Mid-term evaluation of the EU’s Generalised Scheme of Preferences (GSP) : final report.
Date: 2019-08-31
Institutions: Directorate-General for Trade and Economic Security
Subjects: developing countries, development aid, economic consequence, environmental impact, generalised preferences, human rights, market access, report, rule of law, sustainable development, tariff preference

Mid-Term Evaluation of the 
EU’s Generalised Scheme of 
Preferences (GSP) 

Final Report 

Prepared by DEVELOPMENT Solutions Europe Limited 
July – 2018 

The views expressed in the report are those of the consultant, 
And do not present an official view of the European Commission. 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
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EUROPEAN COMMISSION 
Directorate-General for Trade 
Directorate D – Sustainable Development; Economic Partnership Agreements – Africa, 
Caribbean and Pacific; Agri-Food and Fisheries 
Unitd D1 – Trade and Sustainable Development, Generalised System of Preferences 

Contact: 
E-mail: 

European Commission 
B-1049 Brussels 

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Mid-Term Evaluation of the 
EU’s Generalised Scheme of 
Preferences (GSP) 

Final Report   

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About DEVELOPMENT Solutions 

DEVELOPMENT Solutions (DS) is a European consultancy which serves the international 
donor  and  business  community  in  support  of  sustainable  development  and  sustainable 
investment  objectives  world-wide.  Our  expertise  is  built  on  our  strong  grounding  in 
project  design  and  management,  research,  policy  and  regulatory  analysis,  and  the 
management of capacity strengthening programmes for governments.  

Our  primary  projects  are  in  support  of  EU  external  policies  and  cooperation  in  third 
countries,  which includes  deep  experience  in  the  area  of  trade  policy,  environment  and 
sustainable solutions. This work has served as a valuable demonstration as to how trade 
and  environmental  policies  can  support  developing  countries  to  transition  towards 
sustainable  growth,  which  can  bring  economic  efficiency  and  contribute  to  local  and 
international efforts for sustainable development outcomes. 

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Abstract 

This Mid-Term Evaluation seeks to analyse the functioning and impact of Regulation (EU) 
No. 978/2012 applying a scheme of generalised tariff preferences (‘the GSP Regulation’). 
This Final Report presents the overall findings on the economic, social, human rights and 
environmental impact in the beneficiary countries.  

The Mid-Term Evaluation finds that the positive economic impact of the GSP reform can 
already  be  witnessed  and  that  the  relevance  of  the  GSP  remains  strong.  Its  aggregate 
trade  impact  has  reduced  but  it  remains  positive  and  vital  for  those  countries  most  in 
need  of  support  for  their  market  access,  notably  LDCs  and  other  vulnerable  countries. 
The effectiveness of the GSP has been enhanced by focusing better on countries most in 
need.  Effectiveness has also been  enhanced through improved monitoring by the EU  of 
adherence to and effective implementation of relevant international conventions in GSP+ 
countries. The GSP has had an overall positive impact on social development and human 
rights in the beneficiary countries, but only a limited impact on sustainable development 
and environmental protection.  

The  GSP  should  be  considered  as  a  facilitator,  because  the  nature  and  extent  of  the 
positive  impact  is  critically  co-determined  by  the  domestic  priorities  of  the  beneficiary 
countries  as  reflected  in  the  human  rights,  socio-economic  and  environmental  policies 
adopted and implemented.   

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Executive summary 
In 1971, the European Community first 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 preferences to support developing countries.  

Regulation (EU) No. 978/2012 (‘the GSP Regulation’) introduced reforms to the scheme, 
including  on  the  number  of  beneficiary  countries,  product  coverage,  mechanisms  for 
graduation  and  temporary  withdrawal  and  the  Special  Incentive  Arrangement  for 
Sustainable  Development  and  Good  Governance  (‘GSP+’).  The  objectives  of  the  GSP 
Regulation were 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.  

The GSP Regulation entered into force on 1 January 2014 for a period of ten years. The 
scheme offers three different preference arrangements: 

1.  A general arrangement (‘Standard GSP’); 
2.  A  Special  Incentive  Arrangement  for  Sustainable  Development  and  Good 

Governance (‘GSP+’) for vulnerable countries; and 

3.  An  Everything  But  Arms  (‘EBA’)  arrangement  for  Least  Developed  Countries 

(LDCs). 

For  the  present  Mid-Term  Evaluation  of  the  GSP  Regulation,  both  quantitative  and 
qualitative  desk  research  and  analysis  have  been  employed  to  assess  the  economic, 
social,  environmental,  and  human  rights  impact  of  the  reformed  scheme.  The  Project 
Team has conducted an economic analysis of the scheme using the most up-to-date and 
detailed  economic,  trade  and  tariff  data  provided  by  the  European  Commission. 
Additionally,  the  Project  Team  has  used  indicators,  where  available,  to  analyse  the 
social, environmental and human rights impact in the beneficiary countries.  

To  complement  the  data  analysis  and  literature  review  and  to  raise  awareness  of  the 
scheme  among  relevant  stakeholders,  a  comprehensive  and  inclusive  stakeholder 
consultation process has been implemented.  

Key findings 

Positive economic impacts  of the GSP Regulation can already be witnessed. The main 
economic findings can be summarised as follows:  

Export Growth 
o 

For  the  group  of  countries  that  were  eligible  for  GSP  preferences  throughout  the 
period 2011-2016, there has been evidence of an increase in EU imports originating 
from countries under the three arrangements post GSP-reform. This was particularly 
the  case  for  the  49  EBA  countries.  This  finding  is  consistent  with  the  objectives  of 
the  GSP  reform  to  target  export  expansion  especially  amongst  the  developing 
countries most in need and most vulnerable. While there has been a small absolute 
increase  in  the  exports  of  the  23  Standard  GSP  countries  since  2014,  their  three 
year average annual post-reform imports slightly declined compared with pre-reform 
period  (2011-2013).  It  is  noted  that  the  increases  of  imports  under  GSP  were 
realized in a context of a flat EU import demand around EUR 1.55 trillion per annum.  

o  The  main  product  sections  imported  under  the  GSP  are  textiles,  footwear,  and 
machinery and mechanical appliances. Between 2014 and 2016, textile imports grew 
by 24.5 per cent, compared to 6.5 per cent between 2011 and 2013. 

Erosion of Preference Margins 

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o  There  were  no  major  changes  in  preference  margins  that  existed  in  the  pre-  and 
post-reform  periods.  Preference  margins  were  the  highest  for  agriculture  and 
foodstuffs,  textiles  and  clothing  and  footwear  imports,  while  the  margins  were 
negligible  for  works  of  art,  pulp  of  wood  and  other  fibrous  cellulosic  material,  and 
pearls, precious, semi-precious stones.  

 Utilisation of Preferences 
o  Both  EBA  and  GSP+  beneficiary  countries  have  significantly  increased  their 
preference  utilisation  rates  since  2014,  indeed  by  more  than  10  percentage  points 
on  average.  Nevertheless,  10  out  of  49  EBA  countries  experienced  a  reduction  of 
their  preference  utilisation  rate  by  more  than  10  percentage  points.    For  Standard 
GSP beneficiary countries eligible throughout the period 2011-2016, utilisation rates 
decreased on average by 3 percentage points following the GSP reform, with only 10 
out of the 23 countries improving their preference utilisation rates.  

Export Diversification 
o  The level of export diversification, measured by number of tariff lines for which non-
zero  exports  have  been  recorded,  has  been  the  highest  for  Standard  GSP 
beneficiaries, but decreased considerably at all sector levels for GSP+ beneficiaries. 
The  EBA  beneficiaries  also  increased  the  number  of  tariff  lines  under  which  they 
traded.  

o  Nevertheless,  calculations  of  Herfindahl  indices  across  the  three  GSP  arrangements 
confirm that EBA countries have the least diversified export portfolios at the product 
and  sectoral  levels,  with  18  countries  experiencing  an  improvement  during  the 
period of review and 29 countries not  realizing any change or  even deterioration in 
their export diversification profiles at the product level.  

Bilateral gravity model estimates 
o  The bilateral gravity model estimates confirm that tariffs negatively affect EU import 
values,  whereas  preference  margins  positively  affect  bilateral  EU  imports.  The 
methods used also assess whether those countries that have been eligible for any of 
the  GSP  arrangements  throughout  the  period  2011-2016  tended  to  trade  more 
intensively  with  the  EU.  The  gravity  modelling  reconfirms  that  the  GSP  reform  has 
increased their trade under GSP. 

o  There is some tentative evidence of a negative impact on trade with the EU for those 
countries that ceased to be eligible for GSP preferences after the reform that entered 
into force in 2014. Those countries that switched to having a trade agreement during 
the period (from previously trading under Standard GSP or MAR arrangements) may 
have experienced a negative impact on their trade with the EU. This may be due to 
country-specific  circumstances,  but  could  be  an  'unintended'  effect  of  the  GSP 
Regulation which warrants further examination. 

Positive  social  and  human  rights  impacts  of  the    GSP  Regulation  can  already  be 
witnessed.  However,  in  some  cases  the  impact  has  been  limited  or  negative.  The  main 
social and human rights findings can be summarised as follows:  

o  The GSP’s legal conditionality through the temporary withdrawal mechanism and the 
GSP+ arrangement has incentivised beneficiary  countries to adhere to  fundamental 
labour  and  human  rights.  Even  though  in  practice,  the  temporary  withdrawal 
mechanism under the GSP Regulation has not been applied during the period under 
review.  

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o  The  GSP  can  be  considered  as  a  facilitator  of  social  development  and  adherence  to 
fundamental  labour  and  human  rights.  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.  

o  However in several instances, economic growth and export opportunities did not go 
hand-in-hand  with  adherence  to  fundamental  labour  and  human  rights  (e.g. 
instances  of  land  grabbing  and  the  violation  of  fundamental  labour  rights  were 
reported in several of the country case-studies). 

Environmental  impacts of the GSP Regulation are difficult to determine due to a lack 
of  available  data  on  environmental  indicators  as  well  as  long-time  lags  in  their 
availability.  The  scheme  has  contributed  to  both  positive  and  negative  environmental 
developments  in  beneficiary  countries.  The  main  environmental  findings  may  be 
summarised as follows: 

o  The  legal  conditionality  of  the  GSP+  to  ratify  and  implement  international 
conventions  on  environmental  protection  and  climate  change  has  incentivised 
beneficiary countries to adhere to environmental protection. 

o  While  the  increased  exports  and  resulting  economic  growth  could  contribute  to 
sustainable development, the impact will only be positive if the beneficiary countries 
have  policies  in  place  to  effectively  direct  their  resources  to  environmental  policies 
and  mitigation  measures  to  limit  any  potentially  detrimental  effects  of  increased 
economic activity on the environment. 

o  Textiles and clothing are the main import products under the GSP. Their production 
and  trade  tend  to  have  a  detrimental  effect  on  the  environment  in  the  absence  of 
adequate environmental and waste management mechanisms. 

The relevance  of  the  GSP remains strong. Its aggregate trade impact has reduced but 
it remains positive and vital for those countries most in need of support for their market 
access,  notably  LDCs  and  other  vulnerable  countries.  The  effectiveness  of  the  GSP  has 
been enhanced by focusing more on countries most in need. Effectiveness has also been 
enhanced  through  improved  monitoring  by  the  EU  of  adherence  to  and  effective 
implementation of relevant international conventions in GSP+ countries.  

The  efficiency  of  the  GSP  has  remained  largely  unchanged,  as  utilisation  of 
preferences  as  well  as  margins  of  preferences  remained  largely  unchanged  during  the 
period  under  review.  Efficiency  in  the  implementation  of  the  GSP  by  the  EU  has  also 
been  achieved  through  the  reliance  and  strategic  partnership  with  the  relevant 
monitoring bodies in the implementation of the GSP Regulation.  

There have been both  positive  and  negative  unintended  consequences associated 
with GSP reform. On the positive side, the Mid-Term Evaluation (MTE) notes the creation 
of female employment opportunities and improved participation of women in the labour 
force  in  export  industries  trading  with  the  EU.  On  the  negative  side,  the  accelerated 
environmental  degradation  linked  to  export  industries  in  beneficiary  countries  is 
emphasized. 

The scope for reducing regulatory burden on the EU and the beneficiary countries 
the  regulatory  burden  is  limited.  There  remains  a  risk  of  increasing  the  regulatory 
burden  on  the  EU  and  beneficiary  countries  through  extending  and  intensifying  the  EU 

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monitoring  to  a  broader  group  of  beneficiary  countries.  While  this  is  likely  to  further 
enhance the effectiveness of the GSP, especially with regard to social and human rights, 
it is also likely to raise costs and reduce the efficiency of its implementation. 

The MTE Project Team presents the following recommendations for follow-up during the 
current implementation phase of the GSP Regulation:  

o  Improve  transparency  of  EU’s  GSP+  monitoring:  The  higher  frequency  and 
improved scope  of the  monitoring of the  GSP+  arrangement has increased the EU’s 
leverage in the beneficiary countries. It has allowed for constructive dialogue and has 
been  found  to  contribute  to  sustainable  development  and  good  governance.    It  is 
recommended  that  there  be  greater  transparency  about  the  list  of  issues 
(‘scorecard’)  for  the  dialogues  which  the  EU  conducts  with  the  authorities  of  GSP+ 
beneficiary  countries.  In  practical  terms,  the  agenda  for  the  dialogues  could  be 
published and a summary report of the dialogues could be placed on EU websites.  

o  Promote  greater  awareness  of  GSP  in  beneficiary  countries:  National 
workshops  convened  in  EBA  and  GSP+  countries  showed  that  a  lack  of  information 
and,  in  some  instances,  misconceptions  about  the  GSP  continue  to  persist.  It  is 
sensitization 
recommended 
programmes are promoted in order to raise awareness about the GSP.  

information  exchange  and 

stakeholder 

that 

o  Safeguard  provisions  to  be  more  effectively  used:  The  amendments  to  the 
safeguard provisions in the GSP Regulation have not been used:  re-introduction of 
normal Common Customs Tariff duties has not been initiated under the current GSP 
Regulation.  It 
is  recommended  that  the  European  Commission  launches 
investigations  in  accordance  with  its  mandate  and  provide  notice  of  its  procedures, 
deadlines, and findings.  

o  Temporary withdrawal of tariff preferences to be more effectively used: The 
EU  may  decide  to  withdraw  trade  preferences  in  case  of  severe  and  systematic 
violations of fundamental rights. This creates an incentive for governments to better 
guarantee these rights for their people. It  is  recommended that whenever severe 
and systematic violation is reported by relevant monitoring bodies, the Commission 
takes immediate steps to initiate the relevant procedures and establish the relevant 
files. 

The  MTE  Project  Team  presents  the  following  recommendations  to  be  considered  after 
expiry  of  the  GSP  Regulation,  to  ensure predictability and legal certainty during the 
implementation of the current scheme. 

o  Update  the  list  of  conventions  on  core  human  and  labour  rights  as  well  as 
on  environment  and  governance  principles:  The list of  conventions that GSP+ 
countries  are  required  to  ratify  and  effectively  implement  has  been  found  to  be 
incomplete and outdated. It is recommended that a detailed review be undertaken 
towards  a  possible  update.  For  example,  the  feasibility  of  including  ratification  and 
effective implementation of the Paris Agreement on Climate Change1, adopted by UN 
Member States in recent years, needs to be examined. To ensure legal certainty, the 
list should be updated only after expiry of the present GSP Regulation. 

1 Paris Agreement under the United Nations Framework Convention on Climate Change (here referred to as 
“the Paris Agreement on Climate Change”) 

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o  Harmonize  the  Standard  GSP  and  the  GSP+  approaches:  Eligibility  for  the 
Standard  GSP 2  has  been  markedly  reduced  under  the  GSP  Regulation.  The 
evaluation  project  team  questions  the  continued  relevance  of  the  Standard  GSP 
arrangement  beyond  2023,  as  distinct  and  separate  from  the  GSP+.    The  latter 
includes  EU  monitoring  of  ratification  and  effective  implementation  of  relevant 
conventions  and  provides  special  incentives  for  sustainable  development  and  good 
governance.  This  approach  is  recognized  to  enhance  the  effectiveness  of  the  GSP 
Regulation.  It  is  recommended  that  the  Standard  GSP  and  the  GSP+  are 
harmonized after expiry of the GSP Regulation.  

o  Consider  inclusion  of  selected  trade  in  services:  In  view  of  the  rapid  rise  in 
trade  in  services  within  the  EU  and  with  the  rest  of  the  world,3 it  is  recommended 
that  the  European  Commission  reviews  the  scope  for  inclusion  of  selected  trade  in 
services categories within the framework of the successor to the current GSP.  It  is 
recommended that a stock taking of the WTO’s services waiver for LDCs should be 
undertaken.  

o  Ensure  coherence  between  GSP  and  the  FTA/PTA  regimes:  This  evaluation 
study,  in  particular  the  detailed  econometric  analyses  of  the  determinants  of 
bilateral  trade  flows  and  the  impact  of  changes  in  trade  regime  status,  finds  that 
countries leaving the GSP and MAR arrangements do not necessarily experience an 
increased  value  of  EU  imports,  even  if  they  enter  into  reciprocal  preferential  trade 
arrangements.  These  findings  must  be  regarded  as  preliminary  and  will  need  to  be 
re-examined, taking into account a longer time-frame. In general, there need to be 
sufficient  incentives  for  countries  to  graduate  from  the  EBA  to  the  GSP+  status  as 
well as from GSP+ to other FTA arrangements. It  is  recommended that the issue 
of  coherence  between  GSP  and  FTA/PTA  regimes  is  included  in  the  impact 
assessment  at  the  time  of  the  formulation  and  adoption  of  a  possible  successor 
Regulation upon expiry of the current GSP. 

2The GSP Regulation (EU) No 978/2012 refers to this as the ‘general arrangement’.  See Ch.1 Art 1. 2 (a).  
3See Trade for All, Section 2.1.1 on promoting trade in services.  

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Table of contents 

Executive summary ............................................................................................ 7 

Table of contents.............................................................................................. 12 

List of tables .................................................................................................... 16 

List of figures ................................................................................................... 18 

List of abbreviations ......................................................................................... 20 

List of key concepts .......................................................................................... 22 

1 

Introduction ............................................................................................ 26 

1.1 

The Mid-Term Evaluation of the EU’s GSP ............................................ 26 

1.2  Overview of current Generalised Scheme of Preferences ..................... 29 

1.2.1 

Beneficiary countries .......................................................................... 32 

1.2.2 

Product coverage ............................................................................... 33 

1.2.3 

Tariffs .............................................................................................. 34 

1.2.4  Graduation mechanism ....................................................................... 34 

1.2.5  Withdrawal mechanism ...................................................................... 35 

1.2.6 

Safeguard mechanism ........................................................................ 35 

1.3  Review of preliminary intervention hypothesis .................................... 35 

1.4  Method and Approach to the Mid-Term Evaluation (MTE) .................... 38 

2 

Economic impact analysis ....................................................................... 41 

2.1 

Lessons learnt from previous evaluations ............................................ 41 

2.2  Descriptive and diagnostic analysis ..................................................... 44 

2.2.1 

Tariff and preference margin analysis ................................................... 44 

2.2.2 

Trade flow analysis ............................................................................ 56 

2.3 

Econometric analysis using the gravity model ..................................... 75 

2.3.1 

Specification and data ........................................................................ 75 

2.3.2 

Results of the gravity model ................................................................ 77 

2.4 

Econometric analysis using the preference utilisation rate model........ 86 

2.4.1  Specification and data .................................................................... 86 

2.4.2 

Results of the preference utilisation rate model ..................................... 88 

3 

Social and human rights impact analysis ................................................ 93 

3.1 Lessons learnt from literature ................................................................. 93 

3.2 Social and human rights impact of the GSP ............................................. 95 

3.3 Social and human rights impact of the GSP+ ........................................... 98 

3.4. Good governance impact of GSP+......................................................... 102 

3.5 Review of social progress using the Social Progress Index (SPI) .......... 104 

4 

Environmental impact analysis ............................................................. 111 

4.1. Lessons learnt from literature .............................................................. 111 

4.2. Environmental impact of the GSP ......................................................... 112 

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4.3. Environmental impact of the GSP+ ....................................................... 115 

4.4. Review of environmental progress using the ND-GAIN Index .............. 119 

4.4.1. Overview of progress in case study countries ......................................... 122 

4.5. Conclusions from the environmental impact analysis ........................... 124 

5 

Case studies on textile and machinery sectors ...................................... 127 

5.1 

Impact of GSP on textile sector ......................................................... 127 

5.1.1 

The textile and clothing sector in the EU market .................................. 127 

5.1.2 

EU trade in textile and clothing .......................................................... 128 

5.1.3 

Trade in textile and clothing under the GSP ......................................... 130 

5.1.4 

Impact of GSP on producers in the EU ................................................ 141 

5.1.5 

Conclusions ..................................................................................... 142 

5.2 

Impact of GSP on machinery sector ................................................... 144 

5.2.1 

The machinery sector in the EU market .............................................. 144 

5.2.2 

EU trade in machinery ...................................................................... 145 

5.2.3 

Trade in machinery under the GSP ..................................................... 146 

5.2.4 

Impact on producers in the beneficiary countries ................................. 160 

5.2.5 

Impact on producers in the EU .......................................................... 161 

6 

Case Studies on EBA countries .............................................................. 163 

6.1 

Impact of the EBA on Bangladesh ...................................................... 163 

6.1.1  Economic impact ........................................................................... 163 

6.1.2  Social impact ................................................................................ 167 

6.1.3  Environmental impact ................................................................... 172 

6.1.4  Distribution of gains ..................................................................... 179 

6.1.5  Unintended consequences ............................................................ 181 

6.2 

Impact of the EBA on Ethiopia ........................................................... 184 

6.2.1  Economic impact ........................................................................... 184 

6.2.2  Social impact ................................................................................ 190 

6.2.3  Environmental impact ................................................................... 195 

6.2.4  Distribution of gains ..................................................................... 201 

6.2.5  Unintended consequences ............................................................ 202 

7 

Case Studies on GSP+ Countries ........................................................... 203 

7.1 

Impact of the GSP+ on Bolivia ........................................................... 203 

7.1.1 

Economic impact ............................................................................. 203 

7.1.2 

Social impact .................................................................................. 208 

7.1.3 

Environmental impact ...................................................................... 213 

7.1.4 

Implementation of GSP+ conventions ................................................. 218 

7.1.5 

Stakeholder awareness of GSP+ requirements .................................... 222 

7.2 

Impact of the GSP+ on Pakistan ........................................................ 223 

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7.2.1 

Economic impact ............................................................................. 223 

7.2.2 

Social impact .................................................................................. 228 

7.2.3 

Environmental impact ...................................................................... 233 

7.2.4 

Implementation of GSP+ conventions ................................................. 238 

7.2.5 

Stakeholder awareness of GSP+ requirements .................................... 242 

8 

Conclusions and Recommendations ...................................................... 243 

8.1  Review of Evaluation Questions ......................................................... 243 

8.1.1 

Are the objectives of the current GSP on track to be achieved? ............. 243 

8.1.2  What are the factors (positive and negative) influencing the achievements 
observed? ................................................................................................... 248 

8.1.3  What unintended consequences, if any, can be linked to the design, 
implementation, or use of the current GSP? .................................................... 249 

8.1.4 

Efficiency – To what extent is the current GSP efficient? ....................... 251 

8.1.5 

To what extent is the current GSP coherent with the EU’s relevant policies?
252 

8.1.6 
To what extent is the current GSP relevant to the development needs which 
it is intended to address? .............................................................................. 254 

8.2  Conclusions ........................................................................................ 254 

8.2.1 

Economic Impact ............................................................................. 255 

8.2.2 

Social and Human Rights Impact ....................................................... 257 

8.2.3 

Environmental Impact ...................................................................... 258 

8.3  Recommendations ............................................................................. 263 

9 

Annexes ................................................................................................ 267 

9.1  Annex I - Imports and utilisation rates by GSP beneficiary (in millions 
of euros) ..................................................................................................... 267 

9.2  Annex II - List of tariff regimes applicable to EU import partners (2011-
2016) 279 

9.3  Annex III- Dummy variables used in econometric models ................. 288 

9.4  Annex IV – Analytical Framework for Mid-Term Evaluation of the EU’s 
GSP  292 

9.5  Annex V - Summary of stakeholder consultations .............................. 299 

9.5.1 

Stakeholder consultation strategy ...................................................... 299 

9.5.2 

Electronic stakeholder outreach and engagement tools ......................... 300 

9.5.3  Online Public Consultation ................................................................. 302 

9.5.4 

Interviews and meetings .................................................................. 303 

9.5.5 

Civil Society Dialogue ....................................................................... 305 

9.5.6 

Local workshops in Bangladesh, Ethiopia, Bolivia and Pakistan .............. 307 

9.5.7  Meetings with the European Commission and ISSG .............................. 309 

9.5.8  Main Challenges and mitigation strategies........................................... 310 

9.6  Annex VI - Summary of research methods and analytical methods ... 311 

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9.6.1 

Economic impact analysis ................................................................. 311 

9.6.2 

Social and human rights impact assessment ....................................... 313 

9.6.3 

Environmental impact assessment ..................................................... 315 

9.6.4 

Case studies ................................................................................... 316 

9.7  Annex VII - GSP’s Impact on EU Imports of Biofuels ......................... 319 

9.8  Annex VIII - Application of GSP Regulation and EU’s Sanitary and 
Phytosanitary Legislation ............................................................................ 327 

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List of tables 
Table 1:  Overview of the three GSP arrangements ................................................. 29 
Table 2: Beneficiary countries by GSP arrangement included in the study................... 32 
Table 3: Share of EU imports by tariff regime (2011-2016) ...................................... 45 
Table 4: Pre- and post-reform EU imports by GSP arrangement ................................ 47 
Table 5: Preferential access under GSP arrangements by number and percentage of tariff 
lines (2016) ........................................................................................................ 48 
Table 6: Evolution of preferential access under GSP arrangements by share of tariff lines 
(2008-2016) ....................................................................................................... 49 
Table 7: Distribution of tariffs under the MFN and GSP regimes (2011 and 2016) ........ 50 
Table 8: Share of EU imports from GSP beneficiary countries by tariff regime (2011-
2016) ................................................................................................................ 52 
Table 9: Preference margins by HS section compared to MFN tariffs (2011 and 2016) . 55 
Table 10: GSP imports as a share of total EU imports by HS section (2011-2016) ....... 57 
Table 11: Utilisation rate per Standard GSP beneficiary (2011-2016) ......................... 62 
Table 12: Utilisation rate per GSP+ beneficiary (2011-2016) .................................... 63 
Table 13: Utilisation rate per EBA beneficiary (2011-2016) ....................................... 64 
Table 14: Diversification by number of tariff lines for EBA beneficiaries ...................... 66 
Table 15: Diversification by number of tariff lines for Standard GSP beneficiaries ........ 68 
Table 16: Diversification by number of tariff lines for GSP+ beneficiaries ................... 69 
Table 17: Herfindahl Index for EBA countries (2011-2016) ....................................... 71 
Table 18: Herfindahl Index for Standard GSP countries (2011-2016) ......................... 73 
Table 19: Herfindahl Index for GSP+ countries (2011-2016)..................................... 74 
Table 20: Results of the OLS regression - Bilateral gravity model at the product level .. 80 
Table 21: Results of the fixed effects model with interactions of reform and regime 
dummies – Bilateral gravity model at the product level ............................................ 83 
Table 22: Results of the OLS regression – Preference utilisation rate model ................ 89 
Table 23: Results of the fixed effects regression – Preference utilisation rate model .... 91 
Table 24: Recent ratification of human rights and labour rights conventions ............... 98 
Table 25: Ratification of international conventions on human rights and labour rights by 
GSP+ eligible countries ........................................................................................ 99 
Table 26: Ratification of international conventions on good governance by GSP+ eligible 
countries .......................................................................................................... 103 
Table 27: Overview of social progress indicators under the Social Progress Index ...... 105 
Table 28: Country ranking under Social Progress Index (2014 & 2017) .................... 105 
Table 29: Ratification of international conventions on climate change and environmental 
protection by GSP+ eligible countries................................................................... 116 
Table 30: Shortcomings in the implementation of relevant conventions by GSP+ 
beneficiaries ..................................................................................................... 116 
Table 31: Overview of vulnerability indicators under the ND-GAIN Index .................. 119 
Table 32: Overview of readiness indicators under the ND-GAIN Index ...................... 120 
Table 33: Country ranking under ND-GAIN Index (2015) ....................................... 121 
Table 34: Designated HS chapters for textiles and clothing ..................................... 127 
Table 35: EU imports of textiles and clothing from GSP beneficiaries in millions of euros 
(2011-2016) ..................................................................................................... 131 
Table 36: Designated HS chapters for machinery .................................................. 144 
Table 37: EU imports of machinery from GSP beneficiaries in millions of euros (2011-
2016) .............................................................................................................. 146 
Table 38: Data sources used for MTE economic impact analysis .............................. 312 
Table 39: Social and human rights indicators used in MTE ...................................... 313 
Table 40: Environmental indicators used in MTE .................................................... 315 
Table 41: Analytical questions used in MTE case studies ......................................... 317 

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Table 42: EU imports of ethanol under the GSP ..................................................... 321 
Table 47: Notable EU SPS measures .................................................................... 327 
Table 48: Impact of EU SPS on case study countries .............................................. 335 

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List of figures 
Figure 1: Intervention logic for the Regulation (EU) No. 978/2012............................. 37 
Figure 2: Analysis of the usage of GSP preferences by eligible countries (2011-2016) .. 47 
Figure 3: Average share of major EU imports under the GSP regime (pre- and post-
reform) .............................................................................................................. 58 
Figure 4: GSP textiles imports compared to total GSP imports .................................. 59 
Figure 5: EU imports of mineral and chemical products under GSP in millions of euros 
(2011-2016) ....................................................................................................... 60 
Figure 6: Utilisation rate per GSP arrangement ....................................................... 61 
Figure 7: Overview of the development in social progress in the four case study countries
....................................................................................................................... 109 
Figure 8: ND-GAIN Index for selected countries (2010-2015) ................................. 123 
Figure 9: EU imports of textile and clothing products (2011-2016) .......................... 129 
Figure 10: EU imports of textiles and clothing from GSP beneficiary countries by tariff 
regime (2016) .................................................................................................. 132 
Figure 11: EU imports of textiles and clothing under Standard GSP (2011-2016)....... 133 
Figure 12: Share of EU imports of textiles and clothing from India (2011-2016) ........ 133 
Figure 13: Annual growth rates of textiles and clothing exports for GSP+ beneficiaries 
(2011-2016) ..................................................................................................... 134 
Figure 14: EU imports of textiles and clothing under GSP+ (2011-2016) .................. 135 
Figure 15: EU imports of textile and clothing from GSP+ beneficiary countries by tariff 
regime (2016) .................................................................................................. 135 
Figure 16: Share of EU imports of textile and clothing goods from Pakistan (2011-2016)
....................................................................................................................... 136 
Figure 17: Value and annual growth rate of textile and clothing imports under EBA 
(2010-2016) ..................................................................................................... 137 
Figure 18: EU imports of textiles and clothing under the EBA (2011-2016) ............... 137 
Figure 19: EU imports of textile and clothing from EBA beneficiary countries by tariff 
regime (2016) .................................................................................................. 138 
Figure 20: Share of EU imports of textile and clothing goods from Bangladesh (2011-
2016) .............................................................................................................. 139 
Figure 21: Top 10 exporters of textiles to the EU market ....................................... 140 
Figure 22: Top 10 exporters of textiles to the EU market: pre- and post-reform changes
....................................................................................................................... 141 
Figure 23: Value and annual growth rate of EU machinery imports (2011-2016) ....... 145 
Figure 24: EU imports of machinery from GSP beneficiary countries by tariff regime 
(2016) ............................................................................................................. 147 
Figure 25: EU imports of machinery under GSP (2011-2016) .................................. 148 
Figure 26: EU imports of machinery under GSP from selected beneficiary country (2016)
....................................................................................................................... 149 
Figure 27: EU machinery imports from Standard GSP beneficiaries by tariff regime 
(2011-2016) ..................................................................................................... 150 
Figure 28: EU machinery imports under Standard GSP from selected Standard GSP 
countries (2011-2016) ....................................................................................... 151 
Figure 29: Share of EU machinery imports from Vietnam (2011-2016) .................... 152 
Figure 30: EU machinery imports from GSP+ countries (2011-2016) ....................... 152 
Figure 31: EU machinery imports under GSP+ from selected GSP+ countries (2011-
2016) .............................................................................................................. 153 
Figure 32: Share of EU machinery imports from the Philippines (2011-2016) ............ 154 
Figure 33: EU machinery imports under EBA (2011-2016) ...................................... 155 
Figure 34: EU machinery imports under EBA from selected EBA countries (2011-2016)
....................................................................................................................... 156 

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Figure 35: Machinery imports from Ethiopia and Angola in millions of euros (2011-2016)
....................................................................................................................... 157 
Figure 36: Share of EU machinery imports from Ethiopia (2011-2016) ..................... 158 
Figure 37: Top 10 exporters of machinery to the EU market ................................... 159 
Figure 38: Top 10 exporters of machinery to the EU: pre- and post-reform changes .. 160 
Figure 39: Bangladesh’s total exports to the EU (2011-2016) ................................. 163 
Figure 40: Composition of Bangladesh’s exports under EBA by HS Chapter (2016) .... 164 
Figure 41: Bangladesh’s EBA preferential exports (2011-2016) ............................... 165 
Figure 42: Bangladesh’s EBA preference utilisation for top ten exports in 2016 ......... 165 
Figure 43: GDP and GDP growth in Bangladesh (2010-2015) .................................. 166 
Figure 44: Added value of different sectors as percentage of Bangladesh’s GDP (2011, 
2015) .............................................................................................................. 166 
Figure 45: FDI inflows into Bangladesh (2011-2015) ............................................. 167 
Figure 46: Ethiopia’s exports to the EU (2011-2016) ............................................. 184 
Figure 47: Composition of Ethiopia’s exports under EBA by HS chapter (2016) ......... 185 
Figure 48: Ethiopia’s EBA preference utilisation (2011-2016) .................................. 186 
Figure 49: Ethiopia’s EBA preference utilisation for top ten exports in 2016  ............. 186 
Figure 50: GDP and GDP growth in Ethiopia (2011-2015) ....................................... 189 
Figure 51: Added value of different sectors as percentage of Ethiopia’s GDP (2011, 2015)
....................................................................................................................... 189 
Figure 52: FDI inflows in Ethiopia (2011-2015) ..................................................... 190 
Figure 53: Bolivia’s total exports to the EU (2011-2016) ........................................ 203 
Figure 54: Composition of Bolivia's exports under GSP+ by HS Section (2016) ......... 204 
Figure 55: Bolivia’s GSP+ preference utilisation (2011-2016) ................................. 205 
Figure 56: Bolivia’s GSP+ preference utilisation for top ten exports in 2016 .............. 206 
Figure 57: GDP and GDP growth in Bolivia (2010-2015) ......................................... 207 
Figure 58: Added value of different sectors as percentage of Bolivia's GDP ............... 207 
Figure 59: FDI inflows into Bolivia (2011-2015) .................................................... 208 
Figure 60: Pakistan’s total exports to the EU (2011-2016) ...................................... 223 
Figure 61: Composition of Pakistan’s exports under GSP+ by HS Chapter (2016) ...... 224 
Figure 62: Pakistan’s GSP+ preference utilisation (2011-2016) ............................... 225 
Figure 63: Pakistan’s GSP+ preference utilisation for the top 10 exports in 2016....... 225 
Figure 64: GDP and GDP growth in Pakistan (2011-2015) ...................................... 226 
Figure 65: Added value of different sectors as percentage of Pakistan’s GDP (2011, 
2015) .............................................................................................................. 227 
Figure 66: FDI inflows into Pakistan (2011-2015) .................................................. 228 
Figure 67: Overview of the stakeholder consultation activities and tools ................... 300 
Figure 68: Number and percentage of pages viewed by browser ............................. 301 
 Figure 70: Monthly downloads for all files ......... 302 
Figure 69: Time spent on visits 
Figure 71：Regulatory intensity and total imports ................................................. 334 

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List of abbreviations 

AA 
ACP 

AGOA 

CAT 

CBD 

CDM 

CEDAW 

CERD 

CPEC 

CITES 

CN  
CPI 

CPIA 

CPPCG 

CRC 

CSD 

DCFTA 

DG AGRI 

DG GROW 

DG MARE 

DG TRADE 
DS 

EBA 

EC 
EEAS 

EEC 
EPA 

EPI 

EU 
FDI 

FTA 

GATT 
GIBF 

GHG 
GNI 

GSP 

GSP+ 

Association Agreement 
African, Caribbean and Pacific Group of States 

African Growth and Opportunity Act 

Convention Against Torture and other Cruel, Inhuman or Degrading 
Treatment or Punishment 
Convention on Biological Diversity 

Clean Development Mechanism 

Convention on the Elimination of All Forms of Discrimination 
Against Women 

International Convention on the Elimination of All Forms of Racial 
Discrimination 
China-Pakistan Economic Corridor 

Convention on International Trade in Endangered Species of Wild 
Fauna and Flora 
Combined Nomenclature  
Corruption Perception Index 

Country Policy and Institutional Assessment 
Convention on the Prevention and Punishment of the Crime of 
Genocide 
Convention on the Rights of the Child 

Civil Society Dialogue 

Deep and Comprehensive Free Trade Agreement 
The Directorate General for Agriculture and Rural Development of 
the European Commission 

The Directorate General for Internal Market, Industry, 
Entrepreneurship and SMEs of the European Commission 

The Directorate General for Maritime Affairs and Fisheries of the 
European Commission 

The Directorate General for Trade of the European Commission 
Development Solutions Europe Limited  

Everything but Arms 

European Commission 
European External Action Service 

European Economic Community 
Economic Partnership Agreement 

Environmental Performance Index 

European Union 
Foreign Direct Investment 

Free Trade Agreement 

General Agreement on Tariffs and Trade 
Global Biodiversity Information Facility 

Greenhouse Gas 
Gross National Income 

Generalised Scheme of Preferences 

Special Incentive Arrangement for Sustainable Development and 
Good Governance 

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Growth and Transformation Plan 
Human Development Index 
Herfindahl Index 
Harmonized System 

International Covenant on Civil and Political Rights 
International Covenant on Economic Social and Cultural Rights 

International Energy Agency 

International Labour Organization 
International Monetary Fund 

International Narcotics Control Board 
Inter-Service Steering Group 
International Trade Centre 
Least Developed Country 

Most Favoured Nation 

Mid-Term Evaluation  
Non-governmental Organisation 

Organization for Economic Co-Operation and Development 
Policy Coherence for Development 

Preferential Trade Agreement  

Regulation on Registration, Evaluation, Authorisation and 
Registration of Chemicals 
Rules of Origin 

South Asian Free Trade Area 

Small and Medium Sized Enterprise 
Social Progress Index 
Sanitary and Phytosanitary Standards 
Terms of Reference 

United Nations 
United Nations Convention Against Corruption 

United Nations Conference on Trade and Development 

United Nations Development Programme 
United Nations Framework Convention on Climate Change 

United States of America 
World Bank 

World Customs Organization 

World Trade Organization 

GTP 
HDI 
HI  
HS 

ICCPR 
ICESCR 

IEA 

ILO 
IMF 

INCB 
ISSG 
ITC 
LDC 

MFN 

MTE  
NGO 

OECD 
PCD 

PTA  

REACH 

RoO 

SAFTA 

SME 
SPI 
SPS 
ToR 

UN 
UNCAC 

UNCTAD 

UNDP 
UNFCCC 

US 
WB 

WCO 

WTO 

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List of key concepts 

Economic Concepts/Indicators  

Eligible preferences  

Utilisation rate 

Coverage rate  

Margin of preference  

Preference erosion 

Goods that can access preferential tariff treatment 
under a given trade agreement  

GSP preferential imports as a percentage of eligible 
imports under the respective GSP arrangement  

Eligible preferential imports divided by total dutiable 
imports 

The difference between the duty payable under a GSP 
arrangement and the duty that would be accessible 
under MFN conditions 

The process by which the preference granted to a 
specific good loses its nominal or relative value 

Most-Favoured-Nation 
(MFN) tariff  

The highest amount of duty that a country can impose 
on imports from a non-preferential trading partner 

Trade volumes  

Terms of trade 

Intensive margins  

Extensive margins  

Sectoral output 

Export diversification 

Herfindahl index 

Gravity model 

Fixed effects model  

The amount of goods traded between two countries 
measured in terms of value or quantity 

Relative price of exports in terms of imports 

The increase in the quantity of a good traded as a 
result of a reduction of exporting costs, which further 
leads to an expansion of existing exports. 

