Peru (bioethanol). The EU also imports feed stocks 
that  can  be  used  for  producing  biofuels.  They  mainly  come  from  Indonesia  and  Malaysia 
(palm oil), Brazil and the US (soybeans), Ukraine (maize, wheat), Canada (wheat), Russia and 
Moldova (barley, ray), as well as Serbia (sugar beet). 

With  the  2012  GSP  reform  several  of  the  main  exporters  to  the  EU  of  biofuels  and  feed 
stocks,  were  no  longer  eligible  for  GSP  either  due  to  their  income  status  (e.g.  Malaysia)  or 
since  they  entered  into  Free  Trade  Agreements  with  the  EU  (e.g.  Guatemala  and  Peru). 
Furthermore, Indonesia, who is a main source of palm oil imports, has been graduated from 
the  product  section  that  covers  palm  oil  since  1  January  2014  when  the  GSP  Regulation 
entered into force. Although the EU imports about EUR 4 billion a year of palm oil, a small 
and declining share of these imports have been under GSP: by 2016, this share had fallen to 
1%. Moreover, cereal based feed stocks (maize, wheat etc.) are not covered by GSP. 

The  significant  reduction  in  the  number  of  GSP  beneficiaries  has  led to  a  drastic decline  in 
EU imports of biodiesel, from about EUR 2.6 billion in 2012 to just over EUR 450 million in 
2016. Under the GSP Regulation, the main sources of EU imports of biofuels under GSP are 
Bolivia and Pakistan, who export ethanol duty free to the EU under the GSP+ arrangement. 
Imports of ethanol from these two countries have varied over the period 2011-2016. Over the 
period from 2014 to 2016, EU imports of ethanol under GSP fell by 60%, with imports from 
Bolivia falling by 73%.  The share of GSP ethanol  imports from Pakistan rose from 26%  to 
67%  of  the  EU’s  total  GSP  ethanol  imports  over  the  period  2014  to  2016.  In  2016  GSP 
imports  of  ethanol  from  Pakistan  accounted  for  17%  of  EU  total  imports  from  the  world, 
while Bolivia accounted for 5%. 

The  sustainability  aspects  related  to  EU  imports  of  ethanol  were  assessed  by  the  external 
consultant  in  particular  in  terms  of  impacts  in  the  exporting  countries.  Both  in  Bolivia  and 
Pakistan  ethanol  is  produced  from  sugarcane.  The  external  consultant  considered  that  the 
main  impacts  of  sugarcane  cultivation  on  the  environment  were  related  to  deforestation, 
effluents  and  air  emissions,  soil  quality  and  greenhouse  gas  emissions,  which  can  be 
considerable (e.g. in Bolivia the sugarcane industry is one of the main water polluters and in 
Pakistan  sugarcane  has  significantly  contributed  to  water  consumption  and  changing  water 
flows). 

As  mentioned  above,  the  reduction  in  the  number  of  GSP  beneficiaries  has  led  to  a 
considerable decline in EU imports of biodiesel under GSP, and was negligible in 2015 and 

31 Final Report on the Mid-Term Evaluation of the EU's Generalised Scheme of Preferences (GSP) prepared by 
Development Solutions, Annex VII contains a more detailed description of EU imports of biofuels under GSP. 

37 

 
 
 
 
 
 
 
 
 
                                                            
2016. Consequently the sustainability impacts associated with GSP imports will have fallen to 
low  levels.  Although  the  EU  imports  about  EUR  4  billion  a  year  of  palm  oil,  a  small  and 
declining share of these imports have been under GSP: by 2016, this share had fallen to 1%. 
Consequently,  sustainability  impacts  associated  with  palm  oil  imports  under  GSP  have  a 
small  and  declining  share  of  impacts  related  to  total  EU  imports.  This  is  confirmed  by  the 
external  consultant's  assessment.  Furthermore,  impacts  from  GSP  imports  of  biofuels  and  a 
key  feedstock,  palm  oil,  are  generally  difficult  to  isolate  from  impacts  linked  to  domestic 
consumption  and  other  trade  (including  to  non-EU  countries),  or  from  other  contributing 
factors such as national policies or conditions. Nevertheless, attention needs to be paid to the 
possible  impact  on the environment  from  sugarcane  cultivation  in  Bolivia  and  Pakistan that 
could be associated to trade under GSP+. 

6.2 

Sanitary and phytosanitary measures 

Sanitary and phytosanitary (SPS) measures have the aim of pursuing legitimate public policy 
objectives in protecting human, animal and plant life and health. EU SPS measures are subject 
to  the  disciplines  (e.g.  in  terms  of  affecting  trade)  and  transparency  rules  of  the  WTO 
Agreement  on  the  Application  of  SPS  Measures.  EU  SPS  measures  apply  equally  to  goods 
produced in the EU and imported into the EU. In international trade SPS measures can have 
an adverse effect on trade  and are examples of  what is  referred to  as  non-tariff barriers. As 
such they can affect the GSP's intended goal of facilitating trade for developing countries, in 
particular for agriculture products. 

The external study found that, at the time of writing, the EU has 118 SPS measures in place, 
out of which 18 affect the case study countries Bangladesh, Bolivia, Ethiopia and Pakistan. A 
number of GSP beneficiaries have expressed concerns related to these measures highlighting 
the negative effects on international trade in  agricultural  products, leading to adverse socio-
economic  impacts  on  commodity  producing  countries.  Indeed,  the  external  consultant 
postulates  that  SPS  measures  have  the  most  adverse  effect  on  the  countries  for  which 
agriculture products represent the highest share of exports. Additionally, the barriers to trade 
that  can  result  from  SPS  measures  can  offer  an  explanation  why  certain  GSP  beneficiaries 
have lower preference utilisation rates. SPS measures can therefore negatively affect the GSP 
Regulation's stated goal of focusing tariff preferences on the countries most in need. 

The  Commission  notes  that  complying  with  SPS  measures  can  pose  challenges  for  in 
particular developing countries that many times experience capacity and technical know-how 
constraints in dealing with such requirements. The EU's policy response has therefore been to 
assist,  through  development  and  technical  assistance,  developing  countries  in  ensuring  their 
goods  can  comply  with  EU  SPS  measures.  Indeed,  between  2015  and  2016  the  EU  (the 
Commission and EU Member States) carried out more than 400 technical assistance activities 
with  developing  countries  in  the  SPS  area32.  It  should  also  be  kept  in  mind  that  non-EU 
countries must be authorised (on health and safety grounds) to export certain products to the 
EU  (e.g.  fishery  products)  Furthermore,  it  should  be  noted  that  on  average  agriculture 
products represented in 2016 11.6% of total imports under GSP (10% for EBA countries, 13% 
for GSP+ and 12.3% for Standard GSP). There are, however, countries, for example Ethiopia, 
where agriculture products represent the majority of imports under GSP (80.3% in the case of 
Ethiopia). 

32 See the EU report to the WTO, G/SPS/GEN/1139/Add.4 from 10 July 2017. 

38 

 
 
 
 
 
 
                                                            
6.3 

Fight against terrorism and money laundering 

Article 19 of the GSP Regulation refers to failure to comply with international conventions on 
anti-terrorism  and  money  laundering  as  grounds  for  the  possible  temporary  withdrawal  of 
GSP.  While  such  conventions  are  within  the  legal  framework  of  the  GSP  Regulation,  the 
pursuit of policy objectives related to anti-terrorism and money laundering, including related 
international  cooperation,  is  primarily  done  within  the  specific  EU  policy  and  legal 
frameworks.  The  Commission  ensures  consistency  and  coherence  in  the  application  of  the 
different policies. 

The  EU's  Counter-Terrorism  Strategy33  recognises  the  important  role  of  promoting 
international  partnership  by  working  with  others  beyond  the  EU,  particularly  the  UN,  other 
international  organisations,  and  key  third  countries,  to  deepen  the  international  consensus, 
build  capacity  and  strengthen  cooperation  to  counter  terrorism.  In  this  context,  GSP  and  in 
particular GSP+ could be seen as contributing to the 'Prevent' key priority of promoting good 
governance, democracy, education and economic prosperity. It should be noted that there are 
no specific international conventions on anti-terrorism listed in the GSP Regulation. 

The EU's legal framework on anti-money laundering and counter terrorist financing is the 4th 
Anti-Money Laundering Directive (AMLD), which was recently amended by the 5th AMLD, 
as  wells  as  EU  Regulation  2015/847  on  information  on  the  payer  accompanying  transfer  of 
funds. Both instruments take into account the 2012 Recommendations of the Financial Action 
Task  Force  (FATF).  The  5th  AMLD  introduces  substantial  improvement  to  better  equip  the 
Union to prevent the financial system from being used for money laundering and for funding 
terrorist  activities,  including  broadening  the  criteria  for  the  assessment  of  high-risk  third 
countries  and  improve  the  safeguards  for  financial  transactions  to  and  from  such  countries. 
Within  the  context  of  the  AMLD  the  Commission  identifies  non-EU  countries  that  present 
strategic  deficiencies  in  their  regime  on  anti-money  laundering  and  countering  terrorist 
financing. There are currently 16 countries considered as "high-risk countries". Of these, 9 are 
GSP beneficiaries (Afghanistan, Ethiopia, Laos, Pakistan, Sri Lanka, Syria, Uganda, Vanuatu, 
and Yemen), which have all provided a written high-level political commitment to address the 
identified  deficiencies  and  have  developed  an  action  plan  with  the  FATF.  GSP  and  in 
particular  GSP+  could  be  seen  as  contributing  generally  to  anti-money  laundering  efforts, 
especially  through  the  implementation  of  the  UN  Convention  Against  Corruption,  which  is 
among the GSP Conventions. 

7. 

Conclusions 

The three main long-term objectives of the 2012 GSP reform (as described in the intervention 
logic34) are the following: 

i. 

ii. 
iii. 

To  contribute  to  poverty  eradication  by  expanding  exports  from  countries  most  in 
need; 
To promote sustainable development and good governance; 
To ensure better safeguard for the EU’s financial and economic interest.  

33 http://www.consilium.europa.eu/en/policies/fight-against-terrorism/eu-strategy/  
34 See Figure 1 on page 8 

39 

 
 
 
 
 
 
 
 
                                                            
The external consultant used three complementary approaches to analyse the functioning and 
impact  of  the  GSP  in  the  beneficiary  countries  and  the  EU,  namely:  (i)  quantitative  and 
qualitative  desk  research  and  data  analyses;  (ii)  an  inclusive  and  extensive  stakeholder 
consultation process; and (iii) country and sector case studies. The analysis related to mainly 
social, human rights and environmental impacts saw certain limitations due to lack of up-to-
date  data  and  indicators,  as  well  as  difficulties  in  establishing  a  causal  link  to  GSP  and 
isolating the effect of GSP from other important factors. The analysis was complemented by 
four country case studies, which while giving greater insights with regard to those countries, 
might not always lead to conclusions of general applicability. 