The increase in the number of goods traded as a result 
of a reduction of exporting costs, which further leads to 
a widening or diversification in the range of products 
that are exported). 

The output of an industry at a given level of 
aggregation 

Export diversification refers to a change in a country’s 
export structure, which is typically reflected in the 
range of goods that is exported from the same sector 
or from different sectors.  

It is the sum of squared shares of each product in total 
export. A country with a perfectly diversified export 
portfolio will have an index close to zero, whereas a 
country which exports only one product will have a 
value of 1 (least diversified) 

The gravity model is often referred to as the 
‘workhorse’ of international trade policy analysis. It is 
used to analyse the determinants of bilateral trade 
flows. The basic model predicts bilateral trade flows to 
be positively related to economic size (often using GDP 
measurements) and negatively related to distance 
between two countries. Enhanced models used in this 
study estimate the impact of additional variables such 
as the applicable trade regime and the preference 
margins applied.  

A fixed effects model is a statistical model that is used 
primarily to remove omitted variable bias by measuring 
change within a group. It controls for unobserved 
heterogeneity when heterogeneity is constant over 
time and correlated with independent variables. 

Social, Human Rights and Governance Concepts/Indicators 

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Employment 

the 
Employment-to-population 
proportion of the country’s working age population that 
is employed 

to  measure 

ratio 

Female employment 

Share of women in wage employment 

Youth unemployment 

The  unemployment  rate  for  the  age  group  15  to  24 
years 

Wages 

Average real wages; and average real wage growth 

Social Protection Rating 

Social Inclusion Rating 

Poverty rate 

Civil Liberties Index 

Gender Equality Rating 

Voice and Accountability 
Index 

Political Stability Index 

Government Effectiveness 
Index 

Regulatory Quality Index 

Rule of Law Index 

Corruption Perceptions 

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 

including 

to  select 

in  education,  health, 

Assessment  of  the  extent  to  which  a  country  has 
installed  institutions  and  programmes  to  enforce  laws 
and  policies  that  promote  equal  access  for  men  and 
women 
the  economy  and 
protection under law 
Assessment  of  citizens’  ability 
their 
government,  benefit  from  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, 
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 
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  violence 
covering 
rights, 
confidence  in  the  police  force  and  judicial  system,  the 
informal sector etc. 
Assessment  of  the  perceived  level  of  public  sector 

crime,  property 

indicators  on 

development 

private 

sector 

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EUROPEAN COMMISSION 

Index (CPI) 

corruption in a country on a scale of 0 (highly corrupt) 
to 100 (very clean) 

Control of Corruption Index  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. 
Assessment  of  political  rights  in  a  country  covering 
indicators  on  the  electoral  process,  political  pluralism 
and participation, and functioning of government 

Political Rights  Index 

Social Progress Index (SPI)  An  aggregate  of  social  and  environmental  indicators 
that capture three dimensions of social progress: Basic 
Human  Needs,  Foundations  of  Wellbeing,  and 
Opportunity. 
The Sustainable Development Goals (SDGs), otherwise 
known  as  the  Global  Goals,  are  a  universal  call  to 
action  to  end  poverty,  protect  the  planet  and  ensure 
that all people enjoy peace and prosperity. 

Sustainable Development 
Goal  (SDG) 

Environmental Concepts/Indicators 

Waste generation 

Environmental 
Sustainability Rating 

Forest area coverage 

Land use and competition 

Land tenure and ownership 
rights 

Terrestrial and freshwater 
biodiversity 

ND-GAIN index 

Biodiversity 

Climate change 

CO2 emissions 

Biofuels  

Renewable energy 

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  coverage  generally  refers  to  the  relative 
(expressed  in  percentages)  or  absolute  land  area  that 
is covered by forests, forest canopy, or open woodland. 
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) and/or urbanization. 
Private  ownership  of  land  and  further  investments  in 
land  improvements  (i.e.  increased  economic  returns 
per unit of land) 
UN SDG  indicator on the proportion of important sites 
for  terrestrial  and  freshwater  biodiversity  that  are 
covered by protected areas 
Notre  Dame  Global  Adaptation  Initiative:  Navigation 
tool  that  helps  manage  risks  exacerbated  by  climate 
change  such  as  over-crowding, 
insecurity, 
inadequate infrastructure and civil conflicts   
Proportion  of  terrestrial  and  marine  areas  protected, 
number of threatened species 

food 

Climatology  indexes  including  precipitation,  humidity, 
temperature,  weather  extremes,  GHG  emissions  and 
concentrations, etc. 

UN SDG indicator on total CO2 emissions and per capita 
emissions 

Use of biofuels 

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

Proportion of fish stocks 

UN  SDG  indicator  on  the  proportion  of  fish  stocks 

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Biodiversity 

within biologically sustainable levels 

Proportion  of  terrestrial  and  marine  areas  protected, 
number of threatened species 

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1   Introduction 
This  section  will  provide  an  introduction  to  the  Mid-Term  Evaluation  of  the  EU’s 
Generalised  Scheme  of  Preferences  (GSP)  and  its  objectives  in  Section  1.1.  It  will 
further provide an overview of the main tenets of the current GSP (Section 1.2), as well 
as  a  review  of  the  preliminary  intervention  hypothesis  of  the  Regulation  No.  978/2012 
(Section  1.3).  Lastly,  the  methodology  and  approach  to  the  Mid-Term  Evaluation  is 
presented in Section 1.4.  

1.1  The Mid-Term Evaluation of the EU’s GSP 

On  2  May  2016,  the  Directorate  General  for  Trade  of  the  European  Commission  (DG 
Trade)  published  an  Evaluation  and  Fitness  Check  Roadmap4 to  announce  its  mid-term 
evaluation  of  Regulation  (EU)  No.  978/2012  on  a  scheme  of  generalised  tariff 
preferences  (‘the  GSP  Regulation’)5.  The  European  Commission  will  present  its  findings 
on  the  application  of  the  GSP  Regulation  to  the  European  Parliament  and  the  Council, 
which will be used to assess the need to review the GSP.  

In  order  to  support  the  GSP  Evaluation,  the  European  Commission  mandated  the  Mid-
Term  Evaluation  of  the  GSP.  The  evidence-based  report  that  will  result  from  this  study 
will  provide  relevant  data  that  will  feed  into  the  European  Commission’s  Evaluation 
Report.  The  goal  of  this  study  is  to  assess  whether  the  objectives  set  by  the  GSP 
Regulation  are  on  track  to  be  achieved,  on  the  basis  of  the  results  to  date  of  the  EU’s 
GSP in its current form during the period 2014-2016.  

The general objectives of the Mid-Term Evaluation are to undertake an assessment of: 

i. 
ii. 

iii. 

iv. 

v. 

vi. 

vii. 

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 
present GSP;  
the relevance of the scheme with respect to the developmental and other 
needs of developing countries, and in particular, of LDCs; 
the scheme’s coherence with EU foreign, trade and development policy and 
other relevant policies; 
the potential for regulatory simplification and burden reduction both for the 
EU and the beneficiary countries; and  
possible infringements and abuses of the GSP System. 

It  seeks  to  examine  the  impact  across  the  three  different  GSP  arrangements,  namely: 
the  general  arrangement  (commonly  referred  to  as  the  ‘Standard  GSP’  arrangement); 
the  special  incentive  arrangement  for  sustainable  development  and  good  governance 
(commonly  referred  to  as  the  ‘GSP+’  arrangement);  and  the  special  incentive  for  least 
developed  countries  (commonly  referred  to  as  the  ‘Everything  But  Arms’  or  EBA 
arrangement).  

The Mid-Term Evaluation was launched in November 2016 following the kick-off meeting 
in  Brussels,  Belgium.  In  the  Inception  Phase  of  the  project,  several  preparatory  and 
research  activities  were  conducted,  including  a  preliminary  literature  review,  the 

4 European Commission. (2016). Roadmap: Interim Evaluation of the Regulation (EU) No. 978/2012 on a 
scheme of generalised tariff preferences (GSP Regulation). Available at: http://ec.europa.eu/smart-
regulation/roadmaps/docs/2016_trade_021_evaluation_gps_regulation_en.pdf  
5 Regulation (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 

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preparation  of  a  description  how  the  GSP  functions  as  well  as  formulation  of  the 
preliminary  intervention  logic  of  the  GSP  Regulation  in  terms  of  activities,  expected 
results  and  short  and  long-term  impact.  The  phase  also  included  the  finalization  of  the 
methodological  approach  for  the  evaluation  and  the  Stakeholder  Consultation  Strategy, 
as  well  as  the  launch  of  the  dedicated  project  website  to  share  results  and  receive 
stakeholder  inputs.  The  1st  Civil  Society  Dialogue  and  the  1st  Inter-Service  Steering 
Group  (ISSG)  meeting  were  held  on  19  January  2017  in  Brussels,  where  the  Draft 
Inception Report was presented and discussed. Feedback and findings of these activities 
were  incorporated  in  the  Final  Inception  Report,  which  was  published  on  the  dedicated 
website on 25 April 2017.6 

During the Implementation Phase of the project, a great deal of activities was conducted 
by the Project Team. These included quantitative and qualitative analyses of the impact 
of  the  GSP,  including  the  review  of  economic,  social  and  environmental  data. 
Econometric  modelling  was  undertaken  to  identify  and  quantify  the  trade  and  tariff 
impact  on  the  EU  and  beneficiary  countries  of  the  GSP  Regulation.  Local  stakeholder 
workshops were held in Bangladesh on 7 February 2017, in Ethiopia on 7 March 2017, in 
Bolivia  on  26  April  2017,  and  in  Pakistan  on  16  May  2017.  A  12-week  Online  Public 
Consultation was held from 17 March 2017 until 9 June 2017. The 2nd ISSG Meeting was 
held  on  1  June  2017,  where  the  Draft  Interim  Report  was  discussed.  Apart  from 
stakeholder  outreach  workshops,  face-to  face  meetings  and  telephone  interviews  were 
held  with  stakeholders  on  the  impact  and  application  of  the  EU’s  GSP.  The  2nd  Second 
Civil  Society  Dialogue  was  convened  in  Brussels  on  25  September  2017  to  discuss  the 
findings of the Final Interim Report. 

In  the  Finalization  Phase  of  the  Project,  the  outcomes  and  the  results  of  the  impact 
assessment  were  tabulated,  and  proposals  for  policy  recommendations  formulated.  The 
details  of  communication  and  consultation  activities  were  thoroughly  reviewed  for 
insertion into the Final Report and its Annexes:  

o  Outline of contacts with stakeholders in the EU and in the beneficiary countries; 
o  Minutes  of  the  four  local  workshops  in  Pakistan,  Bolivia,  Ethiopia  and 

Bangladesh, including key stakeholder positions and points of view; 

o  A summary of the two  sector-specific case-studies covering textile and clothing 
industry 

including  comments 

from 

as  well  as  the  machinery  sectors, 
stakeholders;  

o  Minutes  of  the  two  Civil  Society  Dialogues  held  in  Brussels,  outlining  key 
stakeholder positions and points of views, programmes and a list of participants; 
o  Concise summary of comments, suggestions and feedback received through the 
online public consultation and how such  feedback  was  incorporated  in  the  Final 
Report; 

o  Overview of the level of use of the dedicated project website; and  
o  References and data sources used. 

A timeline of the main project activities conducted is presented in the diagram below: 

6 The Final Inception Report is available here: http://www.gspevaluation.com/resources/  

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The Evaluation was carried out with the active input and engagement of the Directorate 
General for Trade. An Inter-Service Steering Group (ISSG) was established by the EC to 
allow  for  the  full  range  of  relevant  institutional  perspectives  to  be  shared  with  the 
implementing Project Team in a single forum. The following EU Directorate Generals and 
services were represented in the ISSG: 

Internal Market, Industry, Entrepreneurship and SMEs (DG GROW); 
International Cooperation and Development (DG DEVCO); 

  Trade (DG TRADE); 
 
 
  Agriculture and Rural Development (DG AGRI); 
  Maritime Affairs and Fisheries (DG MARE); 
  Employment, Social Affairs & Inclusion (DG EMPL) 
  Environment (DG ENV); 
  Health and Food Safety (DG SANTE); 
  Energy (DG ENER); 
  Eurostat – European Statistics (DG ESTAT); 
  Taxation and Customs Union (DG TAXUD); 
  Legal Services (DG SJ); 
  The European Commission Secretariat General; and  
  The European External Action Service (EEAS). 

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1.2  Overview of current Generalised Scheme of Preferences  

The current GSP offers three different preference arrangements:  

(i) 
(ii) 

(iii) 

a general arrangement (‘Standard GSP’);  
a  Special  Incentive  Arrangement  for  Sustainable  Development  and  Good 
Governance (‘GSP+’); and  
an Everything but Arms (‘EBA’) arrangement.  

Table 1 provides an overview of provisions and beneficiaries under these arrangements.  

Table 1:  Overview of the three GSP arrangements7 

Standard GSP 

GSP+ 

Beneficiaries 

Low or lower-middle 
income countries 

Vulnerable (in terms 
of export 
diversification, export 
and import volumes) 
Standard GSP 
beneficiaries that 
have ratified the 27 
GSP+ relevant 
international 
conventions 

EBA 

LDCs 

Number of 
beneficiaries 

Non-sensitive 
goods 

18 

9 

49 

duty suspension for 
around 66% of all EU 
tariff lines  

duty suspension for 
around 66% of all EU 
tariff lines  

duty suspension for 
all goods with the 
exception of arms and 
ammunition 

Sensitive goods 
specific duty 
ad valorem duty 

duty reduction: 
30 per cent 
3.5 percentage points 

duty suspension 

duty suspension 

The Standard GSP 
The Standard GSP arrangement is targeted at developing countries that are classified by 
the  World  Bank  as  lower  or  lower-middle  income  countries  and  that  do  not  have  equal 
preferential  access  to  the  EU  market  through  another  arrangement  or  measure  –  for 
example  an  Association  Agreement  (AA),  Free  Trade  Agreement  (FTA)  or  Economic 
Partnership Agreement (EPA). Countries that are eligible for trade preferences under the 
Standard GSP are listed in Annex II of the GSP Regulation, which is reviewed on a yearly 
basis. 8 If  beneficiaries  no  longer  meet  the  requirements  set  out  above,  they  will  no 
longer  be  granted  trade  preferences  under  the  Standard  GSP. 9 As  of  1  January  2017, 
there were 23 beneficiary countries under the Standard GSP arrangement. 

The  Standard  GSP  beneficiary  countries  can  benefit  from  duty  suspension  for  non-
sensitive  products,  except  for  agricultural  components,  as  well  as  from  duty  reductions 
for sensitive products across approximately 66 per cent of all EU tariff lines. A Standard 
GSP beneficiary country ceases to benefit from preferential market access for a specific 
product group if European Union imports of such products exceed the thresholds set out 
in the GSP Regulation for three consecutive years (‘the graduation mechanism’).10  

7 Situation as of December 2017. 
8 Article 5 (2) of the GSP Regulation specifically states that: “[b]y 1 January of each year following the entry 
into force of this Regulation the Commission shall review Annex II.” 
9 Regulation (EU) No. 978/2012, Chapter II: General Arrangement, Article 4-5. 
10 Regulation (EU) No. 978/2012, Chapter II: General Arrangement, Article 7-8. 

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The GSP+ arrangement 
The  GSP+  arrangement  was  introduced  in  2006  to  support  vulnerable  developing 
countries  in  assuming  the  requirements  tied  to  the  ratification  and  effective 
implementation  of  27  international  conventions  on  human  rights,  labour  rights, 
environmental protection and climate change, and good governance. 

Although  the  number  of  conventions  included  were  not    expanded;  the  graduation  by 
product section no longer applies to GSP+ countries and applications are accepted at any 
time  rather  than  only  once  in  every  18  months. 11  The  removal  of  more  advanced 
developing  countries  and  highly  competitive  sectors  from  the  GSP  has  also  reduced 
competitive pressures faced by GSP+ beneficiaries.    

Furthermore, the  current GSP Regulation relaxes the  eligibility criteria for the  GSP+.  In 
the 2008 GSP Regulation, beneficiaries were eligible for GSP+ only if their GSP covered 
imports  represented  less  than  1  per  cent  in  value  of  total  GSP  imports  to  the  EU.  This 
was  increased  to  2  per  cent  with  Regulation  (EU)  978/2012.12 As  of  9th  February  2015, 
this  threshold  was  further  increased  to  6.5  percent  as  per  the  Commission  Delegated 
Regulation (EU) 2015/602.13 

Standard  GSP  beneficiary  countries  can  apply  for  GSP+  preferential  market  access  if 
they satisfy the following three conditions: 

1.  First,  the  beneficiary  is  considered  to  be  vulnerable  due  to  a  lack  of  export 
diversification,  defined  below,  and  it  faces  insufficient  integration  within  the 
international  trading  system.  Annex  VII  of  the  GSP  Regulation  mentions  the 
following thresholds for diversification and integration: 

a.  Sections  of  the  GSP-covered  imports  represent  75%  of  total  GSP  imports 

by that country over a three-year period; and 

b.  The beneficiary’s  GSP  covered imports  is the three-year average share of 
GSP-covered  imports  of  the  specific  beneficiary  country,  relative  to  the 
GSP-covered  imports  of  all  GSP  countries.   This  average  has  to  be  lower 
than 6.5% in order to qualify for GSP+. 

2.  Furthermore,  the  beneficiary  has  ratified  the  27  GSP+  covered  conventions  and 
the  relevant  monitoring  bodies  do  not  identify  serious  failure  to  effectively 
implement any of the relevant conventions in their most recent conclusions.  
3.  Finally, the beneficiary gives its binding undertaking to maintain ratification of the 
relevant  conventions  and  to  ensure  the  effective  implementation  thereof,  to 
accept  the  reporting  requirements  imposed  by  each  of  those  conventions  and  to 
accept regular monitoring and review under said conventions and to participate in 
and cooperate with the GSP+ monitoring process.14 

If  the  beneficiary  country  no  longer  fulfils  the  conditions  set  out  in  Regulation  (EU) 
978/2012, it can be (temporarily) withdrawn from the scheme.  

There  are  currently  9  beneficiaries  under  the  GSP+  arrangement.  GSP+  beneficiary 
countries can benefit from complete duty suspension for products across approximately 

11 European Commission. (October 2014) The EU’s Generalised Scheme of Preferences (GSP), p. 12. Available 
at: http://trade.ec.europa.eu/doclib/docs/2014/november/tradoc_152865.pdf   
12   Regulation (EU) No. 978/2012, Annex VII 1 (b) 
13 Commission Delegated Regulation (EU) 2015/602 amending Regulation (EU) No. 978/2012 of the European 
Parliament and the Council as regards the vulnerability threshold defined in point 1(b) of Annex VII to that 
Regulation, Article 1 
14 Regulation (EU) No. 978/2012, Chapter III: Special Incentive Arrangement for Sustainable Development and 
Good Governance, Article 9. 

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66 per cent of all EU tariff lines.15 The graduation mechanism for the Standard GSP does 
not apply to the GSP+ arrangement. 

Another important reform introduced by the GSP Regulation is the enhanced monitoring 
mechanism.  In  line  with  the  objective  of  policy  coherence,  this  mechanism  aims  to 
provide  incentives  to  uphold  commitments  for  sustainable  development  and  good 
governance  of  the  beneficiary  countries.  This  is  carried  out  through  two  interrelated 
tools: (i) the 'scorecard' – a list of issues covering shortcomings in implementation of the 
international  conventions  and  cooperation  with  international  monitoring  bodies  which  is 
sent  out  every  two  at  the  start  of  the  GSP+  monitoring  cycle;  and  (ii)  the  GSP+ 
dialogue, whereby the EU engages with the respective beneficiary countries, focusing on 
the  beneficiary’s  shortcomings,  achieving  progress  on  these  shortcomings  and  on 
overcoming challenges. The GSP+ dialogue builds on existing bilateral fora, which allows 
focus on the specific country’s national context.16  

In addition to the scorecard and the dialogues, the reformed GSP+ adopted the following 
practices to improve the quality of monitoring:17 

1.  Status  reports  on  the  compliance  of  GSP+  countries  with  reporting  obligations 
under the conventions  and effective implementation  are now required every two 
rather  than  every  three  years.  Scrutiny  by  the  European  Parliament  is  added  to 
that of the Council of the EU. 

2.  Beneficiary countries are required to fully cooperate with international monitoring 

bodies and fulfil their reporting requirements, without reservations. 

3.  Specific  criteria  for  withdrawal  have  been  provided  for  by  the  GSP  Regulation. 
These  criteria  rely  on  conclusions  and  reports  from  relevant  monitoring  bodies 
and  are  supplemented  by  sources  beyond  these  reports  if  necessary.  Moreover, 
the  burden  of  proof  has  been  reversed,  so  that  the  beneficiary  country  is 
responsible for demonstrating how it has improved on issues previously identified 
as problematic.  

The EBA arrangement 
The  EBA  is  a  permanent  arrangement,  covering  the  LDCs  as  classified  by  the  United 
Nations (UN), numbering 49 at the time of writing. This arrangement, which was put in 
place in 2001 and incorporated into the GSP Regulation, allows duty-free and quota-free 
access for all products originating in LDCs, except for arms and ammunition listed in the 
World Customs Organization (WCO) Harmonized System (HS) Chapter 93. The EBA was 
not affected by the reform of the GSP. Hence, unlike other GSP countries, LDCs are not 
excluded  from  the  scheme  if  they  benefit  from  other  preferential  arrangements.  This 
makes tariffs treatment and product coverage more advantageous for LDCs compared to 
earlier  arrangements  such  as  the  Cotonou  Agreement. 18 As  a  result  of  the  reformed 
graduation criteria under the GSP Regulation, fewer countries benefit from the GSP and 
GSP+ arrangements. This has reduced the competitive pressure faced by LDCs and has 
provided  these  countries  with  more  export  opportunities.  In  this  respect,  the  reforms 
have made the EBA arrangement more effective. 

Policy  changes  which  are  especially  relevant  for  the  EBA  arrangement  are  the  updated 
Rules  of  Origin  (RoO)  under  the  GSP,  which  entered  into  force  on  1  January  2011. 
Different RoO apply to  Standard GSP and GSP+ beneficiaries on the  one hand and EBA 
beneficiaries  on  the  other.  In  the  case  of  the  latter,  there  is  a  lower  value  addition 

15 Regulation (EU) No. 978/2012, Chapter III: Special Incentive Arrangement for Sustainable Development and 
Good Governance, Article 12. 
16 European Commission (2016). GSP+ Report on sustainability, human rights and good governance. Questions 
and Answers, p. 3. 
17 European Commission. (October 2014)). The EU’s Generalised Scheme of Preferences (GSP), p. 12. Available 
at: http://trade.ec.europa.eu/doclib/docs/2014/november/tradoc_152865.pdf   
18 UNCTAD. (2015). Generalized System of Preferences: Handbook on the Scheme of the European Union, p. 
13. Available at: http://unctad.org/en/PublicationsLibrary/itcdtsbmisc25rev4_en.pdf 

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threshold for several products. This allows LDCs to use more non-originating materials.19 
Additionally, under the reformed RoO, the African, Caribbean and Pacific Group of States 
(ACP  countries)  which  are  included  in  the  GSP  can  no  longer  enjoy  accumulation  with 
other ACP countries, as they did under the Cotonou agreement. However, LDCs can still 
profit  from  the  Cotonou  agreement’s  conditions  where  these  are  more  favourable  to 
them.20   

The  following  sections  complement  the  aforementioned  overview  of  the  current  GSP  by 
providing  a  detailed  account  of  (i)  the  beneficiary  countries  covered;  (ii)  the  product 
coverage; (iii) the tariff reduction or suspension; (iv)the graduation mechanism; (v) the 
withdrawal mechanism; and (vi) the safeguard mechanism.    

1.2.1  Beneficiary countries 
The  reform  of  the  GSP  readjusted  the  focus  of  the  scheme  to  those  countries  most  in 
need and significantly reduced the number of beneficiary countries (from 177 to 90). In 
addition  to  the  revised  conditions  mentioned  in  Chapter  1.2,  overseas  countries  or 
territories that are under the administration of the EU Member States or other developed 
countries also can no longer benefit from preferences under the GSP.  

The  80  beneficiary  countries  as  of  31  December  2016  that  will  be  investigated  in  this 
study are listed in Table 2 below. These are countries that traded consistently under the 
GSP arrangement from January 2011 until December 2016.21 

Table 2: Beneficiary countries by GSP arrangement included in the study22 
Standard GSP 

GSP+23 

EBA 

1.  Cameroon (since 1 
October 2014) 

2.  Congo 
3.  Cook Islands 
4.  Cote d’Ivoire (since 1 

October 2014) 

5.  Fiji(since 1 October 2014) 
6.  Ghana (since 1 October 

2014) 
7.  India 
8.  Indonesia 
9.  Iraq 
10. Kenya (since 1 October 

2014) 

11. Marshall Islands 
12. Micronesia 
13. Nauru 
14. Nigeria 
15. Niue 
16. Sri Lanka24 

1.  Armenia 
2.  Bolivia 
3.  Cape Verde 
4.  Kyrgyzstan (since 25 
November 2015) 

5.  Mongolia 
6.  Pakistan 
7.  Paraguay 
8.  Philippines (since 25 
December 2014)  

1.  Afghanistan 
2.  Angola 
3.  Bangladesh 
4.  Benin 
5.  Bhutan 
6.  Burkina Faso 
7.  Burundi 
8.  Cambodia 
9.  Central African Republic  
10. Chad 
11. Comoros Islands 
12. Democratic Republic of Congo 
13. Djibouti 
14. Equatorial Guinea 
15. Eritrea 
16. Ethiopia 
17. Gambia 
18. Guinea 
19. Guinea-Bissau 
20. Haiti 

19 S. Bilal, I. Ramdoo and Q. de Roquefeuil, GSP Reform: Principles, values and coherence, p. 10. Available at: 
http://ecdpm.org/wp-content/uploads/2013/11/BN-24-GSP-Reform-Principles-Values-Coherence-2011.pdf  
20 Ibid., p. 14. 
21 It is important to note that Myanmar/Burma and South Sudan started to trade under EBA preferences in 
2013, but were still considered as a part of this group as they still trade under GSP preferences. On the other 
hand, Georgia graduated from the GSP+ arrangement in January 2017 and was not considered as a part of the 
selected 80 beneficiary countries.  
22 It should be noted there are some countries that simultaneously received preferential market access 
privileges under the GSP and under a free trade agreement in a given year. Annex II details the specific trade 
regime under which import partners traded with the European Union in a given year. In the case where there is 
simultaneous use of trade regimes, the one which provides greater market access treatment is recorded.  
23 Pakistan, the Philippines and Kyrgyzstan transitioned from the Standard GSP arrangement to the GSP+ 
arrangements in the years 2014, 2015, and 2016, respectively.  

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17. Swaziland (since 1 
October 2014) 

18. Syria 
19. Tajikistan 
20. Tonga 
21. Ukraine25 
22. Uzbekistan 
23. Vietnam 

21. Kiribati 
22. People’s Democratic Republic 

Lao 
23. Lesotho 
24. Liberia 
25. Madagascar 
26. Malawi 
27. Mali 
28. Mauritania 
29. Mozambique 
30. Myanmar/Burma26 
31. Nepal 
32. Niger 
33. Rwanda 
34. Samoa27 
35. Sao Tome and Principe 
36. Senegal 
37. Sierra Leone 
38. Solomon Islands 
39. Somalia 
40. South Sudan 
41. Sudan 
42. Tanzania 
43. Timor-Leste 
44. Togo 
45. Tuvalu 
46. Uganda 
47. Vanuatu 
48. Yemen 
49. Zambia 

1.2.2  Product coverage 
With the exception of EBA arrangement – which already covers all products except arms 
and  ammunition  –  product  coverage  under  the  reformed  GSP  has  been  slightly 
expanded,  resulting  in  increased  preference  margins  for  the  covered  products.  In 
particular,  the  GSP  encompasses  6,350  eligible  products  under  the  Standard  GSP  and 
GSP+ arrangements, and 7,200 under the EBA arrangement.  

The  expanded  product  coverage  mainly  involves  raw  materials  and  can  be  divided  into 
three  categories:  category  A,  adding  15  new  tariff  lines  to  non-sensitive  (duty-free 
access) products; category B, converting 4 tariff lines that were sensitive (reduced tariff 
access)  to  non-sensitive;  and  category  C,  adding  4  new  tariff  lines  to  GSP+  (duty-free 
access).  Product  coverage  under  the  Standard  GSP  and  GSP+  arrangements  now 
includes  a  number  of  agricultural  and  fishery  products  listed  in  HS  chapters  1-24,  and 
almost  all  processed  and  semi-processed  industrial  products,  including  ferroalloys,  that 
are listed in HS chapters 25-97, except for chapter 93 (arms and ammunition).28  

24 Given that Sri Lanka benefitted from Standard GSP preferences over the period under investigation, we will 
investigate the related impacts under this arrangement. Sri Lanka’s preferential treatment has since been 
reinstated in the GSP+ arrangement since 19 May 2017. 
25 Ukraine will cease to benefit from GSP preferences on 1 January 2018, following a two-year transition period 
after entry into force of the EU-Ukraine Deep and Comprehensive Free Trade Area (DCFTA). 
26 In July 2013, the Commission reinstated EBA preferences for Myanmar/Burma, applied retroactively as of 13 
June 2012. More information is available at: http://europa.eu/rapid/press-release_IP-13-695_en.htm  
27 Samoa will graduate to Standard GSP status on 1 January 2019 as it is no longer identified as an LDC by the 
UN. 
28 UNCTAD. (2015). Generalized System of Preferences: Handbook on the Scheme of the European Union, p. 7. 
Available at: http://unctad.org/en/PublicationsLibrary/itcdtsbmisc25rev4_en.pdf 

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1.2.3  Tariffs 
The  GSP  Regulation  includes  three  possible  methods  of  calculating  tariff  reductions  for 
sensitive  products,  with  limited  exceptions  for  textiles  and  clothing.  This  differentiates 
sensitive products from non-sensitive ones:29 

1.  A  flat  rate  reduction  of  3.5  percentage  points  in  the  most-favoured-nation  duty 

(applicable to the ad valorem duties); 

2.  A  30  per  cent  reduction  in  the  most-favoured-nation  duty  where  only  specific 

duties apply; 

3.  A flat rate reduction of 3.5 percentage points applicable to the ad valorem duties 

only, where duties are composed of both ad valorem and specific duties. 

Specific calculation methods were put in place in 2001. Concerns have since been raised 
that  for  certain  products  these  methods  might  lead  to  more  favourable  treatment  than 
3.5  percentage  points.  Accordingly,  the  2008  GSP  Regulation  introduced  a  provision  to 
ensure that in such cases, the previous preferential duty rate applies.  

1.2.4  Graduation mechanism 
Under  the  current  legal  framework,  a  country  will  graduate  from  the  list  of  beneficiary 
countries if it no longer meets the scheme’s eligibility criteria  – i.e. if it already benefits 
from  other  preferential  market  access  or  is  classified  by  the  World  Bank  as  a  high-
income or upper-middle income country. To facilitate the process of adding or removing 
a  country  from  the  list  of  eligible  beneficiaries,  the  Commission  has  been  empowered 
under the GSP Regulation to amend the list through delegated acts rather than through 
the much longer ordinary legislative procedure.30  

In the  case of Standard GSP  countries only, an individual product  section can graduate 
from the GSP if it has become highly competitive (Article 8). To improve the functioning 
of the graduation mechanism, the GSP reform expanded the number of product sections 
from 21 to 32 to reflect more homogeneous product categories. Moreover, to reflect the 
reduced  number  of  beneficiaries,  the  thresholds  for  product  section  graduation  have 
been  increased  from  15  to  17.5  per  cent,  with  the  exception  of  textiles  for  which 
thresholds have increased from 12.5 to 14.5 per cent for textiles.31  

Following  China’s  graduation  from  the  GSP,  the  thresholds  for  product  graduation  were 
once  again  revised,  increasing  from  17.5  to  57  per  cent  with  the  exception  of  textiles, 
where  the  thresholds  moved  from  14.5  to  47.2  per  cent.32 The  threshold  for  live  trees 
and  other  plants,  oils  and  fats  and  magnesium  oxide,  mineral  fuels  and  quicklime 
remained  at  17.5  per  cent. 33  This  mechanism  does  not  apply  to  GSP+  and  EBA 
beneficiaries. The list of product  sections which have been removed through graduation 
is subject to a review by the Commission every three years.34  

29 Ibid., p. 9. 
30 European Commission. (October 2014) The EU’s Generalised Scheme of Preferences (GSP), p. 14. Available 
at: http://trade.ec.europa.eu/doclib/docs/2014/november/tradoc_152865.pdf   
31 UNCTAD. (2015). Generalized System of Preferences: Handbook on the Scheme of the European Union, p. 7. 
Available at: http://unctad.org/en/PublicationsLibrary/itcdtsbmisc25rev4_en.pdf 
32 Commission Delegated Regulation (EU) 2015/1978 of 28 August 2015 amending Regulation (EU) No 
978/2012 of the European Parliament and the Council as regards the modalities for the application of Article 8 
listed in Annex VI to that Regulation.  
33 Commission Delegated Regulation (EU) 2015/1978 of amending Regulation (EU) No. 978/2012 of the 
European Parliament and the Council as regards the modalities for the application of Article 8 listed in Annex VI 
to that Regulation. 
34 UNCTAD. (2015). Generalized System of Preferences: Handbook on the Scheme of the European Union, p. 7. 
Available at: http://unctad.org/en/PublicationsLibrary/itcdtsbmisc25rev4_en.pdf 

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1.2.5  Withdrawal mechanism 
Article  19  of  the  GSP  Regulation  defines  the  reasons  for  which  preferences  may  be 
temporarily withdrawn in respect of all or certain products:35 

1.  Serious and systematic violation of principles laid down in the main human rights 

and labour rights conventions listed in the GSP Regulation; 

2.  Export of goods made by prison labour; 
3.  Serious  shortcomings  in  customs  controls  on  the  export  or  transit  of  drugs  or 
failure  to  comply  with  international  conventions  on  antiterrorism  and  money 
laundering; 

4.  Serious  and  systematic  unfair  trading  practices,  including  those  affecting  the 
supply  of  raw  materials  and  those  which  are  prohibited  or  actionable  under  the 
WTO Agreements; 

5.  Serious and systematic infringement of the objectives adopted by regional fishery 
organisations  or  any  international  arrangements  to  which  the  EU  is  a  party 
concerning the conservation and management of fishery resources. 

In  Article  21  of  the  GSP  Regulation,  the  concept  of  administrative  cooperation  is 
introduced, requiring a beneficiary country to timely communicate, assist and update on 
the  rules  of  origin  (RoO).  In  case  this  is  not  respected  by  a  beneficiary  country,  the 
country can be temporarily withdrawn from the scheme. The  GSP Regulation introduced 
a provision allowing the Commission to withdraw preferences in an expedited manner in 
urgent cases.36     

1.2.6  Safeguard mechanism 
The objective of the safeguard mechanism is to prevent serious difficulties for European 
producers as a result of the preferences granted under the GSP. 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 reform granted 
the  Commission  with  the  authority  to  issue  delegated  acts  to  immediately  reinstate 
Common Customs Tariff duties in urgent cases (Article 27).   

Specific  safeguard  clauses  were  introduced  by  the  GSP  Regulation  (Articles  29-31)  for 
textile,  agriculture  and  fishery  products.  These  are  additional  to  the  surveillance 
mechanism  for  agriculture  and  fishery  products,  which  already  existed  in  the  previous 
Regulation. However, these specific safeguard clauses do not apply to EBA beneficiaries 
nor  to  countries  with  a  share  of  imports  into  the  EU  of  less  than  6  per  cent  of  all  GSP 
covered imports.37  

1.3  Review of preliminary intervention hypothesis38  

The general objectives  of the GSP Reform  of 201239 were threefold: (i) to contribute to 
poverty  eradication  by  expanding  exports  from  countries  most  in  need;  (ii)  to  promote 

35 UNCTAD. (2015). Generalized System of Preferences: Handbook on the Scheme of the European Union, p. 
18. Available at: http://unctad.org/en/PublicationsLibrary/itcdtsbmisc25rev4_en.pdf. 
36 Regulation (EU) No 978/2012 of the European Parliament and of the Council, article 21, paragraph 3.  
37 UNCTAD. (2015). Generalized System of Preferences: Handbook on the Scheme of the European Union, p. 
21. Available at: http://unctad.org/en/PublicationsLibrary/itcdtsbmisc25rev4_en.pdf  
38 It is important to note that the Project Team did not find it necessary to revise the initial intervention 
hypothesis that was presented in the Inception Report. There was overall consistency with the work performed 
and the findings and conclusions drawn from the execution of the other research tasks.  
39 See for reference the following documents: Commission Staff Working Paper Impact Assessment Vol. I 
Accompanying the document  Proposal for a Regulation of the European Parliament and of the Council on 
applying a scheme of generalised tariff preferences {COM(2011) 241 final}{SEC(2011) 537 final, available at: 
http://ec.europa.eu/smart-regulation/impact/ia_carried_out/docs/ia_2011/sec_2011_0536_en.pdf ; 

35 

 
 
 
 
 
                                                 
 
EUROPEAN COMMISSION 

sustainable development and good governance; and (iii) to ensure a better safeguard for 
the EU’s financial and economic interest. 

These  general  objectives  were  further  translated  into  six  specific  operational  objectives 
for the GSP Regulation: 

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  ensuring  that  the  EU’s 

financial and economic interests are protected; and 

6.  To enhance legal certainty, stability and predictability of the scheme. 

The  intervention  logic  in  Figure  1  shows  the  linkage  between  the  GSP  Regulation’s 
implementation  activities,  the  operational  objectives,  the  intermediate  effects  and  the 
expected  results  for  the  beneficiaries  as  well  as  the  short,  medium  and  long-term 
impact.    The  figure  demonstrates  the  channels  through  which  the  scheme  achieves  its 
objectives and impact. 

Commission Staff Working Paper Impact Assessment Vol. II Accompanying the document  Proposal for a 
Regulation of the European Parliament and of the Council on applying a scheme of generalised tariff 
preferences {COM(2011) 241 final}{SEC(2011) 537 final, available at: 
http://aei.pitt.edu/38027/1/SEC_(2011)_536_II_1.pdf  

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Figure 1: Intervention logic for the Regulation (EU) No. 978/2012 

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1.4  Method and Approach to the Mid-Term Evaluation (MTE) 

The  Project  Team  utilised  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;  and  (ii)  an  inclusive  and  extensive 
stakeholder consultation process; and (iii) country and sector case studies.  

The economic analyses of the scheme used up-to-date and detailed economic, trade and 
tariff data provided by Eurostat of the European Commission. 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  has 
been  complemented  by  qualitative  research  based  on  literature  sources  as  well  as 
econometric estimation of the determinants of trade flows using gravity modelling. 

for 

framework 

the  MTE  of 

in  
The  analytical 
Annex  IV. It outlines the approach to assess the application and impact of the current 
GSP 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  EU’s  GSP 

is  presented 

The Project Team has applied the following methodology for the economic, social, human 
rights and environmental impact analyses. A similar approach was also taken to the four 
country case studies and the two sectoral case studies:  

i. 

Economic  impact  analysis  –  Throughout  the  course  of  the  MTE,  the  Project 
Team 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  utilisation.  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  Project  Team  conducted  an  in-depth 
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  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.  

For  effective  econometric  modelling,  the  trade  data  were  cleaned  and  matched 
with tariff data by country and by product class at the CN-8 digit level in order to  
allow  the  Project  Team  to  analyse  the  impact  of  the  GSP  reform  as  precisely  as 
possible.  The  Project  Team  analysed  the  trade  data  from  three  years  before  to 
three years after the scheme’s reform 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  the  GSP  Regulation.  To  ensure  consistency  of  data,  the  Project  Team 
made use of EU import data 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.  

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iii. 

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Social  and  human  rights  impact  analyses:  The  Project  Team  has  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.  

indicators  and  with  substantial 

Environmental  impact  analysis:  To  carry  out  the  environmental  analysis 
section of the evaluation, the Project Team conducted extensive research on the 
pre-determined 
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 Project Team examined a wide range of environmental impacts 
which include: air and water purity/pollution; waste; natural resources, including 
forests, wildlife and fisheries; biodiversity; and climate change. 

input 

The  reformed  GSP  has  only  been  in  force  for  three  years,  and  as  a  result  the  Project 
Team found that the number of readily available and up-to-date social, human rights and 
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.  As  a  result,  the 
Project  Team  utilised  international  databases  and  indices  (such  as  the  Social  Progress 
Index and the ND-GAIN Index) to create cross-country comparative assessment.  

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.  

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  analyses  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 

39 

 
 
 
 
 
EUROPEAN COMMISSION 

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. 

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2  Economic impact analysis 
This section will discuss the economic impact of the GSP on the beneficiary countries. It 
will address the following evaluation questions: 

i.  What  has  been  the  impact  of  the  present  scheme  on  developing  countries  and 

LDCs? 

ii.  What are the factors influencing the achievements observed? 
iii.  What  unintended  consequences, 

if  any,  can  be 

linked  to  the  design, 

implementation, or use of the current GSP? 

Firstly,  a  brief  overview  of  the  available  evaluations  on  the  economic  impact  of  the 
previous  GSP  will  be  presented  in  Section  2.1.  Secondly,  an  overview  of  tariffs  and 
preference  margins  will  be  presented  (Section  2.2.1),  as  well  as  detailed  analyses  of 
trade  flows under the various components  of the GSP  (Section  2.2.2).  It will contrast 
the impact before the introduction of Regulation No.978/2012 (during 2011-2013, which 
is  referred  to  as  the  pre-reform  period)  with  the  period  of  implementation  of  the 
Regulation  (2014-2016,  which  is  referred  to  as  the  post-reform  period).  Furthermore, 
the  section  will  present  econometric  estimates  of  impact  of  the  GSP  Regulation  using  a 
gravity  modelling  approach  (Section  2.3)  as  well  as  estimates  of  the  determinants  of 
preference utilisation rates (Section 2.4). 

2.1  Lessons learnt from previous evaluations 

The  expected  economic  impact  of  the  GSP  on  the  beneficiary  countries  is  premised  on 
the hypothesis that preferential market access encourages higher economic growth as a 
result  of  increased  export  opportunities  due  to  lowering  market  access  barriers. 
Furthermore,  it  is  expected  that  preferences  may  increase  exports  at  the  intensive 
margin  (that  is,  where  countries  increase  their  existing  exports),  as  well  as  at  the 
extensive  margin  (where  countries  widen  or  diversify  the  range  of  products  that  are 
exported).  Along  with  the  EU  market  providing  an  economic  driver  for  growth  and 
development, it is anticipated that beneficiary countries may also benefit from improved 
access to regional and global markets, as well as from increased inflows of Foreign Direct 
Investment (FDI).  

However, it has been noted that participation in a preferential tariff regime is merely one 
out of many factors that may propel the growth of an economy. The scheme operates in 
an overall bigger context in which trade preferences can only serve as a facilitator, albeit 
a  highly  significant  one,  in  assisting  a  beneficiary  country  to  achieve  its  growth  and 
development objectives.40 

Evaluation  studies  indicate  that  the  GSP  has  led  to  an  increase  in  exports  from 
developing  countries  to  the  EU  and  has  had  an  overall  positive  effect  on  the  economic 
and  social  development  of  the  respective  countries.41 However,  the  level  of  exports  to 
the EU differs a great deal among GSP beneficiaries.  In 2010, it was found that the EU 
imports  under  the  GSP  from  East  Asia,  the  Pacific  and  South  Asia  are  significantly 
greater than any other countries or regions included in the GSP.42 

40CARIS.(2010). Mid-Term Evaluation of the EU’s Generalised System of Preferences, p. 12. 
41CARIS.(2010). Mid-Term Evaluation of the EU’s Generalised System of Preferences. Rahman M. (2014). Trade 
Benefits for Least Developed Countries: the Bangladesh Case. Available at: 
http://www.un.org/en/development/desa/policy/cdp/cdp_background_papers/bp2014_18.pdf. Copenhagen 
Economics.(2015). Assessment of Economic Benefits Generated by the EU Trade Regimes towards the 
Developing Countries. Available at:  http://trade.ec.europa.eu/doclib/docs/2015/july/tradoc_153595.pdf 
42CARIS.(2010). Mid-Term Evaluation of the EU’s Generalised System of Preferences. 

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It  was  also  observed  that  the  economic  impact  of  the  EU’s  GSP  in  the  beneficiary 
countries  is  measurable  after  a  relatively  short  period  of  time.  The  Copenhagen 
Economics  study  on  the  economic  benefits  generated  by  the  GSP  arrangement  in 
developing  countries  finds  that  the  sizeable  impact  on  exports  is  recognizable,  on 
average, within two years after preferences have been granted.43 

Importantly,  the  share  of  total  EU  imports  which  entered  under  the  GSP  is  relatively 
modest.    In  2008,  under  the  previous  GSP  Regulation,  only  5.1  per  cent  of  total  EU 
imports were under GSP, with imports under the Standard GSP arrangement accounting 
for  4.18  per  cent,  while  0.46  per  cent  and  0.46  per  cent  of  EU  imports  entered  under 
GSP+ and EBA arrangements, respectively.  

The GSP intends to stimulate a beneficiary country’s economic growth by widening their 
preference  margins,  thereby  contributing  to  the  respective  country’s  competitiveness. 
However,  as  trade  barriers  are  generally  lowered  via  multilateral  trade  liberalization  as 
well  as  regional  or  bilateral  FTAs,  the  value  of  the  GSP  trade  preferences  is  bound  to 
diminish. Several studies have paid attention to this development of preference erosion 
and have investigated the changes of preference margins over time.44 

Research  on  the  impact  of  trade  preferences  under  the  previous  GSP  Regulation  noted 
that  there  were  a  significant  number  of  sectors  where  GSP  preferences  had  been 
completely  eroded  and  several  exports  from  GSP  beneficiary  countries  utilise  the  full 
Most  Favoured  Nation  (MFN)  tariff  (i.e.  where  the  MFN  tariff  is  equal  to  zero). 45 For 
example,  a  case  study  on  Mozambique,  presented  in  the  2010  Mid-Term  Evaluation  of 
the  EU’s  GSP  Report,  suggests  that  the  impact  of  the  preference  regime  is  likely  to  be 
overstated,  because  a  significant  number  of  products  exported  by  developing  countries 
do not benefit from any positive preferential margin since they enter the EU under MFN 
= 0 duties.46 This has significant implications for the impact of the  GSP, which critically 
depends “on the extent of that preference margin, as well as on the relationship between 
that  margin,  and  the  incentive  for  firms  and  countries  to  utilise  the  preferences  on 
offer.”47 

There are some differences in opinions in the evaluation literature as to where eventual 
tariff  margins  and  preference  rents  are  absorbed.  Some  case  studies,  like  the  one  on 
Mozambique, argue that exporters may be unable to capture the price margin related to 
the  trade  preferences.48 Other  studies  contest  this  and  indicate  that  export  prices  and 
the  preference  rents  of  the  decreased  tariffs  are  at  least  partly  captured  by  the 
exporters.49 The  CARIS  2010  evaluation  states  that  “both  market  share  and  the  size  of 
the  preference  margin  are  positively  transmitted  to  the  price  margin,  which  suggests 
that preference margins are transmitted to exporters.”50 

The evaluation literature further suggests that the EU’s GSP has had a positive impact on 
countries’  export  diversification.  The  theoretical  explanations  for  this  expected  benefit 
are  rooted  in  the  infant  industry  assumption  as  well  as  the  more  recent  heterogeneous 

43Copenhagen Economics. (2015). Assessment of Economic Benefits Generated by the EU Trade Regimes 
Towards the Developing Countries, p. 17. 
44CARIS.(2010). Mid-Term Evaluation of the EU’s Generalised System of Preferences; Cirera, X. (2010).The 
Impact of Trade Preferences on Export Prices in the European Union – Who Captures the Preference Rent? 
45Cirera, X. (2010).The Impact of Trade Preferences on Export Prices in the European Union – Who Captures 
the Preference Rent?p. 22. 
46Cirera, X. and Alfieri, A. (2011).Unilateral Trade Preferences in the EU: An Empirical Assessment for the Case 
of Mozambican Exports, p. 9. 
47CARIS.(2010). Mid-Term Evaluation of the EU’s Generalised System of Preferences, p. 13. 
48Cirera, X. and Alfieri, A. (2011).Unilateral Trade Preferences in the EU: An Empirical Assessment for the Case 
of Mozambican Exports, p. 9. 
49CARIS.(2010). Mid-Term Evaluation of the EU’s Generalised System of Preferences, p. 69; Cirera, X. 
(2010).The Impact of Trade Preferences on Export Prices in the European Union – Who Captures the 
Preference Rent? 
50CARIS.(2010). Mid-Term Evaluation of the EU’s Generalised System of Preferences, p. 96. 

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firm  trade  theory.  In  short,  both  theoretical  perspectives  place  importance  on 
preferential  treatment  for  young  recently  established  industries.  In  doing  so,  it  is 
suggested  that  through  the  reduction  of  trade  barriers,  more  firms  and  producers  are 
encouraged to export.  

Trade preferences have often also been criticized for creating an incentive to specialize in 
a  few  products  that  are  given  preferential  access  or  prevent  the  beneficiary  countries 
from  adopting  more  liberal  trade  policies.   Gamberoni  (2007)  suggests  that  unilateral 
trade preferences have led to an anti-diversification effect in the case when preferences 
have been granted under permanent and stable schemes.51 Nevertheless, the 2013  IFN 
study on the EU’s impact on export diversification suggests that the EBA and GSP+ have 
had a significantly positive effect on export diversification.52 

The  evaluation  literature  on  the  utilisation  of  preferences  show  that  the  majority  of  EU 
imports  from  developing  countries  enters  the  EU  under  zero  duties  and  that  EU 
preferences  are  well  used.53In  cases  where  preference  utilisation  is  low,  the  volume  of 
imports  dutiable  and  hence  potentially  eligible  for  preferences  is  also  often  low.  An 
exception  appears  to  be  EU  imports  of  textiles  and  textile  articles  from  the  non-ACPs 
LDC  and  from  ASEAN,  which  may  be  related  to  restrictive  EU  Rules  of  Origin  (RoO)  in 
that particular sector, rather than it being a general phenomenon. Around 90 per cent of 
preference-eligible  imports  in  Canada,  the  EU  and  the  US  use  available  preferences. 54 
Preference utilisation was also found to increase depending on the size of the preferential 
margin and the export value.55  Additionally, where the utilisation of preferences was low, 
it  was  found  that  the  preferential  margin  was  small,  thus  suggesting  that  compliance 
costs  may  be  low  but  not  negligible.  Nevertheless,  it  should  also  be  noted  that  many 
imports  with  small  preferential  margins  feature  high  utilisation  rates,  even  where 
significant administrative costs exist.56 

The  literature  further  explains  that  non-utilisation  of  preferences  is  mainly  due  to  the 
costs  of  compliance  associated  to  preferential  regimes. 57 An  important  element  to 
consider  is  compliance  with  product  specific  rules  of  origin.  In  order  to  be  eligible  for 
preferential  treatment,  exporters  need  to  comply  with  rules  that  establish  a  minimum 
threshold  of  domestic  transformation  in  the  production  process  from  inputs  imported 
abroad. While trying to avoid export deflection of finished products from non-preferential 
countries,  rules  of  origin  may  indirectly  discourage  some  forms  of  outward  processing 
and  outsourcing  as  these  would  be  categorized  as  originating  in  non-preferential 
partners.  The  absence  of  the  relevant  local  production  capacity  for  such  inputs  would 
effectively render certain locally-produced finished goods (despite being covered by the 
trade  agreement)  ineligible  for  preferential  market  access. 58This  may  have  affected  a 
substantial share of trade flows. 

51 Gamberoni, E. (2007) Do unilateral trade preferences help export diversification? An investigation of the 
impact of European unilateral trade preferences on the extensive and intensive margin of trade. HEI Working 
Paper, No. 17/2007 
52Persson, M. and Wilhemsson, F. (2013).EU Trade Preferences and Export Diversification, p. 25. 
53Nilsson, L. & Mattson, N. (2009) Truths and myths about the openness of EU trade policy and 
the use of EU trade preferences. 
54Keck, A. and Lendle, A. (2012).New evidence on preference utilisation.World Trade Organization 
Economic Research and Statistics Division, Staff Working Paper ERSD-2012-12 
55Candau, F., et al. (2004).The utilisation rate of preferences in the EU. 
56Keck, A. and Lendle, A. (2012).New evidence on preference utilisation.World Trade Organization 
Economic Research and Statistics Division, Staff Working Paper ERSD-2012-12 
57CARIS.(2010). Mid-Term Evaluation of the EU’s Generalised System of Preferences. Nilsson, Lars. (2015). EU 
exports and uptake of preferences: A First Analysis. Keck, A. and Lendle, A. (2012).New evidence on 
preference utilisation.World Trade Organization 
Economic Research and Statistics Division, Staff Working Paper ERSD-2012-12 
58Eckart, N. (2006). Comparing EU free trade agreements: Rules of Origin.In Brief, No. 61. Available at: 
http://ecdpm.org/wp-content/uploads/2013/11/IB-6I-Comparing-EU-Free-Trade-Agreements-Rules-of-Origin-
2006.pdf . 

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Lastly,  assessing  the  effect  of  trade  preferences  on  FDI  in  beneficiary  countries,  the 
CARIS evaluation report estimates a very high impact. Their results suggest a difference 
of  FDI  inflows  from  beneficiaries  to  non-beneficiaries  of  over  200  per  cent.  It  is, 
however,  emphasized  that  the  results  should  not  be  taken  ‘too  literally’  as  the  data 
providing  the  source  for  this  calculation  is  limited  in  coverage  and  relatively  high  in 
variation.59 

Overall,  previous  evaluations  have  found  that  the  GSP  has  had  a  positive  economic 
impact  on  beneficiary  countries.  However,  some  results  show  that  the  GSP  tends  to 
foster developing countries’ exports in the short-run, but hampers them in the long-run 
due  to  limited  export  diversification.  Additionally,  GSP  recipients  that  are  relatively 
economically  advanced  are  more  likely  to  benefit  from  GSP  preferences  than  less 
advanced  countries.60 Nonetheless,  GSP  programs  have  increased  trade  flows  between 
developed and developing countries, as well as FDI in developing countries. However, it 
has  been  argued  that  GSP  programs  have  not  been  used  to  their  full  potential  due  to 
structural  weaknesses  related  to  length,  coverage  and  legal  framework,  including  rules 
of  origin. 61 It  was  therefore  suggested  that  in  order  to  enhance  GSP’s  effectiveness, 
preferences should be available for a longer period of time, regulated by transparent and 
predictable  mechanisms,  and  covering  products  where  developing  countries  are 
competitive.  

2.2  Descriptive and diagnostic analysis 

2.2.1  Tariff and preference margin analysis 
In  this  section,  we  investigate  the  share  of  EU  imports  by  tariff  regime,  preferential 
access  under  the  GSP  by  number  and  share  of  tariff  lines,  the  distribution  of  tariffs  by 
regime  and  share  of  tariff  lines,  preference  usage  by  regime  type,  and  changes  in  the 
preference margins during the period under review (2011-2016).  

Share of EU imports by tariff regime  
Table  3  below  shows  the  share  of  EU  imports  by  tariff  regime  from  2011-2016,  which 
essentially represents the actual usage of preferences over the period. The table depicts 
the share of EU imports under the different MFN arrangements (referred to as MFN = 0 
and  MFN  >0);  under  the  three  GSP  arrangements  (referred  to  as  ‘GSP’);  under  other 
preferential  schemes  (referred  to  as  ‘FTAs/PTAs’);  and  under  other  international  trade 
arrangements  in  which  the  EC  accords  preferences  to  third  countries62 (referred  to  as 
‘Other’). The column labelled as ‘trade under zero tariffs’ reflects the percentage of duty-
free trade under MFN arrangements, GSP and FTAs/PTAs.  

59CARIS.(2010). Mid-Term Evaluation of the EU’s Generalised System of Preferences, p. 106. 
60Herz, B., et al. (2010). The Dark Side of the Generalized Systems of Preferences.Available 
at:https://www.sachverstaendigenrat-
wirtschaft.de/fileadmin/dateiablage/Arbeitspapiere/The_Dark_Side_of_the_Generalized_System_of_Preference
s.pdf 
61The Graduate Institute of International and Development Studies. (2011). A Comparative Analysis of 
Generalised System of Preferences: Challenges, Constraints and Opportunities for Improvement. Available at: 
https://www.tradelab.org/images/tradelab/pdf/clinics/2016/A_Comparative_Analysis_of_Generalised_Systems
_of_Preferences_Challenges_Constraints_and_Opportunities_for_Improvement.pdf 
62 This includes preferences granted under the EU’s Market Access Regulation. Regulation 1528/2007 governs 
the EU import regime for 36 African, Caribbean and Pacific countries that negotiated Economic Partnership 
Agreements in 2007. With the expiry of the trade regime under the ACP-EU Cotonou Agreement, the 
Regulation allowed exports from these 36 countries to continue to enter the EU duty-free and quota-free. The 
Regulation was a bridging solution for the countries that had negotiated Economic Partnership Agreements but 
not yet signed and ratified these. In order to avoid a disruption in trade, the Regulation anticipated the duty 
free access that the EU offered in these agreements whilst the 36 countries moved towards ratification. 

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It  is  important  to  note  that  a  country’s  exports  may  fall  under  several  tariff  regimes 
simultaneously  in  a  given  year.  For  example,  a  country’s  exports  may  fall  under 
“MFN=0” and “FTAs/PTAs”. Furthermore, some countries switched from one tariff regime 
(e.g. GSP) to another tariff regime (e.g. FTAs/PTAs) during the period under review i.e. 
2011-2016.  Annex  II  below  provides  a  detailed  list  of  the  applicable  trade  regime  as 
used  in  this  study  for  each  country  on  a  yearly  basis.63 Changes  in  the  applicable  tariff 
regime  are  particularly  pertinent  for  tariff  regime  analyses,  as  well  as  for  the  gravity 
modelling  and  preference  utilisation  rate  modelling  analyses  presented  in  Section  2.3 
and Section 2.4 below. 

Table 3: Share of EU imports by tariff regime (2011-2016) 

MFN=0   MFN>0 

GSP 

FTAs/PTAs 

Other  

Total  

Trade under 
zero tariffs 

Import 
value 
(EUR 
millions) 
1578724 

2011 

62.5% 

21.5% 

2012 

1631256 

63.6% 

20.0% 

2013 

1530711 

61.9% 

20.2% 

2014 

1534073 

60.4% 

23.1% 

5.8% 

5.8% 

6.1% 

3.9% 

9.5% 

9.8% 

10.7% 

11.6% 

0.7% 

0.9% 

1.1% 

1.1% 

100.0% 

100.0% 

100.0% 

100.0% 

75.2% 

76.6% 

76.0% 

74.1% 

2015 

1557035 

2016 
Source: Authors’ calculations based on trade and tariff data supplied by the European Commission 

1546772 

56.6% 
56.1% 

26.1% 
26.1% 

3.9% 
4.1% 

12.4% 
12.8% 

1.1% 
0.9% 

100.0% 
100.0% 

71.2% 
71.4% 

From  Table  3  above,  we  can  see  that  the  importance  of  trade  preferences  as  a 
percentage  of  total  EU  imports  is  relatively  modest.    Such  preferences  refer  to  those 
attainable  under  the  GSP,  under  FTAs/PTAs  and  other  arrangements.  Over  the  period 
2011-2016, trade under these preferential arrangements accounted for less than 20 per 
cent  of  total  EU  imports  per  year,  of  which  those  imported  under  GSP  arrangements 
accounted  for  a  trade-weighted  average  of  4.9  per  cent  of  total  EU  imports  per  year. 
Therefore,  this  reveals  that  the  major  share  of  trade  takes  place  under  MFN 
arrangements.  

Crucially important to note is that trade at the MFN level is often at duty-free  rates.  In 
2016, more than half of imports (56.1 per cent) entered the EU market at the MFN duty-
free level. Another 26.1 per cent were subject to positive MFN tariffs; thus in total, 82.2 
per  cent  of  EU  imports  entered  under  MFN  arrangements  in  that  year.  This  was  in 
contrast to 13.7 per cent of imports under FTAs/PTAs and other arrangements, and 4.1 
per cent under the GSP. 

We  can  also  see  that  EU  imports  under  non-GSP  preferential  schemes,  which  include 
FTAs,  PTAs,  DCFTAs  and  EPAs,  have  steadily  increased  during  the  years  under  review, 
signalling their growing importance. The average share of imports under FTAs/PTAs has 
increased by 2.2 percentage points over the period 2014-2016 compared to the previous 
period.  This  finding  is  consistent  with  the  EU’s  trade  policy  objectives  to  encourage 
countries  that  were  previously  GSP  beneficiaries  to  continue  their  trade  with  the  EU 
under more comprehensive preferential trading schemes, which are often reciprocal. 

Given that the list of eligible countries in the Standard GSP and GSP+ arrangements has 
changed  significantly  as  a  result  of  graduation,  we  further  explore  whether  observed 
changes  in  GSP  imports  are  driven  in  part  by  the  number  of  countries  eligible  to  trade 
with the EU. Figure 2 below presents a graphical overview of EU imports under the GSP. 
It  seeks  to  identify  the  impact  of  the  changes  in  the  countries  eligible  throughout  the 

63 Although some countries were eligible to trade using GSP preferences and preferences under other trade 
agreements simultaneously, countries were given regime statuses based on the regime that provided the most 
preferential access in the stated year. 

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period 2011- 2016 as distinct from imports originating from countries that ceased to be 
eligible from 2014 onwards. 

From the diagram  on the left-hand side, we  can see the total value  of imports from all 
the  countries  that  traded  under  the  three  different  GSP  arrangements  (GSP+,  EBA  and 
Standard  GSP)  over  the  period  2011-2016.  Following  entry  into  force  of  the  GSP 
Regulation  in  2014,  we  observe  a  significant  decline  in  the  value  of  imports  under  the 
Standard  GSP  arrangement  owing  to  the  graduation  of  a  significant  number  of 
beneficiary countries. A slight decline in GSP+ imports is also evident. On the contrary, a 
steady increase in imports under the EBA arrangement is evident.  

The  diagram  on  the  right-hand  side  depicts  total  EU  imports  from  the  80  beneficiary 
countries  under  investigation  in  this  study:  49  EBA  countries 64 ,  23  Standard  GSP 
countries65 and 8 GSP+ countries66 (as described in section 1.2 above).  These  countries 
were eligible for GSP throughout, i.e. both during the pre- and the post-reform periods.   
In  order  to  assess  how  GSP  reform  has  impacted  these  countries’  exports,  we  analyze 
EU imports originating from these countries throughout the period 2011-2016. From this 
graph, we can see that imports have increased for each of the three groups.  

In  particular,  there  has  been  a  substantial  increase  in  exports  from  the  EBA_49 
countries. Their exports to the EU increased from EUR 11.3 billion in 2011 to 23.5 billion 
in 2016. In the case of the Standard GSP_23 countries, exports increased from EUR 30.8 
billion  in  2011  to  EUR  31.6  billion  in  2016;  while  exports  from  the  GSP+_8  countries 
increased from EUR 4.9 billion in 2011 to EUR 7.4 billion in 2016. 

64 The 49 EBA countries are: Afghanistan, Angola, Bangladesh, Benin, Bhutan, Burkina Faso, Burundi, 
Cambodia, the Central African Republic, Chad, the Comoros Islands, the Democratic Republic of the Congo, 
Djibouti, Equatorial Guinea, Eritrea, Ethiopia, Gambia, Guinea, Guinea-Bissau, Haiti, Kiribati, the People’s 
Democratic Republic of Laos,  Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritania, Mozambique, 
Myanmar/Burma, Nepal, Niger, Rwanda, Samoa, Sao Tome and Principe, Senegal, Sierra Leone, the Solomon 
Islands, Somalia, South Sudan, Sudan, Tanzania, Timor-Leste, Togo, Tuvalu, Uganda, Vanuatu, Yemen and 
Zambia. Of the 49 EBA countries under investigation, only Myanmar/Burma and South Sudan were not eligible 
for GSP preferences throughout the entire period. Both countries became eligible in for GSP preferences in 
2013.  
65 The 23 Standard GSP countries are: Cameroon, Congo, the Cook Islands, Cote d’ Ivoire, Fiji, Ghana, India, 
Indonesia, Iraq, Kenya, the Marshall Islands, Micronesia, Nauru, Nigeria, Niue, Sri Lanka, Swaziland, Syria, 
Tajikistan, Tonga, Ukraine, Uzbekistan and Vietnam. It is important to note that there are some countries (e.g. 
Cameroon, Cote d’Ivoire, Fiji, Ghana, Kenya and Swaziland) that traded under the Standard GSP arrangement 
and under the EU’s Market Access Regulation simultaneously. 
66 The 8 GSP+ countries are: Armenia, Bolivia, Cape Verde, Kyrgyzstan, Mongolia, Pakistan, Paraguay and the 
Philippines. Whereas Kyrgyzstan, Pakistan and the Philippines transitioned from the Standard GSP arrangement 
to the GSP+ arrangement post-reform, we have labelled them as GSP+ countries for the entire period of 
investigation.  

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70000

60000

50000

40000

30000

20000

10000

S
O
R
U
E

F
O
S
N
O
I
L
L
I
M
N
I

100000

90000

80000

70000

60000

50000

40000

30000

20000

10000

S
O
R
U
E

F
O
S
N
O
I
L
L
I
M
N
I

0
2011

2012

2013

2014

2015

2016

0
2011

2012

2013

2014

2015

2016

GSP+

EBA

Standard GSP

GSP+_8

EBA_49

Standard GSP_23

Figure 2: Analysis of the usage of GSP preferences by eligible countries (2011-2016) 

We  can  therefore  conclude  that  although  the  share  of  GSP  imports  in  total  EU  imports 
has  declined  markedly,  there  is  evidence  of  increased  exports  under  the  three 
arrangements post GSP-reform for those countries that remained eligible throughout the 
period under review. This has been especially the case for the 49 EBA countries and the 
8  GSP+  countries,  where  exports  have  increased  by  62.1  per  cent  and  53.8  per  cent, 
respectively in the post-reform period compared to the pre-reform period.  This finding is 
consistent  with  the  objectives  of  the  GSP  reform  to  target  export  expansion  especially 
amongst the developing countries most in need and most vulnerable. 

Table 4: Pre- and post-reform EU imports by GSP arrangement 

2011 

2012 

2013 

2014 

2015 

2016 

Average pre-reform 

Average post-reform 

Percentage Added 
(post/pre) 

Import value 

Standard 
GSP_23 
countries 

GSP+_8 
countries 

EBA_49 
countries 

EUR billions  

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% 

Source: Authors’ calculations based on trade and tariff data supplied by the European Commission 

Overview of preferential access under the GSP  
This  section  investigates  the  extent  of  preferential  access  that  was  provided  under  the 
three GSP arrangements in 2016 in Table  5 below. This will help to determine the level 
of preferential access that was afforded by the EU in terms of number and share of tariff 
lines.  It can be seen that the difference between the number of tariff lines that receive 
preferential access under the GSP+ and EBA regimes is much smaller than the difference 

47 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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between  those  that  receive  preferential  access  under  the  Standard  GSP  and  the  EBA 
regimes.  

Additionally,  it  is  important  to  note  that  out  of  a  total  of  9414  tariff  lines,  3011  lines 
were  MFN  zero  lines  in  2016.  All  countries  that  exported  to  the  EU,  including  Standard 
GSP,  GSP+  and  EBA  beneficiary  countries,  were  entitled  to  zero  duties  under  these 
specific lines. Besides these MFN zero lines, there were 6215 and 6385 tariffs lines at the 
CN  8-digit  tariff  level  that  benefitted  from  preferential  duty-free  treatment  under  the 
GSP+ and EBA arrangements, respectively; while, there were only 3023 tariff lines that 
benefitted  under  the  Standard  GSP  arrangement.  As  is  known,  under  the  EBA 
arrangement  all  tariff  lines  are  eligible  for  preferential  duty  free  rates  and  zero  MFN 
duties  excepting  arms  and  ammunition.  This  amounted  to  99.8  per  cent  of  all  lines. 
Notably, there were 18 ‘MFN > 0’ lines under the EBA arrangement, which covered arms 
and ammunition, amounting to merely 0.2 per cent of tariff lines. In the cases of GSP+ 
and Standard GSP countries, preferential duty free rates and zero MFN duties amounted 
to 98 per cent and 64 per cent67, respectively.  

Table 5: Preferential access under GSP arrangements by number and percentage of tariff 
lines (2016) 

Number of tariff lines 

Percentage  of tariff lines 

MFN = 0 
MFN > 0 

Preferential duty free 
Positive preferential tariffs 

Standard 
GSP 
3011 

238 

3023 

3142 

GSP+ 
3011 

181 

6215 

7 

EBA 
3011 

18 

6385 

0 

Standard 
GSP 
32.0% 

2.5% 

32.1% 

33.4% 

GSP+ 
32.0% 

1.9% 

66.0% 

0.1% 

Total 
*Source: Authors’ calculations based on tariff data supplied by the European Commission  
**Specific tariffs have not been taken into account 

100.0% 

9414 

9414 

9414 

100.0% 

EBA 
32.0% 

0.2% 

67.8% 

0.0% 

100.0% 

In  order  to  assess  how  preferential  regimes  have  evolved  over  time,  we  compare  the 
preferential access under the GSP in the years 2008, 2011 and 2016. The year 2008 is 
included  to  show  the  evolution  of  preferential  access  under  GSP  over  a  longer  time 
frame,  drawing  on  the  2010  Report  of  the  Mid-Term  Evaluation  of  the  previous  GSP 
Regulation.  Table  6  shows  the  share  of  tariff  lines  that  attracted  MFN  duty-free  rates, 
positive  MFN  tariffs  preferential  duty-free  rates,  and  positive  preferential  tariffs, 
respectively. 

It is revealed that preferential duty-free access remained more or less unchanged during 
the period for the Standard GSP and GSP+ arrangements. However, in the case of EBA 
countries, the share of tariff lines that attracted preferential duty-free access declined by 
around 10 percentage  points in 2016 compared with 2008. This came as a result of an 
increase in the number of tariff lines eligible to enter the EU market at the MFN duty-free 
level, signalling a reduction in preference margins for EBA countries.  