The 2012 GSP reform introduced major changes in relation to the previous GSP Regulations: 

  Tightening of  the  eligibility  criteria  resulting  in  a  decrease  in  the  number  of  beneficiary 

countries from 172 to 92. 

  Revised  product  graduation  criteria  that  resulted  in  relative  terms  more  product  sections 

being graduated. 

  Relaxed GSP+ eligibility criteria and removing GSP+ countries from product graduation 
as  an  incentive  to  apply  for  GSP+  and  thus  contribute  to  improving  sustainable 
development. This has resulted initially in 16 GSP+ beneficiaries, reduced to currently 9 
since 7 of the GSP+ countries entered into FTAs with the EU. 
Improved GSP+ monitoring resulting in substantially upgraded and intensified monitoring 
in terms of frequency and scope. 

 

  A more efficient and credible temporary withdrawal mechanism, which although has not 
been used to date, has increased the EU's leverage in pushing for respect of fundamental 
rights and which has seen concrete positive results. 

  An improved safeguard mechanism, which has seen a first safeguard investigation being 

initiated. 

This mid-term evaluation shows that the EU intervention in the form of the reformed GSP is 
largely delivering on its objectives, in particular: 

Economic impact: the focus of preferences under GSP to the countries most in need has led 
to a substantial increase in imports from in particular EBA and GSP+ countries. The removal 
of more competitive suppliers from GSP has given more room and opportunity for the more 
vulnerable  countries  to  export  to  the  EU.  The  use  of  GSP  preferences  and  export 
diversification  have  shown  some  improvements  or  remained  unchanged.  The  share  of  GSP 
imports in  total imports from beneficiary countries has  also increased substantially showing 
the  continued  relevance  of  GSP.  In  this  respect,  GSP  can  contribute  to  poverty  eradication, 
but depends to a large degree on the domestic policies and priorities in place in beneficiary 
countries.  Normally  the  reduction  in  the  number  of  GSP  beneficiaries,  including  large  and 
competitive suppliers, should lead to less import competition for EU industry. However, some 
EU industries (e.g. textiles, rice and tyres) continue to face competitive pressure from imports 
under GSP. The ongoing safeguard investigation related to rice from Cambodia and Myanmar 
will be important for assessing the functioning of the reformed safeguard mechanism. 

Social and human rights impact: international trade and economic growth can contribute to 
social development if the beneficiary countries have policies in place to effectively direct their 
resources  to  support  social  development  for  all  layers  of  society.  GSP  can  be  considered  to 
have,  overall,  made  a  positive  contribution  to  the  furtherance  of  social  and  human  rights  in 

40 

 
 
 
 
 
 
 
 
beneficiary countries. This has in particular been the case for the GSP+ arrangement, which 
incentivises  countries  to  ratify  and  implement  international  conventions  related  to  the 
protection of human rights, labour rights, protection of the environment and good governance. 
The  enhanced  GSP+  monitoring  mechanism,  as  well  enhanced  engagement  towards  certain 
EBA countries, has also contributed by giving the EU leverage towards beneficiary countries 
in pushing for respect of fundamental rights. 

Environmental impact: as with social development, international trade can also contribute to 
sustainable  development  if  accompanied  by  appropriate  policies  and  mitigating  measures  in 
beneficiary countries. There are indications that GSP has only had a limited impact (positive 
or negative) on the environment. This is something that needs to examined further (e.g. how 
to better measure the possible impact of GSP), including through the implementation of the 
environment protection and climate change conventions under GSP+.  

The improved GSP+ monitoring process can be considered to be more effective than under 
the previous GSP Regulation. Nevertheless, a lesson learned from this evaluation is that there 
is scope for simplification by extending the monitoring cycle from the current two years to a 
longer  time  period.  The  way  the  GSP+  monitoring  process  is  implemented  already  ensures 
transparency  and  inclusiveness,  including  with  civil  society.  Nevertheless,  the  Commission 
will  consider  what  practical  measures  could  be  taken  to  further  enhance  transparency  and 
inclusiveness in the monitoring process. 

The efficiency of GSP has either improved, or at least remained stable during the period of 
application.  Some  barriers  to  the  utilisation  of  GSP  and  as  an  instrument  for  export 
diversification  were  identified.  Awareness  among  businesses  in  beneficiary  countries  of  the 
trade opportunities offered by GSP is key. This is also the case for civil society in relation to 
the implementation of GSP Conventions. More can certainly be done by the EU to help raise 
awareness, but this must also be a responsibility for beneficiary countries. Dealing with other 
factors  that  can  adversely  affect  the  utilisation  of  GSP,  such  as  supply  side  constraints,  the 
enabling  environment  in  beneficiary  countries  and  other  trade  barriers  (e.g.  non-tariff 
measures  and  rules  of  origin)  require  response  through  other  EU  policies,  as  well  as  in  the 
beneficiary countries themselves. 

The GSP Regulation can also be considered to be coherent with other relevant EU policies 
in particular development and foreign and a security policy, especially at it relates to promote 
and protect fundamental rights and sustainable development. 

41 

 
 
 
 
 
 
 
 
 
 
Annex I – Procedural Information 

In  March  2016,  the  Directorate-General  for  Trade  (DG  TRADE)  launched  a  midterm 
evaluation  of  Regulation  978/2012  of  the  European  Parliament  and  of  the  Council  of  25 
October  2012  applying  a  scheme  of  generalised  tariff  preferences  and  repealing  Council 
Regulation (EC) No 732/2008 ('GSP Regulation'). Due to its large scope, it was decided that 
the  evaluation  would  be  supported  by  an  external  study.  The  contract  for  the  study  was 
awarded to Development Solutions, and the kick-off meeting with the external consultant was 
held in November 2016. The website (http://www.gspevaluation.com/) created by the external 
consultant to maintain stakeholders up-to-date and facilitate their participation in the process 
was  launched  in  January  2017.  The  study  was  originally  foreseen  to  last  until  November 
2017. However, unexpected delays led the contract to be extended until May 2018. 

An  Inter-Service  Steering  Group  was  created  at  the  start  of  the  evaluation  featuring  the 
following services: 

  The Directorate General for Trade (DG TRADE);  
  The  Directorate  General  for  Internal  Market,  Industry,  Entrepreneurship  and  SMEs  (DG 

GROW);  

  The Directorate General for International Cooperation and Development (DG DEVCO);  
  The Directorate General for Agriculture and Rural Development (DG AGRI);  
  The Directorate General for Maritime Affairs and Fisheries (DG MARE);  
  The Directorate General for Environment (DG ENV);  
  The Directorate General for Health and Food Safety (DG SANTE);  
  The Directorate General for Energy (DG ENER);  
  The Directorate General for Eurostat – European Statistics (DG ESTAT);  
  The Directorate General for Taxation and Customs Union (DG TAXUD);  
  The Directorate General for Legal Services (DG SJ);  
  The European Commission Secretariat General;  
  The European External Action Service (EEAS). 

The group first convened on 17 November 2016. The meeting focused on the context and the 
scope of the midterm evaluation, as well as more specifically on the methodology and data to 
be  employed.  Among  the  points  discussed  were  the  purpose  and  objective  of  the  midterm 
evaluation,  the  data  and  methodology  to  be  considered  in  the  study,  the  stakeholder 
consultation  activities  and  the  organisation  of  the  local  workshops  in  Bangladesh,  Ethiopia, 
Bolivia and Pakistan. 

A  second  meeting  of  the  ISSG  took  place  on  19  January  2017.  During  the  meeting,  the 
external  consultant  provided  a  detailed  update  on  the  GSP  midterm  evaluation  progress  to 
date. The ISSG and the external consultant furthermore discussed the Draft Inception Report 
and the necessary steps to be taken towards its finalisation. Additionally, the meeting served 
to  discuss  and  work  towards  overcoming  the  challenges  related  to  data  quality  and 
availability. 

The  third  meeting  of  the  group  took  place  on  13  June  2017.  At  the  time,  the  external 
consultant  provided  the  preliminary  findings  of  the  Draft  Interim  Report  and  identified  the 
steps to be taken towards its finalisation. An update was also provided on the consultation and 
research activities undertaken to date. The ISSG provided comments and suggestions on the 

42 

 
 
 
 
 
 
 
 
Draft Interim Report, which were incorporated in the Final Interim Report that was completed 
by the end of August 2017. 

43 

 
 
 
 
 
Annex II – Methods and analytical models used in preparing the evaluation 

This  section  provides  a  brief  overview  of  the  methodology  applied  by  the  external  consultant  for  the  economic,  social,  human  rights  and 
environmental  impact  analyses.  It  also  provides  a  synopsis  of  the  approach  taken  to  the  four  country  case  studies  and  the  two  sectoral  case 
studies. 

evaluation 
questions 

1.  (i) To what 
extent are 
the 
objectives of 
the current 
GSP on track 
to be 
achieved?   

Judgement criteria 

Required evidence and 
analysis/ possible indicators 

Sources of evidence/ 
methodological tools 

Coverage in Final Report   

Following the application of 
Regulation (EU) No 978/2012: 

The Project Team will 
analyse:  

i.  Have preferences been 
better focused on 
countries most in need?  

ii.  Have disincentives for 

diversification been 
removed for countries 
most in need?  
iii.  Has there been 

enhanced consistency 
with overall trade 
objectives, whether 
bilateral or 
multilateral?  
iv.  Has support been 
strengthened for 
sustainable 
development and good 
governance? 

i.  Revised eligibility 
criteria and  
ii.  Reduced number of 
beneficiaries;  
iii.  Reformed graduation 
and increased 
thresholds; 
Simplified GSP+ 
entry mechanism;  

iv. 

v.  A more effective and 

transparent 
mechanism for 
monitoring and 
evaluating the GSP+ 
countries’ 
commitment and 
progress in the 
implementation of 
GSP+ conventions;  

iii. 

iv. 

i.  Desk research 
ii.  Online Public 
Consultation  
Stakeholder 
interviews 
Stakeholder 
outreach 
workshops in 
Bangladesh, 
Ethiopia, Bolivia 
and Pakistan 
v.  Case studies for 

selected countries 
and sectors 
vi.  Analysis of tariff 

and trade data 
between the EU 
and GSP 
beneficiary 
countries (overall 
and by sector) 

i.  Chapter 2 – Economic 
Impact Analysis 

ii.  Chapter 3 – Social 

Impact Analysis  

iii.  Chapter 4 – 

Environmental Impact 
Analysis  
iv.  Chapter 5 - Case 

Studies on Textiles 
and Machinery 

v.  Chapter 6 – Case 
Studies on EBA  
countries  
vi.  Chapter 7 – Case 
Studies on GSP+ 
countries  

vii.  Chapter 8 – 

Conclusions and 
Recommendations 

44 

 
 
 
 
 
evaluation 
questions 

Judgement criteria 

Required evidence and 
analysis/ possible indicators 

Sources of evidence/ 
methodological tools 

Coverage in Final Report   

v.  Has the efficiency of 

safeguard mechanisms 
been improved to 
ensure that the EU’s 
financial and economic 
interests are protected? 
vi.  Has the legal certainty, 

stability and 
predictability of the 
scheme been 
enhanced?  