In the years 2011 and 2016, the shares of tariff lines that attracted positive preferential 
tariffs were almost negligible for the GSP+ arrangement, and zero in the case of the EBA 
arrangement.  On  the  contrary,  there  was  a  slight  increase  in  the  number  of  tariff  lines 
that  attract  positive  preferential  tariffs  in  2016  under  the  Standard  GSP  arrangement 
compared  to  2011.  This  came  as  a  result  of  a  reduction  in  positive  MFN  tariffs  and  a 

67 The product categories that were excluded altogether from preferential tariff treatment under the Standard 
GSP (i.e. where MFN>0) include the following: textiles and apparels; fish and crustaceans, molluscs and other 
aquatic invertebrates; preparations of vegetables, fruit, nuts or other parts of plants; organic chemicals; and 
cotton. 

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resultant  increase  in  positive  preferential  tariffs.  This  indicates  that  there  were  a  few 
tariff lines that received preferential treatment in the form of  reduced tariffs (i.e. lower 
than what would apply at the MFN level) for Standard GSP countries.  

Table 6: Evolution of preferential access under GSP arrangements by share of tariff lines 
(2008-2016) 

Standard 
GSP 
22.1% 

2008 
GSP+ 

EBA 

22.1% 

22.1% 

MFN = 0 

Standard 
GSP 
32.2% 

Percentage  of tariff lines  
2011 
GSP+ 

EBA 

32.2% 

32.2% 

Standard 
GSP 
32.0% 

2016 

GSP+  EBA 

32.0% 

32.0% 

MFN > 0 

8.3% 

7.6% 

0.3% 

2.8% 

2.2% 

0.2% 

2.5% 

1.9% 

0.2% 

Preferential 
duty free 
Positive 
preferential 
tariffs 
Total  

33.5% 

68.2% 

77.5% 

32.6% 

65.6% 

67.6% 

32.1% 

66.0% 

67.8% 

36.0% 

2.1% 

0.0% 

32.4% 

0.1% 

0.0% 

33.4% 

0.1% 

0.0% 

100.0% 

100.0%  100.0%  100.0% 

100.0%  100.0%  100.0%  100.0% 

100.0% 

Source: Authors’ calculations based on tariff data supplied by the European Commission.68 

Distribution of tariffs under MFN and GSP regimes 
This section further analyses the distribution of tariffs under the MFN and GSP regimes in 
order to assess the applicable tariffs in the pre- and post-reform periods, using the years 
2011 and 2016 as reference points, respectively. This analysis will help us to determine 
the extent of improvements in preferential market access.  

Table  7  shows the percentage share of total tariff lines across the MFN, Standard GSP, 
GSP+ and EBA arrangements in 2011 and 2016, where we simply count the number of 
tariff lines (‘t’) at the CN-8 digit level that have (i) zero-rated tariffs; (ii) tariffs between 
0 and 5 per cent; (iii) between 5 and 10 per cent; (iv) between 10 and 15 per cent; (v) 
between 15 and 20 per cent; and(vi) above 20 per cent.  

It is observed that a very high percentage  of tariff lines under both the EBA and GSP+ 
arrangements have consistently received duty-free treatment (t=0) for both years under 
observation – over 97 per cent under the GSP+ arrangement and over 99 per cent under 
the  EBA  arrangement.  We  can  see  that  tariffs  for  arms  and  ammunition  under  the  EBA 
arrangement fall between 0 and 5 per cent (0<t<5) and accounted for just 0.2 per cent 
of tariff lines in both years.  In the case of the GSP+ arrangement, there were applicable 
positive tariffs (0<t) for approximately 2 per cent of tariff lines in both periods. For the 
Standard  GSP  arrangement,  a  significant  number  of  tariff  lines  (around  65  per  cent  in 
2011 and 64 per cent in 2014) were eligible for duty-free treatment.  

The remaining tariffs lines under the Standard GSP arrangement were mostly eligible for 
tariffs  between  0  and  5  per  cent  (0<t<5),  as  well  as  between  5  and  10  per  cent 
(5<t<10).  On  the  contrary,  tariffs  were  much  more  diversified  under  the  MFN 
arrangement  in  both  years.  In  effect,  approximately  32  per  cent  of  tariff  lines  were 
eligible to receive duty-free treatment, while 55 per cent  of tariff lines were  eligible for 
duties below 10 per cent. The remaining 13 per cent of tariff lines faced duties above 10 

68Shares have been calculated simply with respect to the total number of tariff lines and are not trade-
weighted. The 2010 CARIS Report  reports tariff lines at the HS-10 digit level notes that in 2002, the number 
of counted tariff lines was 14, 155; the number of counted tariff lines in 2005 was 13,990; and the amount of 
counted tariff lines in 2008 was 14, 259. In our evaluation, the number of counted tariff lines at the CN 8-digit 
level for 2011 is 9294, while the number in 2016 is 9414 lines.  

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per  cent.  Overall,  there  were  hardly  any  changes  in  the  distribution  of  tariffs  by  tariff 
rates in the pre- and post-reform periods. It is important to point out that foodstuff and 
textiles are the two product categories that have the highest tariffs across the MFN tariff 
regime as well as under the Standard GSP and GSP+ arrangements. Between 2011 and 
2016, these two product categories represented on average 69 per cent of all goods with 
tariffs between 5 per cent and 15 per cent. 

Table 7: Distribution of tariffs under the MFN and GSP regimes (2011 and 2016) 

2011 

2016 

Share of tariff lines  

MFN 

Tariff t=0 

32.2% 

Standard 
GSP 
64.8% 

GSP+ 

EBA 

MFN 

97.8% 

99.8% 

32.0% 

Tariff 0<t<5 

29.9% 

15.3% 

Tariff 5<t<10 

24.8% 

14.4% 

Tariff 10<t<15 

8.4% 

Tariff 15<t<20 

3.0% 

Tariff 20<t 

1.9% 

3.6% 

1.1% 

1.0% 

0.8% 

0.6% 

0.7% 

0.2% 

0.0% 

0.2% 

0.0% 

0.0% 

0.0% 

0.0% 

30.4% 

24.1% 

8.8% 

3.0% 

1.8% 

Standard 
GSP 
64.1% 

15.6% 

14.4% 

3.7% 

1.2% 

1.0% 

GSP+ 

EBA 

98.0% 

99.8% 

0.7% 

0.5% 

0.6% 

0.2% 

0.0% 

0.2% 

0.0% 

0.0% 

0.0% 

0.0% 

Total  

100.0
% 
Source: Authors’ calculations based on tariff data supplied by the European Commission69 

100.0%  100.0% 

100.0% 

100.0% 

100.0% 

100.0% 

100.0% 

Share of EU imports from GSP beneficiary countries by tariff regime 
Table  8 below  shows the percentage  share  of EU imports from the 80 GSP beneficiary 
countries over the period 2011-2016 by tariff regime. This helps us to identify the actual 
tariff regime that has been utilized by exporters in GSP countries over the period under 
investigation. Importantly, it should be noted  that beneficiary countries  exported under 
their respective GSP arrangements (EBA, GSP+ and Standard GSP arrangements), under 
the  MFN  regime,  and  in  some  cases,  under  other  preferential  trading  arrangements  at 
the same time in a given year.  

It  can  be  seen  that  there  has  been  a  decline  in  the  share  of  products  exported  at  MFN 
duty-free  rates  (i.e.  MFN=0)  from  all  GSP  countries,  with  the  most  significant  decline 
being reflected for EBA countries. Additionally, in 2016, it can be observed that the large 
share  of  products  were  exported  using  GSP+  preferential  duty-free  rates,  reflecting  an 
enormous 41.7 percentage point increase compared with 2011. This was also evident for 
EBA  countries,  where  preferential  duty  free  usage  increased  by  as  much  as  28 
percentage points comparing 2011 with 2016.   

Additionally, it can be seen that the share of products imported with positive preferential 
GSP  tariffs  in  2016  declined  for  GSP+  countries  (i.e.  where  GSP+  >0)  compared  to 
2011.  The  share  of  EU  imports  under  positive  preferential  GSP  tariffs  for  these  GSP+ 
countries moved from 29.5 per cent in 2011 to 0.2 per cent in 2016.  

Increased usage of preferential duty-free rates and positive preferential tariffs may have 
occurred  for  several  reasons.  Firstly,  given  that  the  composition  of  countries  in  the 
Standard GSP and GSP+ arrangements has changed significantly, the export baskets of 
the remaining countries and resultant tariffs could have been significantly different from 
those of the graduated countries. In the post-reform period, there may have been more 
preferential  duty-free  access  for  the  range  of  products  exported  by  those  countries 
remaining  eligible.    Secondly,  as  a  result  of  the  graduation  of  key  players  from  the 
scheme,  exporters  may  have  been  more  eager  to  take  advantage  of  potential 

69The yearly change in the number of tariff lines was not taken into account in the analysis. On average, the 
yearly variation in the number of tariff lines for the period 2011 -2016 was 0.2 per cent, which was not 
considered as significant to impact the analysis.  

50 

 
 
 
 
 
 
 
 
                                                 
EUROPEAN COMMISSION 

opportunities under the GSP. Thirdly, given entry into force of GSP reforms in 2014 and 
heightened  media  attention,  exporters  may  have  become  more  aware  of  preferential 
market access opportunities under the GSP. 

51 

 
 
 
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Table 8: Share of EU imports from GSP beneficiary countries70 by tariff regime (2011-2016) 

2011 

2012 

2013 

2014 

2015 

2016 

2011 

2012 

2013 

2014 

2015 

2016 

MFN = 0 

MFN > 0 

EBA = 0 

EBA > 0 

Other pref.= 0 

Other pref.  > 0 

Unknown 

EBA Countries 

52.7% 

50.8% 

50.3% 

47.6% 

36.7% 

28.8% 

3.4% 

2.9% 

2.7% 

2.6% 

2.4% 

2.7% 

37.4% 

40.3% 

41.5% 

45.5% 

59.1% 

65.4% 

0.0% 

0.0% 

0.0% 

0.0% 

0.0% 

0.0% 

6.5% 

5.8% 

5.5% 

4.3% 

1.5% 

2.3% 

GSP+ Countries 

0.0% 

0.0% 

0.0% 

0.0% 

0.0% 

0.0% 

0.1% 

0.1% 

0.0% 

0.0% 

0.3% 

0.8% 

MFN = 0 

MFN > 0 

GSP+ = 0 

GSP+ > 0 

Other pref.= 0 

Other pref.  > 0 

Unknown 

52.6% 

47.8% 

47.2% 

43.7% 

43.4% 

40.6% 

8.1% 

8.6% 

8.4% 

8.0% 

7.7% 

7.5% 

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% 

0.2% 

8.9% 

0.5% 

0.4% 

0.4% 

Standard GSP Countries 

0.0% 

0.0% 

0.0% 

0.0% 

0.0% 

0.0% 

0.0% 

0.1% 

0.0% 

0.0% 

0.4% 

0.2% 

MFN = 0 

MFN > 0 

GSP = 0 

GSP > 0 

Other pref.= 0 

Other pref.  > 0 

Unknown 

2011 

2012 

62.9% 

66.7% 

10.9% 

9.9% 

11.3% 

10.9% 

12.4% 

10.3% 

2.5% 

2.1% 

0.0% 

0.0% 

0.0% 

0.1% 

Total 

100% 

100% 

100% 

100% 

100% 

100% 

Total 

100% 

100% 

100% 

100% 

100% 

100% 

Total 

100% 

100% 

70 This table investigates the share of EU imports from 80 beneficiary countries by tariff regime from 2011 -2016.  These 80 GSP beneficiary countries are listed per GSP 
arrangement in Chapter 1.2.1. With the exception of South Sudan and Myanmar/Burma that did not start to trade using GSP preferences until 2013, all other countries 
traded using GSP preferences from 2011-2016. It is also important to note that there were several countries that traded under the GSP and under other preferential trade 
agreements (particularly, the EU’s Market Access Regulation) simultaneously. Additionally, whereas Kyrgyzstan, Pakistan and the Philippines transitioned from the Standard 
GSP arrangement to the GSP+ arrangement post-reform, we have labelled them as GSP+ countries for the entire period of investigation. 

52 

 
 
                                                 
 
 
  
  
  
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2013 

2014 

2015 

2016 

65.4% 

63.5% 

59.7% 

55.9% 

10.3% 

13.0% 

13.7% 

15.0% 

11.1% 

8.6% 

9.3% 

10.1% 

11.0% 

11.8% 

13.0% 

14.2% 

2.3% 

3.1% 

4.0% 

4.5% 

Source: Authors’ calculations based on trade and tariff data supplied by the European Commission 

0.0% 

0.0% 

0.1% 

0.1% 

0.0% 

0.0% 

0.2% 

0.2% 

100% 

100% 

100% 

100% 

53 

 
 
EUROPEAN COMMISSION 

Preferential margins under the GSP  
Table  9  below  captures  preferential  margins  under  the  three  GSP  arrangements  by 
sector. We analyse the preferential margins under each arrangement by comparing them 
with MFN tariffs in the years 2011 and 2016. This is done to assess changes over time to 
determine which sectors have experienced preference declines (erosion) or increases.  

From  the  table,  we  can  observe  that  preferential  margins  ranged  from  0.6  per  cent  to 
10.5  per  cent.  It  also  reveals  sectors  where  preferential  margins  were  equal  to  zero. 
Importantly, preferential margins were highest for EBA and  GSP+  countries in the case 
of  prepared  foodstuffs  (HS  Section  IV),  amounting  to  around  10  per  cent  in  2011  and 
2014.  This  is  in  contrast  to  a  preference  margin  of  3.0  per  cent  for  Standard  GSP 
countries.  

It  is  observed  that  MFN  tariffs  in  the  EU  market  were  highest  for  agriculture  and 
foodstuffs (HS Sections I – IV), textiles and clothing (HS Section XI), and footwear (HS 
Section  XII).  Consequently,  preferential  margins  were  significant  for  EBA  and  GSP+ 
countries  –  around  8  per  cent  in  2011  and  2016.  On  the  other  hand,  the  table  reveals 
that  preference  margins  were  either  very  low  or  completely  eroded  for  the  following 
sections:  HS Section XXI – works of art; HS Section X – pulp of wood and other fibrous 
cellulosic  material;  HS  Section  XV  –  base  metals  and  articles  of  base  metal;  and  HS 
Section XIV – pearls, precious, semi-precious stones.  

Table  9  also  shows  the  changes  in  the  preference  margins,  comparing  2011  and 
2016.Overall the extent of erosion was very limited, as evidenced by the high frequency 
of zero percentage change in the last three columns of Table 8, covering the three GSP 
arrangements.  The  driver  of  such  (limited)  changes  in  the  preference  margins  were 
(small) changes in the MFN tariffs  

Across all three GSP arrangements, preference margins declined in 2016 for  HS Section 
III  -  animal  or  vegetable  fats  and  oils;  HS  Section  VI  –  products  of  the  chemical  and 
allied  industries;  HS  Section  VII  –  plastics  and  articles  thereof;  HS  Section  XV  –  base 
metals  and  articles  of  base  metal;  HS  Section  XVI  –  machinery  and  mechanical 
appliances; and HS Section XVII – vehicles, aircraft, vessels, transport, etc. Notably, HS 
Section  VI  –  products  of  the  chemical  and  allied  industries  -  experienced  the  most 
significant  decline,  amounting  to  3.5  percentage  points  for  both  EBA  and  GSP+ 
countries, and 3 percentage points for Standard GSP countries. 

On the contrary, preference margins increased across all three GSP arrangements in the 
following  sectors:    HS  Section  V  –  mineral  products;  HS  Section  VIII  -  raw  hides  and 
skins, leather, fur skins; HS Section IX – wood and articles of wood; HS Section XVIII – 
optical  and  photographic  instruments.  HS  Section  XVIII  –  optical  and  photographic 
instruments  experienced  the  most  significant  increase,  amounting  to  2.4  percentage 
points  for  EBA  and  GSP+  countries,  and  0.8  percentage  points  for  Standard  GSP 
countries.  

54 

 
 
 
 
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Table 9: Preference margins by HS section compared to MFN tariffs (2011 and 2016) 

2011 

EBA 

GSP+ 

Standard 
GSP 

5.9% 
4.1% 
5.6% 
10.1% 
0.7% 
4.3% 
4.6% 

3.0% 

2.4% 
0.0% 
8.0% 
8.0% 
4.0% 

0.6% 

5.8% 
4.1% 
5.6% 
10.1% 
0.7% 
4.3% 
4.6% 

3.0% 

2.4% 
0.0% 
8.0% 
8.0% 
4.0% 

0.6% 

3.0% 
2.1% 
2.9% 
3.6% 
0.7% 
3.8% 
3.9% 

2.3% 

1.8% 
0.0% 
1.6% 
3.7% 
2.6% 

0.6% 

EBA 

6.6% 
4.2% 
5.5% 
10.5% 
2.4% 
0.8% 
4.3% 

4.6% 

3.2% 
0.0% 
8.0% 
8.2% 
4.0% 

0.6% 

2016 

GSP+ 

5.6% 
4.1% 
5.5% 
10.4% 
2.4% 
0.8% 
4.1% 

4.6% 

3.0% 
0.0% 
8.0% 
8.2% 
4.0% 

0.6% 

Standard 
GSP 
2.3% 
1.6% 
2.8% 
3.0% 
1.8% 
0.8% 
3.6% 

3.9% 

2.1% 
0.0% 
1.6% 
3.7% 
2.6% 

0.6% 

EBA 

GSP+ 

Change in Preference Margin 
Standard 
GSP 
-0.7 
-0.5 
-0.1 
-0.6 
1.1 
-3.0 
-0.3 

0.7 
0.1 
-0.1 
0.4 
1.7 
-3.5 
-0.3 

-0.2 
0.0 
-0.1 
0.3 
1.7 
-3.5 
-0.5 

1.6 

0.8 
0.0 
0.0 
0.2 
0.0 

0.0 

1.6 

0.6 
0.0 
0.0 
0.2 
0.0 

0.0 

1.8% 

1.8% 

1.5% 

0.0% 

0.0% 

0.0% 

-1.8 

-1.8 

HS Section  

Description 

Section I 
Section II 
Section III 
Section IV 
Section V 
Section VI 
Section VII 
Section VIII 

Section IX 
Section X 
Section XI 
Section XII 
Section XIII 
Section XIV 

Section XV 

Section XVI 

Live Animals; animal products 
Vegetable products 
Animal or Vegetable fats and oils 
Prepared foodstuffs 
Mineral products 
Products of the chem. & allied inds 
Plastics and Articles thereof 
Raw hides and skins, leather, 
furskins 
Wood and articles of wood 
Pulp of wood or other fibrous… 
Textiles 
Footwear, headgear, umbrellas… 
Articles of stone, plaster, cement… 
Pearls, precious, semi-precious 
stones 
Base metals and articles of base 
metal 
Machinery and mechanical 
appliances 
Vehicles, aircraft, vessels, transport 
Optical, photographic... Instruments 
Arms and ammunition 
Miscellaneous manufactured articles 
Works Of Art, collectors' Pieces... 

2.4% 

2.4% 

2.1% 

Section XVII 
Section XVIII 
Section XIX 
Section XX 
Section XXI 
Source: Authors’ calculations based on tariff data supplied by the European Commission 

4.9% 
2.5% 
2.2% 
2.6% 
0.0% 

4.9% 
2.5% 
2.2% 
2.6% 
0.0% 

3.1% 
2.3% 
2.2% 
2.5% 
0.0% 

1.8% 

2.3% 
4.9% 
2.4% 
2.6% 
0.0% 

1.7% 

2.3% 
4.9% 
2.4% 
2.6% 
0.0% 

1.4% 

2.1% 
3.1% 
2.3% 
2.5% 
0.0% 

-0.6 

-2.6 
2.4 
0.2 
0.0 
0.0 

-0.7 

-2.6 
2.4 
0.2 
0.0 
0.0 

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 

55 

 
 
EUROPEAN COMMISSION 

2.2.2  Trade flow analysis 
In this section, we investigate trade flows under the EU’s GSP regime, including imports 
under  the  GSP  as  a  share  of  total  EU  imports,  the  composition  and  share  of  imports 
under  the  GSP  itself,  the  utilisation  rates,  and  impact  on  export  diversification  of  the 
beneficiary countries. 

GSP imports as a share of total EU imports  
In Table  10 below, we investigate imports under the GSP regime as a share of total EU 
imports  by  sector  during  the  period  2011-2016,  distinguishing  between  the  pre-  and 
post-reform  periods.  This  helps  us  to  determine  the  extent  of  growth  or  decline  in 
sectoral  imports  post  GSP  reform.  In  columns  a)  and  b),  we  consider  the  average 
imports  of  all  the  countries  that  exported  using  GSP  preferences 71  in  both  periods. 
However,  in  columns  c)  and  d),  we  further  dissect  only  the  imports  from  the  80 
beneficiary countries72under investigation that traded in both periods. 

From  the  table,  we  observe  that  average  shares  have  fluctuated  over  the  periods  if  we 
compare columns a) and b).  Importantly, we  can see  only three instances  of increased 
share of imports by sector under the GSP regulation in the EU market in the post-reform 
period,  notably  in  Section  XII-  footwear,  headgear,  et  cetera  (8.94  percentage  points), 
Section XI – textiles (4.46 percentage points); and Section XIV – pearls, precious, semi-
precious stones (0.08 percentage points).  

It  can  be  seen  from  columns  c)  and  d)  that  the  share  of  imports  from  the  80  GSP 
countries  as  a  percentage  of  total  EU  imports  has  increased  for  13  of  the  21  listed 
sectors. Imports increased substantially in the cases of Section XII- footwear, headgear, 
et cetera (11.22 percentage points), Section XI – textiles (5.52 percentage points); and 
Section  IV  –  prepared  foodstuffs  (1.66  percentage  points).  A  further  investigation  into 
these  sectors  reveals  a  significant  increase  in  exports  from  Bangladesh  and  Cambodia 
under  Section  XI,  and  Vietnam  and  India  under  Section  XII.  It  is  also  noteworthy  to 
mention  that  India’s  overall  exports  under  Section  XI  continued  to  increase  although  it 
was  no  longer  able  to  access  GSP  preferences  for  its  textiles  products,  but  only  for  its 
apparel and clothing products.  

Among  the  sectors  that  reflected  declines  in  their  shares  for  all  GSP  countries  and  also 
with respect to the 80 beneficiary countries under investigation are: Section III - Animal 
or  vegetable  fats  and  oils;  Section  VI  –  Products  of  the  chem.  &  allied  industries;  and 
Section VIII - raw hides and skins, leather, furskins.   

Additionally, there were 3 sectors where imports were miniscule, and as a result, there 
was no sectoral share for all GSP beneficiary countries. These include Section X - Pulp of 
wood  or  other  fibrous  wood;  Section  XIX  -  Arms  and  ammunition;  and  Section  XXI  - 
Works of Art, collectors' pieces, etc. 

71 This refers to the average imports of all GSP beneficiaries that traded using GSP preferences from 2011-
2016. The list of countries that traded under the three GSP arrangements on a yearly basis is outlined in Annex 
II.  
72These 80 countries are listed per GSP arrangement in Chapter 1.2.1. With the exception of South Sudan and 
Myanmar/Burma that did not start to trade using GSP preferences until 2013, all other countries traded using 
GSP preferences from 2011-2016. It is also important to note that there were several countries that traded 
under the GSP and under other preferential trade agreements (particularly, the EU’s Market Access Regulation) 
simultaneously. Additionally, whereas Kyrgyzstan, Pakistan and the Philippines transitioned from the Standard 
GSP arrangement to the GSP+ arrangement post-reform, we have labelled them as GSP+ countries for the 
entire period of investigation. 

56 

 
 
 
                                                 
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Table 10: GSP imports as a share of total EU imports by HS section (2011-2016) 

HS Section 

Description 

a.  Average_ALL 
(2011-2013) 

Miscellaneous manufactured articles 

Optical, photographic... Instruments 

Footwear, headgear, umbrellas… 
Textiles 
Pearls, precious, semi-precious stones 
Pulp of wood or other fibrous… 

SECTION XII 
SECTION XI 
SECTION XIV 
SECTION X 
SECTION XIX  Arms and ammunition 
SECTION XXI  Works Of Art, collectors' Pieces... 
SECTION 
XVIII 
SECTION XX 
SECTION XVI  Machinery and mechanical appliances 
SECTION XV 
SECTION V 
SECTION 
XVII 
SECTION VIII  Raw hides and skins, leather, furskins 
SECTION XIII  Articles of stone, plaster, cement… 
SECTION IX 
SECTION II 
SECTION IV 
SECTION VI 
SECTION I 
SECTION VII 
SECTION III 

Wood and articles of wood 
Vegetable products 
Prepared foodstuffs 
Products of the chem. & allied inds 
Live Animals; animal products 
Plastics and Articles thereof 
Animal or Vegetable fats and oils 

Base metals and articles of base metal 
Mineral products 
Vehicles, aircraft, vessels, transport 

16.74% 
23.13% 
0.87% 
0.00% 
0.00% 
0.00% 
1.45% 

3.50% 
2.28% 
5.36% 
2.57% 
4.13% 

20.83% 
9.23% 
8.33% 
8.40% 
13.52% 
8.01% 
22.09% 
17.88% 
28.74% 

b.  Average_ALL 
(2014-2016) 
25.69% 
27.58% 
0.95% 
0.00% 
0.00% 
0.00% 
1.07% 

Change 
(b-a) 
8.94 
4.46 
0.08 
0.00 
0.00 
0.00 
-0.38 

c. Average _ 80 
(2011-2013) 
14.11% 
21.86% 
0.73% 
0.00% 
0.00% 
0.00% 
0.66% 

d. Average _80 
(2014-2016) 
25.33% 
27.38% 
0.95% 
0.00% 
0.00% 
0.00% 
0.83% 

Change 
(d-c) 
11.22 
5.52 
0.21 
0.00 
0.00 
0.00 
0.17 

2.74% 
1.35% 
3.32% 
0.09% 
1.27% 

16.58% 
4.80% 
3.66% 
2.90% 
6.87% 
0.55% 
11.89% 
6.01% 
10.34% 

-0.76 
-0.93 
-2.03 
-2.49 
-2.86 

-4.25 
-4.43 
-4.68 
-5.50 
-6.65 
-7.46 
-10.20 
-11.87 
-18.40 

2.41% 
1.07% 
2.31% 
0.44% 
2.31% 

16.51% 
4.34% 
3.20% 
1.75% 
4.19% 
2.91% 
9.92% 
4.82% 
13.30% 

2.57% 
1.20% 
3.21% 
0.06% 
0.75% 

16.31% 
4.39% 
3.62% 
2.47% 
5.85% 
0.49% 
10.65% 
5.30% 
9.53% 

0.17 
0.13 
0.90 
-0.38 
-1.56 

-0.20 
0.05 
0.42 
0.73 
1.66 
-2.42 
0.73 
0.48 
-3.77 

*Source: Authors’ calculations based on trade data supplied by the European Commission 
**  Average_ALL  refers  to  the  average  imports  of  all  the  countries  that  exported  using  GSP  preferences  in  one  or  both  periods  (includes  countries  who  exited  the 
scheme after the reform), while Average_80 refers to the imports from the 80 beneficiary countries under investigation which retained their GSP status  throughout 
the two periods. 

57 

 
 
 
 
 
 
 
EUROPEAN COMMISSION 

Composition and share of imports under the GSP 
EU imports of textiles have consistently been the main sector of imports under the GSP 
since  2011.  In  2011,  these  imports  accounted  for  22  per  cent  of  total  imports  from  all 
GSP  beneficiaries  countries.  However,  with  the  implementation  of  the  new  GSP 
Regulation, textile imports as a  share of total GSP imports have more than doubled. In 
2014,  textile  imports  accounted  for  42  per  cent  of  total  GSP  imports;  while  in  2016, 
textile  imports  amounted  to  50  per  cent  of  total  GSP  imports,  which  symbolize  the 
dominance of products from this sector for the remaining GSP beneficiary countries post-
reform.  

Figure  3  shows  the  average  share  of  major  EU  imports  under  the  GSP  regime  in  the 
pre- and post- reform periods (reflected as ‘before’ and ‘after’, respectively 2011-13 and 
2014-16) by sector and products. It can be seen that the average share of EU imports of 
textiles  increased  by  24  percentage  points  in  the  post-reform  period.  This  further 
supports  the  earlier  findings  of  the  growth  in  the  share  of  textiles  in  EU  imports  from 
GSP countries in the post-reform period.  

Other

Manufactured articles

Vegetable products

Prepared foodstuffs

Raw hides and skins, etc.

Live Animals

Plastics

Base metals

Machinery

Footwear, etc.

Textiles

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

After

Before

Figure 3: Average share of major EU imports under the GSP regime (pre- and post-
reform) 

We further investigate the export patterns of the 80 GSP countries under investigation73. 
It is  evident that textiles account for the majority of exports  from this group74.  In fact, 
textiles accounted for almost 49 per cent of the total EU imports under GSP in the post-
reform  period,  increasing  by  over  7  percentage  points  compared  to  the  pre-reform 
period.  Footwear  and  leather  products  also  increased  their  share  by  4.15  percentage 

73 These 80 countries are listed per GSP arrangement in Chapter 1.2.1. With the exception of South Sudan and 
Myanmar/Burma that did not start to trade using GSP preferences until 2013, all other countries traded using 
GSP preferences from 2011-2016. It is also important to note that there were several countries that traded 
under the GSP and under other preferential trade agreements (particularly, the EU’s Market Access Regulation) 
simultaneously. Additionally, whereas Kyrgyzstan, Pakistan and the Philippines transitioned from the Standard 
GSP arrangement to the GSP+ arrangement post-reform, we have labelled them as GSP+ countries for the 
entire period of investigation. 
74For further details please see the textiles case study section of this report. 

58 

 
 
 
 
 
 
                                                 
 
EUROPEAN COMMISSION 

points,  and  accounted  for  around  9  per  cent  of  all  EU  imports  under  GSP  in  the  post-
reform period. 

s
o
r
u
e

f
o
s
n
o

i
l
l
i

m
n

i

70.000

60.000

50.000

40.000

30.000

20.000

10.000

0

55%

50%

45%

40%

35%

30%

25%

2011

2012

2013

2014

2015

2016

GSP Textiles imports

Total GSP imports

% of Textiles over total

Average pre-reform

Average post-reform

Figure 4: GSP textiles imports75 compared to total GSP imports 

Furthermore,  while  the  value  of  overall  GSP  imports  have  declined  significantly  since 
2014 owing to the exit of major players such as China as well as the graduation of India 
from  preferential  market  access  for  some  textiles  products  (Section  11-a),  the  value  of 
textiles  imports  under  the  GSP  has  continued  to  increase  in  the  post-reform  period, 
revealing  an  expansionary  effect.  In  fact,  growth  in  the  three  year  post-reform  period 
has  been  recorded  at  24.5  per  cent  compared  to  6.5  per  cent  in  the  pre-reform  period 
2011-2013.  

Additionally, it can be observed from Figure 3 above that the average share of imported 
footwear  increased  by  6  percentage  points  in  the  post-reform  period.  In  like  manner, 
there  were  minor  increases  in  the  average  shares  of  raw  hides  and  skins,  as  well  as 
miscellaneous  manufactured  articles.  All  sectors  listed  as  ‘Other’  either  maintained 
constant shares or experienced declining shares in the post-reform period.76 

Importantly,  there  was  a  significant  decrease  in  imports  that  fall  under  Section  V  – 
mineral products and under Section VI – products of the chemical and allied industries in 
the  post-reform  period,  as  shown  by  Figure  5  below.  In  the  case  of  minerals, 
approximately  80  per  cent  of  GSP  exports  emanated  from  the  United  Arab  Emirates, 
Kuwait, Russia, Saudi Arabia, and Brazil. All these countries graduated from the scheme 
following  GSP  reform  in  2014.  In  the  case  of  exports  of  chemical  and  allied  products, 
approximately  83  per  cent  of  GSP  exports  in  the  pre-reform  period  emanated  from 
Russia,  India,  Indonesia,  Saudi  Arabia,  Brazil,  Malaysia,  and  Argentina.  The  majority  of 
these  countries  either  graduated  from  the  GSP  altogether  or  graduated  from  obtaining 
GSP preferences from this HS Section in particular following GSP reform in 2014. 

75 These refer to EU imports of textiles under the GSP from the 80 countries that listed per GSP arrangement in 
Chapter 1.2.1. 
76These include products that fall under the following HS Sections: Section III – animals or vegetables fats and 
oils, Section IX – wood and articles of wood; Section V – mineral products; Section VI – products of the 
chemical and allied industries; Section XIII – articles of stones, plaster, cement; Section XIV – pearls, 
precious, semi-precious stones; Section XVII – vehicles, aircraft, vessels, transport; and Section XVIII – 
Optical, photographic instruments. 

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15000

10000

5000

0

2011 2012 2013 2014 2015 2016

Chemical products

Mineral products

Figure 5: EU imports of mineral and chemical products under GSP in millions of euros 
(2011-2016) 

Utilisation rates under the GSP 
In this sub-section, utilisation rates will be explored to analyse how countries under the 
different  GSP  arrangements  have  taken  advantage  of  eligible  preferences.  A  country’s 
utilisation rate of GSP preferences is estimated by the total value of its GSP preferential 
exports  divided  by  the  total  value  of  its  eligible  GSP  preferential  exports.  Annex  I 
contains  the  detailed  value  of  GSP  preferential  imports,  the  value  of  GSP  eligible 
preferential imports, as well as the utilisation rate for each GSP beneficiary country over 
the period 2011-2016.  

In  summary,  Figure  6  groups  utilisation  rates  across  GSP  arrangements  for  the  80 
countries77under  investigation  in  the  pre-  and  post-reform  periods.  We  can  see  that  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 per cent. By the 
second  period,  the  average  utilisation  rate  increased  by  around  10  percentage  points. 
This  was  primarily  due  to  an  increase  in  GSP  preferential  exports  from  Bangladesh, 
Cambodia and Mozambique during the post GSP reform years, i.e. from 2014 to 2016. In 
like  manner,  the  average  utilisation  rate  for  GSP+  countries  increased  by  around  9 
percentage  points  in  the  second  period  to  88  per  cent.  This  was  primarily  due  to  an 
increase in exports under GSP originating from Pakistan and the Philippines.  

When we compare the  same group of Standard GSP  countries  over the entire period in 
Figure  6,  it  can  be  seen  that  the  average  utilisation  rate  declined  by  3  percentage 
points.  This  was  mainly  due  to  the  fact  that  GSP  preferential  and  eligible  exports 
declined by almost EUR 2 billion and EUR 3 billion, respectively in 2014 compared to the 
previous year. However, by the year 2016, both GSP preferential and eligible exports for 
these countries exceeded pre-reform amounts. Nevertheless, the average utilisation rate 

77These 80 countries are listed per GSP arrangement in Chapter 1.2.1. With the exception of South Sudan and 
Myanmar/Burma that did not start to trade using GSP preferences until 2013, all other countries traded using 
GSP preferences from 2011-2016. It is also important to note that there were several countries that traded 
under the GSP and under other preferential trade agreements (particularly, the EU’s Market Access Regulation) 
simultaneously. Additionally, whereas Kyrgyzstan, Pakistan and the Philippines transitioned from the Standard 
GSP arrangement to the GSP+ arrangement post-reform, we have labelled them as GSP+ countries for the 
entire period of investigation.  

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in  the  pre-reform  period  was  greater  than  that  of  the  post-reform  period  for  Standard 
GSP countries. 

GSP+ Countries

Standard GSP Countries

EBA Countries

After

Before

0%

20%

40%

60%

80%

100%

Figure 6: Utilisation rate per GSP arrangement 

Upon closer examination of preference utilisation rates for individual countries under the 
Standard  GSP  arrangement  (Table  11),  we  can  see  that  9  out  of  the  23  countries 
increased  their  preference  utilisation  rate  in  the  post-reform  period.  These  countries 
included Cameroon (10.3 percentage points), the Cook Islands (11.3 percentage points), 
Syria  (15.3  percentage  points),  Iraq  (18.1  percentage  points),  and  Tonga  (46.3 
percentage  points).  If  we  further  investigate  the  case  of  Tonga  that  had  the  largest 
increase,  it  is  revealed  that  its  total  exports  to  the  EU  were  miniscule  in  2011  (merely 
EUR  511,000).  However  in  the  post-reform  period,  its  average  exports  to  the  EU 
increased to EUR 710,000, of which EUR 103, 000 was eligible for GSP preferences and 
EUR  63,000  was  recorded  as  GSP  preferential  exports.    The  increase  in  Tonga’s  GSP 
preferential  and  eligible  exports,  though  still  miniscule,  has  led  to  a  noteworthy 
improvement in its utilisation rate. 

In  several  cases,  the  average  utilisation  rates  for  individual  Standard  GSP  countries  in 
the  pre-reform  period  were  low.  This  has  occurred  partly  as  result  of  the  simultaneous 
use  of  trade  preferences  to  export  to  the  EU  market,  whereby  some  countries  were 
eligible  to  export  using  GSP  preferences  and  other  preferential  arrangements  at  the 
same.  This  was  the  case  for  the  following  Standard  GSP  countries:  Cameroon,  Fiji, 
Ghana,  Ivory  Coast,  Kenya  and  Swaziland.  They  were  eligible  to  export  under  the  EU’s 
Market Access Regulation for African countries and under the GSP in both periods. As a 
result, the GSP utilisation rates were low in comparison to the utilisation rates under the 
respective preferential arrangements.  

Additionally,  countries  like  Micronesia  and  Ukraine  are  noteworthy.  In  the  case  of 
Micronesia,  the  average  utilisation  rate  declined  by  48.4  percentage  points,  while 
Ukraine’s  average  utilisation  rate  declined  by  41.1  percentage  points.  A  review  of 
Micronesia’s  GSP  preferential  exports  reveals  that  the  value  of  trade  was  in  fact 
miniscule. Whereas almost all of its eligible GSP exports were being exported under the 
regime in the pre-reform period, by the post-reform period, this declined significantly. In 
2016,  only  25  per  cent  of  GSP  eligible  exports  were  being  actually  exported  under  the 
scheme. In the case of Ukraine, there was simultaneous use of GSP and FTA preferences 
in  2016  as  there  was  the  provisional  application  of  the  EU-Ukraine  Deep  and 
Comprehensive  Free  Trade  Agreement  (DCFTA)  on  1  January  2016.  Therefore,  this 
resulted  in  a  deterioration  of  its  average  utilisation  rate  in  the  post-reform  period  of 
imports under GSP.  

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Of all the Standard GSP countries, the countries with the highest utilisation rates in the 
post-reform  period  were:  India  (88.3  per  cent);  Tajikistan  (84.3  per  cent);  Uzbekistan 
(82.8 per cent); and Nigeria (67.3 per cent).  

Table 11: Utilisation rate per Standard GSP beneficiary (2011-2016) 

Country 

Tonga 

Iraq 

Syria 

Cook Islands 

Cameroon 

Kenya 

India 

Vietnam 

Niue 

Ivory Coast 

Ghana 

Fiji 

Marshall Islands 

Tadjikistan 

Indonesia 

Swaziland 

Sri Lanka 

Congo 

Uzbekistan 

Nigeria 

Nauru 
Ukraine 
Micronesia 

a. Average 
(2011-2013) 

b. Average 
(2014 -2016) 

Change 
(b-a) 

13.2% 

1.2% 

8.4% 

12.4% 

0.4% 

0.9% 

83.7% 

55.4% 

0.0% 

0.2% 

1.0% 

6.3% 

2.7% 

87.8% 

74.6% 

4.7% 

62.3% 

77.4% 

89.0% 

83.5% 

18.7% 
88.8% 
88.9% 

59.6% 

19.2% 

23.7% 

23.7% 

10.7% 

9.1% 

88.3% 

58.6% 

0.3% 

0.2% 

0.1% 

4.2% 

0.0% 

84.3% 

71.0% 

0.5% 

56.4% 

71.4% 

82.8% 

67.3% 

0.0% 
47.7% 
40.5% 

46.3 

18.1 

15.3 

11.3 

10.3 

8.2 

4.6 

3.2 

0.3 

0.0 

-0.9 

-2.0 

-2.7 

-3.5 

-3.6 

-4.3 

-5.9 

-6.0 

-6.2 

-16.2 

-18.7 
-41.1 
-48.4 

Source: Authors’ calculations based on trade data supplied by the European Commission 

Utilisation rates are noticeably higher for GSP+ beneficiaries in comparison to Standard 
GSP  beneficiaries.  The  GSP+  beneficiary  country  that  increased  its  utilisation  rate  the 
most  in  the  post-reform  period  was  the  Kyrgyz  Republic  (30.1  percentage  points).  This 
was followed by Pakistan (10.8 percentage points). These two countries are noteworthy 
as  both  of  them  transitioned  from  Standard  GSP  beneficiary  status  to  GSP+  status  in 
2016 and 2014, respectively. This reveals the importance of the GSP+ preferences in the 
expansion  of  exports  of  these  two  countries.  The  most  relevant  case  is  Pakistan  which 
experienced  a  sudden  increase  in  exports  of  beverages,  raw  hides,  skins  and  leather, 
textiles  and  automobiles  from  2014  onwards.  This  came  about  due  to  enhanced  tariff 
reductions under the GSP+ arrangement.  

Even  though  overall  preference  utilisation  rates  were  relatively  high  for  Mongolia  and 
Armenia,  there  were  declines  in  the  period  2014-2016.  In  the  case  of  Mongolia,  while 
preferential exports increased in the second period compared to the first, there was also 
an  increase  in  GSP  eligible  exports  that  were  actually  traded  under  MFN>0 
arrangements.  This  contributed  significantly  to  the  drop.  In  the  case  of  Armenia,  there 
was a slight decrease in GSP preferential exports in the second period. 

The GSP+ countries that had the highest utilisation rates in the post-reform period were 
Cape  Verde  (96.9  per  cent);  Pakistan  (95.8  per  cent);  Bolivia  (95.4  per  cent);  and 
Paraguay (91.9 per cent). 

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Table 12: Utilisation rate per GSP+ beneficiary (2011-2016) 

a.  Average 

(2011-2013) 

b. Average 
(2014 -2016) 

Change 
(b-a) 

34.0% 

84.9% 

88.3% 

66.3% 

96.7% 

95.3% 

94.0% 

92.7% 

64.1% 

95.8% 

91.9% 

68.9% 

96.9% 

95.4% 

91.0% 

85.0% 

30.1 

10.8 

3.6 

2.6 

0.2 

0.0 

-3.0 

-7.7 

Country  

Kyrgyz Republic 

Pakistan 

Paraguay 

Philippines 

Cape Verde 

Bolivia 

Armenia 

Mongolia 

Source: Authors’ calculations based on trade data supplied by the European Commission 

EBA  counties  recorded  the  most  substantial  increases  in  preference  utilisation  rates  in 
the  post-reform  period  of  all  the  three  GSP  arrangements.  Of  the  47  highlighted 
countries,  21  countries  recorded  increases  in  their  utilisation  rate  in  the  post-reform 
period, while 26 countries recorded declines. Notably, the average rise in the utilisation 
rate was 29.5 percentage points, while the average decline was 12.5 percentage points. 

Several countries with low utilisation rates initially were able to take greater advantage 
of GSP preferences in the post-reform period. Such countries included Uganda (increase 
of 70.5 percentage points); Comoros (increase of 69.5 percentage points); Mozambique 
(increase  of  68.4  percentage  points);  and  Haiti  (increase  of  54.3  percentage  points). 
Importantly, Uganda recorded the most significant increase in utilisation rate in the post-
reform  period  across  all  the  three  GSP  arrangements.  Between  2011  and  2014,  it 
benefitted  from  preferences  under  the  EU’s  Market  Access  Regulation  while  still  being 
eligible  for  GSP  preferences. 78 However  in  2015,  when  it  ceased  to  benefit  from  the 
Market  Access  Regulation,  it  increased  its  usage  of  EBA  preferences.  Consequently,  its 
GSP  utilisation  rate  was  low  in  the  first  period  compared  to  the  second  period.  The 
increase  in  Comoros’  utilisation  rate  came  as  a  result  of  an  exponential  increase  in  its 
GSP  preferential  and  eligible  exports.  In  2011,  its  utilisation  rate  was  0.93  per  cent 
compared to 94.42 per cent in 2016.  

Conversely,  there  were  several  countries  that  utilized  their  EBA  preferences  to  a  lesser 
extent in the post-reform period. These countries included Vanuatu, Tuvalu, the Central 
African Republic, and Yemen. Vanuatu recorded the highest decline in utilisation rate in 
the post-reform period – 74.5 percentage points. A review of Vanuatu’s GSP preferential 
exports reveals that they were in fact miniscule. However, they declined significantly in 
the post-reform period, contributing to the huge drop in the utilisation rate. 

Nevertheless,  EBA  countries  are  consistently  the  highest  preference  users  across  all 
three  GSP  arrangements.  The  countries  that  lead  the  pack  are  Solomon  Islands, 
Senegal, Laos, Mauritania, Malawi, the Gambia, and Cambodia.  

78It is also important to note that Mozambique and Haiti also benefitted from the EU’s Market Access Regulation 
from 2011-2014. 

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Table 13: Utilisation rate per EBA beneficiary (2011-2016)79 

Country 

Uganda 
Comoros 
Mozambique 
Haiti 
Burundi 
Tanzania 
Lesotho 
Rwanda 
Zambia 
Togo 
Mali 
Sao Tome and Principe 
Equatorial Guinea 
Kiribati 
Afghanistan 
Eritrea 
Sudan 
Cambodia 
Congo (Democratic Rep) 
Somalia 
Bangladesh 
Niger 
Burkina Faso 
Nepal 
Solomon Islands 
Laos 

Madagascar 
Senegal 
Guinea 
Bhutan 
Mauritania 
Malawi 
Benin 
Gambia 
Chad 
Sierra Leone 
Djibouti 
Timor-Leste 
Liberia 
Angola 
Samoa 
Guinea Bissau 
Ethiopia 
Yemen 
Central African Republic 
Tuvalu 
Vanuatu 

a.  Average 

(2011-2013) 

b. Average 
(2014 -2016) 

Change 
(b-a) 

2.4% 
1.4% 
4.6% 
7.3% 
9.1% 
28.4% 
12.8% 
2.1% 
26.2% 
52.6% 
58.6% 
51.3% 
78.8% 
3.9% 
39.7% 
87.1% 
89.6% 
91.4% 
60.2% 
1.1% 
95.3% 
77.6% 
87.0% 
93.0% 
99.8% 
97.7% 

3.1% 
98.1% 
39.2% 
98.0% 
98.3% 
98.4% 
90.8% 
98.6% 
5.4% 
71.0% 
11.0% 
10.4% 
20.7% 
61.1% 
39.0% 
20.6% 
97.5% 
94.1% 
63.3% 
41.4% 
92.0% 

72.9% 
70.9% 
72.9% 
61.6% 
62.6% 
81.5% 
61.1% 
49.0% 
71.7% 
84.1% 
80.4% 
61.6% 
88.9% 
13.4% 
46.5% 
93.4% 
95.9% 
93.4% 
61.8% 
2.6% 
96.7% 
77.3% 
86.6% 
92.5% 
99.1% 
97.0% 

2.0% 
97.0% 
37.7% 
96.3% 
96.3% 
95.8% 
87.4% 
95.1% 
0.0% 
62.5% 
2.3% 
0.0% 
9.6% 
43.5% 
19.0% 
0.0% 
76.1% 
66.2% 
24.6% 
0.0% 
17.5% 

70.5 
69.5 
68.4 
54.3 
53.4 
53.1 
48.3 
46.8 
45.5 
31.5 
21.7 
10.3 
10.1 
9.5 
6.8 
6.3 
6.3 
2.0 
1.6 
1.5 
1.3 
-0.3 
-0.4 
-0.5 
-0.7 
-0.7 

-1.1 
-1.2 
-1.5 
-1.7 
-2.0 
-2.6 
-3.4 
-3.5 
-5.4 
-8.5 
-8.8 
-10.4 
-11.1 
-17.7 
-20.0 
-20.6 
-21.4 
-27.8 
-38.6 
-41.4 
-74.5 

Source: Authors’ calculations based on trade data supplied by the European Commission 

Analysis of trade diversification 
Export diversification is one of the key indicators used to evaluate the economic impact 
of  the  GSP  on  beneficiary  countries.  To  remove  disincentives  for  diversification  for 
countries  most  in  need  is  a  short-to-medium  term  impact  that  is  anticipated  from  the 
implementation  of  the  GSP  Regulation.  Export  diversification  is  considered  to  be 

79Myanmar/Burma and South Sudan have been excluded from this analysis. Myanmar/Burma was reinstated 
into the GSP in 2013 and South Sudan became eligible for GSP preferences in 2014. 

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important for developing countries because still many of these countries are often highly 
dependent on a few primary commodities for their export earnings.80 

Diversification by number of tariff lines reporting trade  
One  of  the  methods  that  we  will  use  to  analyse  the  change  and  extent  of  export 
diversification amongst GSP beneficiary countries is to measure the number of tariff lines 
within which a country achieves exports over time. The tables presented below illustrate 
the  average  number  of  CN-8  digit  tariff  code,  comprising  9414  lines  in  2016,  in  which 
trade  was  reported  in  the  pre-and  post-reform  periods  and  the  change  across  these 
periods for the 80 beneficiary countries.81 The counting of tariff lines with non-zero trade 
provides  us  with  an  indication  of  whether  diversification  of  exports  with  different 
products has been achieved. 

For  all  the  EBA  countries  taken  together,  it  can  be  seen  that  there  was  a  19  per  cent 
increase  in  the  number  of  tariff  lines  with  non-zero  trade  originating  from  individual 
countries  in  the  post-reform  period.  For  47  EBA  countries  with  data  for  the  pre-  and 
post-reform  periods,  we  see  an  increase  of  reported  trade  across  2,791  lines.  This  was 
the  most  sizeable  increase  of  all  the  three  arrangements,  though  starting  from  a  very 
low base and having a large number of countries. Importantly, 37 out of the 47 countries 
recorded increases, while the other 10 countries recorded decreases. Individual countries 
such  as  Bangladesh,  Madagascar  and  Tanzania  increased  the  number  of  tariff  lines 
through which they recorded exports of goods by 220 lines or more. It is also important 
to  highlight  other  countries  such  as  Kiribati  and  Vanuatu,  which  recorded  the  highest 
percentage change in tariff lines, though starting from an extremely low base of just 25 
and  53  lines  respectively  in  the  pre-reform  period  (just  about  0.5  per  cent  of  all  tariff 
lines).  

Conversely,  Afghanistan,  Haiti,  Sudan,  Lesotho,  Sierra  Leone,  Tuvalu,  Yemen,  Central 
African  Republic,  Samoa  and  Guinea  Bissau  all  traded  under  fewer  tariff  lines  in  the 
previous period. Guinea recorded the largest decline, seizing to report trade in 80 tariff 
lines.  This  was  followed  by  the  Central  African  Republic  and  Yemen,  which  recorded 
discontinuation of trade in 22 tariff lines each.  

Overall, the EBA countries that traded under the most tariff lines in the post-reform were 
Bangladesh  (1707  tariff  lines),  Madagascar  (1400  tariff  lines),  and  Senegal  (1073  tariff 
lines).  Hence, using this measure, these  countries have achieved the  highest degree of 
diversification in their trade  with the EU and have  substantially improved diversification 
in the short-to-medium term.   

80World Integrated Trade Solution, (2017).Trade Indicators. Available at: 
http://wits.worldbank.org/wits/wits/witshelp/Content/Utilities/e1.trade_indicators.htm 
Between 2011 and 2016, there was an increase of 120 tariff lines because of HS re-classifications. This 
variation of 0.2% per annum is not considered significant enough to impact the analysis.  

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Table 14: Diversification by number of tariff lines for EBA beneficiaries 

a.  Average 
(2011-2013) 
25 
53 
660 
60 
115 
48 
28 
47 
111 
150 
35 
369 
103 
347 
195 
386 
1129 
777 
482 
838 
241 
513 
264 
135 
934 
1488 
216 
363 
110 
57 
312 
344 
87 
330 
203 
992 
339 
447 
317 
244 

b. Average 
(2014 -2016) 
52 
79 
979 
88 
167 
69 
39 
65 
149 
192 
45 
463 
129 
434 
244 
480 
1400 
962 
590 
1024 
293 
622 
315 
158 
1073 
1707 
248 
416 
125 
65 
351 
383 
96 
364 
221 
1054 
353 
440 
304 
233 

Difference 
(b-a) 
27 
26 
319 
28 
53 
21 
11 
18 
38 
42 
9 
94 
26 
87 
49 
94 
271 
185 
108 
186 
52 
108 
51 
23 
139 
220 
32 
53 
15 
7 
40 
39 
9 
34 
19 
62 
14 
-7 
-13 
-10 

Percentage Change 
109% 
50% 
48% 
47% 
46% 
44% 
39% 
38% 
34% 
28% 
26% 
26% 
25% 
25% 
25% 
24% 
24% 
24% 
22% 
22% 
22% 
21% 
19% 
17% 
15% 
15% 
15% 
15% 
13% 
13% 
13% 
11% 
11% 
10% 
9% 
6% 
4% 
-2% 
-4% 
-4% 

 Country  
Kiribati 
Vanuatu 
Tanzania 
Bhutan 
Gambia 
Comoros 
Timor-Leste 
Somalia 
Djibouti 
Rwanda 
Solomon Islands 
Togo 
Eritrea 
Congo (Democratic Rep) 
Liberia 
Mozambique 
Madagascar 
Angola 
Uganda 
Cambodia 
Benin 
Ethiopia 
Guinea 
Malawi 
Senegal 
Bangladesh 
Equatorial Guinea 
Laos 
Chad 
Sao Tome and Principe 
Mauritania 
Mali 
Burundi 
Burkina Faso 
Niger 
Nepal 
Zambia 
Afghanistan 
Haiti 
Sudan 

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 Country  
Lesotho 
Sierra Leone 
Tuvalu 
Yemen 
Central African Republic 
Samoa 
Guinea Bissau 
TOTAL NR. OF LINES (3-year 
averages) 

a.  Average 
(2011-2013) 
68 
252 
17 
169 
95 
41 
83 

14993 

b. Average 
(2014 -2016) 
65 
237 
16 
147 
74 
32 
44 

17784 

Difference 
(b-a) 
-3 
-15 
-1 
-22 
-22 
-9 
-39 

2791 

Percentage Change 
-5% 
-6% 
-6% 
-13% 
-23% 
-23% 
-47% 

19% 

*Source: Authors’ calculations based on trade data supplied by the European Commission 
**Myanmar/Burma and South Sudan have been excluded from this analysis. Myanmar/Burma was reinstated into the GSP in 2013 and South Sudan became eligible for 
GSP preferences in 2013.  

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A  similar  analysis  was  undertaken  for  the  Standard  GSP  countries,  which  showed  that 
there  was  a  4  per  cent  increase  in  the  number  of  tariff  lines  used  in  the  post-reform 
period. Almost all the countries recorded increases with the exception of three countries 
(Swaziland,  the  Cook  Islands  and  Syria).  Syria  is  noteworthy  as  there  was  a  decline  of 
642 tariff lines following GSP reform, which also coincides with the intensification of civil 
and political unrest in the country.  Noticeably, there were varying degrees of increased 
diversification, ranging from 1 per cent to 74 per cent of the initial number of tariff lines 
under which trade took place. India and Indonesia both recorded a 1 per cent increase; 
while Micronesia and Tonga both recorded a 74 per cent increase. For these two cases, it 
is evident that the initial number of tariff lines traded during 2011-13 was extremely low. 
Nevertheless, the overall picture that emerges is an increased degree of diversification.  

Overall, the Standard GSP countries that traded under the largest number of tariff lines 
in  the  post-reform  period  were  India  (utilizing  6,  647  tariff  lines),  Ukraine  (4,551  tariff 
lines), Indonesia (4, 195 tariff lines) and Vietnam (4,049 tariff lines). 

Table 15: Diversification by number of tariff lines for Standard GSP beneficiaries 

a.  Average 
(2011-2013) 

b. Average 
(2014 -2016) 

Difference 
(b-a) 

Percentage 
Change 

Micronesia 

Tonga 

Niue 

Iraq 

Marshall Islands 

Uzbekistan 

Ivory Coast 

Tadjikistan 

Fiji 

Congo 

Kenya 

Cameroon 

Ghana 

Nigeria 

Nauru 

Ukraine 

Vietnam 

Sri Lanka 

India 

Indonesia 

Swaziland 
Cook Islands 
Syria 
TOTAL  

14 

19 

7 

493 

57 

412 

852 

133 

198 

440 

1220 

899 

1142 

1394 

19 

4287 

3822 

2021 

6567 

4148 

239 
63 
1379 
29827 

25 

33 

12 

773 

79 

523 

1068 

158 

236 

521 

1346 

991 

1251 

1500 

20 

4551 

4049 

2101 

6647 

4195 

236 
42 
737 
31094 

11 

14 

5 

280 

22 

111 

216 

25 

37 

81 

126 

92 

109 

106 

1 

264 

227 

80 

80 

46 

-3 
-21 
-642 
1267 

74% 

74% 

67% 

57% 

39% 

27% 

25% 

19% 

19% 

18% 

10% 

10% 

10% 

8% 

7% 

6% 

6% 

4% 

1% 

1% 

-1% 
-33% 
-47% 
4% 

Source: Authors’ calculations based on trade data supplied by the European Commission 

With  regard  to  the  GSP+  countries,  Table  16  below  reveals  that  changes  were  not  as 
significant  as  in  the  Standard  GSP  and  EBA  arrangements.  The  eight  GSP+  countries 
increased the tariffs lines under which they traded after GSP reform,  with the exception 
of Cape Verde (2 per cent decrease). Increased use of tariff lines ranged from 2 per cent 
to  26  per  cent,  with  Paraguay  and  the  Kyrgyz  Republic  accounting  for  the  former  and 
Mongolia accounting for the latter. It can also be seen that Pakistan and the Philippines 
led  the  pack  in  terms  of  the  overall  number  of  tariff  lines  used  in  both  periods,  and 
increased  usage  in  the  post-reform  period  by  141  and  105  tariff  lines,  respectively. 
Given  their  transition  from  the  Standard  GSP  to  GSP+  arrangement  in  2014  and  2015, 

68 

 
 
 
 
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respectively,  this  provides  further  evidence  that  greater  preferential  access  under  the 
GSP+ has resulted in an improved diversification of exports from these countries.  

Table 16: Diversification by number of tariff lines for GSP+ beneficiaries 

Mongolia 

Bolivia 

Armenia 

Pakistan 

Philippines 

Paraguay 

Kyrgyz Republic 

Cape Verde 

TOTAL  

a. Average 
(2011-2013) 
342 

b. Average 
(2014 -2016) 
432 

Difference 
(b-a) 
90 

Percentage 
Change 
26% 

643 

586 

2833 

2942 

487 

273 

414 

8520 

723 

633 

2974 

3047 

499 

279 

405 

8992 

80 

47 

141 

105 

12 

6 

-9 

472 

12% 

8% 

5% 

4% 

2% 

2% 

-2% 

6% 

Source: Authors’ calculations based on trade data supplied by the European Commission 

Assessment of diversification using the Herfindahl Index 
We further investigate the extent of export diversification of the GSP beneficiaries using 
the  Herfindahl  Index.  The  Herfindahl  Index  (HI)  is  an  indicator  which  measures  the 
diversification  of  a  country’s  export  portfolio. 82 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. 

For example, if Country A exports only 2 products to the EU, where each product has an 
export  share  of  0.5,  then  Country  A’s  HI  score  would  be  equal  to  0.5.83 On  the  other 
hand,  if  Country  B  exports  20  products  to  the  EU,  where  each  product  has  an  export 
share of 0.05, then Country B’s HI score would be equivalent to 0.05.84  If we compare 
the  HI  scores  of  Country  A  and  Country  B,  it  is  evident  that  Country  A  has  a  narrow 
export  base  given  its  HI  score  is  closer  to  1  (indicative  of  a  least  diversified  portfolio); 
while Country B has broad export base given that its HI score is closer to 0 (indicative of 
a highly diversified export portfolio).  

We  assess  export  diversification  based  on  the  beneficiaries’  exports  to  the  EU  at  the 
product level using CN 8-digit trade data as well as at the sectoral level using HS 2-digit 
trade data. This will help us to assess whether GSP beneficiary countries have expanded 
the products exported to the EU following GSP reform. It will also help to assess whether 
exports have been concentrated in only a few sectors or whether additional sectors have 
been exporting, thus revealing a higher degree of diversification.   

From  the  Table  17  below,  we  can  see  that  the  following  EBA  countries  have  diversified 
export portfolios at the product level, almost attaining the highly diversified score of 0 in 
the  post-regulation  period:  Bangladesh,  Cambodia,  Laos,  Nepal  and  Senegal.  These 
results  of  the  HI  reconfirm  our  findings  presented  above.  On  the  other  hand,  the 
following  countries  had  least  diversified  portfolios  at  the  product  level  in  the  post-

82World Integrated Trade Solution (2017).Trade Indicators. Available at: 
http://wits.worldbank.org/wits/wits/witshelp/Content/Utilities/e1.trade_indicators.htm 
83 The sum of squared shares is calculated here as: 0.25 +0.25 = 0.5.  
84 The sum of squared shares is calculated here as: 0.025* 20 = 0.05. 

69 

 
 
 
  
 
 
 
 
 
                                                 
EUROPEAN COMMISSION 

regulation period: Angola, Burundi, Equatorial Guinea, Lesotho, Rwanda, Sao Tome and 
Principe and Timor-Leste, with HI product scores exceeding 0.5 in the pre-reform period 
2011-2013.  Niger  is  noteworthy  as  it  reflected  the  largest  change  in  the  post-reform 
period,  moving  from  a  moderately  diversified  export  portfolio  at  the  product  level 
towards  a  least  diversified  portfolio.  However,  this  is  not  necessarily  due  to  a  decrease 
on the number  of products  exported but to a  sudden and massive increase in only  one 
product: Natural uranium which increased from 0 to EUR 133 million in one single year. 
Notably, the country that recorded the most positive change in export diversification at 
the product level was Guinea Bissau, moving from 0.64 in the first period to 0.28 in the 
second  period.  This  reflects  a  significant  increase  in  the  number  of  products  that  were 
traded since 2014.  

If we further investigate export diversification at the sectoral level, we find that countries 
like Bangladesh and Cambodia that are highly diversified at the product level are not as 
diversified  at  the  sectoral  level.  In  other  words,  they  may  export  new  products,  but 
these are typically within the same sectors.  Some of the EBA countries that were closer 
to  being  perfectly  diversified  at  the  sectoral  level  with  HI  scores  below  0.2  were 
Afghanistan, Benin, Madagascar, Mali, and Togo. 

In  contrast,  the  countries  that  were  least  diversified  at  the  sectoral  level  were  Lesotho 
and  Niger.  The  countries  that  showed  improvements  at  both  the  product  and  sector 
levels of all the EBA beneficiaries were: Burundi, Chad, Congo (Democratic Rep), Djibouti, 
Eritrea,  Haiti,  Malawi,  Niger,  Samoa,  Sao  Tome  and  Principe,  Somalia,  South  Sudan, 
Tanzania and Tuvalu. 

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Table 17: Herfindahl Index for EBA countries (2011-2016) 

EBA Countries  

Afghanistan 
Angola 
Bangladesh 
Benin 
Bhutan 
Burkina Faso 
Burundi 
Cambodia 
Central African Republic 
Chad 
Comoros 
Congo (Democratic Rep) 
Djibouti 
Equatorial Guinea 
Eritrea 
Ethiopia 
Gambia 
Guinea 
Guinea Bissau 
Haiti 
Kiribati 
Laos 
Lesotho 
Liberia 
Madagascar 
Malawi 
Mali 
Mauritania 
Mozambique 
Nepal 
Niger 
Rwanda 
Samoa 
Sao Tome and Principe 
Senegal 
Sierra Leone 

Product Level (CN-8 digit level)  

Sectoral Level (HS-2 digit level)  

a.  Average 
          (2011-2013) 
0.15 
0.85 
0.06 
0.14 
0.62 
0.22 
0.72 
0.03 
0.41 
0.55 
0.48 
0.28 
0.27 
0.68 
0.12 
0.34 
0.17 
0.57 
0.64 
0.22 
0.34 
0.05 
0.97 
0.31 
0.04 
0.33 
0.1 
0.45 
0.52 
0.07 
0.34 
0.67 
0.14 
0.82 
0.04 
0.29 

b.  Average 

      (2014 -2016) 
0.1 
0.82 
0.05 
0.14 
0.56 
0.21 
0.82 
0.03 
0.22 
0.6 
0.28 
0.29 
0.28 
0.75 
0.56 
0.24 
0.17 
0.52 
0.28 
0.29 
0.26 
0.05 
0.98 
0.24 
0.06 
0.44 
0.11 
0.17 
0.4 
0.04 
0.87 
0.46 
0.19 
0.86 
0.03 
0.27 

Change 
  (b-a) 
-0.05 
-0.03 
-0.01 
0 
-0.06 
-0.01 
0.1 
0 
-0.19 
0.05 
-0.2 
0.01 
0.01 
0.07 
0.44 
-0.1 
0 
-0.05 
-0.36 
0.07 
-0.08 
0 
0.01 
-0.07 
0.02 
0.11 
0.01 
-0.28 
-0.12 
-0.03 
0.53 
-0.21 
0.05 
0.04 
-0.01 
-0.02 

c.  Average 
          (2011-2013) 
0.2 
0.91 
0.43 
0.3 
0.72 
0.25 
0.74 
0.36 
0.57 
0.56 
0.58 
0.3 
0.29 
0.88 
0.22 
0.37 
0.22 
0.57 
0.64 
0.24 
0.5 
0.22 
0.98 
0.35 
0.12 
0.49 
0.17 
0.56 
0.53 
0.19 
0.36 
0.77 
0.19 
0.86 
0.26 
0.35 

d.  Average 

        (2014 -2016) 
0.13 
0.84 
0.42 
0.17 
0.62 
0.25 
0.84 
0.34 
0.81 
0.6 
0.49 
0.31 
0.3 
0.82 
0.56 
0.27 
0.22 
0.54 
0.36 
0.31 
0.4 
0.29 
0.98 
0.28 
0.12 
0.61 
0.15 
0.33 
0.42 
0.18 
0.91 
0.65 
0.25 
0.88 
0.22 
0.38 

Change 
  (d-c) 
-0.07 
-0.07 
-0.01 
-0.13 
-0.1 
0 
0.1 
-0.02 
0.24 
0.04 
-0.09 
0.01 
0.01 
-0.06 
0.34 
-0.1 
0 
-0.03 
-0.28 
0.07 
-0.1 
0.07 
0 
-0.07 
0 
0.12 
-0.02 
-0.23 
-0.11 
-0.01 
0.55 
-0.12 
0.06 
0.02 
-0.04 
0.03 

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Solomon Islands 
Somalia 
Sudan 
Tanzania 
Timor-Leste 
Togo 
Tuvalu 
Uganda 
Vanuatu 
Yemen 
Zambia 

0.43 
0.31 
0.31 
0.09 
0.95 
0.25 
0.21 
0.31 
0.36 
0.51 
0.33 

0.35 
0.68 
0.26 
0.13 
0.93 
0.13 
0.53 
0.3 
0.21 
0.16 
0.28 

-0.08 
0.37 
-0.05 
0.04 
-0.02 
-0.12 
0.32 
-0.01 
-0.15 
-0.35 
-0.05 

0.5 
0.49 
0.33 
0.14 
0.95 
0.26 
0.26 
0.34 
0.4 
0.66 
0.34 

0.51 
0.7 
0.29 
0.17 
0.93 
0.15 
0.62 
0.33 
0.29 
0.28 
0.41 

0.01 
0.21 
-0.04 
0.03 
-0.02 
-0.11 
0.36 
-0.01 
-0.11 
-0.38 
0.07 

*Source: Authors’ calculations based on trade data supplied by the European Commission.  
**Myanmar/Burma and South Sudan have been excluded from this analysis. Myanmar/Burma was reinstated into the GSP in 2013 and South Sudan became eligible for 
GSP preferences in 2013.  
***Countries highlighted in grey and in bold are examples of countries that have either made significant positive changes or have highly diversified portfolios; while 
countries highlighted in red and in italics are examples of countries that have either made significant negative changes or have less diversified portfolios.  

72 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
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When  the  same  analysis  is  undertaken  for  the  Standard  GSP  countries,  13  of  the  23 
countries  reflected  positive  changes  in  export  diversification  at  the  product  level  in  the 
second period, moving closer to highly diversified score of zero. There were 5 countries 
that  had  unchanged  scores  as  in  the  pre-reform  period,  while  5  countries  reflected 
negative changes.  

Some  noteworthy  countries  that  consistently  had  diversified  portfolios  at  the  product 
level  were  India,  Indonesia,  Sri  Lanka,  Ukraine  and  Uzbekistan.    The  Marshall  Islands 
and  the  Congo  improved  their  status  significantly  in  the  post-regulation  period.  On  the 
other  hand,  Iraq’s  export  portfolio  was  the  least  diversified  at  the  product  level,  while 
Tonga’s export basket decreased the most in the second period.   

Unlike the situation with the EBA countries, Standard GSP countries that exhibited highly 
diversified  portfolios  at  the  product  level  were  also  similarly  diversified  at  the  sectoral 
level.  Notably,  Congo  and  Micronesia  showed  progress  on  the  path  to  export 
diversification at the sectoral level post-reform. 

Table 18: Herfindahl Index for Standard GSP countries (2011-2016) 

Product Level (CN-8 digit level)  

Sectoral Level (HS-2 digit level)  

a.  Average 
     (2011-2013) 

b.  Average 
    (2014-2016) 

Change 
(b-a) 

c.  Average 

d.  Average 

       (2011-2013) 

      (2014 -2016) 

Change 
  (d-c) 

0.3 
0.66 
0.47 
0.78 
0.33 

0.01 

0.02 
0.98 
0.17 
0.11 

0.61 

0.38 
0.39 
0.73 
0.62 
0.02 
0.41 
0.25 
0.33 
0.19 
0.04 
0.06 
0.11 

0.21 
0.43 
0.52 
0.74 
0.24 

0.01 

0.01 
0.98 
0.22 
0.11 

0.36 

0.25 
0.17 
0.75 
0.52 
0.02 
0.45 
0.07 
0.3 
0.42 
0.03 
0.05 
0.11 

-0.09 
-0.23 
0.05 
-0.04 
-0.09 

0 

-0.01 
0 
0.05 
0 

-0.25 

-0.13 
-0.22 
0.02 
-0.1 
0 
0.04 
-0.18 
-0.03 
0.23 
-0.01 
-0.01 
0 

0.33 
0.73 
0.58 
0.78 
0.39 

0.05 

0.07 
0.99 
0.36 
0.22 

0.9 

0.83 
0.43 
0.93 
0.62 
0.17 
0.64 
0.33 
0.41 
0.31 
0.12 
0.18 
0.16 

0.25 
0.49 
0.61 
0.74 
0.37 

0.04 

0.07 
0.99 
0.48 
0.21 

0.8 

0.39 
0.25 
0.89 
0.52 
0.19 
0.59 
0.14 
0.39 
0.57 
0.1 
0.17 
0.18 

-0.08 
-0.24 
0.03 
-0.04 
-0.02 

-0.01 

0 
0 
0.12 
-0.01 

-0.1 

-0.44 
-0.18 
-0.04 
-0.1 
0.02 
-0.05 
-0.19 
-0.02 
0.26 
-0.02 
-0.01 
0.02 

Standard 
GSP 
countries 
Cameroon 

Congo 
Cook Islands 
Fiji 
Ghana 
India 

Indonesia 
Iraq 
Ivory Coast 
Kenya 
Marshall 
Islands 
Micronesia 
Nauru 
Nigeria 
Niue 
Sri Lanka 
Swaziland 
Syria 
Tajikistan 
Tonga 
Ukraine 
Uzbekistan 
Vietnam 

*Source: Authors’ calculations based on trade data supplied by the European Commission 
**Countries highlighted in grey and in bold are examples of countries that have either made significant positive 
changes  or  have  highly  diversified  portfolios; while countries  highlighted  in red  and  in  italics  are examples of 
countries that have either made significant negative changes or have less diversified portfolios. 

The  majority  of  GSP+  countries  achieved  only  minor  changes  in  their  export 
diversification  at  the  product  level  in  the  post  regulation  period,  with  the  exception  of 
Paraguay. Paraguay recorded the most tangible improvement in export diversification at 
the product level of all GSP+ countries.  There was no change in export diversification at 
the  product  level  for  Bolivia,  Cape  Verde,  Pakistan  and  the  Philippines.  It  is  also 
important to note that Pakistan had the most diversified export portfolio at the product 
level of all the GSP+ countries, followed by the Philippines.  

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Similarly,  there  were  only  minor  changes  in  export  diversification  at  the  sectoral  level, 
with the exception of Paraguay. Pakistan was the most diversified of the GSP+ countries 
at  the  sectoral  reform  in  the  post-reform  period.  However,  its  HI  at  the  sectoral 
compared  to  the  product  level  was  higher,  signaling  a  less  diversified  portfolio  at  the 
sectoral  level.  It  is  also  important  to  note  that  Mongolia  experienced  no  changes  in  its 
diversification status at the sectoral level post-reform. 

Table 19: Herfindahl Index for GSP+ countries (2011-2016) 

Product Level (CN-8 digit level)  
a.  Avg. 
(2011-2013) 

b.  Avg. 
(2014 -2016) 

Change  
(b-a) 

Sectoral Level (HS-2 digit level)  

c.  Avg. 

d.  Avg. 

 (2011-2013) 

 (2014 -2016) 

Change  
(d-c) 

GSP+ 
Countries   
Armenia 

Bolivia 

0.18 

0.12 

Cape Verde 

0.14 
Kyrgyz Republic  0.11 
Mongolia 

0.24 

Pakistan 

Paraguay 

Philippines 

0.02 

0.62 

0.04 

0.16 

0.12 

0.14 

0.18 

0.23 

0.02 

0.3 

0.04 

-0.02 

0.2 

0 

0 

0.07 

-0.01 

0 

-0.32 

0 

0.16 

0.3 

0.19 

0.28 

0.12 

0.64 

0.23 

0.18 

0.2 

0.29 

0.28 

0.28 

0.15 

0.32 

0.26 

-0.02 

0.04 

-0.01 

0.09 

0 

0.03 

-0.32 

0.03 

*Source: Authors’ calculations based on trade data supplied by the European Commission 
**Countries highlighted in grey and in bold are examples of countries that have either made significant positive 
changes  or  have  highly  diversified  portfolios; while countries  highlighted  in red  and  in  italics  are examples of 
countries that have either made significant negative changes or have less diversified portfolios. 