Following the application of 
Regulation (EU) No 978/2012:  

i.  What has been the 

economic impact of the 
present scheme on 
developing countries 
and Least Developed 
Countries?  

(ii) What has 
been the 
impact of the 
present 
scheme on 
developing 
countries 
and Least 
Developed 
Countries?  

vi. 

 Clarified temporary 
withdrawal provisions 
and procedures;  
Simplified and 
clarified safeguard 
mechanisms; and 
viii.  Redefined product 

vii. 

sections and increased 
product coverage.  

In order to determine the 
economic impact, the Project 
Team will:  

i.  Analyse detailed trade 
in goods and tariff 
data between the EU 
and the GSP 
beneficiary countries 
over the period 2011-
2016 (preparing 
indicators such as the 
utilisation rate, 
coverage rate and 
preference margins);  

ii.  Analyse the 

vii. 

Econometric 
analyses using 
data from 
EUROSTAT as 
primary sources, 
and 
UNCOMTRADE 
and the World 
Bank 
Development 
Indicators.  

iii. 

iv. 

i.  Desk research 
ii.  Online Public 
Consultation  
Stakeholder 
interviews 
Stakeholder 
outreach 
workshops in 
Bangladesh, 
Ethiopia, Bolivia 
and Pakistan 
v.  Case studies for 

selected countries 
and sectors 
vi.  Analysis of tariff 

and trade data 

i.  Chapter 2 – Economic 
Impact Analysis  
ii.  Chapter 5 – Case 

Studies on Textiles 
and Machinery  
iii.  Chapters 6.1.1 & 6.2.1 
– Case Studies on 
EBA  countries  
iv.  Chapter 7.1.1 & 7.2.1  
– Case Studies on 
GSP+ countries  

v.  Chapter 8 – 

Conclusions and 
Recommendations 

45 

 
 
 
 
 
 
 
evaluation 
questions 

Judgement criteria 

Required evidence and 
analysis/ possible indicators 

Sources of evidence/ 
methodological tools 

Coverage in Final Report   

vii. 

between the EU 
and GSP 
beneficiary 
countries (overall 
and by sector) 
Econometric 
analyses using 
data from 
EUROSTAT as 
primary sources, 
and 
UNCOMTRADE 
and the World 
Bank 
Development 
Indicators.  

importance of the EU 
market to GSP 
beneficiary countries; 
iii.  Analyse, as precisely 

as possible, the role 
of the GSP scheme 
itself on economic 
growth and 
development in 
beneficiary countries; 
iv.  Analyse the impact of 

the GSP on specific 
sectors in beneficiary 
countries (descriptive 
statistical analysis of 
sectoral trends and 
developments, 
including export 
diversification); and 
v.  Conduct econometric 
analyses to determine 
the impact of GSP 
reform on trade flows 
and export 
diversification. 

ii.  What has been the 
social and human 
rights impact of the 
present scheme on 

In order to determine the 
social and human rights 
impact, the Project Team will 

i.  Desk research 
ii.  Online Public 
Consultation  
Stakeholder 

iii. 

i.  Chapter 3– Social 
Impact Analysis  
ii.  Chapter 5 – Case 

Studies on Textiles 

46 

 
 
 
evaluation 
questions 

Judgement criteria 

Required evidence and 
analysis/ possible indicators 

Sources of evidence/ 
methodological tools 

Coverage in Final Report   

developing countries 
and Least Developed 
Countries?  

and Machinery 
iii.  Chapters 6.1.2 & 6.2.2 
– Case Studies on 
EBA  countries  
iv.  Chapter 7.1.2 & 7.2.2  
– Case Studies on 
GSP+ countries  

v.  Chapter 8 – 

Conclusions and 
Recommendations 

iv. 

interviews 
Stakeholder 
outreach 
workshops in 
Bangladesh, 
Ethiopia, Bolivia 
and Pakistan 
v.  Case studies for 

selected countries 
and sectors 
vi.  Analysis of social 
and human rights 
indicators using 
data from national 
statistical 
agencies, the 
International 
Labour 
Organization, 
World Bank, 
Freedom House, 
Transparency 
International, 
among others  

analyse the impact of the 
current GSP scheme on the 
following:  

i. 
ii. 

Employment rate; 
Female employment 
rate;  

iii.  Youth employment 

rate;  
iv.  Wage rate;  
v. 
Social protection rate;  
vi. 
Social inclusion rate;  
vii. 
Poverty rate;  
viii.  Civil liberties index;  
ix.  Gender equality rate;  
x.  Voice and 

xi. 

accountability Index;  
Political stability 
index;  
xii.  Government 

effectiveness index;  

xiii.  Regulatory quality 

index;  

xiv.  Rule of law index;  
xv.  Corruption 

perceptions index 
(CPI); and  

xvi.  Control of corruption 

index.  

47 

 
 
 
 
evaluation 
questions 

Judgement criteria 

Required evidence and 
analysis/ possible indicators 

Sources of evidence/ 
methodological tools 

Coverage in Final Report   

iii.  What has been the 

environmental impact 
of the present scheme 
on developing 
countries and Least 
Developed Countries?  

iii. 
iv. 

In order to determine the 
environmental impact, the 
Project Team will analyse the 
impact of the current GSP 
scheme on the following: 
i.  Waste generation;  
ii. 
Environmental 
sustainability rate;  
Forest area coverage; 
Land use and 
competition;  
Land tenure and 
ownership rights; 
Terrestrial and 
freshwater 
biodiversity;  
Proportion of fish 
stocks;  
viii.  Biodiversity;  

vii. 

vi. 

v. 

ix.  Climate change;  
x.  CO2 emissions;  
xi.  Biofuels; and  
xii.  Renewable energy. 

iii. 

iv. 

i.  Desk research 
ii.  Online Public 
Consultation  
Stakeholder 
interviews 
Stakeholder 
outreach 
workshops in 
Bangladesh, 
Ethiopia, Bolivia 
and Pakistan 
v.  Case studies for 

selected countries 
and sectors 
vi.  Analysis of 

environmental 
indicators using 
data from the 
IEA, World Bank, 
FAO, Global 
Resources 
Assessment, UN 
agencies, CBD 
and AQUASTAT, 
among others 

i.  Chapter 4– 

Environmental Impact 
Analysis  
ii.  Chapter 5 –Case 

Studies on Textiles 
and Machinery 
iii.  Chapters 6.1.3 & 6.2.3 
– Case Studies on 
EBA  countries  
iv.  Chapter 7.1.3 & 7.2.3  
– Case Studies on 
GSP+ countries  

v.  Chapter 8 – 

Conclusions and 
Recommendations 

2.  What are the 
factors 
(positive and 
negative) 

i.  What positive factors 

i. 

have contributed to the 
economic, social, 
human rights and/or 

Identification of the 
factors that have 
positively contributed 
to the impact deduced 

i.  Desk research 
ii.  Online Public 
Consultation  
Stakeholder 

iii. 

i.  Chapter 2 – Economic 
Impact Analysis 

ii.  Chapter 3 – Social 

Impact Analysis  

48 

 
 
 
 
evaluation 
questions 

influencing 
the 
achievement
s observed?  

3.  What 

unintended 
consequence
s, if any, can 
be linked to 
the design, 
implementati
on, or use of 
the current 
GSP? 

Judgement criteria 

Required evidence and 
analysis/ possible indicators 

Sources of evidence/ 
methodological tools 

Coverage in Final Report   

environmental impact 
of the present scheme 
on developing 
countries on 
developing countries 
and Least Developed 
Countries?  

ii.  What negative factors 
have contributed to the 
economic, social, 
human rights and/or 
environmental impact 
of the present scheme 
on developing 
countries on 
developing countries 
and Least Developed 
Countries?  

i.  What economic, social, 
human rights and/or 
environmental impacts 
have resulted from the 
design of the current 
GSP? 
-  Have there been 
any positive 
unintended 

from the economic, 
social, human rights 
and environmental 
analyses outlined 
above. 

Identification of the 
factors that have 
negatively 
contributed to the 
impact deduced from 
the economic, social, 
human rights and 
environmental 
analyses outlined 
above. 

Identification of the 
effects of the GSP 
reform on 
environmental 
protection, labour 
rights and human 
rights; 
Identification of 
stakeholder groups 
that have been 

ii. 

i. 

ii. 

iv. 

interviews 
Stakeholder 
outreach 
workshops in 
Bangladesh, 
Ethiopia, Bolivia 
and Pakistan 
v.  Case studies for 

vi. 

selected countries 
and sectors 
Economic, social, 
human rights and 
environmental 
analyses 
undertaken in 
fulfilment of 
evaluation 
Question (1) 
above 

iii. 

i.  Desk research 
ii.  Online Public 
Consultation  
Stakeholder 
interviews 
Stakeholder 
outreach 
workshops in 
Bangladesh, 
Ethiopia, Bolivia 

iv. 

iii.  Chapter 4 – 

Environmental Impact 
Analysis  
iv.  Chapter 5 - Case 

Studies on Textiles 
and Machinery 

v.  Chapter 6 – Case 
Studies on EBA  
countries  
vi.  Chapter 7 – Case 
Studies on GSP+ 
countries  

vii.  Chapter 8 – 

Conclusions and 
Recommendations 

i.  Chapter 2 – Economic 
Impact Analysis 

ii.  Chapter 3 – Social 

Impact Analysis  

iii.  Chapter 4 – 

Environmental Impact 
Analysis  
iv.  Chapter 5 - Case 

Studies on Textiles 
and Machinery 

49 

 
 
 
 
 
 
evaluation 
questions 

Judgement criteria 

Required evidence and 
analysis/ possible indicators 

Sources of evidence/ 
methodological tools 

Coverage in Final Report   

affected by the reform 
in an unintended 
manner; and 
Identification of 
positive/negative side 
effects of the reform 
in the beneficiary 
countries and the EU. 

v.  Chapter 6 – Case 
Studies on EBA  
countries  
vi.  Chapter 7 – Case 
Studies on GSP+ 
countries  

vii.  Chapter 8 – 

Conclusions and 
Recommendations 

and Pakistan 
v.  Case studies for 

vi. 

selected countries 
and sectors 
Economic, social, 
human rights and 
environmental 
analyses 
undertaken in 
fulfilment of 
evaluation 
Question (1) 
above. 

effects?  