In  view  of  the  level  and  changes  of  export  diversification  comparing  across  the  three 
arrangements (EBA, Standard GSP and GSP+) using both the tariff line indicator as well 
as the HI, it is noted that export diversification increased after the implementation of the 
GSP Regulation. It should also be noted that the eligible countries in the EBA group have 
diversified the least. From the EBA countries, 18 countries experienced an improvement 
during  the  period  of  review,  while  29  countries  did  not  realize  any  change  or  even 
deterioration  in  their  export  diversification  profiles  at  the  product  level.85Overall,  GSP+ 
countries  were  the  most  diversified  of  all  the  three  arrangements,  with  all  countries 
having HI scores of between 0.02 and 0.32 at both product and sectoral levels.  

It can be observed that for Standard GSP and GSP+ countries, the GSP reform coincided 
with a positive impact on diversification – nearly all countries under these arrangements 
succeeded  to  place  a  greater  number  of  products  in  the  EU  markets.  However,  for 
countries  under  that  traded  under  the  EBA  arrangement,  the  positive  impact  is  much 
more  limited,  reflecting  the  domestic  policy  and  resource  constraints  they  face  in 
building up their productive capacities.  

85 At the sectoral level, 19 countries experienced an improvement, while 28 countries realized no change or 
deterioration in their export diversification profiles.  

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2.3  Econometric analysis using the gravity model 

In this section, we present the findings of a bilateral gravity model at the product level, 
which  seeks  to  assess  the  impact  of  the  EU’s  GSP  on  exports  to  the  EU.    The  gravity 
model is often  referred  to as the  ‘workhorse’  of international trade policy analysis. It is 
used  to  analyse  the  determinants  of  bilateral  trade  flows.  The  basic  model  predicts 
bilateral  trade  flows  to  be  positively  related  to  economic  size  (often  using  GDP 
measurements)  and  negatively  related  to  distance  between  two  countries.  Enhanced 
models  estimate  the  impact  of  additional  variables  such  as  the  applicable  trade  regime 
and  the  preference  margins  applied,  or,  for  example,  whether  the  countries  share  a 
common border or common language.  

The key idea in the gravity model is that the economic size of the partner countries will 
influence  the  amount  of  trade  between  them,  and  that  ‘friction’  between  countries  also 
matters.  This  friction  may  be  related  to  the  distance  between  markets,  as  well  as  to 
policy barriers such as tariffs or quotas.  

In  our  model,  the  standard  economic  mass  variables  are  utilised,  as  well  as  several 
dummy  variables  that  are  intended  to  capture  the  extent  of  tariff  barriers  between 
countries as well as changes in those tariff barriers. In the context of this MTE, we focus 
explicitly  on  modelling  the  changes  in  tariffs  arising  from  the  implementation  of  the 
978/2012  GSP  Regulation,  such  as  the  change  in  the  trade  regime  (MFN,  GSP,  and 
RTA/FTA)  for  which  a  particular  country  is  eligible.  We  model  this  by  assessing  the 
changes  in  the  tariffs  levels  as  well  as  the  changes  in  the  preference  margins  and  how 
these correlate to changes in the bilateral trade flows between a particular country and 
the EU. 

2.3.1  Specification and data86 
The specific hypotheses that are being tested are:  

(a)  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  

(b) whether there have been associated  impacts on the exports of those  countries that 
are no longer eligible for the GSP. 

The  variables  which  have  been  taken  into  account  in  the  different  gravity  model 
regressions  are  presented  in  this  section.  Not  all  the  listed  variables  are  used  in  every 
regression; the details are specifically outlined in the subsequent text.  

log(𝑋𝑖𝑘𝑟𝑡) = 𝛽0 +   𝛽1 log(𝐻𝑆2𝑒𝑥𝑝𝑜𝑟𝑡𝑠𝑖𝑤𝑡) +   𝛽2log (𝑑𝑖𝑠𝑡𝑐𝑎𝑝𝑖) + 𝛽3𝑐𝑜𝑚𝑙𝑎𝑛𝑔𝑖 +   𝛽4𝑐𝑜𝑙𝑜𝑛𝑦𝑖
+   𝛽5 log(𝑟𝑒𝑚𝑜𝑡𝑒𝑛𝑒𝑠𝑠)𝑖 + 𝛽6𝑡𝑎𝑟𝑖𝑓𝑓𝑠𝑖𝑘𝑟𝑡 + 𝛽7𝑚𝑎𝑟𝑔𝑖𝑛𝑠𝑖𝑘𝑟𝑡 + 𝛽8 𝑟𝑒𝑓𝑜𝑟𝑚𝑡
+ ∑ 𝑟𝑒𝑔𝑖𝑚𝑒𝑖𝑡

+𝛽𝑖𝑘 +   𝛽𝑡 + µ𝑖𝑡 

where:  

𝑖𝑡

log(Xikrt)  is  the  natural  logarithm  of  EU  imports  originating  from  country  i  of 

product k under regime r in period t; 

log(HS2exportsiwt)is  the  natural  logarithm  of  country  i’s  total  exports  to  the 

world w defined at HS 2-digit level in period t;87 

86The traditional gravity model includes a variable for the common language between two economies. However, 
the language dummy was excluded from these regressions, as we have the trade of each partner country with 
the EU as a whole, but where clearly the EU is comprised of countries with a wide variety of languages, and 
clear attribution of language to any given partner flow is therefore problematic 

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log(distcapi)  is  the  natural  logarithm  of  the  distance  from  the  capital  of  each 

country to the EU;88 

colonyi is a dummy variable that indicates if the country i was a colony of any EU 

member State;  

log(remotenessi)  is  the  natural  logarithm  of  country  i’s  average  weighted 
distance from the EU, where the weights are the partner countries’ shares of world GDP. 
The  ‘remoteness’  variable  is  sometimes  incorporated  in  gravity  models  to  control  for 
multilateral resistance terms for exporting and importing countries  

tariffsikrt refer to the fixed percentage tariff rates of the value of imports applied 

to country i’s imports into the EU of product k in regime r in period t;  

marginsikrt are preferential margins that accrue to country i for the EU imports of 
product  k  in  regime  r  in  period  t.  Preferential  margins  are  defined  as  the  difference 
between the MFN tariff rate and the preferential rate; 

reformt is a dummy variable that captures the difference between the pre-reform 

period (2011-2013) and post-reform period (2014-2016); 

regimeit are dummy variables that indicate the trade status (for example, GSP or 

FTA) of country i in the EU market in period t.  

βik is a vector of fixed effects for the exporting countries and products at the CN 

8-digit level;  

βt is a vector of fixed effects for time (yearly frequency); and  
µ𝒊𝒕is the error term. 

Our  trade  data  consists  of  CN  8-digit  EU  imports,  which  were  matched  with  HS  2-digit 
global  exports  for  each  of  the  EU’s  preferential  import  partners  from  2011  to  2016.89 
This  period  takes  into  account  the  three  years  prior  to  entry  into  force  of  the  current 
Regulation as well as the three years post entrance into force.  

Importantly, the dataset has allowed us to match for each partner country and product 
line at the CN 8-digit level, the regime(s) under which a country was eligible to trade in 
a given year. Although some countries were eligible to trade using GSP preferences and 
preferences under other trade agreements simultaneously, countries were given regime 
statuses  based  on  the  regime  that  provided  the  most  preferential  access  in  the  stated 
year. Annex  II provides the detailed list of the EU’s import partners by tariff regime for 
each year during the period under review 2011-2016. 

The  final  dataset  accounts  for  approximately  1.3  million  non-zero  trade  flows.90 Import 
and tariff data at the CN 8-digit level were provided by the European Commission, which 
are  seen  as  the  most  consistent  and  reliable  sources  of  information  available  for  this 
analysis.  Global  exports  at  the  HS  2-digit  level  were  retrieved  from  the  United  Nations 

87 A key variable in most gravity model estimations is an “activity” variable that captures the economic size of 
the countries being modelled. In an aggregate gravity model based on global trade the typical activity variables 
would be the GDPs of the exporting and importing countries respectively. When working at a disaggregated 
level this is no longer appropriate. Ideally, one should use the level of production (of the sector) in the 
exporting country and the level of consumption in the importing country. However, this data is rarely available. 
In this study, we follow the approach of French (The Composition of Exports and Gravity, 2011) where we use 
the total world exports at the sectoral level for each product traded between country i and the EU as the 
activity variable. This is done primarily because of the high level of product disaggregation (CN 8-digit level) of 
the EU trade data. We do this at the 2-digit level of disaggregation to minimise problems of endogeneity.  
88 Brussels, Belgium was used as a proxy for the capital of the EU.  
89 Kindly note that the following EU preferential trading partners were not taken into account in the gravity 
analysis: Croatia, as it became a part of the European Union in 2014; the Netherland Antilles, as it was 
dissolved in 2014; South Sudan, as it did not exist before 2013; and St. Barthelemy, as it left the European 
Union in 2012 to become an overseas collectivity of France. All other non-EU countries were included in the 
gravity modelling estimates. 
90Dealing with zero trade flows at such a high level of disaggregation is very challenging. The regressions that 
are reported in this chapter are based on the positive trade flows. Attempts were made to run PPML 
regressions which take into account the zero trade flows, but given the large number of zeros in view of the 
level of disaggregation it was found that the model did not converge. 

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International  Trade  Statistics  Database  (UN  Comtrade).  Structural  variables,  including 
distance  and  colony  variables  were  retrieved  from  the  gravity  model  database  of  the 
Centre d'Études Prospectives et d'Informations Internationales (CEPII). 

As a result of the GSP  reform,   the  eligibility criteria for a particular trade  regime   also 
changed.  We  seek  to  explore  the    impact  of  such  changes  in  status  in  the  regressions. 
We have defined a list of distinct statuses in order to capture changes in the eligibility of 
countries  across  each  of  the  three  GSP  arrangements,  the  participation  in  trade 
agreements,  as  well  as  in  the  EU’s  Market  Access  Regulation  (MAR).  We  have  coined 
statuses  for  beneficiaries  that  have  ‘always’  traded  under  a  particular  regime  over  the 
period  under  review.  In  like  manner,  we  have  given  statuses  to  countries  that  moved 
‘out’ of one arrangement into another arrangement/MFN arrangements at period t.  

A  list  of  the  dummy  variables  that  are  utilised  to  reflect  these  changes  in  a  country’s 
trade  regime  status  during  the  period  under  review  (2011-2016)  is  provided  in  Annex 
III.91 

The  following  trade  regime  dummy  variables  are  used  in  the  gravity  model 
specifications:92 

1.  ‘EBA_Always’ –  which captures all countries that have consistently traded under 

the EBA arrangement from 2011-2016;  

2.  ‘StdrGSP_Always’  –  which  captures  all  countries  that  have  consistently  traded 

under the Standard GSP arrangement from 2011-2016; 

3.  ‘GSPplus_Always’  –  which  captures  all  countries  that  have  consistently  traded 

under the GSP+ arrangement from 2011-2016; 

4.  ‘TradeAgr_Always’  –  which  captures  all  countries  that  have  consistently  traded 

under a free trade agreement from 2011-2016; 

5.  ‘MAR_Always’ –  which captures all countries that have  consistently traded under 

the EU’s Market Access Regulation from 2011-2016; 

6.  ‘StdrGSP_Out_GSPplus’ – which captures the countries that transitioned from the 

Standard GSP arrangement to the GSP+ arrangement over the period 2011-2016;  

7.  ‘StdrGSP_Out_TradeAgr’  –  which  captures  the  countries  that  transitioned  from 
the Standard GSP arrangement to a trade agreement over the period 2011-2016; 
8.  ‘StdrGSP_Out_NoAgr’  –  which  captures  the  countries  that  transitioned  from  the 

Standard GSP arrangement to MFN trade over the period 2011-2016.  

9.   ‘GSPplus_Out_TradeAgr’  –  which  captures  the  countries  that  transitioned  from 

the GSP+ arrangement to a trade agreement over the period 2011-2016.  

10.  ‘MAR_Out_TradeAgr’  –  which  captures  the  countries  that  transitioned  from  the 
EU’s Market Access Regulation to a trade agreement over the period 2011-2016.  

2.3.2  Results of the gravity model  

91The following countries that participated in the EBA arrangement were not given dummy variables as a result 
of disproportionately low trade values and low representation in a proposed dummy variable category: 
Myanmar/Burma was reinstated into the GSP in 2013, while South Sudan became eligible for GSP preferences 
in 2013. They were the only two countries that entered into the EBA arrangement over the period under 
investigation; Cape Verde, Madagascar, and the Maldives were the only countries that transitioned from the 
EBA arrangement to the GSP+ arrangement, a trade agreement, and MFN trade, respectively. 
92The countries that are incorporated in each regime dummy group are listed in Annex III. Additionally, the 
MAR_Out_EBA variable (which captures all countries that transitioned from the EU’s Market Access Regulation 
to the EBA arrangement) was not used in the gravity model due to insufficient data for HS2 world exports for 
the countries. The countries that are captured in the MAR_Out_EBA regime dummy are: Burundi, Comoros, 
Haiti, Lesotho, Mozambique, Rwanda, Tanzania, Uganda, and Zambia. 

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We  will  examine  in  the  regressions  below    the  extent  to  which  trade  with  the  EU 
increased/decreased  for  the  country  groups  with  different  trade  regime  statuses 
following  GSP  reform.  The  dummy  variables  above  describe  these  various  statuses  and 
Annex III lists the countries included in each country group.   

For example, the regression results below confirm that EU imports originating from EBA 
countries rose after the GSP reform. In effect, EU imports from EBA countries during the 
post-reform period are “different” from imports prior to the reform. While this in itself is 
interesting and indicative, it is not sufficient to allow us to conclude that the GSP reform 
had anything to do with that increase in  imports.  It may  well be that since the  reform, 
EU  demand  for  imports  has  generally  risen  from  all  countries  for  reasons  unrelated  to 
the  GSP  reform.  Thus,  while  exports  from  EBA  countries  to  the  EU  have  risen,  this  is 
driven  by  a  general  increase  in  EU  demand,  as  distinct  from  any  change  in  the  GSP 
regime.  

In  order  to  have  greater  confidence  that  any  increase  (or  decrease)  in  EU  imports 
originating  from  EBA  countries  is  associated  with  the  GSP  reform,  we  need  to  compare 
the  change  in  EU’s  EBA  imports,  with  another  group  of  countries  for  whom  it  can 
plausibly  be  argued  that  they  were  not  directly  affected  by  the  GSP  reform.  This  is  the 
control group of countries.  

Similar to the case of the EBA countries, it may well be found that the EU’s imports from 
countries  that  were  not  directly  affected  by  the  reform  also  increased  after  the  GSP 
reform.  This  would  suggest  that  the  change  in  imports  from  EBA  countries  did  not 
directly result from the reform itself but because of other factors influencing EU imports. 
Hence,  it  is  recommended  to  assess  both  the  change  (difference)  in  imports  from  EBA 
countries, and the change (difference) in imports experienced by the control group, and 
then  to  look  at  the  difference  in  those  differences.  This  technique  is  usually  referred  to 
as a “difference-in-difference” approach.  

If  we  find  that  the  difference  in  the  trade  performance  of  these  EBA  countries  post 
reform, for example, varies significantly from the difference in the trade performance of 
the control group post reform, then it is more plausible to argue that the increase in the 
trade from these EBA countries was driven by the GSP reform.  

In order to undertake this work econometrically, one needs to include a control group in 
the regressions, and then apply the policy change to those countries that will have been 
directly affected by the policy change (the treatment group).93 

Hence  in  the  gravity  regressions,  we  take  into  account  all  countries,  including  those 
countries that traded consistently under the MFN regime. These MFN countries are thus 
our control group, as they are the countries which are least likely to be directly affected 
by  the  GSP  reform  since  it  did  not  directly  apply  to  them.  The  policy  change  is  also 
captured  by  the  reform  dummy  (reformt)  which  is  0  before  the  reform  and  1  after  the 
reform.  This  dummy  is  then  interacted  with  all  our  preference  country  groups  (the 
treatment groups), except for the MFN group of countries (the control group).  

It should be noted that we seek to assess two aspects of the counterfactual. The first is 
the  difference  between  the  treatment  groups  (e.g.  the  EBA  countries)  with  the  EU 
imports  originating  from  the  control  group  countries  (i.e.  those  countries  that  traded 
with the EU under MFN). The second relates to the changes in trade before and after the 
reform and, in particular, the differences in the changes in trade before and after for the 
treatment  and  control  groups. The  difference-in-difference  technique  enables  us  to 

93 For further explanation of the specification, see Ashenfelter, Orley, Phillip Levine and David Zimmerman 
(2002), "Statistics and Econometrics: Methods and Applications", in particular Chapter 18, Panel data models, 
pp.262-276.  

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capture both before and after differences as well as differences between the performance 
of the control and the treatment groups. 

In  the  regressions  below,  we  present  two  sets  of  results.  In  the  first  sub-section,  we 
provide  a  set  of  pooled  OLS  regressions.  The  aim  of  these  regressions  is  to  explore 
whether there is any evidence that any of the GSP country groups typically trade more 
or less with the EU compared to countries that have unaffected by the change in policy. 
In this case, the countries that traded under the MFN regime over period are considered 
as  the  control  group.  It  is  important  to  note  that  the  pooled  OLS  regressions  provide 
little information on causality, and hence on whether changes in GSP had an impact on 
trade  flows.  Nevertheless,  these  regressions  therefore  serve  as  a  useful  benchmark.  In 
the subsequent sub-section, we move to a panel regression framework where the aim is 
to explicitly assess the evidence on the possible impact of changes in the GSP regimes.  

Pooled OLS regression 
Table 20 presents three specifications of the ordinary least squares (OLS) regressions.94 
Column (1) estimates the relationship between a country’s exports to the EU (dependent 
variable) and the following independent variables: a country's world sectoral exports (at 
the  HS  2-digit  level),  distance,  colony,  remoteness,  and  the  regime  dummies 95.  Time 
dummies  are  included.  The  first  column  therefore  aims  to  capture,  on  average,  the 
relationship  between  trade  and  the  different  preferential  regimes  over  the  time  period. 
That relationship is being captured through the use of dummy variables, and not through 
the explicit use of the tariffs applied to each of these regimes. The explicit incorporation 
of the tariffs is undertaken in Column (2). In Column (2), we include the tariffs that are 
applied by the EU to  each of the trade flows;  while in Column (3), the tariff variable is 
replaced  by  the  preference  margin  variable  in  order  to  provide  a  complementary 
approach to the role of tariffs on trade.  

94The Ordinary Least Squares regression (OLS) is also known as a linear regression (simple or multiple 
depending on the number of explanatory variables). It relies on the assumptions of linearity sample variation, 
random sampling and zero conditional mean. Its efficiency depends on homoscedasticity, no serial correlation 
and normally distributed errors. 
95The gravity model is based on detailed product level estimations. Therefore where a given product was 
graduated out of the GSP this has been accounted for in the estimations.   The way in which the database has 
been designed allows us to identify the amount each country traded of a particular product under each regime. 
Therefore, if a country graduated out of a given sector in 2015, they could no longer be eligible to export under 
GSP, so they would then have to export under the MFN regime. This has been reflected in our data, and in this 
way the regime dummy has a product dimension. 

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Table 20: Results of the OLS regression - Bilateral gravity model at the product level 

VARIABLES 

(1)96 

(2)97 

(3)98 

0.444*** 

(0.00122) 

0.438*** 

(0.00124) 

log(HS2exports) 

margins 

log(distcap) 

colony 

log (remoteness) 

tariffs 

EBA_Always 

StdrGSP_Always 

GSPplus_Always 

TradeAgr_Always 

MAR_Always 

StdrGSP_Out_NoAgr 

StdrGSP_Out_GSPplus 

StdrGSP_Out_TradeAgr 

0.0171*** 

(0.00553) 

-0.453*** 

(0.00843) 

-0.293*** 

(0.00211) 

1.062*** 

(0.0180) 

0.705*** 

(0.0120) 

0.418*** 

(0.0230) 

0.553*** 

(0.00905) 

0.304*** 

(0.0280) 

-0.222*** 

(0.0105) 

0.450*** 

(0.0271) 

1.080*** 

(0.128) 

GSPplus_Out_TradeAgr 

-0.126*** 

MAR_Out_TradeAgr 

Constant 

Observations 

R-squared 

(0.0195) 

1.287*** 

(0.0277) 

-8.501*** 

(0.0572) 

1,248,359 

0.248 

0.443*** 

(0.00123) 

0.0198*** 

(0.000850) 

0.0177*** 

(0.00555) 

-0.480*** 

(0.00852) 

-0.296*** 

(0.00214) 

1.000*** 

(0.0182) 

0.702*** 

(0.0120) 

0.357*** 

(0.0232) 

0.520*** 

(0.00924) 

0.284*** 

(0.0281) 

-0.194*** 

(0.0106) 

0.395*** 

(0.0272) 

1.025*** 

(0.128) 

-0.180*** 

(0.0197) 

1.243*** 

(0.0278) 

-8.463*** 

(0.0576) 

1,231,857 

0.249 

0.0290*** 

(0.00556) 

-0.497*** 

(0.00853) 

-0.301*** 

(0.00215) 

-0.0324*** 

(0.000827) 

0.981*** 

(0.0182) 

0.709*** 

(0.0120) 

0.333*** 

(0.0232) 

0.505*** 

(0.00922) 

0.253*** 

(0.0281) 

-0.179*** 

(0.0105) 

0.379*** 

(0.0272) 

1.016*** 

(0.128) 

-0.201*** 

(0.0196) 

1.223*** 

(0.0278) 

-8.252*** 

(0.0578) 

1,231,857 

0.249 

Standard errors in parentheses 
*** p<0.01, ** p<0.05, * p<0.1 

Column (1) of the Table 20 includes the dummy variables for each of the trade regimes, 
but  does  not  include  the  tariffs  explicitly  or  the  preferential  margins.  Therefore,  this 

96Time fixed effects are incorporated in this regression.  
97Ibid. 
98Ibid. 

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regression seeks to assess the extent to which the level of trade for those countries with 
some form of preferential arrangement with the EU trade is different to those that trade 
on a most favoured nation (MFN) level and, hence, on a non-preferential basis.  

As one would expect, the level of bilateral trade is positively associated with the level of 
economic activity as proxied by the log of HS2 exports, and is negatively correlated with 
distance and remoteness.  

Of  principal  interest,  however,  are  the  coefficients  on  the  regime  variables.  The 
interpretation for the regime dummies is how much each group is trading with the EU in 
comparison to the MFN reference group. Hence, controlling for all the other factors such 
as  distance  and  total  sectoral  world  exports  in  the  regression,  the  EBA  countries,  for 
example, trade more with the EU than the MFN reference group.  

In  most  cases,  we  find  positive  coefficients  for  GSP  and  non-GSP  preferential  trade 
regimes. On average and while controlling for all the other variables, all trading partners 
with the exception of two preferential partners traded more with the EU, than is the case 
for  the  MFN  countries.  The  two  exceptions  were  countries  that  previously  traded  either 
under  market  access  arrangements,  or  had  GSP  and  then  switched  to  having  a  trade 
agreement with the EU (MAR_Out_TradeAgr, and StdrGSP_Out_TradeAgr).  

longer  eligible 

The  results  also  suggest  that  two  groups  of  countries,  namely  those  previously  were 
under GSP and then switched to MFN status (StdrGSP_Out_NoAgr), and those that were 
no 
trade  agreement 
(GSPplus_Out_TradeAgr), on average and while controlling for the other factors, tend to 
trade less with the EU in comparison to countries that have consistently traded under the 
MFN tariff regime.  

for  GSP+  but  switched 

to  having  a 

It  is  important  to  take  into  consideration  specific  factors.  Out  of  the  group  of  GSP+ 
countries  which  signed  a  trade  agreement,  Colombia,  Peru  and  Panama  represented 
roughly  75  per  cent  of  the  combined  exports  of  this  group  to  the  EU.  These  three 
countries  are  heavily  dependent  on  commodities,  which  experienced  drastic  price 
declines  starting  in  2014.  This  was  the  case  for  such  as  fossil  fuels,  minerals  and 
agricultural commodities. These external factors (which coincide with the year of the GSP 
reform)  may  have  had  a  direct  influence  on  their  exports  to  the  EU.  On  average,  the 
total value of exports from these three countries decreased by 32 per cent. In turn, this 
is  likely  to  have  dominated  the  results  of  the  entire  group,  reflecting  in  a  negative 
coefficient in the OLS model. 

In  the  subsequent  two  columns  (2)  and  (3),  we  first  introduce  tariffs,  and  then  as  an 
alternative  preference  margins.  We  explicitly  calculate  those  preferences  by  using  the 
actual information on the tariffs levied on partner country exports. In the second column 
of the table, we do this by including the tariffs directly. In the third column of the table, 
we  try  an  alternative  specification  in  which  we  calculate  the  preference  margin,  as  the 
difference  between  the  MFN  tariff  and  the  applied  preferential  tariff.  We  have  also 
included  the  regime  dummies  as  before.  The  tariff  variable  (or  the  preference  margin 
variable)  is  intended  to  capture  the  direct  relationship  between  tariffs  and  trade.  The 
GSP  dummy  variable  is  also  expected  to  capture  some  of  the  direct  effects  as  well  as 
additional  and  possibly  more  indirect  relationship  between  trade  and  the  preferential 
regimes  –  for  example,  that  having  preferences  might  increase  investment  (domestic 
and/or foreign), which in turn might lead to increased trade.  

As  expected,  from  the  second  column,  we  see  a  negative  and  statistically  significant 
coefficient  on  tariffs,  and  in  the  third  column,  a  positive  and  statistically  significant 
coefficient  on  the  preference  margins.  This  indicates  that  higher  tariffs  are  associated 
with lower trade values; and higher preference margins are associated with higher trade 
values. The value of the coefficients on the regime dummies is broadly similar to that in 

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the first column, though typically the size of the coefficients declines somewhat. This too 
is  to  be  expected  as  the  tariff  variable  and  preference  margin  are  now  directly  pick  up 
the impact of trade. 

Fixed effects regression with interaction of reform and regime dummies   
In Table  21 below, we turn to panel fixed effects regressions with regime dummies and 
reform  dummies99.  A  fixed  effects  regression  is  a  type  of  panel  analysis  that  helps  to 
explore  cross-sectional  and  time  series  data  simultaneously. 100 The  aim  of  these 
regressions  is  to  explicitly  explore  whether  the  change  in  the  GSP  regime  impacted  on 
country  level  trade  flows.  The  fixed  effects  model  controls  for  time-invariant  variables 
such as distance, historical linkages in order to focus on year-to-year changes, countries 
that change trade regime status, as well as the reform of the GSP regulation.  

It  is  important  to  note  that  in  the  panel  regressions  any  variable  that  does  not  change 
over  time  such  as  e.g.  distance  is  automatically  absorbed  by  the  country  fixed  effects 
used.  Hence,  for  those  countries  that  throughout  the  period  under  investigation  were 
always  eligible  for  a  given  trade  regime  (for  example,  EBA_Always,  StdrGSP_Always, 
GSP+_Always,  TradeAgr_Always  and  MAR_Always),  the  regression  cannot  identify  the 
impact  of  the  change  in  GSP  arrangements  on  their  trade.  As  noted  above,  in  order  to 
overcome  this,  we  create  an  event  dummy,  which  we  call  the  reform  dummy. 101We 
interacted  the  reform  dummy  with  each  of  the  regime  dummies  in  order  to  assess 
whether the evolution of trade before the reform was any different from after the reform 
for each of the groups of countries. Hence, our aim is to investigate where there is any 
evidence that trade changed after the introduction of the GSP reform.  

We  apply  the  reform  dummy  to  all  of  the  preference  regime  countries,  but  not  to  the 
countries  that  trade  with  the  EU  under  MFN.  These  are  described  in  Annex  III  as  ‘No 
Agreement’  and  this  group  includes  major  partners  of  the  EU,  among  others,  Australia, 
New  Zealand,  Canada,  US  and  Japan.  This  latter  group  of  countries  is  therefore  the 
control  group  in  these  regressions.  Once  again  these  regressions  are  ‘difference-in-
difference’ regressions, where we are comparing the changes in trade for the preference 
regimes  countries,  with  the  changes  in  trade  for  the  MFN  countries.  These  regressions 
are therefore comparing the change in trade before and after the reform for each of the 
respective  groups,  with  the  change  in  trade  before  and  after  the  reform  for  the  control 
group.  

Table  21  below  presents  three  fixed  effects  regressions  in  which  the  reform  dummies 
are  interacted  with  regime  dummies.  In  Column  (1),  we  do  not  directly  include  the 
information  on  tariffs  or  preference  margins  and  focus  on  the  interaction  terms. 102 As 
previously done with the pooled OLS regressions, time fixed effects are also incorporated 

99In order to guarantee the accuracy of the methodology applied, a Hausman test was performed to show that 
the fixed effects model was preferred to the random effects model. 
100 Importantly, the OLS model does not differentiate between time periods and cross sections denying the 
heterogeneity or individuality that may exist among cross sections. The OLS assumes that cross sections act as 
one, neglecting the cross section and time series nature of the data. On the other hand, the fixed effects model 
captures heterogeneity or individuality among cross sections by allowing them to have its own intercept value. 
Unlike the OLS model, the fixed effects model takes into account the cross section and time nature of data. 
101For illustrative purposes, supposing a country (or country-product combination because of graduation) 
changed regime in 2015, the regime dummy that would be applied for the years 2011-2016 would be 0 0 0 0 1 
1 for each consecutive year.  In like manner, the reform dummy for the years 2011-2016 would be 0 0 0 1 1 1 
for each consecutive year. When both the regime and the reform dummies are interacted for the years 2011-
2016, the combination would be 0 0 0 0 1 1 for each consecutive year.  

102 Distance and colony are time invariant variables and, as such, were dropped from the fixed effects model.. 
Additionally, the regime dummy denoting transition from the EU’s Market Access Regulation to the EBA 
arrangement was dropped due to collinearity.  

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to  capture  year-on-year  changes.  In  addition  to  the  variables  listed  in  Column  (1), 
Column (2) further includes the tariff variable, while in Column (3) the tariff variable is 
replaced with the preference margin variable. 

Table 21: Results of the fixed effects model with interactions of reform and regime 
dummies – Bilateral gravity model at the product level 

VARIABLES 

log(HS2exports) 

log (remoteness) 

Tariffs 

Margins 

(1)103 
log(Xikrt) 
0.125*** 

(0.00406) 

-0.0394** 

(0.0158) 

reformEBA_Always 

0.175*** 

(0.0202) 

reformStdrGSP_Always 

0.0588*** 

reformGSPplus_Always 

reformTradeAgr_Always 

reformMAR_Always 

(0.0116) 

0.0174 

(0.0274) 

-0.0147** 

(0.00747) 

0.0513 

(0.0328) 

reformStdrGSP_Out_NoAgr 

-0.00556 

(0.00832) 

reformStdrGSP_Out_GSPplus 

0.0769*** 

(0.0186) 

reformStdrGSP_Out_TradeAgr 

-0.279** 

(0.117) 

reformGSPplus_Out_TradeAgr 

0.115*** 

(0.0155) 

(2)104 
log(Xikrt) 
0.122*** 

(0.00408) 

-0.0237 

(0.0162) 

-0.0214*** 

(0.00179) 

0.179*** 

(0.0202) 

0.0620*** 

(0.0117) 

0.0203 

(0.0274) 

-0.0116 

(0.00755) 

0.0526 

(0.0328) 

0.0445*** 

(0.00933) 

0.0219 

(0.0192) 

-0.277** 

(0.116) 

0.109*** 

(0.0162) 

(3)105 
log(Xikrt) 
0.122*** 

(0.00408) 

-0.0240 

(0.0162) 

0.0216*** 

(0.00178) 

0.180*** 

(0.0202) 

0.0620*** 

(0.0117) 

0.0202 

(0.0274) 

-0.0115 

(0.00754) 

0.0534 

(0.0328) 

0.0454*** 

(0.00932) 

0.0216 

(0.0192) 

-0.277** 

(0.116) 

0.110*** 

(0.0162) 

reformMAR_Out_TradeAgr 

-0.0933*** 

-0.0912*** 

-0.0908*** 

Constant 

Observations 

R-squared 

Number of pairid 

(0.0277) 

-5.589*** 

(0.243) 

1,248,359 

0.004 

363,163 

(0.0277) 

-5.715*** 

(0.247) 

1,231,857 

0.004 

361,693 

(0.0277) 

-5.809*** 

(0.247) 

1,231,857 

0.004 

361,693 

Standard errors in parentheses 
*** p<0.01, ** p<0.05, * p<0.1 

As  noted  above,  when  we  interact  reform  dummies  with  regime  dummies,  we  capture 
the  ‘always’  dummies  which  were  previously  time-invariant.  Column  (1)  reveals  that 
those  countries  that  have  always  traded  under  the  EBA  and  the  Standard  GSP 

103Country-product fixed effects and time fixed effects are taken into account in this regression.  
104Ibid. 
105Ibid. 

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arrangements,  as  well  as  those  that  transitioned  from  the  Standard  GSP  to  GSP+ 
arrangement  and  from  the  GSP+  arrangement  to  a  trade  agreement  all increased  their 
exports to the EU post-reform in comparison to those countries that did not trade under 
any preferential trade agreement. On the contrary, countries that always traded under a 
trade  agreement  decreased  their  exports  to  the  EU  post-reform  in  comparison  to 
countries that did not trade under any agreement.  This was also the  case  for  countries 
that transitioned from the Standard GSP arrangement to a trade agreement, as well as 
from the EU’s Market Access Regulation to a trade agreement.106 

While there is no evidence of a decline in actual trade flows between FTA countries and 
the EU, there was a more sustained increase in the average export growth  rate  of  GSP 
beneficiaries. For countries that always traded under an FTA, the average growth rate of 
exports moved from 5 percent in the pre-reform period (2011-2013) to 6 percent in the 
post-reform  period  (2014  to  2016).  In  like  manner,  for  countries  that  continuously 
traded under the GSP, the average export growth rate moved from 1 per cent in the pre-
reform  period  to  9  per  cent  in  the  post-reform  period.  However,  it  is  also  important  to 
note that the total value  of  EU imports under  GSP  represent  only one third of the total 
value imported from countries that have always traded using FTA preferences.  

When we introduce the tariffs in Column (2) and preference margins in Column (3), we 
again find as expected  a negative relationship was between exports and tariffs, while a 
positive  relationship  can  be  seen  between  exports  and  preference  margins.  With  the 
interaction of the reform dummies with the regime dummies in Columns (2) and (3), we 
continue to witness similar trends as in Column (1) with two exceptions. Countries that 
transitioned from the Standard GSP arrangement to MFN trade were now found to have 
increased  their  trade  post-reform  in  comparison  to  countries  that  did  not  trade  under 
any  preferential  trade  agreement  over  the  period.  Second,  the  variable  denoting 
transition  from  the  Standard  GSP  to  the  GSP+  arrangement  remained  positive  but 
statistically insignificant in the last two regressions.  

Summary results of the gravity modelling 
The  table  below  provides  a  summary  of  the  results  from  the  pooled  OLS  regressions 
(OLS),  the  fixed  effects  panel  regressions  with  interaction  of  the  regime  dummies  with 
the  reform  dummy  (FE).  We  focus  on  the  estimation  results  which  were  obtained  with 
the ‘margin’ variable included, as this is the most relevant in the context of the effect of 
the  GSP  trade  preferences.  In  each  case,  we  report  the  sign  of  the  relevant  coefficient 
and where the coefficient was statistically significant. The summary table is based on the 
third column of results from the OLS and FE regressions reported above.  

106The sign of the coefficients for these regime dummies are similar to the results of the previous fixed effects, 
and, as such, a similar discussion applies.  