-  Have there been 
any negative 
unintended 
effects?  

iii. 

ii.  What economic, social, 
human rights and/or 
environmental impacts 
have resulted from the 
implementation of the 
current GSP? 
-  Have there been 
any positive 
unintended 
effects? 

-  Have there been 
any negative 
unintended 
effects? 

iii.  What economic, social, 

human rights and/or 
environmental impacts 
have resulted from the 
use of the current 
GSP? 
-  Have there been 
any positive 

50 

 
 
 
 
 
evaluation 
questions 

Judgement criteria 

Required evidence and 
analysis/ possible indicators 

Sources of evidence/ 
methodological tools 

Coverage in Final Report   

unintended 
effects? 

-  Have there been 
any negative 
unintended 
effects? 

4.  To what 

extent is the 
current GSP 
efficient? 

i.  How does the current 
GSP scheme compare 
with the previous GSP 
scheme? 

ii. 

iii. 

Identification of the 
ratio between the 
costs and benefits of 
the current scheme 
compared with the 
previous scheme 
(evidenced by the 
results of the midterm 
evaluation of the 
EU’s GSP in 2010); 
and 
Identification of the 
ratio between the 
inputs and outputs of 
the current GSP 
reform (evidenced by 
the results of the 
midterm evaluation of 
the EU’s GSP in 
2010) 

iii. 

iv. 

i.  Desk research 
ii.  Online Public 
Consultation  
Stakeholder 
interviews 
Stakeholder 
outreach 
workshops in 
Bangladesh, 
Ethiopia, Bolivia 
and Pakistan 
v.  Case studies for 

vi. 

selected countries 
and sectors 
Economic, social, 
human rights and 
environmental 
analyses 
undertaken in 
fulfilment of 
evaluation 
Question (1) 
above. 

i.  Chapter 2 – Economic 
Impact Analysis 

ii.  Chapter 3 – Social 

Impact Analysis  

iii.  Chapter 4 – 

Environmental Impact 
Analysis  
iv.  Chapter 5 - Case 

Studies on Textiles 
and Machinery 

v.  Chapter 6 – Case 
Studies on EBA  
countries  
vi.  Chapter 7 – Case 
Studies on GSP+ 
countries  

vii.  Chapter 8 – 

Conclusions and 
Recommendations 

51 

 
 
 
evaluation 
questions 

Judgement criteria 

Required evidence and 
analysis/ possible indicators 

Sources of evidence/ 
methodological tools 

Coverage in Final Report   

The Project Team will 
analyse whether EU trade 
objectives have been 
enhanced or hindered as a 
result of reform of the GSP 
scheme. 

5.  To what 

i.  What synergies or 

extent is the 
current GSP 
coherent 
with the 
EU’s 
relevant 
policies?  

inconsistencies exist 
between the current 
GSP scheme and other 
EU trade policies?  
ii.  What synergies or 

inconsistencies exist 
between the current 
GSP scheme and EU 
development policies? 

iii.  What synergies or 

inconsistencies exist 
between the current 
GSP scheme and the 
EU foreign policy? 
iv.  What synergies or 

inconsistencies exist 
between the current 
GSP scheme and other 
EU policies? 

i.  Desk review, 

consisting mainly 
of review of EU’s 
trade and 
development 
policies 
ii.  Online Public 
Consultation  
Stakeholder 
interviews 
Stakeholder 
outreach 
workshops in 
Bangladesh, 
Ethiopia, Bolivia 
and Pakistan 

iii. 

iv. 

i.  Chapter 2 – Economic 
Impact Analysis 

ii.  Chapter 3 – Social 

Impact Analysis  

iii.  Chapter 4 – 

Environmental Impact 
Analysis  
iv.  Chapter 5 - Case 

Studies on Textiles and 
Machinery 
v.  Chapter 6 – Case 
Studies on EBA  
countries  
vi.  Chapter 7 – Case 
Studies on GSP+ 
countries  

vii.  Chapter 8 – 

Conclusions and 
Recommendations 

6.  To what 

i.  How does the current 

GSP scheme contribute 
to sustainable 
development and 
poverty eradication 
objectives? 

extent is the 
current GSP 
scheme 
relevant to 
the 
development 
needs which 
it is intended 

The Project Team will 
analyse whether specific 
reforms undertaken were the 
most appropriate to address 
the problems identified with 
the previous scheme. 

i. 

ii. 

iii. 

Desk review, 
consisting mainly 
of review of the 
old and new GSP 
Regulation 
Online Public 
Consultation  
Stakeholder 
interviews 

i.  Chapter 2 – Economic 
Impact Analysis 

ii.  Chapter 3 – Social 

Impact Analysis  

iii.  Chapter 4 – 

Environmental Impact 
Analysis  
iv.  Chapter 5 - Case 

Studies on Textiles and 

52 

 
 
 
 
 
evaluation 
questions 

to address? 

Judgement criteria 

Required evidence and 
analysis/ possible indicators 

Sources of evidence/ 
methodological tools 

Coverage in Final Report   

Machinery 
v.  Chapter 6 – Case 
Studies on EBA  
countries  
vi.  Chapter 7 – Case 
Studies on GSP+ 
countries  

vii.  Chapter 8 – 

Conclusions and 
Recommendations 

iv. 

v. 

Stakeholder 
outreach 
workshops in 
Bangladesh, 
Ethiopia, Bolivia 
and Pakistan 
Economic, social, 
human rights and 
environmental 
analyses 
undertaken in 
fulfilment of 
evaluation 
Question (1) 
above. 

53 

 
 
 
 
 
 
Economic impact analysis 

The  external  consultant  recognised  that  the  extent  to  which  the  GSP  could  have  positive 
economic  impacts  on  developing  countries  depends  on  multiple  factors,  including  the 
importance of the EU market in the country’s overall exports and level of preferential market 
access  utilization.  Additionally,  the  GSP’s  effectiveness  will  also  depend  on  other  factors 
including  the  domestic  institutional  environment  and  appropriate  domestic  policies  to 
stimulate  exports.  Taking  these  factors  into  account,  the  external  consultant  conducted  an 
analysis of the economic impacts of the different GSP arrangements on beneficiary countries 
using  the  most  up-to-date  and  detailed  economic,  trade  and  tariff  data  from  the  European 
Commission.  This  analysis  is  complemented  by  qualitative  analyses  in  the  form  of  case 
studies,  where  more  in-depth  quantitative  work  focuses  on  the  determinants  of  preference 
non-utilisation  as  well  as  decomposing  the  economic  and  welfare  effects  of  participation  in 
the GSP scheme. 

The empirical quantitative economic analysis consists of two main parts: (i) a diagnostic and 
descriptive analysis of data at the Combined Nomenclature 8-digit level from trade databases 
such as Eurostat, TARIC, UN ComTrade, and World Bank World Integrated Trade Solution 
(WITS); and an econometric analysis of trade data from 2011 to 2016, provided by the EC at 
a  Combined  Nomenclature  8-digit  level  disaggregation,  using  the  gravity  model  in  various 
specifications. 

The methodology used for the quantitative data analysis is threefold: 

i. 

Identification  of  policy  changes:  For  an  effective  quantitative  analysis  of  the  trade 
and  economic  impact  of  the  GSP,  it  is  essential  to  have  a  clear  overview  of  the 
changes to the GSP over the period under examination. In this respect, the following 
activities have been undertaken: 
a.  Identification of the beneficiary countries under each of the three arrangements for 

each year. 

b.  Identification  of  all  country-sector  combinations  that  graduated  from  the  scheme 
or  where  trade  preferences  were  reinstated.  The  product  sections  on  which 
graduation  is  calculated  changed  with  the  introduction  of  the  reformed  GSP  in 
2014. 

c.  Identification of the changes to GSP tariffs that were introduced with the reformed 

scheme. 

d.  Identification  of  changes  in  the  Rules  of  Origin,  as  applicable  during  the  period 

under review. 

ii.  Descriptive/diagnostic  analysis:  Descriptive  and  diagnostic  analyses  have  been 
conducted  which  examine  the  degree  of  coverage  and  preferential  access  under  the 
three  GSP  arrangements  (Standard  GSP,  GSP+,  and  EBA  regimes),  and  further  by 
sections.  The  extent  to  which  the  EU  imports  from  GSP  countries  compared  to  its 
other  trading  partners  has  also  been  assessed,  including  the  sectors  that  utilize 
preferences the most. Significant emphasis has been placed on the extent to which the 
preferences  align  with  the  structure  of  developing  country  exports.  This  involved 
looking at the share of each country’s exports covered by the regimes and comparing 
this to the shares of Most Favoured Nation tariff-zero trade. Additionally, there have 
been detailed analyses of differences in tariffs across regime types and the preference 

54 

 
 
 
 
 
 
 
 
margins  which  exist  across  sectors.  In  this  respect,  the  following  have  been 
extensively analysed:   

  Share  of  trade  by  tariff  category  (Most  Favoured  Nation,  GSP,  Regional  Trade 

Agreements (RTA)) 

  Utilisation rate: Preferential imports as a percentage of eligible imports 
  Preference margins 
  Export diversification: 

-  Number of 8-digit product lines exported 
-  Number  of  8-digit  product  lines  per  sector  (diversification  can  only  have 

occurred within a specific sector) 

-  Concentration indices by country and country-sector combinations. 

Further  analysis  of  the  impact  of  the  GSP  on  export  diversification  was  undertaken, 
including  calculations  of  the  Herfindahl  Index  to  determine  the  extent  of  such 
diversification in beneficiary countries at both the product and the sector levels. 

Econometric modelling:  Extensive regression  analysis  was used  to  measure the changes in 
exports to the EU and impact of the changes resulting from the 978/2012 Regulation, drawing 
on the so-called “gravity model”. Different specifications of the gravity model were used in 
the  following  ways:  (i)  to  assess  whether  the  removal  of  countries  eligible  for  GSP  and 
changes in the GSP regime itself have impacted EU imports from the GSP eligible countries; 
and (ii) to assess whether there have been associated impacts on the exports of those countries 
that  are  no  longer  eligible  for  the  GSP.  The  consultant  also  used  regression  analysis  in  the 
following ways: (i) to establish whether utilisation rates are related to preference margins; and 
(ii)  to  investigate  whether  there  is  any  evidence  of  any  changes  in  utilisation  rates  in  the 
period following the changes in the GSP Regulation. 