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Summary Table for Gravity Model estimates 107 

OLS  
(with margins) 

FE  
(with margins) 

EBA_Always 

StdrGSP_Always 

GSPplus_Always 

TradeAgr_Always 

MAR_Always 

StdrGSP_Out_NoAgr 

StdrGSP_Out_GSPplus 

StdrGSP_Out_TradeAgr 

GSPplus_Out_TradeAgr 

MAR_Out_TradeAgr 

+(***) 

+ (***) 

+ (***) 

+ (***) 

+ (***) 

- (***) 

+(***) 

+ (***) 

- (***) 

+ (***) 

+ (***) 

+ (***) 

n.s.s. 

n.s.s 

n.s.s 

+(***) 

n.s.s 

- (**) 

+ (***) 

- (***) 

There are several interesting points which emerge from this summary table: 

  For  those  countries  that  are  always  part  of  the  EBA  regime,  and  always  part  of 
the Standard GSP arrangement, we see that they tend to trade more intensively 
with  the  EU  compared  to  MFN  countries  and  we  observe  that  GSP  reform 
facilitated an increase of their trade with the EU; 

  For  those  countries  that  were  in  the  GSP+  arrangement  throughout  the  period 
under  review, the  evidence is inconclusive; while the OLS  estimates are positive 
and significant, the FE estimates cease to be statistically significant. The same is 
found  for  the  countries  that  were  trading  under  Trade  Agreements  and  MAR 
throughout the period;  

  The  OLS  estimates  report  a  negative  impact  on  trade  with  the  EU  for  those 
countries  that  were  no  longer  eligible  for  GSP  preferences  after  the  reform  and 
did not enter into a trade agreement (e.g. China). However, this result is rejected 
in the second column of the table with fixed  effects and reform dummies as the 
results are positive and statistically significant. The same was found for countries 
that left GSP+ to continue trading under a trade agreement; 

  Those that switched to having a trade agreement (from previously trading under 
Standard  GSP  or  MAR  arrangements)  have  seen  a  relative  decline  in  trade  with 
the EU in the latter period. While it is possible that this is an “unintended” effect 
of the GSP, our discussion suggests that it is more likely to be driven by country-
specific  factors  (such  as  price  declines  of  key  commodities  traded  or  political 
instability) affecting the trade of the countries in these groups; and 

  Finally, those countries  that transitioned from the Standard GSP arrangement to 
the GSP+ arrangement reported positive and significant results in OLS estimates. 
However,  FE  regressions  find  positive  and  significant  estimates  only  if  we 
combine effects of tariffs and margins (as depicted in Column 1), which cease to 
be  found  if  we  control  for  margins  (or  tariffs)  separately  (i.e.  as  depicted  in 
Columns 2 and 3). 

107 Note: ‘***, **’ refers to statistical significance at the 99% and 95% levels respectively. ‘n.s.s’ refers to 
estimates that were not statistically significant at these levels.  

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2.4  Econometric analysis using the preference utilisation rate 

model 

In this section, we present the findings of a preference utilisation model, which seeks to 
estimate  the  determinants  of  preference  utilisation  rates.  For  the  purposes  of  these 
regressions we define the preference utilisation rate as a country’s actual exports under 
EU preferential trade agreements divided by its eligible preferential exports108 in a given 
year. 

Importantly,  we  seek  to  assess  the  relationship  between  the  utilisation  rate  and  the 
following variables: GDP per  capita, trade freedom, political stability, governance, trade 
flows,  preference  margins  and  tariffs.  As  in  the  gravity  model  in  the  preceding  section, 
we use regime-specific dummy variables to capture the implementation of the 978/2012 
GSP Regulation, and in particular whether an event such as change in the eligible trade 
regime  (to  MFN  or  RTA/FTA  or  within  GSP)  took  place  since  the  implementation  of  the 
GSP regulation in 2014. 

The  preference  utilisation  rate  model  incorporates  all  countries  that  traded  using  EC 
preferences  over  the  years  2011  -  2016,  with  the  exception  of  13  countries 109  that 
transitioned  from  the  Standard  GSP  arrangement  to  MFN  trade  (referred  to  as 
StdrGSP_Out_NoAgr) in 2014. These countries are not included in the sample, because, 
by  definition,  there  are  no  preferences  for  these  countries  to  utilise  once  they  have 
transitioned to MFN trade post 2014. Their preference utilisation rate becomes zero.  

2.4.1  Specification and data 
The  specific  hypotheses  that  are  being  tested  are:  (a)  to  establish  whether  utilisation 
rates  are  related  to  preference  margins  and  (b)  to  investigate  whether  there  is  any 
evidence  of  any  changes  in  utilisation  rates  in  the  period  following  the  changes  in  the 
GSP Regulation.  

The following variables are used in the various specifications of the utilisation rate model 
in this section: 

𝑢𝑡𝑖𝑙𝑟𝑎𝑡𝑒𝑖𝑘𝑟𝑡 = 𝛽0 +   𝛽1𝐺𝐷𝑃𝑐𝑎𝑝𝑖𝑡𝑎𝑖𝑡 + 𝛽2𝑡𝑟𝑎𝑑𝑒𝑓𝑟𝑒𝑒𝑑𝑜𝑚𝑖𝑡 +   𝛽3𝑝𝑜𝑙𝑖𝑡𝑖𝑐𝑎𝑙𝑠𝑡𝑎𝑏𝑖𝑙𝑖𝑡𝑦𝑖𝑡 + 𝛽4𝑔𝑜𝑣𝑒𝑟𝑛𝑎𝑛𝑐𝑒𝑖𝑡

+   𝛽5𝑡𝑟𝑎𝑑𝑒𝑓𝑙𝑜𝑤𝑠𝑖𝑘𝑟𝑡 ∑ 𝑟𝑒𝑔𝑖𝑚𝑒𝑖𝑡

+ 𝛽6𝑡𝑎𝑟𝑖𝑓𝑓𝑠𝑖𝑘𝑟𝑡 + 𝛽7𝑚𝑎𝑟𝑔𝑖𝑛𝑠𝑖𝑘𝑟𝑡 + 𝛽𝑡+𝛽𝑖𝑘 + 𝛽𝑖𝑘𝑡

+ 𝛽𝑠𝑡+µ𝑖𝑡 

𝑖𝑡

where: 

utilrateikrt is the country i’s utilisation rate of product k under regime r in period 

t, as defined above;  

GDPcapitait is the GDP per capita of country i in period t; 
tradefreedomit  measures  the  degree  of  trade  freedom  in  country  i  in  period  t. 
Trade freedom is a composite measure of the extent of tariff and nontariff barriers that 
affect imports and  exports of goods  and services.  The trade  freedom  score is based  on 
two inputs: The trade-weighted average tariff rate and non-tariff barriers (NTBs).110The 

108This refers to products covered by the preference regime according to the tariff schedule. 
109 These 13 countries are: Argentina, Azerbaijan, Bahrain, Brazil, Brunei, Christmas Island, Cocos Islands, 
Cuba, Gabon, Guam, Heard and McDonald Islands, Iran, Kazakhstan, Kuwait, Libya, Macao, Malaysia, Oman, 
Palau, Qatar, Russia, Saudi Arabia, United Arab Emirates, Uruguay, Venezuela, American Samoa, Norfolk 
Island, Northern Mariana Islands, Tokelau, US Minor outlying Islands, and Virgin Isles.  
110The Heritage Foundation. (2017). Available at: http://www.heritage.org/index/book/methodology#open-
markets. 

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aim of including this variable is that the degree of trade-freedom may be a proxy for the 
quality of trade related institutions and bureaucracy in a country, and the higher this is 
the  more  likely  it  is  that  exporters  may  be  able  to  take  advantage  of  preference 
arrangements.111 

politicalstabilityit measures the degree of political stability in country i in period 
t.  It  measures  perceptions  of  the  likelihood  of  political  instability  and/or  politically 
motivated  violence. 112 Once  again,  this  can  be  seen  a  proxy,  albeit  broader,  for  the 
ability of exporters to take advantage of preferences.113 

governanceit  measures  the  degree  of  government  effectiveness  in  country  i  in 
period t. Government effectiveness captures perceptions of the quality of public services, 
the  quality  of  the  civil  service  and  the  degree  of  its  independence  from  political 
pressures, the quality of policy formulation and implementation, and the credibility of the 
government's  commitment  to  such  policies; 114 We  aim  to  assess  how  government 
effectiveness,  including  its  approach  to  policy  formulation  and  implementation  can 
impact the country’s level of exports under preferences.   

tradeflowsikrt are exports from country i in product k under regime r in period t; 
regimeit  are  dummy  variables  that  indicate  the  change  of  status  across  tariff 

regimes for country i n the EU market in period t.  

marginsikrt  are  preferential  margins  that  accrue  to  country  i  in  the  export  of 
product k in regime r in period t. In our model, preferential margins are defined as the 
difference between the MFN tariff rate and the preferential rate; 
βt is a vector of fixed effects for time (yearly frequency); 
βik is a vector of fixed effects for the exporting countries and products at the CN 

8-digit level; and 

µ𝒊𝒕is the error term. 

The  period  under  investigation  is  2011  to  2016  and  takes  into  account  the  three  years 
prior  to  entry  into  force  of  the  current  Regulation  as  well  as  the  three  years  after  its 
entry into force. Utilisation rates for each of the EU’s preferential trading partners were 
calculated using CN 8-digit trade data provided by the European Commission. Tariff data 
at  the  CN  8-digit  level  was  also  provided  by  the  European  Commission,  which  was 
further  utilised  to  calculate  preference  margins.  Data  on  GDP  per  capita  was  retrieved 
from  the  World  Bank’s  World  Development  Indicators  database;  while  the  data  on 
political stability and quality of governance were retrieved from the World Bank’s World 
Governance Indicators database. Additionally, data on trade freedom was retrieved from 
the Heritage Foundation. The final dataset accounts for approximately 680,000 non-zero 
trade flows. 

As for the gravity modeling, we have defined a list of distinct statuses in order to capture 
changes  in  the  eligibility  of  countries  across  each  of  the  three  GSP  arrangements,  the 
participation  in  trade  agreements,  as  well  as  in  the  EU’s  Market  Access  Regulation 
(MAR).  Similar  to  the  gravity  modeling,  we  have  coined  statuses  for  beneficiaries  that 
have  ‘always’  (i.e.  throughout  the  period  2011-2016)  traded  under  a  particular  regime 
over the period under review.  In like manner,  we have given statuses to countries that 

111Economic freedom, which includes trade freedom, was incorporated as a variable in a model in Agostino, 
Demaria and Trivieri (2007), where they assessed the impact of the EU’s non-reciprocal trade preferences and 
the role of compliance costs.  
112World Bank. (2017). World Governance Indicators. Available at: 
http://info.worldbank.org/governance/wgi/#doc.  
113The political/security situation in a given country can impact the extent to which a country trades, and 
further how it can take advantage of utilise trade preferences. Political stability is commonly used as a control 
variable to identify the influence of the national conditions and internal conflicts on public policies. We utilise it 
to see how the political situation in beneficiary countries has influenced a country’s exports.  
114World Bank.(2017). World Governance 
Indicators.Availableat:http://info.worldbank.org/governance/wgi/#doc.  
Ibid. 

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moved ‘out’ of one arrangement into another arrangement/MFN arrangements at period 
t.  A list of the dummy variables that are utilised to reflect these changes in a country’s 
status during the period under review (2011-2016) is provided in Annex III; 

The  following  dummy  variables  are  used  in  the  preference  utilisation  rate  model 
specifications:115 

1.  ‘EBA_Always’ –  which captures all countries that have consistently traded under the 

EBA arrangement from 2011-2016;  

2.  ‘StdrGSP_Always’ – which captures all countries that have consistently traded under 

the Standard GSP arrangement from 2011-2016; 

3.  ‘GSPplus_Always’ – which captures all countries that have consistently traded under 

the GSP+ arrangement from 2011-2016; 

4.  ‘TradeAgr_Always’ – which captures all countries that have consistently traded under 

a free trade agreement from 2011-2016; 

5.  ‘MAR_Always’ – which captures all countries that have consistently traded under the 

EU’s Market Access Regulation from 2011-2016; 

6.  ‘StdrGSP_Out_GSPplus’  –  which  captures  the  countries  that  transitioned  from  the 
Standard GSP arrangement to the GSP+ arrangement over the period 2011-2016;  
7.  ‘StdrGSP_Out_TradeAgr’  –  which  captures  the  countries  that  transitioned  from  the 

Standard GSP arrangement to a trade agreement over the period 2011-2016; 

8.  ‘StdrGSP_Out_NoAgr’  –  which  captures  the  countries  that  transitioned  from  the 

Standard GSP arrangement to MFN trade over the period 2011-2016; 

9.  ‘GSPplus_Out_TradeAgr’  –  which  captures  the  countries  that  transitioned  from  the 

GSP+ arrangement to a trade agreement over the period 2011-2016; 

10. ‘MAR_Out_TradeAgr’  –  which  captures  the  countries  that  transitioned  from  the  EU’s 
Market Access Regulation to a trade agreement over the period 2011-2016; and 
11. ‘MAR_Out_EBA’  –  which  captures  the  countries  that  transitioned  from  the  EU’s 

Market Access Regulation to the EBA arrangement over the period 2011-2016. 

2.4.2  Results of the preference utilisation rate model 

Pooled OLS regression 
Table 22 below presents two specifications of the OLS regression.116 Column (1) reports 
on the relationship between a country’s utilisation rate under an EU preferential trading 
arrangement  (dependent  variable)  and  the  following independent  variables:  a  country’s 
GDP per  capita, trade freedom, political stability, government effectiveness, trade flows 
and preference margins. Time dummies are also incorporated in order to capture year-
on-year  changes.  Column  (2)  includes  all  the  aforementioned  variables  with  the 
exception  of  the  preference  margin  variable.  With  the  exception  of  the  trade  freedom 
variable, all the independent variables are statistically significant at the 99 per cent.  

The results of both regressions reveal that a country’s utilisation of EU preferential trade 
agreements is positively associated with GDP, quality of governance, and the size of the 
bilateral  trade  flows  between  the  countries.  In  like  manner,  the  results  show  a  positive 
correlation  between  utilisation  rates  and  the  size  of  the  preference  margin  and  a 
negative  correlation  between  utilisation  rates  and  political  instability.  Contrary  to  the 

115The countries that are incorporated in each regime dummy group are listed in Annex III.  
116The Ordinary Least Squares regression (OLS) is also known as a linear regression (simple or multiple 
depending on the number of explanatory variables). It relies on the assumptions of linearity sample variation, 
random sampling and zero conditional mean. Its efficiency depends on homoscedasticity, no serial correlation 
and normally distributed errors. 

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initial  assumption  that  high  levels  of  trade  freedom  result  in  greater  utilisation  of 
preferences,  the  results  reveal  a  negative  correlation  between  these  variables  in  both 
regressions. 

Table 22: Results of the OLS regression – Preference utilisation rate model 

VARIABLES 
GDPcapita 

tradefreedom 

politicalstability 

Governance 

Tradeflows 

Margins 

EBA_Always 

StdrGSP_Always 

GSPplus_Always 

MAR_Always 

StdrGSP_Out_GSPplus 

StdrGSP_Out_TradeAgr 

GSPplus_Out_TradeAgr 

MAR_Out_EBA 

MAR_Out_TradeAgr 

Constant 

Observations 
R-squared 

(1)117 
utilrateikrt 
3.35e-06*** 
(3.81e-08) 
-0.000863*** 
(8.32e-05) 
-0.0913*** 
(0.000908) 
0.0899*** 
(0.00138) 
0.000995*** 
(8.17e-05) 
0.0165*** 
(0.000182) 

0.388*** 
(0.00669) 
487,163 
0.093 
Standard errors in parentheses 

*** p<0.01, ** p<0.05, * p<0.1 

(2)118 
utilrateikrt 
2.82e-06*** 
(3.97e-08) 
-2.99e-05 
(9.40e-05) 
-0.0907*** 
(0.000979) 
0.0884*** 
(0.00153) 
0.00100*** 
(8.14e-05) 

0.0525*** 
(0.00287) 
0.0227*** 
(0.00203) 
0.00323 
(0.00453) 
-0.0532*** 
(0.00389) 
0.00692 
(0.00565) 
-0.0512 
(0.0354) 
-0.153*** 
(0.00355) 
-0.194*** 
(0.00798) 
-0.0695*** 
(0.00544) 
0.404*** 
(0.00767) 
493,519 
0.072 

In  Column  (2)  we  change  the  specification  and  instead  of  including  the  preference 
margin,  we  include  dummy  variables  for  all  of  the  regime  types.  The  dummy  for 
countries that were trading consistently under an FTA was dropped, so the results should 
be  seen  as  relative  to  this  group  of  countries,  i.e.  to  those  countries  who  consistently 
traded  under  a  free  trade  agreement  from  2011-  2016.  This  group  of  countries  is, 
therefore, our control group in the ‘difference-in-difference’ specification.  

It is always important when selecting a control group to choose a group which would not 
have been affected by the policy change. Clearly, in some sense, all countries may have 
been  indirectly  affected  by  the  policy  change,  and  hence  a  perfect  control  group  is  not 
feasible. Nevertheless, it seems plausible to assume that this group is least likely to be 
affected as their preferences did not change over the time period.  

117Time fixed effects are accounted for in this regression. 
118Ibid. 

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The results reveal that countries that have ‘always’ traded under the EBA arrangement, 
and have always traded under the standard GSP arrangements, have higher  preference 
utilisation  rates  in  comparison  to  countries  that  have  always  traded  under  a  free  trade 
agreement. A negative coefficient was found for countries that have always traded under 
EU’s  Market  Access  Regulation,  as  well  as  those  that  transitioned  from  EU’s  Market 
Access Regulation to the  EBA regime and also  to a trade agreement,  as well as for the 
GSP+ countries that transitioned to a free trade agreement. 

Fixed effects regression 
Table  23  below  presents  three  specifications  of  a  fixed  effects  regression. 119In  these 
regressions  we  seek  to  examine  whether  there  have  been  changes  over  time  in  the 
utilisation  rates  and  how  these  may  differ  across  regime  types.  As  before,  we  drop  the 
regime  dummy  “TradeAgr_Always”,  so  the  results  should  be  seen  as  relative  to  this 
group  of  countries  considering  the  same  counterfactual  specifications  as  the  “reform” 
dummies before. 

We  explore  the  role  of  GDP,  size  of  trade  flows,  political  stability  and  governance. 
Column  (1)  reports  the  relationship  between  a  country’s  utilisation  rate  under  an  EU 
preferential  trading  arrangement  (dependent  variable)  and  the  following  independent 
variables:  a  country’s  GDP  per  capita,  trade  freedom,  political  stability,  government 
effectiveness,  trade  flows  and  preference  margins.  Country-product  and  time  fixed 
effects are included in this regression. 

As with the OLS specifications, the fixed effects regressions reveal a positive relationship 
between a country’s preference utilisation rate and its GDP per capita. This was also the 
case  for  the  governance,  trade  flows  and  preference  margin  variables.  The  trade 
freedom  coefficients  are  now  positive,  which  indicate  that  a  country’s  preference 
utilisation rate increased as its overall trade freedom increased. As expected, there was 
a negative relationship between a country’s preference utilisation rate and perceptions of 
political instability in that country.  

Column  (2)  includes  all  the  aforementioned  variables  in  Column  (1).  However,  regime 
dummies  are  now  included.    Therefore  in  this  regression,  we  examine  the  impact  on 
utilisation rates for those countries whose GSP status switched as a result of the regime. 
In  terms  of  both  statistical  significance  and  the  sign  of  the  coefficients,  the  results  are 
mixed.  

For example, we find that utilisation rates increased for those countries that transitioned 
from  the  Standard  GSP  arrangement  into  GSP+  arrangement;  whereas  utilisation  rates 
went down for those that were no longer eligible for the Standard GSP arrangement and 
signed  a  free  trade  agreement  with  the  EU  as  well  as  for  those  that  were  no  longer 
eligible for the Market Access Arrangement and now trade under the EBA arrangement. 
As  noted  in  our  discussion  with  respect  to  the  gravity  modeling  results,  for  the  two 
groups  where  utilisation  rates  decreased,  only  a  small  number  of  countries  are 
represented. Hence, the results are likely to be driven by extraneous changes which are 
not a function of the GSP regime changes, such as the conflict in Ukraine. 

119A fixed effects regression is a type of panel analysis that helps to explore cross-sectional and time series 
data simultaneously. Importantly, the OLS model does not differentiate between time periods and cross 
sections denying the heterogeneity or individuality that may exist among cross sections. The OLS assumes that 
cross sections act as one, neglecting the cross section and time series nature of the data. On the other hand, 
the fixed effects model captures heterogeneity or individuality among cross sections by allowing it to have its 
own intercept value. Unlike the OLS model, the fixed effects model takes into account the cross section and 
time nature of data. 

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Table 23: Results of the fixed effects regression – Preference utilisation rate model 

VARIABLES 

GDPcapita 

tradefreedom 

politicalstability 

governance 

tradeflows 

margins 

StdrGSP_Out_GSPplus 

StdrGSP_Out_TradeAgr 

GSPplus_Out_TradeAgr 

MAR_Out_EBA 

MAR_Out_TradeAgr 

reformEBA_Always 

reformStdrGSP_Always 

reformGSPplus_Always 

reformMAR_Always 

reformStdrGSP_Out_GSPplus 

reformGSPplus_Out_TradeAgr 

reformStdrGSP_Out_TradeAgr 

reformMAR_Out_EBA 

reformMAR_Out_TradeAgr 

Constant 

Observations 

R-squared 

Number of pairid 

(1)120 
utilrateikrt 
8.04e-07*** 
(1.84e-07) 
0.000416** 
(0.000177) 
-0.0179*** 
(0.00229) 
0.0281*** 
(0.00493) 
0.000229*** 
(5.77e-05) 
0.00237*** 
(0.000616) 

(2)121 
utilrateikrt 
9.01e-07*** 
(1.82e-07) 
0.000378** 
(0.000179) 
-0.0183*** 
(0.00231) 
0.0284*** 
(0.00500) 
0.000217*** 
(5.42e-05) 

0.0178*** 
(0.00463) 
-0.124*** 
(0.0462) 
0.00155 
(0.00326) 
-0.0298*** 
(0.00664) 
-0.00498 
(0.00682) 

0.411*** 
(0.0144) 

487,163 

0.002 

173,981 

0.423*** 
(0.0141) 

493,519 

0.002 

174,911 

(3)122 
utilrateikrt 
8.34e-07*** 
(1.83e-07) 
0.000295* 
(0.000180) 
-0.0202*** 
(0.00236) 
0.0245*** 
(0.00510) 
0.000213*** 
(5.36e-05) 

0.0173*** 
(0.00345) 
0.0117*** 
(0.00266) 
-0.0182*** 
(0.00706) 
-0.00630 

(0.00526) 

0.0205*** 

(0.00467) 

0.00416 

(0.00332) 

-0.120*** 

(0.0462) 

-0.0285*** 

(0.00665) 

-0.00357 

(0.00615) 

0.430*** 
(0.0142) 

493,519 

0.002 

174,911 

Standard errors in parentheses 
*** p<0.01, ** p<0.05, * p<0.1 

120Country-product fixed effects and time fixed effects are used in this regression. 
121Ibid. 
122Ibid. 

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Column (3) replaces the regime dummies in Column (2) with the interacted reform and 
regime dummies, as was done for the gravity modeling. When the reform dummies are 
interacted with the regime dummies, the results shown in Column (3) reveal statistically 
significant  and  positive  coefficients  for  the  ‘EBA_Always’  group  of  countries,  the 
‘StdrGSP_Always’  group  of  countries,  and  for  those  countries  that  switched  from  the 
Standard  GSP  arrangement  to  the  GSP+  arrangement.  These  results  are  statistically 
significant  at  the  99  per  cent  level.  This  would  confirm  that  that  post  reform  utilisation 
rates went up. The gravity modeling showed a statistically significant increase in exports 
to the EU in the post GSP reform period for EBA and Standard GSP countries. 

The  increase  in  utilisation  rates  does  not  occur  for  all  countries.  For  example,  we  find 
negative  coefficients  for  the  countries  that  consistently  traded  under  the  GSP+ 
arrangement  (GSPplus_Always)  countries.  Interestingly,  for  these  countries  the  FE 
gravity model did not show statistically significant change in the level of trade with the 
EU. We also see a negative coefficient for those that switched out from the Standard GSP 
to  a  trade  agreement  (StdrGSP_Out_TradeAgr),  and  those  that  switched  from  the  EU’s 
Market  Access  Regulation  to  EBA  preferences  (MAR_Out_EBA).  As  discussed  earlier 
however, this may not be an unintended consequence of the GSP but driven by country 
specific factors.  

The negative coefficients for countries that traded under and transitioned from the EU’s 
Market  Access  Regulation  could  be  explained  by  external  factors.  For  instance,  most  of 
the countries within this group experienced annual declines in their rankings on political 
and civil indices in the post-reform period. This was the case for rankings on the World 
Bank’s  World  Governance  Indicators  for  Control  of  Corruption,  Regulatory  Quality  and 
Civil  Freedom  and  Government  Participation.  These  non-trade  issues  could  significantly 
impact the capabilities of exporters to fully take advantage of GSP preferences.  

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3  Social and human rights impact analysis 
This section will discuss the social impact of the GSP on the beneficiary countries. It will 
address the following evaluation questions: 

What  has  been  the  impact  of  the  present  scheme  on  developing  countries  and 

(i) 
LDCs? 

(ii)  What are the factors influencing the achievements observed? 

(iii)  What  unintended  consequences, 
implementation, or use of the current GSP? 

if  any,  can  be 

linked  to  the  design, 

It will first analyse the literature on the social and human rights impact of the GSP prior 
to the reforms implemented as of 2014 (Section 3.1). This will be followed by a detailed 
review  of  the  social  and  human  rights  impact  of  the  GSP  in  Section  3.2,  including  a 
dedicated  review  of  the  impact  of  the  GSP+  arrangement  (Sections  3.3  and  3.4). 
Section  3.5  will  provide  fresh  data  and  country  rankings  on  social  progress  for  the 
beneficiary  countries  under  investigation  using the  Social  Progress  Index  (SPI).  Further 
information will be provided on the impact of the GSP on employment, on the four pillars 
of  the  Decent  Work  Agenda,  on  working  conditions,  on  poverty  reduction,  on  human 
rights, and on gender equality in the four country case studies.  

3.1 Lessons learnt from literature 
Literature  on  the  social  and  human  rights  impact  of  the  GSP  has  largely  been  of  a 
descriptive and qualitative nature, using country case studies to provide a more detailed 
account  of  the  impact.  The  impact  has  largely  been  equated  with  a  beneficiary’s 
ratification  and  effective  implementation  of  international  conventions  on  labour  and 
human rights.  

Overall, the literature does not  offer any widely held consensus  on the concrete impact 
of the EU’s GSP on labour and human rights. An extensive body of literature and analysis 
suggest that trade and economic growth have a positive effect on poverty reduction. In 
this  respect,  the  GSP  is  considered  to  be  an  instrument  for  reducing  poverty  in 
developing  countries  as  economic  growth  triggered  through  trade  liberalisation  drives 
poverty  reduction.123 However,  it  is  also  pointed  out  that  no  direct  link  between  trade 
liberalisation, economic growth and poverty reduction can be drawn.  

The  literature  review  shows  that  in  some  instances  the  linkage  between  trade 
liberalisation  and  economic  growth  may  be  negative.  It  also  reveals  that  enhanced 
economic growth does  not always  translate into  reduced poverty.  Nevertheless, studies 
suggest that the scheme’s induced human rights promotion can have a beneficial indirect 
impact on poverty reduction as it supports structural changes in society.124  

The  EU  may  withdraw  trade  preferences  temporarily  when  it  identifies  serious  and 
systematic  infringements  of  the  basic  obligations  for  the  GSP.  These  violations  include 
unfair trading practices, export of goods made by prison labour and systematic violations 
of  international  conventions  and  agreements  on  labour  and  human  rights.  It  has  been 
pointed  out  in literature  that  the  EU  has  not  always  applied  the  withdrawal  mechanism 

123 Cardamone, P. and Scoppola, M. (2012). The Impact of EU preferential Trade Agreements on Foreign Direct 
Investment. Available at: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2178874  
124 CARIS. (2010). Mid-Term Evaluation of the EU’s Generalised System of Preferences; Beke, L., D’Hollander, 
D., Hachez, N. and Pérez de las Heras, B. (2014). Report on the integration of human rights in EU development 
and trade policies.  

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consistently  and  in  a  transparent  manner. 125  This  in  turn  impacts  the  scheme’s 
effectiveness  in  the  social  and  human  rights  dimension,  as  the  beneficiary  status  is 
associated  with  “endorsing  a  third  country’s  human  rights  record.”126 The  application  of 
the  withdrawal  mechanism  can  hence  compromise  the  scheme’s  effective  promotion  of 
social  and  human  rights  in  the  beneficiary  countries.127 Critical  analysis  holds  the  view 
that “the impact and credibility of the EU’s approach to human rights in its external trade 
policy  has  been  called  into  question  because  of  the  selective  and  uneven  application  of 
these human rights instruments.”128 Some cases of violation of core labour standards or 
human  rights  such  as  in  Uzbekistan  and  Turkmenistan  have  not  had  negative 
consequences for the respective countries; whereas in other cases, the EU has acted and 
withdrew  preferences  from  the  violating  countries,  including  Myanmar/Burma,  Belarus 
and Sri Lanka.129   

The scheme’s concrete impact on improving social and human rights standards depends 
highly on the specific case and beneficiary country, and is not uniform across countries. 
This  is  enforced  by  the  fact  that  each  country  seeks  to  meet  its  obligations,  and  in 
particular  the  GSP+  commitments,  in  its  individual  context.  In  this  respect,  the  eligible 
countries  face  different  issues,  challenges  and  constraints. 130  The  literature  suggests 
that,  in  order  to  identify  a  tangible  positive  impact  on  the  social  conditions  of  a 
beneficiary  country,  effective  monitoring  of  the  actual  implementation  of  the  relevant 
provisions and conventions is essential. 

In  the  2010  CARIS  study,  it  was  suggested  that  the  effective  implementation  of  labour 
rights and human rights conventions primarily relates to social and economic rights and 
the  adequate  provision  of  education  and  health  services.  It  was  specifically  noted  that 
“costs  of  implementation  are  an  important  factor  in  countries'  decisions  to  adopt 
international  labour  conventions”. 131  However,  despite  the  costs  associated  with 
guaranteeing social and economic rights, the potential benefits for beneficiary countries 
are far greater. As demonstrated by the 2016 European Commission Report on the GSP+ 
arrangement,  several  countries  still  lack  full  compliance  with  the  convention’s 
requirements,  which  are  insufficiently  implemented  in  domestic  laws  or  lack  adequate 
reporting.132 

Overwhelming consensus can be found  on the potential positive impacts  of the scheme 
on  labour  and  human  rights  in  the  beneficiary  countries.  In  particular,  the  GSP+ 
monitoring and reporting process is expected to have the potential to bring about change 
in  law  and  practice  of  labour  and  women  rights.133 This  may  be  demonstrated  by  the 
specific case of El Salvador, in which the country’s Supreme Court found ILO Convention 
No. 87 on Freedom of Association and the Right to Organise to be incompatible with the 
Constitution of El Salvador. This ruling was followed by an examination of the European 

125 Velluti, S. (2016). The Promotion and Integration of Human Rights in EU External Trade Relations; Beke, L., 
D’Hollander, D., Hachez, N. and Pérez de las Heras, B. (2014). Report on the integration of human rights in EU 
development and trade policies.  
126 Beke, L., D’Hollander, D., Hachez, N. and Pérez de las Heras, B. (2014). Report on the integration of human 
rights in EU development and trade policies.  
127 Velluti, S. (2016). The Promotion and Integration of Human Rights in EU External Trade Relations; Beke, L., 
D’Hollander, D., Hachez, N. and Pérez de las Heras, B. (2014). Report on the integration of human rights in EU 
development and trade policies. 
128 Velluti, S. (2016). The Promotion and Integration of Human Rights in EU External Trade Relations, p. 41. 
129 Velluti, S. (2016). The Promotion and Integration of Human Rights in EU External Trade Relations; Beke, L., 
D’Hollander, D., Hachez, N. and Pérez de las Heras, B. (2014). Report on the integration of human rights in EU 
development and trade policies. 
130 European Commission. (2016). GSP+ report on Sustainability, Human Rights and Good Governance. 
Questions and Answers. Available at: trade.ec.europa.eu/doclib/docs/2016/january/tradoc_154179.pdf    
131 CARIS. (2010). Mid-Term Evaluation of the EU’s Generalised System of Preferences, p. 10. 
132 European Commission. (2016). Joint Staff Working Document on the EU Special Incentive Arrangement for 
Sustainable Development and Good Governance (GSP+) covering the period 2014-2015. (SWD (2016) 8 final). 
133 Humbert, F. (2008). Do Social Clauses in Generalised Systems of Preferences Advance the Cause of 
Women? 

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Commission,  which  was  very  likely  instrumental  for  the  subsequent  constitutional 
changes  adopted.  The  prospect  of  losing  GSP+  benefits  are  therefore  believed  to  have 
had a positive effect on the labour and social standards in El Salvador.134 

3.2 Social and human rights impact of the GSP 
Trade  can  have  a  positive  impact  on  social  development,  human  rights  and  labour 
standards.  In  addition  to  supporting  economic  growth,  job  creation  and  poverty 
for  social 
increased  net  exports  can  generate  additional  resources 
reduction, 
development.  However,  the  GSP  is  at  most  a  facilitator  and  for  it  to  have  a  positive 
social  and  human  rights  impact,  governments  should  enact  effective  legislation  and 
social policies, as well as actively support institutions and legal reforms focusing on the 
promotion and protection of human and labour rights.  

The case studies on Bangladesh, Bolivia, Ethiopia and Pakistan show that improvements 
on  a  variety  of  social  indicators  have  occurred  in  the  beneficiary  countries.  The  life 
expectancy  increased  on  average  by  1.6  years  between  2011  and  2015,  with  the 
strongest increase in Ethiopia by 2.5 years. The same positive development is reflected 
in the constant decrease of infant mortality, which has strongly declined in Bangladesh. 
There  are  mixed  results  in  terms  of  spending  on  social  policies  such  as  health  and 
education.  Expenditure  on  education  as  a  percentage  of  GDP  has  increased  in  Bolivia, 
Bangladesh  and  Pakistan  in  recent  years,  but  declined  in  Ethiopia.  Similarly,  public 
expenditure on health as a percentage of GDP has increased in Bolivia and  has declined 
in Pakistan, Ethiopia and Bangladesh by 0.27 per cent on average since 2011.135 

One of the main objectives of the GSP is to strengthen the scheme’s impact on poverty 
eradication. The GSP establishes an indirect link between the preferential market access 
and  the  reduction  of  poverty  by  contributing  to  economic  growth  in  the  beneficiary 
countries.  The  countries  under  scrutiny  in  this  study  have  been  successful  in  their 
poverty  reduction  efforts.  This can be explained by the increased economic growth and 
the  subsequent  enlarged  employment  opportunities,  which  are  expected  to  have  a 
positive effect on poverty reduction.  

A comprehensive analysis of the social impact of the scheme is hampered by an overall 
lack  of  data  on  social  indicators,  as  well  as,  long  time-lags  before  statistics  become 
available. The financial, institutional and human capacities necessary for monitoring and 
collecting such data may be limited for developing countries. 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. Therefore, 
the  case  studies  mainly  look  at  qualitative  assessments  of  social  and  human  rights 
changes.  

The GSP is used by the EU to promote human rights and core labour standards, as well 
as  it  is  used  as  an  instrument  for  poverty  reduction  in  the  beneficiary  countries. 
Additionally,  in  cases  of  severe  violations  of  fundamental  human  rights  and  labour 
standards, trade preferences may be withdrawn.  

134 CARIS. (2010). Mid-Term Evaluation of the EU’s Generalised System of Preferences, p. 154; Velluti, S. 
(2016). The Promotion and Integration of Human Rights in EU External Trade Relations; Beke, L., D’Hollander, 
D., Hachez, N. and Pérez de las Heras, B. (2014). Report on the integration of human rights in EU development 
and trade policies. 
135 World Bank. (2016). World Development Indicators. Available at: 
https://data.worldbank.org/indicator/SH.XPD.PUBL?locations=PK-ET-BD 

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The EU has increasingly promoted labour standards internationally and strengthened its 
cooperation with the ILO through a strategic partnership since 2004.136 The case studies 
have  shown  that  labour  rights  in  Pakistan  as  well  as  in  Bangladesh  have  been 
strengthened  since  the  GSP  has  been  in  place.  These  labour  standards  have  been  put 
forward  through  legislative  acts  and  programme  initiatives,  such  as  the  Sustainability 
Compact  for Bangladesh. Overall, the EU applies  a cooperative, dialogue-based method 
to  increase  the  GSP’s  impact  on  labour  rights.  This  method  implies  close  cooperation 
between the EU and different actors in the beneficiary countries to tackle shortcomings 
and  discuss  achieved  progress.  This  enhances  the  role  of  civil  society,  companies  and 
local authorities in the implementation of labour standards.137  

Additionally,  the  GSP  creates  conditionality  to  comply  with  fundamental  human  rights 
and  labour  standards.  As  stated  in  Article  19  of  the  GSP  Regulation,  the  EU  can 
temporarily withdraw preferential access to its market for any type of beneficiary in case 
of  severe  and  systematic  violations  of  labour  and  human  rights.  Ahead  of  initiating  the 
procedure for temporary withdrawal, the Commission informs the beneficiary country of 
its concerns. This provision can provide an incentive for beneficiary countries to adhere 
to labour and human rights to avoid losing their trade preferences. This conditionality is 
noted  to  have  a  strong  impact  on  countries  that  are  significantly  dependent  on  the  EU 
market for their exports.  