For effective econometric modelling, the trade data were cleaned and matched with tariff data 
by country and by product class at the Combined Nomenclature-8 digit level in order to allow 
for the analysis of the impact of the GSP reform to be as precise as possible. Trade data from 
three years before to three years after the scheme’s reform was analysed to obtain a ‘before’ 
and  ‘after’  comparison.  Any  analysis  over  a  longer  period  of  time  would  create  significant 
data distortions as a result of influences from different factors and changes in policy over the 
years.  The  comparative  approach  adopted  allows  an  accurate  assessment  of  the  impact  of 
Regulation  (EU)  No.  978/2012.  To  ensure  consistency  of  data,  EU  import  data  was  used 
instead of export data from the different beneficiary countries as EU import data records are 
more  reliable  and  accessible  for  all  the  beneficiary  countries  under  investigation.  This  has 
enhanced the overall consistency and comparability of the findings.  

The following primary sources of data have been utilised in the study: 

55 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Institution 
European 
Commission  

 Database 
Eurostat 

TARIC 

United Nations  UN Comtrade 

Title 
Trade data at Harmonized System-6 
level, including utilisation rate, for 
2011-2016 (Data for 2016 will be 
made available from March 2017).  
The integrated tariff of the European 
Communities is a database which 
integrates all measures relating to EU 
customs tariffs, commercial and 
agricultural legislation. 

UN Comtrade (United Nations 
International Trade Statistics 
Database) is a repository of official 
international trade statistics and 
relevant analytical tables.  

Year 
2011-
2016  

2011-
2016 
(updated 
to 
December 
2016) 
2011-
2015 

Social and human rights impact assessment 

The  GSP  is  one  of  the  main  instruments  that  the  EU  uses  to  link  social  and  human  rights 
issues  to  trade.  To  carry  out  the  social  analysis  section  of  the  evaluation,  the  external 
consultant examined the impact of the GSP on the following elements pertaining to social and 
human rights impacts:  

  Employment; 
  Decent  Work  Agenda  (job  creation,  labour  standards,  social  protection  and  social 

dialogue); 

  Working conditions; 
  Wage levels and their changes over time 
  Poverty reduction; 
  Gender equality;  
  Human rights; and 
  Good governance. 

Indicator 

Unemployment 

Female 
employment 

Youth 
unemployment 

Wages 

Description 

Employment-to-population ratio to measure the 
proportion of the country’s working age population 
that is employed. 
Share of women in wage employment 

Source 
World Bank; 
National 
statistics 
World Bank; 
National 
statistics 
World Bank; 
National 
statistics 
Average real wages; and average real wage growth.  National 
statistics 

The unemployment rate for the age group 15 to 24 
years.  

56 

 
 
 
 
 
 
 
Indicator 

Description 

Social Protection 
Rating 

Social Inclusion 
Rating 

Poverty rate 

Civil Liberties 
Index 

Political Rights 
Index 

Gender Equality 
Rating 

Voice and 
Accountability 
Index 

Political Stability 
Index 

Government 
Effectiveness 
Index 

Regulatory 
Quality Index 

Rule of Law 
Index 

Assessment of government policies in social 
protection and labour market regulation that reduce 
the risk of becoming poor, assist those who are poor 
to better manage further risks and ensure a minimum 
level of welfare to all people 
Assessment of policies for social inclusion and 
equity cluster, including gender equality, equity of 
public resource use, building human resources, 
social protection and labour and policies and 
institutions for environmental sustainability 
Proportion of the population below the international 
poverty line of $ 1.90 per day 
Assessment of civil liberties in a country covering 
indicators on freedom of expression and belief; 
associational and organisational rights; rule of law; 
and personal autonomy and individual rights 
Assessment of political rights in a country covering 
indicators on electoral processes, political pluralism 
and participation and functioning of Government. 
Assessment of the extent to which a country has 
installed institutions and programs to enforce laws 
and policies that promote equal access for men and 
women in education, health, the economy and 
protection under law 
Assessment of citizens’ ability to select their 
government, freedom of expression, freedom of 
association and a free media covering indicators on 
human rights, press freedom, electoral process, 
freedom of association and assembly etc. 
Assessment of the likelihood of political instability 
and politically motivated violence, including 
terrorism covering indicators on armed conflict, 
social unrest, violent demonstrations, government 
stability etc. 
Assessment of the quality of public services, civil 
service, policy formulation and implementation, and 
the government’s commitment to its policies 
covering indicators on bureaucracy, quality of 
education, citizen satisfaction etc. 
Assessment of the government’s ability to formulate 
and implement policy and regulations that permit 
and promote private sector development covering 
indicators on discriminatory tariffs and taxes, price 
controls, investment freedom, burden of government 
regulations etc. 
Assessment of agents’ confidence in and abide by 
the rules of society and likelihood of crime and 

Source 
Country Policy 
and Institutional 
Assessment 
(CPIA) World 
Bank 
CPIA World 
Bank 

World Bank 

Freedom House 

Freedom House 

CPIA World 
Bank; available 
up until 2015 

World Bank 

World Bank 

World Bank; 
available up 
until 2015 

World Bank 

World Bank 

57 

 
 
Indicator 

Description 

Source 

Corruption 
Perceptions 
Index (CPI) 

Control of 
Corruption Index 

violence covering indicators on crime, property 
rights, confidence in the police force and judicial 
system, the informal sector etc. 
Assessment of the perceived level of public sector 
corruption in a country on a scale of 0 (highly 
corrupt) to 100 (very clean). 

Assessment of the extent to which public power is 
exercised for private gain and involvement in the 
state by elites and private interests covering 
indicators on corruption, irregular payments, public 
trust etc. 

Transparency 
International; 
available up 
until 2015 
World Bank; 
available up 
until 2015 

The reformed GSP has only been in force for three years, and as a result external consultant 
found  that  the  number  of  readily  available  and  up-to-date  social  and  human  rights  impact 
indicators  is  limited.  Developing  countries  often  lack  the  resources  for  comprehensive 
collection and analysis of data on social and human rights indicators. Furthermore, many of 
the  indicators  have  not  changed  substantially  over  the  course  of  three  years.  This  can  be 
explained  by  the  fact  that  progress  on  social  and  human  rights  indicators  is  slow  because it 
takes significant time to create awareness and realise societal change. 

In  order  to  offset  these  limitations  and  to  reveal  what  is  happening  on  the  ground  in  the 
beneficiary countries, the case studies provide a more in-depth analysis of social impacts. The 
case  studies  rely  heavily  on  literature  review  to  account  for  the  impact  not  covered  by  the 
abovementioned  social  and  human  rights  indicators,  national  statistics  and  reports,  and 
monitoring  reports  by  international  monitoring  bodies,  such  as  the  International  Labour 
Organization.  Additionally,  the  analysis  in  the  case  studies  is  based  on  a  wide  array  of 
stakeholder  consultations  and  concrete  developments,  such  as  improved  cooperation  with 
international  organisations  and  monitoring  bodies,  submission  of  missing  reports  and 
assessments, and the formulation of action plans. 

Environmental impact assessment 

One of the general objectives of the GSP is to promote sustainable development in beneficiary 
countries.  To  carry  out  the  environmental  analysis  section  of  the  evaluation,  the  external 
evaluation conducted extensive research on the pre-determined indicators and with substantial 
input  from  stakeholder  engagement  activities,  identify  the  most  significant  environmental 
issues  that  emanate  from  participation  in  the  GSP.  Additionally,  the  country-specific  case 
studies  provide  a  more  in-depth  overview  of  the  impact  of  the  scheme  on  the  environment. 
The external consultant examined a wide range of environmental impacts, which include: 

  Air and water purity/pollution; 
  Waste; 
  Natural resources, including forests, wildlife and fisheries; 
  Biodiversity; 
  Climate change. 

A range of environmental indicators were used in the evaluation, as set out in the table below. 

58 

 
 
 
 
 
 
 
 
 
Indicator 

Waste 
generation 
Environmental 
Sustainability 
Rating 
Forest Area 
Coverage 

Description 
Municipal waste per capita, municipal waste recovery 
rates 
Assessment of the extent to which environmental 
policies foster the protection and sustainable use of 
natural resources and management of pollution 
Forest area as a percentage of land area, tree cover 
loss/gain, tree cover %, deforestation/reforestation 
rates, LULUCF-related CO2 emissions, carbon stocks 

Land use and 
competition 

Land tenure and 
ownership rights 

Increased competition for land resources (and 
potential resource scarcity) between staple crops, 
commodity crops and livestock; leading to either 
intensification of crop/livestock production (where 
inputs are available) or agricultural expansion for 
increased cropland and grassland (leading to 
deforestation, soil erosion, loss of biodiversity and 
various others) 
Private ownership of land and further investments in 
land improvements (i.e. increased economic returns 
per unit of land) 

Terrestrial and 
freshwater 
biodiversity 

UN SDG indicator on the proportion of important sites 
for terrestrial and freshwater biodiversity that are 
covered by protected areas 

Proportion of 
fish stocks 
Biodiversity 

UN SDG indicator on the proportion of fish stocks 
within biologically sustainable levels 
Proportion of terrestrial and marine areas protected, 
number of threatened species 

Climate change  Climatology indexes including precipitation, humidity, 

temperature, weather extremes, GHG emissions and 
concentrations, etc. 

Source 

IEA Country 
Profiles 
CPIA World 
Bank; available 
up until 2015 
World Bank; 
available up 
until 2015; 
FAO Global 
Resources 
Assessment; 
Global Forest 
Watch 
FAOSTAT; 
available up 
until 
2014/2015; 
FAO Global 
Resources 
Assessment 

FAOSTAT: 
available up 
until 
2014/2015; 
FAO Global 
Resources 
Assessment 
UN; 
FAOSTAT: 
available up 
until 
2014/2015; 
AQUASTAT 
UN 

CBD, GBIF 
and InforMEA 
Country 
Profiles 
UNDP Climate 
Change 
country 
profiles; WHO 
Climate 
Change and 

59 

 
 
 
Indicator 

Description 

CO2 emissions 

UN MDG indicator on total CO2 emissions and per 
capita emissions 

Biofuels  

Use of biofuels 

Renewable 
energy 

UN SDG indicator on the renewable energy share in 
the total final energy consumption 

ND-GAIN index  Navigation tool that helps manage risks exacerbated 

by climate change such as over-crowding, food 
insecurity, inadequate infrastructure and civil 
conflicts,  Notre Dame - Global Adaptation Index 

Source 
Human Health 
Country 
Profiles 
UN; IEA 
Country 
Profiles 
IEA Country 
Profiles 
UN; IEA 
Country 
Profiles 
WDI, 
FAOSTAT, 
WRI, 
AQUASTAT, 
WSDI, WHO, 
etc.  

The reformed GSP has only been in force for three years, and as a result the Project Team has 
found that the number of readily available and up-to-date environmental impact indicators is 
limited. It takes substantial time and resources for agencies to collect data on environmental 
indicators. Often these resources are lacking in developing countries, resulting in out-dated or 
incomplete data. Furthermore, many of the indicators have not changed substantially over the 
course  of  three  years.  This  can  be  explained  by  the  fact  that  progress  on  environmental 
indicators is slow because it takes significant time to create awareness and realise substantial 
change. 

In order to account for these limitations and to reveal what is happening on the ground in the 
beneficiary countries, the case studies provide a more in-depth analysis of the environmental 
impact.  The  case  studies  rely  heavily  on  literature  review  to  account  for  the  impact  not 
covered by the abovementioned environmental indicators, national statistics and reports, and 
monitoring  reports  by  international  monitoring  bodies,  such  as  the  UN.  Additionally,  the 
analysis in the case studies is based on a wide array of stakeholder consultations and concrete 
developments in the countries. 

Case studies 

The  midterm  evaluation  includes  six  case  studies  to  conduct  a  systematic  analysis  of  the 
economic, social, environmental, and human rights impact of the GSP on key countries and 
sectors. The case studies can be divided into the following three categories: 

i.  Case  studies  on  the  textiles  and  machinery  sectors  -  The  Project  Team  has 
conducted  two  case  studies  to  analyse  the  impact  of  the  GSP  on  producers  and 
industries  in  the  EU  and  in  the  beneficiary  countries.  The  textile  sector  has  been 
selected because the sector benefits the most under the scheme. The machinery sector 
has  been  selected  due  to  concerns  about  intensifying  competition  for  EU  industry in 
this sector as a result of the trade preferences. 

60 

 
 
 
 
 
 
 
 
ii.  Case studies on the GSP+ arrangement in Pakistan and Bolivia - Two case studies 
were  carried  out  to  analyse  the  economic,  social,  environmental  and  human  rights 
impact of the GSP+ arrangement. Pakistan has been selected because it is the biggest 
beneficiary under the GSP+. Bolivia has been selected for a case study to extend the 
focus of the study to South America. 

iii.  Case  studies  on  the  EBA  arrangement  in  Ethiopia  and  Bangladesh  -  Two  case 
studies  were  carried  out  to  analyse  the  economic,  social,  environmental  and  human 
rights impact of the EBA arrangement. Bangladesh has been selected for a case study 
because  it  is  the  biggest  beneficiary  under  the  EBA  arrangement.  Ethiopia  has  been 
selected  because  its  economy  is  relatively  diversified  and  to  extend  the  focus  of  the 
study to Africa. 

The case studies extensively draw on quantitative data analysis, complemented by qualitative 
literature review and in-depth stakeholder consultation. The quantitative analysis is based on 
local, regional and relevant international sources presenting the development of key indicators 
over  the  past  years.  Additionally,  qualitative  analysis  and  the  Online  Public  Consultation, 
interviews  and  workshops  are  used  to  gather  invaluable  information  and  insights  from 
stakeholders concerning the countries and sectors covered in the case studies. 

The case studies incorporate analysis of locally produced data sources, comparing wherever 
possible with corresponding figures from the EU or international organisations. Transparency 
and  reliability  of  domestic  institutions  are  a  consistent  theme  across  case  studies  in  this 
regard, as improvement of domestic institutional capacity is closely aligned with the primary 
objectives of the EU’s external sustainable development platform. 

The  analytical  approach  to  the  case  studies  takes  into  account  country  and  sector-specific 
conditions,  and  it  addresses  common  research  questions  using  state-of-the-art  available 
indicators and methodologies. Consistency across the case studies allows for the constitution 
of a final qualitative dataset from which systemic conclusions can be drawn. 

The case studies  follow a  similar outline to ensure comparability between  the countries and 
sectors. The analysis focuses on the GSP’s economic, social, environmental and human rights 
impacts. Each  case study further contains sections detailing any unanticipated effects of the 
GSP encountered during the course of research, and also characterises and disaggregates the 
reference  country’s  trade  profile  with  the  EU  from  the  rest  of  the  GSP  cohort.  Finally,  the 
case  studies  will  systematically  include  policy  recommendations  specific  to  bilateral  trade 
between the reference country and the EU, as  well as  preliminary  identification of thematic 
recommendations applicable to comparable GSP beneficiaries. 

61 

 
 
 
 
 
 
 
 
 
 
Case study 

Analytical questions 

Impact of the 
GSP on the 
textile sector and 
machinery 

-  What  is  the  impact  of  the  GSP  arrangements  on  producers  and 

industries in beneficiary countries? 

-  What  is  the  impact  of  the  GSP  arrangements  on  EU  producers 
and  industries  using  or  competing  with  goods  imported  under 
GSP preferences? 

-  What  is  the  impact  of  the  GSP  preferences  on  the  global 
competitiveness  of  beneficiary  countries’  industries  and  EU 
industry? 

-  What is the impact of the GSP arrangements on the development 

of global value chains? 

-  What  is  the  impact  of  the  reduction  in  the  number  of  GSP 

beneficiary countries under Regulation (EU) 978/2012? 

o  Have competitive pressures been reduced for EU producers 
and  industries  previously  competing  with  producers  and 
industries in excluded countries? 

o  Have competitive pressures been reduced for producers and 

industries in beneficiary countries? 

-  What 

is 

the 

impact  on  production  costs  and  overall 
competitiveness for EU producers that rely on imports under GSP 
preferences? 

Impact of the 
GSP+ in 
Pakistan and 
Bolivia 

Impact of the 
EBA in Ethiopia 
and Bangladesh 

-  What is the impact on costs for EU consumers? 

-  What are the economic, social, environmental, human rights and 

good governance impacts of the GSP+? 

-  What is the impact of the GSP+ on the implementation of GSP+ 
relevant international conventions since the country’s adhesion to 
GSP+? 

o  What  is  the  level  of  political  will  in  the  country  to 
implement and adhere to these international conventions? 

-  What is the role of the GSP+ and its monitoring framework in the 

positive and/or negative changes that occurred? 

-  What is the level of awareness among key stakeholders of GSP+ 

requirements? 

-  Are there any unintended consequences of GSP+? 

-  What  are  the  economic,  social,  environmental  and  human  rights 

impacts of EBA? 

-  What is the impact of EBA on economic development? 
-  What is the impact of EBA on poverty reduction? 
-  What is the impact of EBA on the distribution of gains? 
-  Are there any unintended consequences of EBA? 

62 

 
 
 
 
 
 
 
 
Annex III – Synopsis report of stakeholder consultations 

1. 

Stakeholder consultation strategy 

The objective of the stakeholder consultation process was two-fold: (i) to collect information, 
ideas,  opinions  and  insights  from  a  wide  range  of  stakeholders  to  complement  the  data 
analysis and literature review; and (ii) to raise awareness of the EU’s Generalised System of 
Preferences (GSP) among relevant stakeholders. 
The focus of the stakeholder consultation process was to assess whether the objectives set by 
the  GSP  Regulation  are  on  track  to  be  achieved  and  to  assess  the  scheme’s  effectiveness, 
efficiency,  coherence  and  relevance.  A  particular  focus  was  placed  on  the  countries  and 
sectors covered in the case studies: Bangladesh, Ethiopia, Bolivia and Pakistan, as well as the 
textile and machinery sectors. 
A  range  of  consultation  activities  and  tools  was  employed  to  ensure  a  comprehensive  and 
well-balanced  consultation  process.  The  activities  and  tools  included  a  dedicated  project 
website and electronic outreach tools, a 12-week Online Public Consultation, interviews and 
meetings  with  relevant  stakeholders,  Civil  Society  Dialogues  (CSDs)  in  Brussels,  local 
workshops  in  Bangladesh,  Ethiopia, Bolivia and Pakistan and  an  ongoing  dialogue with  the 
European Commission Inter-Service Steering Group (ISSG). 

Figure 1: Overview of the stakeholder consultation activities and tools 

2. 

Stakeholder outreach and engagement tools 

Website: The dedicated GSP evaluation website www.GSPevaluation.com served as the main 
platform  for  conducting  online  consultation  as  well  as  for  regularly  and  pro-actively 
informing  stakeholders  on  the  midterm  evaluation.  The  Website  included  the  following 
features: 

  Publication of all relevant information concerning the evaluation’s progress through 
uploading  of  reports  (both  draft  and  final  versions),  minutes  of  Civil  Society 

63 

 
 
 
 
 
 
 
 
 
 
 
 
Dialogues and the local workshops, relevant background information, newsletters and 
stakeholder input (permission based); 
Information on the Online Public Consultation with a link to the EU Survey website; 

 
  Detailed information on the local workshops and Civil Society Dialogues; and 
  Data  collection  tools  built  on  the  website’s  back-end  to  easily  collect  and  collate 

information on website usage (‘hits’). 

Social media: The external consultant utilised Twitter and LinkedIn to raise awareness of the 
EU’s GSP and to inform stakeholders on the progress undertaken in the evaluation process. 
Twitter  formed  an  integral  part  of  the  evaluation’s  visibility  strategy.  The  consultant 
frequently posted updates on the evaluation process, upcoming workshops, links to the project 
outputs  and  other  sections  of  the  project  website,  as  well  as  other  sources  of  useful  and 
relevant  information.  At  the  time  of  writing,  37  tweets  were  made,  and  the  GSP  evaluation 
account has 35 followers. 

Additionally, LinkedIn was used by the consultant to maintain contact with the stakeholders 
and  to  promote  relevant  materials  such  as  reports,  meetings  and  information  on  the  local 
workshops  and  links  to  relevant  sections  on  the  project  website.  Through  LinkedIn,  the 
consultant  aimed  to  create  an  ongoing  dialogue  by  encouraging  stakeholders  to  ask  and 
answer project related questions, as well as to participate in the Online Public Consultation. 

Electronic  newsletter:  An  electronic  newsletter  was  designed  to  inform  stakeholders  about 
the project milestones. The newsletter included a summary of the ongoing evaluation process 
and  the  consultation  activities.  The  newsletter  was  distributed  both  via  email  within  the 
network  and  was  also  publicly  available  on  the  project  website.  The  newsletter  was  further 
promoted via the social media channels. 

email 

email 
address 
Dedicated 
comments@GSPevaluation.com, 
from  numerous 
stakeholders seeking to provide their input in the evaluation process or to obtain information 
about the project and the stakeholder consultation activities. 

the 
received  messages 

Through 
the  consultant 

dedicated 

address: 

3. 

Results of the Electronic Stakeholder Outreach and Engagement 

The Public Consultation ran for 12 weeks from 17 March until 9 June 2017. It was featured 
on  the  project’s  website,  the  'Have  Your  Say'  platform  and  the  DG  Trade  website  and  was 
shared via the project’s social media channels. 

The  purpose  of  the  Online  Public  Consultation  was  to  assess  the  economic,  social,  human 
rights, and environmental impacts of the EU’s GSP on its beneficiary countries. Some of the 
specific  issues  that  were  investigated  were  the  effectiveness  and  efficiency  of  the  GSP;  the 
relevance of the scheme with respect to the needs of developing countries, in particular Least 
Developed  Countries;  and  the  coherence  of  the  scheme  in  relation  to  other  EU  trade  and 
development policies. 

In  total,  there  were  961  responses,  with  the  vast  majority  of  respondents  emanating  from 
Europe.  There  was  a  high  sectoral  and  geographical  concentration  where  the  majority  of 
respondents  were  business  stakeholders  (86  per  cent)  and  came  mainly  from  Italy  (96  per 
cent). Furthermore, the majority of European respondents were Italian stakeholders associated 

64 

 
 
 
 
 
 
 
 
 
 
 
with the rice sector. There was a rather low response rate from the textile and clothing sector 
as well as the machinery sector. 

Stakeholders from the Italian rice industry provided clear feedback on the functioning of the 
GSP safeguard mechanism. As the safeguard mechanism does not apply to EBA beneficiaries, 
imports  from  Cambodia  and  Myanmar/Burma  are  disrupting  the  European  rice  sector.  The 
stakeholders  requested  improvement  of  the  efficiency  of  the  mechanism  to  ensure  that  the 
EU’s  financial  and  economic  interests  are  protected.  Stakeholders  did  not  provide  any 
feedback on the functioning of the GSP mechanism in any other aspects. 

Amongst  the  other  stakeholders  the  feedback  was  heterogeneous,  depending  on  the  type  of 
stakeholder  and  their  geographical  location.  Overall,  the  main  findings  indicate  that  the 
majority  (41  per  cent)  feels  that  the  GSP  Regulation  only  partially  achieves  its  general 
objectives, whereas the minority (20 per cent) considers it to not meet its objectives. Positive 
feedback was also received regarding the specific objectives, especially the focus on countries 
most in need: it allows beneficiaries to strengthen their competitiveness and economic growth 
and provides incentives through GSP+ to promote human rights, sustainable development and 
good governance. Concerns were expressed regarding the scheme’s safeguard mechanism and 
the level of compliance of GSP+ beneficiaries with international conventions. 

Respondents  found  it  difficult  to  assess  the  impact  of  the  scheme  on  the  economic,  human 
rights, social and environmental conditions in the beneficiary countries and provided limited 
explanations.  While  the  majority  of  the  feedback  on  the  economic,  human  rights  and  social 
conditions  was  positive,  the  findings  also  highlighted  shortcomings  such  as  potential  land 
grabbing. A stakeholder expressed its concern about the implementation of the UN and ILO 
conventions, as the focus seems to be on the ratification. For example in the case of Pakistan, 
shortcomings  have  been  identified  by  both  the  UN  and  NGOs,  yet  it  remains  a  GSP+ 
beneficiary. 

Business stakeholders highlighted the importance of the GSP as it enhances competitiveness, 
creates opportunities for sourcing and production in beneficiary countries and generates more 
efficient global supply chains. However, due to strict Rules of Origin and sectorial graduation, 
not all companies can take advantage of the tariff reductions. 

4 

Interviews and meetings 

The main objective of the interviews and meetings was to facilitate detailed discussions with 
stakeholders on the various impacts of the GSP. Over 450 key stakeholders were invited for 
interviews  to  share  their  views  and  opinions  on  the  impact  and  application  of  the  GSP 
Regulation.  Overall,  26  interviews  and  7  meetings  were  conducted  with  stakeholders  in  the 
EU  as  well  as  in  the  case  study  countries.  Additionally,  the  consultant  received  stakeholder 
contributions which are available online.35 
The  consultant  conducted  interviews  with  a  range  of  different  stakeholders,  including 
business and sectoral associations, trade unions and non-governmental organisations working 
on labour rights, environmental protection and human rights issues. 

35 The stakeholder contributions are available here: www.gspevaluation.com/resources  

65 

 
 
 
 
 
 
 
 
 
 
                                                            
The consultant has additionally conducted stakeholder meetings with key stakeholders in the 
EU,  Bangladesh,  Ethiopia,  Bolivia  and  Pakistan  ahead  of  the  local  workshops.  These 
meetings  were  organised  to  ensure  that  stakeholders  did  not  feel  impeded  by  government 
presence at the workshops and to allow them to speak freely about the impact of the GSP in 
the country. In this context, the consultant met with trade unions and business organisations. 

Stakeholder input obtained through the interviews and meetings varies depending on the type 
of stakeholder and geographical location. It is furthermore based on the interests represented 
by the stakeholder. 

Stakeholders  in  the  EU  expressed  different  opinions  on  the  impact  of  the  GSP  in  the 
beneficiary  countries.  While  some  argued  it  has  had  a  negative  impact  on  human  rights, 
labour standards and the environment, others argue that the impact has been limited but has 
encouraged discussion with and within the beneficiaries. Other stakeholders highlighted that 
no  general  statement  can  be  made  as  the  impact  differs  per  beneficiary  and  depends  on  a 
number of factors including the awareness of the scheme and the economic relation with the 
EU. 

Stakeholders  also  touched  upon  the  coherence  of  the  Regulation  with  broader  EU  trade 
objectives. While some argued that the Regulation is in line with this, others argued that it is 
not sufficiently supporting export diversification or responding to the commitment to promote 
human rights and environmental protection. The European rice industry emphasised that the 
safeguard mechanism does not protect the interest of EU producers. 

Another  argument  made  by  stakeholders  is  the  need  for  more  robust  monitoring  of  GSP+ 
beneficiaries.  The  monitoring  process  should  be  more  transparent  and  effective,  integrating 
social partners and civil society organisations in the process. Furthermore monitoring should 
occur on a more frequent basis. 

Stakeholder  contributions  made  by  the  Federation  of  European  Rice  Millers  (FERM), 
Federation of the European Sporting Goods Industry (FESI), as well as, a joint contribution 
by  FIDH,  Cambodian  Human 
(ADHOC), 
LigueCambodgienne  de  défense  des  droits  de 
l’homme  (LICADHO),  ODHIKAR, 
ALTSEAN-Burma,  Philippine  Alliance  of  Human  Rights  Advocates  (PRAHA)  and  the 
Human  Rights  Commission  of  Pakistan  (HRCP)  can  be  found  on  the  dedicated  website. 
Interviews and meetings with stakeholders regarding the country-specific and sector-specific 
case studies provided further insight on the impact of the GSP Regulation. 

rights  and  development  association 

Stakeholders  in  Bangladesh  acknowledged  the  importance  of  the  EU  market  for  exports, 
especially  in  the  textile  industry.  Without  the  EBA,  Bangladesh  would  not  have  been  as 
competitive  due  to  their  unstable  labour  relations  and  infrastructure.    Some  stakeholders 
argued  that  the  EBA  has  led  to  increased  income  and  poverty  reduction.  Furthermore,  it 
pressures the government to improve human rights and labour rights, employment and women 
empowerment. Other stakeholders noted that the distribution of gains is unclear and then lack 
of negotiating power for employees due to the high offer of labour. They highlighted pollution 
caused by increased production and the environmental impact of the shrimp industry. 

Stakeholders in Ethiopia considered the EU market as difficult to access due to high standards 
and  Rules  of  Origin.  However,  producers  are  also  encouraged  to  improve  in  order  to  meet 
these  standards.  While  it  was  acknowledged  that  the  scheme  could  benefit  Ethiopia,  it  was 

66 

 
 
 
 
 
 
 
 
 
questioned whether it benefits everyone in society. The increase in floriculture exports creates 
employment  and  income,  but  employees  are  underpaid  and  cannot  support  their  family. 
Furthermore, the floriculture and leather industries generate pollution. 

Stakeholders  in  Pakistan  considered  the  GSP+  beneficial  for  Pakistan’s  economy  as  it 
increases  exports  and  economic  growth.  Furthermore,  the  scheme  supports  employment, 
including female employment, poverty alleviations and improvement of standards. However, 
the  scheme  is  mainly  relevant  for  the  manufacturing  sector  and  does  not  promote  export 
diversification. Maximising production to boost exports has led to environmental degradation, 
and  improvements  have  to  be  made  on  social  and  human  rights.  Lastly,  there  is  a  lack  of 
understanding of the scheme and producers face technical barriers in exporting to the EU. 

Stakeholders in Bolivia mainly commented on the limited awareness of the GSP+ and limited 
importance  of  the  EU  market.  There  are  only  a  few  medium-sized  and  large  companies  in 
Bolivia that could access the EU market. Smaller companies face restrictions due to the legal 
and  SPS  requirements.  Due  to  the  limited  relevance  of  the  scheme,  stakeholders  find  it 
difficult to assess the impact of the scheme. They furthermore highlighted the importance of 
political will and national programmes aimed at sustainable development. 

Stakeholders  from  the  textile  industry  had  differing  standpoints  on  the  impact  of  the  GSP. 
One  stakeholder  acknowledged  the  crucial  economic  role  of  the  scheme  for  businesses  that 
import fabrics and finished products from the beneficiary countries. In this sense it contributes 
to  the  competitiveness  of  products  and  impacts  economic  development  and  employment. 
Another  stakeholder  faced  competition  from  GSP  beneficiaries  and  explained  that  the 
safeguard mechanism is too difficult to trigger. Another stakeholder noted that rather than the 
scheme,  brands  are  the  drivers  when  it  comes  to  positively  influencing  labour  rights  and 
environmental protection. 

5 

Civil Society Dialogue (CSD) 

The 1st CSD in Brussels was organised by DG Trade on 19 January 2017. The CSD involved 
participants  from  registered  civil  society  organisations  and  representatives  from  the 
Commission and the external consultant. The external consultant presented its approach to the 
midterm  evaluation  and  the  stakeholder  consultation  activities.  EU  stakeholders  were  then 
given  the  opportunity  to  refer  their  questions  regarding  the  midterm  evaluation  towards  the 
Commission  and  the  external  consultant  and  to  provide  feedback  on  the  Draft  Inception 
Report.36 

36  The  minutes  of  the  Civil  Society  Dialogue  are  available  here:  http://www.gspevaluation.com/wp-
content/uploads/2016/12/Minutes-Midterm-evaluation-GSP-Civil-Society-Dialogue-19-01-2017.pdf 

67 

 
 
 
 
 
 
 
 
 
 
                                                            
Figure 2: Twitter update from the first Civil Society Dialogue 

The  2nd  CSD  in  Brussels  was  organised  on  25  September  2017.  The  external  consultant 
presented  its  progress  and  preliminary  findings  from  the  Final  Interim  Report.  EU 
stakeholders  were  then  given  the  opportunity  to  refer  their  questions  regarding  the  midterm 
evaluation towards the Commission and the consultant and to provide feedback on the Final 
Interim Report. The second CSD was the final contact between the external consultant and the 
stakeholders, thus providing them a last chance to participate in the stakeholder engagement 
and consultation.37 

During  the  CSDs,  the  stakeholders  mainly  commented  on  the  approach  to  the  midterm 
evaluation  and  sought  to  clarify  findings  of  the  study  with  the  external  consultant  and  the 
European  Commission.  Compared  to  the  other  consultation  activities,  the  stakeholder  input 
focused  predominantly  on  the  functioning  of  the  GSP  Regulation  for  European  producers, 
importers, retailers and distributors rather than on the Regulation’s impact on the beneficiary 
countries. 

Whereas  stakeholders  were  generally  positive  about  the  Regulation,  they  highlighted  the 
administrative  costs  related  to  the  application  of  trade  preferences  which  may  outweigh  the 
benefits of obtaining them, especially for SMEs. Others addressed the Regulation’s safeguard 
mechanism and emphasised the need to protect the European producers. 

Stakeholder  input  was  also  provided  regarding  the  textile  and  clothing  sector,  in  particular 
regarding  the  Rules  of  Origin  requirements.  As  textile  production  gets  increasingly  more 

The 

37 
http://trade.ec.europa.eu/doclib/docs/2017/october/tradoc_156185.pdf 

minutes 

Society 

Civil 

the 

of 

Dialogue 

are 

available 

here: 

68 

 
 
 
 
 
 
 
 
 
 
                                                            
technical,  textile  exporters  from  GSP  countries  are  finding  it  difficult  to  comply  with  the 
double  transformation  requirement,  compared  to  EBA  countries  that  have  to  comply  with 
single transformation requirement. 

6 

Local workshops in Bangladesh, Ethiopia, Bolivia and Pakistan 

The consultant organised four local workshops in the case study countries between February 
and  May  2017.  The  local  workshops  brought  together  key  stakeholders  from  government 
administrations,  businesses,  social  partners, 
international  organisations,  civil  society 
organisations  and  research  institutes.  Local  experts  and  government  representatives  were 
invited  to  comment  specifically  on  the  trade,  economic,  social,  human  rights,  and 
environmental impacts of the GSP arrangement. 

Input received during the local workshops was less heterogeneous and critical of the GSP than 
input received during interviews and meetings. This could be explained by the presence of the 
European Commission and the national Ministries. 

Bangladesh 

The  local  workshop  on  the  EU’s  EBA  in  Bangladesh  was  held  at  the  Le  Meridien  Hotel, 
Dhaka  on  7  February  2017.  The  workshop  brought  together  around  70  stakeholders  from 
government, industry and civil society. 

Speakers  and  participants  pointed  towards  the  overall  positive  impact  of  the  EBA  in 
Bangladesh,  and  the  majority  of  the  gains  that  have  been  made  in  the  RMG  industry.  The 
EBA  has  allowed  Bangladesh  to  be competitive  in  the textile  industry, which  has  increased 
exports to the EU both in terms of value and in terms of export diversification. 

There has been evidence of a declined poverty rate, increased infrastructure development and 
enhanced  productivity  in  the  industrial  sector.  Furthermore,  the  EBA  has  been  a  driver  of 
employment  generation  and  empowerment  of  women  in  the  RMG  sector.  Furthermore,  the 
reform  of  the  Rules  of  Origin  has  greatly  contributed  to  the  increased  utilisation  of  GSP 
preferences and an increase in exports, especially of woven products. Amongst stakeholders 
there is a clear understanding of the importance of EBA preferences, and the requirements and 
obligations to transition from EBA to GSP+. 

On the other hand, stakeholders pointed out that there are several areas that require continuous 
improvement  such  as  the  number  of  union  registrations,  the  minimum  wage,  supply  side 
capacities  and  the  balance  between  environmental  mitigation  and  economic  growth. 
Stakeholders  furthermore  highlighted  the  threat  of  preference  erosion  and  supply  side 
constraints  such  as  increasing  production  costs  due  to  increased  labour  costs,  infrastructure 
and banking costs. 

Ethiopia 

The local workshop on the EU’s EBA in Ethiopia was held at the Capital Hotel and Spa in 
Addis  Ababa  on  7  March  2017.  The  workshop  gathered  65  stakeholders  from  the  national 

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government,  business  organisations,  academia,  think  tanks,  international  organisations  and 
civil society organisations in Ethiopia. 

The  EBA  has  had  a  positive  impact  on  exports,  economic  growth  and  employment.  A 
particular example was provided for the horticulture sector, which saw a rapid development 
and an increase in employment especially for young people and women. Stakeholders argued 
that  the  EBA  has  supported  Ethiopia’s  decreasing  poverty  rate  in  the  past  decade  and  the 
increasing  life  expectancy  and  years  of  schooling.  Moreover,  an  increased  awareness  about 
the need for sustainable development was also found. 

Certain segments of the population have yet to fully benefit from the rapid economic growth. 
Stakeholders  furthermore  highlighted  the  sustainable  development  challenges  faced  by 
Ethiopia.  Additionally,  there  have  been  concerns  regarding  the  application  of  labour  rights, 
worker discrimination, land grabbing and the restrictions faced by civil society organisations. 

The  EBA  has  had  limited  success  in  increasing  export  diversification  due  to  the  Rules  of 
Origin,  technical  trade  barriers  and  supply-side  constraints.  Therefore,  the  potential  of 
Ethiopia’s exports to the EU has yet to be fully realised beyond agricultural products such as 
coffee and flowers. Furthermore, there are concerns over decreasing preference margins and 
increasing competition. The importance of the EU as a trade partner has also been declining in 
recent years as other markets are becoming increasingly more important for Ethiopia. 

Bolivia 

The local workshop on the EU’s GSP+ in Bolivia was held at Hotel Camino Real in La Paz 
on 25 April 2017. The workshop gathered 52 participants from government, industry and civil 
society. 

Stakeholders  highlighted  that  the  trade  preferences  offered  by  the  GSP+  have  been  an 
incentive  to  commit  to  the  implementation  of  UN  and  ILO  conventions  and  to  drive 
development.  Qualitative  improvements  have  also  been  made  as  a  result  of  the  increased 
monitoring  under  the  GSP+.  While  issues  regarding  human  rights,  labour  rights,  good 
governance  and  environmental  sustainability  remain,  the  GSP+  has  introduced  debate  on 
these topics in Bolivian society. 

Other stakeholders emphasised that an increase in exports does not necessarily translates into 
development. There is a need for sound economic, social and environmental policies to ensure 
that  the  Bolivian  population  can  fully  benefit  from  increased  exports.  Whereas  in  the 
manufacturing  sector  there  are  more  value-added  products  and  greater  employment 
opportunities, poverty has increased in areas where only natural resources are produced. 

It  was  furthermore  pointed  out  that  Bolivian  producers  face  non-tariff  barriers  to  enter  the 
European market, such as Certificates of Origin and SPS standards, which hinder the growth 
of  Bolivian  exports.  There  are  additionally  concerns  about  the  erosion  of  preferences. 
Stakeholders lastly recommended measures for the Bolivian government to engage businesses 
in the GSP+, such as through training sessions. 

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Pakistan 

The local workshop on the EU’s GSP+ in Pakistan was held at the Marriott Islamabad Hotel 
on 16 May 2017. The workshop gathered 66 participants from government, industry and civil 
society. 

Stakeholders  noted  the increased  exports  to  the EU,  but  said  that  the  positive  impact  of  the 
GSP scheme can mainly be seen on the formal export sector, i.e. textile and apparel. There is 
a  high  utilisation  of  trade  preferences  under  the  GSP+  and  without  the  scheme  Pakistan’s 
decline  in  global exports would have been  steeper. Overall  there is  a high awareness of the 
GSP+ and its obligations amongst the stakeholders. 

The  scheme  provides  an  incentive  for  Pakistan  to  implement  its  obligations  regarding  its 
Constitution and the UN and ILO Conventions. A Treaty Implementation Cell was set up to 
ensure  that  benefits  from  the  GSP+  are  shared  across  society  without  discrimination, 
focussing on inclusive growth across sectors. 

Some  stakeholders  expressed  their  concerns  about  the  GSP+  leading  to  a  trade  diversion 
rather  than creation,  especially in  the  years  directly  following  its  introduction.  Furthermore, 
there  has  been  slow  progress  in  poverty  reduction  and  implementation  of  labour  standards. 
Several  civil  society  organisations  in  Pakistan  requested  to  be  more  involved  in  the  GSP+ 
monitoring, while others noted that producers should be more involved in GSP+ compliance. 

7. 

Main Challenges and mitigation strategies 

Some  of  the  main  challenges  with  the  stakeholder  consultations  were  the  low  initial 
involvement  of  stakeholders  in  the  local  workshops.  Hence,  bilateral  meetings  with  civil 
society and business associations have been initiated in workshop countries. 

Another challenge was the inherent rigidity of the format and the low initial response rate to 
the  Public  Consultation.  However,  through  active  promotion  through  online  outreach, 
workshops,  emails  and  calls, the consultant  managed  to  engage  with  important stakeholders 
and  receive  their  inputs.  Finally,  as  stakeholder  contributions  are  such  an  important  part  of 
giving a nuanced picture of the impacts of the EU’s GSP on its beneficiary countries, a large 
number  of  stakeholder  activities  have  taken  place.  Over  450  invitations  were  sent  to 
stakeholders  from  Europe,  Bangladesh,  Bolivia,  Pakistan,  Ethiopia,  and  other  beneficiary 
countries to participate in meetings and interviews. 

8. 

Feedback to stakeholders 

The Commission will organise a Civil Society Dialogue meeting once the its official report to 
the European Parliament and the Council on the mid-term evaluation has been adopted. The 
external  consultant  will  present  the  final  study  and  the  Commission  present  its  views, 
considerations  and  conclusions  regarding  the  findings  in  the  external  study,  including  input 
from stakeholders. 

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