Bangladesh  constitutes  such  a  case  and  also  an  example  of  how  the  EU  approaches 
conditionality when severe violations of labour rights and workers’ safety standard occur. 
The  EU  has  repeatedly  communicated  its  intention  to  initiate  the  temporary  withdrawal 
procedure  for  Bangladesh  due  to  the  lack  of  occupational  safety  in  the  country.  Such 
warnings have been issued in response to the Rana Plaza collapse in 2013. The EU has 
taken  the  approach  of  close  engagement  and  collaboration  with  the  Government  of 
Bangladesh  to  improve  labour  standards,  including  factory  safety,  resulting  in  the 
Sustainability Compact. Additionally, there have also been safety audits in RMG factories, 
the  launch  of  the  Better  Work  Bangladesh  Programme  and  increased  resources  to 
improve fire security.138 

The  dialogue  and  collaboration  approach  has  not  been  adopted  by  the  US,  which  in 
addition to the Sustainability Compact withdrew its trade preferences for Bangladesh. 139 
The  EU  continues  to  follow  the  developments  with  regard  to  occupational  safety  in 
Bangladesh.  For  example,  in  March  2017,  the  EU  reminded  the  Government  of 
Bangladesh  of  its  commitments  to  uphold  labour  standards  with  a  letter  delivered 
through the Bangladesh Embassy in Brussels.140 

For  Bangladesh,  the  EBA  is  an  economic  and  social  driver.141 Hence,  the  withdrawal  of 
preferential  access  to  the  EU  market  can  severely  impact  economic  and  social 
dimensions  in  Bangladesh.  In  2016,  Bangladesh  exported  EUR  16.2  billion  worth  of 
goods  to  the  EU,  of  which  EUR  15.2  billion  was  RMG  exports.  Its  exports  to  the  EU 
accounted for 43.6 per cent of Bangladesh’s global exports in the same year. Withdrawal 
of  EBA  preferences  would  reinstate  the  Common  Customs  Tariff  and  would  severely 

136 European Commission (2004). Memorandum of Understanding. Available at: 
http://www.ilo.org/wcmsp5/groups/public/---europe/---ro-geneva/---ilo-
brussels/documents/genericdocument/wcms_169299.pdf  
137 Democracy Reporting International (2016). GSP+ and Sri Lanka. Available at: http://democracy-
reporting.org/wp-content/uploads/2016/06/GSP-and-Sri-Lanka_ENG-1.pdf; Stakeholder Contribution, 
07/04/2017;  
138 European Commission. (2016). Joint Conclusions Second Follow-up Meeting on Bangladesh Sustainability 
Compact. Available at: http://trade.ec.europa.eu/doclib/docs/2016/january/tradoc_154181.pdf  
139 Although, it should be noted that US preferences do not apply to most textile and garment products. 
140 The Financial Express. (2017). European Commission warns Bangladesh of GSP benefit suspension. 
Available at: http://www.thefinancialexpress-bd.com/2017/03/24/65146/EC-warns-of-BD-GSP-benefit-
suspension  
141 Ark et al. (2016). the integration of EU development, trade and human rights policies. Available at: 
http://www.fp7-frame.eu/frame-reps-9-4/  

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impact the country’s competitive advantage, in particular with respect to countries with 
similar competitive advantages such as Cambodia and Pakistan. 

As  noted  in  the  literature  review,  Article  19  has  not  been  triggered  under  the  current 
GSP  Regulation  in  the  case  of  severe  and  systematic  of  labour  and  human  rights.  This 
has  also  been  challenged  by  various  civil  society  organisations  in  communications  with 
the Commission, including in the stakeholder consultation for the present Evaluation.142 

This  may  also  be  illustrated  with  the  case  of  Cambodia.  Cambodia’s  exports  to  the  EU 
have increased significantly since 2009 as a result of the EBA preferences. In 2016, the 
EU  was  its  main  export  destination,  accounting  for  37  per  cent  of  Cambodia’s  global 
exports. 143  A  wide  range  of  industries  benefits  from  the  trade  preferences,  including 
land-intensive  industries  such  as  sugar  and  rice. 144  As  a  result  of  the  increased 
production of sugar and rice, there have reportedly been severe human rights violations 
in the form  of widespread displacement, violent evictions and land grabbing in order to 
issue land concessions to these industries. In this context, the UN and civil society have 
issued  clear  statements  on  the  negative  impact  of  these  land  concessions  on  human 
rights in Cambodia.145  

The  Commission  has  not  triggered  Article  19  in  response  to  the  reported  human  rights 
violations  in  Cambodia.  Similar  to  the  case  of  Bangladesh,  the  EU  has  increased  its 
development cooperation with the country focusing on the country’s land sector reform. 
The  EU’s  Multi-Annual  Indicative  Programme  2014-2020  further  illustrates  this 
commitment  as  it  focuses  on  cooperation  in  agriculture  and  natural  resource 
management,  basic  education  and  skills  development  and  governance  and 
administration.146  

Numerous  civil  society  organisations  have  criticised  the  European  Commission’s 
approach  to  the  situation  in  Cambodia.  They  argue  that  the  approach  has  not  been 
effective  as  the  human  rights  violations  continue,  and  there  is  a  lack  of  political  will  in 
Cambodia to substantially improve the situation. Civil society organisations also criticise 
the  EU’s  hesitance  to  withdraw  EBA  preferences  in  order  to  incentivise  the  country  to 
adhere to fundamental human rights.147  

Another  case  that  may  demonstrate  a  lack  of  consistent  application  of  Article  19  is  the 
case  of  Myanmar/Burma.  EEC  trade  preferences  had  been  suspended  since  1997 
following  labour  rights  violations  concerning  forced  labour.  However,  Myanmar/Burma’s 
status  as  EBA  beneficiary  was  reinstated  in  2013  once  the  required  conditions  were 
fulfilled following an assessment of the ILO. The reinstatement of trade preferences had 

142 Act Alliance. (2016). Available at: : http://actalliance.eu/wp-content/uploads/2016/05/Finalized_CSOs-
JointLetter-EUs-Commissioner4Trade-EUDelegation-in-PP_Sugarcane-Case_Jan2016.pdf , FIDH. (2017). 
Available at: https://www.fidh.org/IMG/pdf/2017.05.08_final_fidh-adhoc-licadho-altsean-burma-_odhikar-
_pahra-hrcp_contribution_mid-term_evaluation_of_the_eu_gsp_gd_ca_ag.pdf  Human Rights Watch. (2017). 
Available at: https://www.hrw.org/world-report/2017/country-chapters/cambodia. 
143 European Commission. (2017). European Union Trade in Goods with Cambodia. Available at: 
http://trade.ec.europa.eu/doclib/docs/2006/september/tradoc_113362.pdf  
144 International Federation for Human Rights et al. (2017). Contribution to the Mid-Term Evaluation of the EU 
GSP. Available at: https://www.fidh.org/IMG/pdf/2017.05.08_final_fidh-adhoc-licadho-altsean-burma-
_odhikar-_pahra-hrcp_contribution_mid-term_evaluation_of_the_eu_gsp_gd_ca_ag.pdf  
145 Human Rights Council. (2012). Report of the Special Rapporteur on the situation of human rights in 
Cambodia. Available at: http://www.ohchr.org/Documents/HRBodies/HRCouncil/RegularSession/Session21/A-
HRC-21-63-Add1_en.pdf; International Federation for Human Rights et al. (2017). Contribution to the Mid-
Term Evaluation of the EU GSP. Available at: https://www.fidh.org/IMG/pdf/2017.05.08_final_fidh-adhoc-
licadho-altsean-burma-_odhikar-_pahra-hrcp_contribution_mid-term_evaluation_of_the_eu_gsp_gd_ca_ag.pdf  
146 EEAS. (2017). Cambodia and the EU. Available at: https://eeas.europa.eu/headquarters/headquarters-
homepage/1006/cambodia-and-eu_en  
147 ACT Alliance. (2016). NGO letter to Commissioner Malmström and HR Mogherini. Available at: 
http://actalliance.eu/wp-content/uploads/2016/05/Finalized_CSOs-JointLetter-EUs-Commissioner4Trade-
EUDelegation-in-PP_Sugarcane-Case_Jan2016.pdf  

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a  significant  economic  impact,  as  exports  to  the  EU  increased  from  EUR  192  million  in 
2013 to EUR 963 million in 2016.148  

Despite  significant  progress  and  wide-ranging reforms  in  the  country,  reports  of  severe 
human  rights  violations  have  continued 
include 
discrimination  against  ethnic  and  religious  minorities,  conflict-related  violence  and 
regression  of  the  freedoms  of  expression,  speech,  assembly  and  association.  Although 
Myanmar/Burma's cooperation with UN Special Rapporteur (Yanghee Lee) continues, her 
full  access  to  areas  to  discharge  her  mandate  in  an  appropriate  manner  remains  an 
issue.  An  independent  international  fact-finding  mission  was  established  by  the  UN 
Human Rights Council in March 2017.149 

to  surface.  These  violations 

It  is  argued  that  the  human  rights  violations  qualify  for  temporary  withdrawal  under 
Article  19  of  the  Regulation.  However,  the  European  Commission  has  been  reluctant  to 
withdraw the EBA preferences or has sought to address the issues through other means 
and instruments. An explanation could be that the previous withdrawal had  little impact 
on enhancing compliance with human rights and labour rights. This is due to the limited 
levels of trade the country had with the EU prior to withdrawal, which restricted the EU’s 
leverage  in  the  country. 150  In  this  context,  stakeholders  have  suggested  that 
Myanmar/Burma  would  better  benefit  from  trade  preferences  of  the  type  that  GSP+ 
grants to condition human rights and labour standards.151 

The  social  impact  of  the  scheme  is  two-fold.  On  the  one  hand,  the  scheme  generates 
additional  revenue  and  resources  for  social  development  policies.  Furthermore,  the 
conditionality  of  the  scheme  can  be  an  incentive  for  beneficiaries  to  adhere  to 
fundamental labour and human rights. On the other hand, the GSP can have a negative 
impact  through  stimulating  trade  and  production,  which  could  result  in  practices  to 
favour  selected  economic  and  political  elites  through  unfair  practices  such  as  e.g.  land 
grabbing.  

3.3 Social and human rights impact of the GSP+ 
GSP+ status is granted to beneficiaries based on vulnerability criteria and the ratification 
and implementation of the 27 international conventions on human rights, labour rights, 
environmental  protection  and  good  governance.  The  reformed  scheme  has  granted 
GSP+  status  to  a  number  of  beneficiaries  that  did  not  previously  receive  GSP+ 
preferences  –  Ecuador,  El  Salvador,  Guatemala,  Kyrgyzstan,  Pakistan,  Panama  and  the 
Philippines.  Other  countries  benefitted  from  the  GSP+  under  the  prior  Regulation  and 
had already ratified and implemented the list of conventions, which remained unchanged 
at the time of adoption of the 978/2012 Regulation. 

Table 24: Recent ratification of human rights and labour rights conventions152 
Recent ratification 

GSP+ status 

Country 

Ecuador 

1 January 2014 until 
1 January 2015 

  Convention against Torture, 2010 

148 European Commission. (2017). Trade in goods with Myanmar. Available at: 
http://trade.ec.europa.eu/doclib/docs/2006/september/tradoc_113423.pdf  
149 UNODC. (2016). Report of the Special Rapporteur on the situation of human rights in Myanmar. Available 
at: https://documents-dds-ny.un.org/doc/UNDOC/GEN/N16/272/60/PDF/N1627260.pdf?OpenElement 
150 Ark et al.(2016) The integration of EU development, trade and human rights policies. Available at: 
http://www.fp7-frame.eu/frame-reps-9-4/ 
151 International Federation for Human Rights et al. (2017). Contribution to the Mid-Term Evaluation of the EU 
GSP. Available at: https://www.fidh.org/IMG/pdf/2017.05.08_final_fidh-adhoc-licadho-altsean-burma-
_odhikar-_pahra-hrcp_contribution_mid-term_evaluation_of_the_eu_gsp_gd_ca_ag.pdf  
152 ILO. Ratifications by country. Available at: http://www.ilo.org/dyn/normlex/en/f?p=1000:11001:::NO:::  

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Pakistan 

1 January 2014 

  Convention against Torture, 2010 
 

International Covenant on Civil and Political Rights, 
2010 

  Withdrawal of reservations to CAT and ICCPR, 2011 

It  can  be  observed  in  Table  24  above  that  Ecuador  and  Pakistan  have  ratified 
conventions  on  human  rights  leading  up  to  their  GSP+  admission.  In  the  case  of 
Pakistan, the ratification of the conventions was linked to the country’s efforts to obtain 
GSP+  status.  However,  Pakistan  formulated  a  number  of  reservations  to  the 
conventions,  which  in  the  reformed  GSP  made  the  country  ineligible  for  GSP+ 
preferences.  In an effort to become  eligible for the GSP+, Pakistan withdrew seven  out 
of  nine  reservations  on  the  International  Covenant  on  Civil  and  Political  Rights  (ICCPR) 
and six out of nine reservations on the Convention Against Torture (CAT).153  

The  aforementioned  cases  illustrate  that  the  EU,  through  conditionality,  can  have  a 
positive  impact  on  the  promotion  of  labour  and  human  rights  in  the  beneficiary 
countries.  Through  this  conditionality,  the  EU  also  has  the  potential  to  have  a  positive 
impact  in  the  Standard  GSP  beneficiaries  that  are  eligible  for  GSP+  based  on  the 
vulnerability criteria. Table  25 demonstrates that about half of the eligible beneficiaries 
have not yet signed or ratified the fundamental conventions on human rights and labour 
standards.  It  furthermore  shows  that  a  number  of  beneficiaries  have  recently  ratified  a 
number of international conventions. 

However,  in  terms  of  ratification  of  human  rights  and  labour  conventions,  the  positive 
impact  on  labour  and  human  rights  in  the  beneficiary  countries  has  been  found  to  be 
limited.  This  is  due  to  the  fact  that  the  majority  of  the  new  GSP+  beneficiaries  had 
already ratified the fundamental international conventions long before their admission to 
the  special  arrangement.  Additionally,  a  large  number  of  Standard  GSP  beneficiaries 
have already ratified all relevant UN and ILO conventions. 

Table 25: Ratification of international conventions on human rights and labour rights by 
GSP+ eligible countries154 

Country 

Ratification of international conventions 

Congo 

  Ratified all UN conventions on human rights 
  Ratified all ILO conventions on labour rights 

Cook Islands    Only ratified the Convention on the Elimination of All Forms of Discrimination 

against Women and the Convention on the Rights of the Child 

  Only ratified the Forced Labour Convention and the Abolition of Forced Labour 

Convention 

Micronesia 

  Only  ratified  the  Convention  on  Elimination  of  All  Forms  of  Discrimination 

Nauru 

Nigeria 

Niue 

against Women and has signed the Convention against Torture 

  Not a member of the ILO 

  Only  ratified  the  Convention  on  the  Rights  of  the  Child  and  recently  the 
Convention  on  Elimination  of  All  Forms  of  Discrimination  against  Women  in 
2011 and the Convention against Torture in 2012 

  Not a member of the ILO 

  Ratified all UN conventions on human rights 
  Ratified all ILO conventions on labour rights 

  Only ratified the Convention on the Rights of the Child 
  Not a member of the ILO 

Syrian Arab 

  Ratified all UN conventions on human rights 

153 Democracy Reporting. (2016). GSP+ in Pakistan: A Brief Introduction. Available at: http://democracy-
reporting.org/newdri/wp-content/uploads/2016/05/gsp__in_pakistan._a_brief_introduction..pdf  
154 ILO. Ratifications by country. Available at: http://www.ilo.org/dyn/normlex/en/f?p=1000:11001:::NO::: 

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Republic 

  Ratified all ILO conventions on labour rights 

Tajikistan 

  Ratified all UN conventions on human rights, most recently the Convention on 

the Prevention and Punishment of the Crime of Genocide in 2015 

Ukraine 

Uzbekistan 

  Ratified all ILO conventions on labour rights 

  Ratified all UN conventions on human rights 
  Ratified all ILO conventions on labour rights 

  Ratified all UN conventions on human rights 
  Ratified all ILO conventions on labour rights, most recently the Convention on 
Freedom of Association and Protection of the Right to Organise in 2016 which 
has yet to enter into force 

In addition to ratifying the international  conventions, beneficiary countries must adhere 
to  their  reporting  obligations  under  the  various  conventions.  It  has  been  found  that 
beneficiaries  perform  better  in  reporting  on  their  obligations  under  human  rights 
conventions and labour rights conventions compared to environmental conventions. The 
first biennial Commission Report on the GSP+155 reveals that beneficiaries have generally 
made  considerable  efforts  to  comply  with  their  reporting  obligations.  However,  the 
monitoring bodies often experience delays in receiving due reports.  

For instance, Cape Verde has not fulfilled its reporting obligations for most of the seven 
human rights conventions, although significant efforts have been made. Similarly, Cape 
Verde  did  not  submit  the  reports  due  in  2014  regarding  fundamental  Conventions  No. 
29, 105, 138 and 182, and delayed the submission of reports of Convention number 87 
and 98 due in 2016. Another  GSP+ beneficiary that encounters difficulties in complying 
with  reporting  obligations  is  Mongolia.  Despite  clear  improvements  in  the  level  of 
compliance,  the  country  still  has  problems  in  its  communications  with  domestic  social 
partners. 

The  differences  between  the  beneficiary  countries  can  also  be  observed  in  the  case 
studies  on  Bolivia  and  Pakistan.  While  Pakistan  generally  complies  with  the  reporting 
requirements, Bolivia, on the other hand, constitutes an example of a GSP+ beneficiary 
that is largely inconsistent in its reporting. Overall, lack of compliance among beneficiary 
countries  could be linked to a lack  of capacity and financial resources  required  for data 
gathering, processing and reporting.  

Another  requirement  of  the  GSP+  is  that  there  cannot  be  any  serious  shortcomings  in 
the  effective  implementation  of  the  conventions  in  the  beneficiary  country.  The 
assessment  on  the  effective  implementation  of  the  conventions  is  based  on  input  from 
the relevant UN monitoring bodies, the European Parliament, the EU Delegations in the 
beneficiary countries, the EU Member States and civil society organisations. The UN and 
ILO  monitoring  bodies  largely  base  their  assessment  on  national  reporting  and  input 
from civil society. In cases where beneficiary countries fail to comply with the reporting 
obligations,  it  becomes  difficult  to  assess  the  effective  implementation  of  the 
conventions, undermining some of the incentives attached to the GSP+ arrangement. 

To support the effective implementation of the conventions, the EU provided a grant to 
the  ILO  in  2015  for  the  two-year  pilot  project  Sustaining  GSP-Plus  Status  by 
Strengthened  National  Capacities  to  Improve  ILS  Compliance  and  Reporting  to  support 
GSP+  beneficiaries  in  the  implementation  of  the  ILO  conventions.  El  Salvador, 
Guatemala, Mongolia and Pakistan participated in the pilot project. Additionally, the EU is 
also  funding  ILO  projects  focused  on  capacity-building  for  the  application  of  ILO 

155 European Commission. (2016). Joint Staff Working Document on the EU Special Incentive Arrangement for 
Sustainable Development and Good Governance ('GSP+') covering the period 2014 – 2015. Available at: 
https://eeas.europa.eu/sites/eeas/files/european_commission._2016._report_on_the_generalised_scheme_of_
preferences_during_the_period_2014-2015.pdf  

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conventions  in  the  following  GSP+  countries:  Armenia,  the  Philippines,  Cape  Verde, 
Mongolia, Pakistan and Paraguay. Furthermore, the EU is also funding projects which are 
aimed  at  strengthening  local  civil  society  organisations  in  GSP+  countries  so  that  they 
can better play their role in ensuring that the international conventions are implemented.  

As stated in Article 15 of the 978/2012 GSP Regulation, the EU can temporarily withdraw 
GSP+  trade  preferences  when  a  beneficiary  country  does  not  respect  the  binding 
undertaking  to  ensure  the  effective  implementation  of  the  GSP+  covered  conventions. 
This  provision  provides  an  incentive  for  beneficiary  countries  to  implement  the 
international  conventions  on  labour  and  human  rights.  This  may  especially  be  true  for 
countries  that  export  significant  volumes  of  sensitive  products  to  the  EU,  for  which  a 
reduced tariff applies under Standard GSP, but for which the GSP+ grants complete duty 
suspension. Additionally, this conditionality is strongest when the EU is the main export 
market for the beneficiary. 

This conditionality is illustrated by the case of Sri Lanka. In February 2010, the Council 
of  Ministers  decided  to  temporarily  suspend  Sri  Lanka’s  GSP+  preferences  after 
shortcomings in the effective implementation of the ICCPR, the CAT and the Convention 
on the Rights of the Child (CRC) were identified. The Commission engaged in a dialogue 
with the Sri Lankan authorities to realise rapid and sustainable progress to address these 
shortcomings and avoid temporary withdrawal from the arrangement. However, due to a 
lack of tangible and sustainable progress by August 2010, the Commission withdrew Sri 
Lanka’s GSP+ status.156 

The withdrawal of GSP+ preferences had a negative impact on the Sri Lankan economy 
and resulted in a loss of thousands of jobs.157 In the context of the huge potential of the 
GSP+, Sri Lanka submitted a request for GSP+ preferences in July 2016, after which the 
Commission  assessed  the  country’s  eligibility  with  the  vulnerability  criteria,  the 
ratification  of  the  27  international  conventions  without  reservation  and  whether  there 
have  been  any  serious  shortcomings 
implementation  of  the 
conventions. 158  In  January  2017,  the  Commission  noted  Sri  Lanka’s  progress  on  the 
effective  implementation  of  its  international  commitments,  including  on  the  ICCPR,  the 
CAT and the CRC, and its improved willingness to address any remaining shortcomings. 
Several  salient  shortcomings  were  identified,  which  form  the  basis  for  the  dialogue 
between the EU and Sri Lanka as part of the GSP+ monitoring process.159 

in  the  effective 

Another  case  in  which  the  Commission  leverages  the  conditionality  linked  to  the  GSP+ 
arrangement concerns the ‘war on drugs’ in the Philippines. After taking office in 2016, 
President  Rodrigo  Duterte  launched  a  war  on  drugs,  after  which  seven  thousand  extra-
judicial  killings  have  taken  place. 160  Furthermore,  in  March  2017,  the  House  of 
Representatives  has  passed  the  Death  Penalty  Bill  which  reinstates  capital  punishment 
for drug-related crimes; however, it still remains to be adopted by the Senate. This bill is 
a  violation  of  Second  Optional  Protocol  of  the  International  Convention  on  Civil  and 
Political Rights, to which the Philippines is a signatory.161 

156 DG Trade. (2010). EU regrets silence of Sri Lanka regarding preferential import regime. Available at: 
http://trade.ec.europa.eu/doclib/press/index.cfm?id=589  
157 Francis, K. (2017). EU restores preferential tax concessions to Sri Lanka. Available at: 
http://abcnews.go.com/International/wireStory/eu-restores-preferential-tax-concessions-sri-lanka-47438327  
158 European Commission. (2017). C(2016) 8996 final. Available at: 
http://ec.europa.eu/transparency/regdoc/rep/3/2016/EN/C-2016-8996-F1-EN-MAIN-PART-1.PDF  
159 European Commission. (2017). Report on assessment of the application for GSP+ by Sri Lanka. Available 
at: http://trade.ec.europa.eu/doclib/docs/2017/january/tradoc_155236.pdf  
160 Human Rights Watch. (2017). Philippines’ ‘War on Drugs’. Available at: 
https://www.hrw.org/tag/philippines-war-drugs  
161 OCHRC. (2017). UN experts urge Filipino legislators to reject death penalty bill. Available at: 
http://www.ohchr.org/EN/NewsEvents/Pages/DisplayNews.aspx?NewsID=21388&LangID=E#sthash.nrzPU3xj.
dpuf  

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The  EU  has  continuously  stressed  in  its  dialogue  with  the  Philippines  that  the  country 
must fulfil its obligations under the international conventions. It has also been noted that 
the alleged cases of extrajudicial killings and the reintroduction of capital punishment will 
be taken into account in the GSP+ monitoring process and the review of the Philippines’ 
implementation  of  the  GSP+.162 In  this  respect,  European  Trade  Commissioner,  Cecilia 
Malmström,  in  March  2017  expressed  the  EU’s  concerns  about  the  abusive  policies  on 
drugs and warned that the country could lose its GSP+ preferences due to these human 
rights  violations.163 Similarly,  the  European  Parliament  urged  the  Commission  to  take 
action  and  consider  the  withdrawal  of  GSP+  preferences  if  the  situation  does  not 
improve.164  

If  GSP+  preferences  were  to  be  withdrawn,  the  Philippines  would  benefit  from  duty 
suspension  on  non-sensitive  goods  and  duty  reduction  on  sensitive  goods,  instead  of 
duty-free  access  to  the  EU  market  for  66%  of  all  EU  tariff  lines.  The  withdrawal  from 
GSP+ would therefore increase the price of Filipino imports into the EU and decrease the 
country’s  competitive  advantage  vis-à-vis  other  GSP+  and/or  EBA  beneficiaries.  This 
could have a substantial impact on the trade between the EU and the Philippines as the 
EU was the Philippines’ second largest export destination in 2016.  

In 2016, the Philippines exported EUR 6.2 billion worth of goods to the EU.165 A number 
of  Members  of  the  House  of  Representatives  have  highlighted  the  potential  negative 
economic  impact  of  reintroducing  the  death  penalty  through  withdrawal  of  GSP+ 
preferences.166 However, while the House of Representatives approved the Death Penalty 
Bill  by  217  votes  in  favour,  54  against  and  1  abstention,  the  Senate  has  still  to  adopt 
it.167  

As illustrated by the cases of Sri Lanka and the Philippines, the conditionality to adhere 
to the fundamental conventions on labour and human rights has the potential to have a 
significant  impact  on  the  social  and  human  rights  situation  in  the  country.  It  can 
incentivise  a  beneficiary  country  to  comply  with  international  conventions  and  realise 
concrete change in the country, though the degree of leverage is also determined by the 
relative importance of the EU market for their exports. 

3.4. Good governance impact of GSP+ 
The  GSP+  conditionality  has  had  a  limited  additional  impact  on  the  ratification  and 
implementation  of  the  UN  conventions  on  drug  control  and  anti-corruption.  The  list  of 
international conventions did not change with the 978/2012 GSP reform and as a result, 
countries  that  already  benefitted  from  the  GSP+  had  already  ratified  and  implemented 
the  conventions  on  good  governance.  Furthermore,  the  four  international  conventions 
had already been ratified by the newly admitted GSP+ beneficiaries. 

162 International Federation for Human Rights et al. (2017). Contribution to the Mid-Term Evaluation of the EU 
GSP. Available at: https://www.fidh.org/IMG/pdf/2017.05.08_final_fidh-adhoc-licadho-altsean-burma-
_odhikar-_pahra-hrcp_contribution_mid-term_evaluation_of_the_eu_gsp_gd_ca_ag.pdf  
163 Human Rights Watch. (2017). EU Takes Aim at Murderous ‘War on Drugs’ Philippines. Available at: 
https://www.hrw.org/news/2017/03/20/eu-takes-aim-murderous-war-drugs-philippines  
164 European Parliament. (2017). European Parliament Resolution of 16 March 2017 on the Philippines – the 
case of Senator Leila M. De Lima. Available at: http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-
%2f%2fEP%2f%2fTEXT%2bTA%2bP8-TA-2017-0088%2b0%2bDOC%2bXML%2bV0%2f%2fEN&language=EN  
165 Data supplied by the European Commission. 
166 Business World. (2017). Death penalty opponents warn of EU trade risks. Available at: 
http://www.bworldonline.com/content.php?section=Economy&title=death-penalty-opponents-warn-of-eu-
trade-risks&id=138524; Cepeda, M. (2017). Villarin: PH to lose $12.8B in EU trade if death penalty returns. 
Available at: http://www.rappler.com/nation/162145-villarin-philippines-lose-billions-eu-trade-death-penalty   
167 ABS-CBN News. (2017). House approves death penalty bill on final reading. Available at: http://news.abs-
cbn.com/news/03/07/17/house-approves-death-penalty-bill-on-final-reading  

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The  EU  can  potentially  positively  impact  the  ratification  and  implementation  of  the 
international  conventions  on  good  governance  by  Standard  GSP  beneficiaries.  Of  the 
beneficiaries  that  meet  the  vulnerability  criteria,  almost  half  have  not  yet  signed  and 
ratified  all  conventions  on  drug  control  and  anti-corruption  required  under  the  GSP+. 
Table  26  below  provides  an  overview  of  the  status  of  ratification  by  the  eligible 
countries. 

Table 26: Ratification of international conventions on good governance by GSP+ eligible 
countries168 

Country 

Ratification of international conventions 

Congo 

Ratified all UN conventions on good governance 

Cook Islands  Only  ratified  the  Convention  against  Illicit  Traffic  in  Narcotic  Drugs  and 

Psychotropic Substances and the Convention against Corruption in 2011 

Micronesia 

Ratified  all  UN  conventions  on  good  governance,  most  recently  the  Convention 
against Corruption in 2012 

Nauru 

Only  ratified  the  Convention  against  Illicit  Traffic  in  Narcotic  Drugs  and 
Psychotropic Substances in 2012 and the Convention against Corruption in 2012 

Nigeria 

Ratified all UN conventions on good governance 

Niue 

Only  ratified  the  Convention  against  Illicit  Traffic  in  Narcotic  Drugs  and 
Psychotropic  Substance  in  2012  with  a  declaration  of  application  through  New 
Zealand  for  the  Convention  on  Narcotic  Drugs  and  the  Convention  on 
Psychotropic Substances 

Syrian Arab 
Republic 

Ratified  all  UN  conventions  on  good  governance,  except  the  Convention  against 
Corruption which it has signed 

Tajikistan 

Ratified all UN conventions on good governance 

Ukraine 

Ratified all UN conventions on good governance 

Uzbekistan 

Ratified all UN conventions on good governance 

The first biennial Commission Report on the GSP+169 demonstrated that all beneficiaries 
generally  complied  with  the  reporting  obligations  under  the  good  governance 
conventions.    However,  there  are  instances  in  which  beneficiary  countries  are  not  fully 
compliant. Cape Verde, for example, is not compliant with the obligation concerning the 
submission  of  information  pursuant  to  Article  12  of  the  1988  convention  for  the  years 
2009-2013.  

The  reports  on  the  implementation  of  these  conventions  are  not  publicly  accessible, 
making  it  difficult  to  assess  the  effective  implementation.  Bolivia  has  not  fully 
implemented  the  conventions  on  drugs  control  with  respect  to  the  coca  leaf.  In  2012, 
Bolivia withdrew from the UN Single Convention on Narcotic Drugs to make a reservation 
to  the  convention  which  allows  the  traditional  use  of  the  coca  leaf  in  the  country.  This 
resulted in an investigation launched by the Commission intended to assess the effect of 
this action on the  country’s  GSP+ status. The  twelve-month investigation revealed that 
Bolivia  has  continued  to  incorporate  the  relevant  provisions  of  the  convention  into  its 

168 UN Treaty Collection. Available at: https://treaties.un.org/Pages/ParticipationStatus.aspx?clang=_en 
169 European Commission. (2016). Joint Staff Working Document on the EU Special Incentive Arrangement for 
Sustainable Development and Good Governance ('GSP+') covering the period 2014 – 2015. Available at: 
https://eeas.europa.eu/sites/eeas/files/european_commission._2016._report_on_the_generalised_scheme_of_
preferences_during_the_period_2014-2015.pdf  

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national legislation that it requested to re-accede the UN Single Convention on Narcotic 
Drugs  in  January  2013  and  can  hence  continue  to  benefit  from  the  GSP+ 
arrangement.170  

3.5 Review of social progress using the Social Progress Index (SPI) 
In  this  section,  the  extent  of  social  progress  made  in  GSP  countries  over  the  review 
period  will  be  assessed  using  the  Social  Progress  Index.  The  Social  Progress  Index, 
hereafter referred to as SPI, is a proxy used to measure a country’s  social progress by 
taking into account both social and environmental factors. The SPI measures changes in 
social  rights  and  entitlements  across  a  wide  range  of  countries,  enabling  comparisons 
across countries and over time.  

The  SPI  has  previously  been  used  by  the  UN  in  their  assessment  of  the  Sustainable 
Development Goals. Social progress is defined here as “the capacity of a society to meet 
the basic human needs of its citizens, establish the building blocks that allow citizens and 
communities to enhance and sustain the quality of their lives, and create the conditions 
for all individuals to reach their full potential”.171  

Social  progress  is  determined  by  a  host  of  factors,  among  others  the  overall 
development  strategies  of  the  country  and  its  domestic  policies  regarding  (i)  the 
provision  of  basic  needs;  and  (ii)  ensuring  access  to  health  and  education  services. 
Therefore  it  is  not  possible  to  establish  a  direct  causality  between  the  GSP  status  of  a 
particular country and its attainment of social progress. The purpose of this review of SPI 
attainment  of  GSP-eligible  countries  is  to  provide  an  overview  of  their  social  progress 
over the review period. The GSP is one contributory factor, among many others, to such 
progress.               

The  SPI  indicator-level  framework  consists  of  50+  indicators  that  go  under  three  broad 
dimensions:  Basic  Human  Needs,  Foundations  of  Wellbeing,  and  Opportunity.  Each 
dimension is divided into four separate components covering specific thematic categories 
related  to  poverty  reduction,  human  rights,  gender  equality,  and  social  protection  and 
dialogue. The index combines societal and environmental outcome indicators drawn from 
official UN data as well as from globally respected research institutions and organizations 
to provide a comprehensive estimate of social progress.172  

As illustrated in Table  27  below, the Basic Human Need dimension is used to assess a 
country’s  ability  to  provide  its  citizens  with  basic  necessities,  by  measuring  access  to 
nutrition  and  medical  care,  access  to  safe  drinking  water,  access  to  adequate  housing, 
and  whether  a  society  is  safe  to  live  in.  The  Foundations  of  Wellbeing  dimension 
measures  whether  citizens  have  basic  access  to  education,  as  well  as  access  to 
information from both inside and outside their  country. Additionally, the measure takes 
into account the conditions for living a healthy life, but also, how well a country protects 
its  natural  environment,  in  terms  of  water,  land  and  air.  Lastly,  the  Opportunity 
dimension  measures  the  degree  to  which  citizens  have  personal  rights  and  freedoms, 
and  whether  people  are  able  to  make  personal  decisions,  as  well  as,  whether  hostility 
towards  certain  groups  in  society  inhibits  individuals  from  reaching  their  full  potential. 
Additionally,  it  takes  into  account  access  to  advanced  forms  of  education,  tapping  into 
citizens’ opportunity for personal development.173 

170 European Commission. (2013). Termination of GSP+ investigation on Bolivia. Available at: 
http://trade.ec.europa.eu/doclib/press/index.cfm?id=879  
171 The Social Progress Imperative. (2017). Social Progress Index 2017. Available at: 
https://www.socialprogressindex.com/methodology 
172 Ibid. 
173 Ibid. 

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Table 27: Overview of social progress indicators under the Social Progress Index174 

HUMAN 

BASIC 
NEED 
Nutrition  and  Basic 
Medical Care 
Water and Sanitation 

Shelter 

Personal Safety 

Basic 

to 

FOUNDATIONS 
OF WELLBEING 
Access 
Knowledge 
Access 
Information 
Communications 
Health and Wellness 

to 
and 

 Environmental 
Quality 

 OPPORTUNITY 

Personal Rights 

Personal Freedom of 
Choice 

and 

Tolerance 
Inclusion 
Access  to  Advanced 
Education 

The  Social  Progress  Index  score  embodies  a  large  body  of  research  with  a  framework 
consisting of three elements, which together create the overall SPI score. A country’s SPI 
score is calculated as the equally-weighted average of a country’s score on each of three 
dimensions  (basic  human  need,  foundations  of  wellbeing,  and  opportunity).  Each 
dimension  consists  of  four  concepts;  thus,  a  country’s  dimension  score  is  calculated  as 
the  equally-weighted  average  of  the  four  concepts  in  that  dimension.  Each  concept  is 
composed  of  specific  indicators  that  measure  as  many  valid  aspects  of  the  concept  as 
possible. These indicators are aggregated using a weighted average, where the weights 
are determined by principal component analysis.  

The SPI score value ranges from 1 to 100, with 100 being the highest possible score. In 
2017, 128  countries were ranked based  on their overall SPI score. Denmark  ranked 1st 
position  with  a  score  of  90.57,  while  the  Central  African  Republic  ranked  128th  position 
with a score of 28.38. Unfortunately, not all GSP countries have been ranked. This is due 
to lack of data for certain aspects of the three dimensions, thus making it impossible to 
calculate an overall SPI score.175  

Table 28 illustrates the overall ranking for GSP beneficiary countries assessed under the 
Social Progress Index in 2014 and 2017. In order to provide a comprehensive evaluation 
assessing  whether  the  objectives  set  by  the  current  GSP  Regulation  are  on  track  to  be 
achieved, the above-mentioned years were selected.  

Table 28: Country ranking under Social Progress Index (2014 & 2017)176 

Country 

SPI 2014 Rank177 

SPI 2017 Rank178 

Variance179 

GSP+ Arrangement180 

Armenia 

Paraguay  

Philippines 

Bolivia 

Kyrgyzstan 

Mongolia 

67 

58 

68 

75 

84 

88 

59 

60 

68 

69 

77 

86 

+8 

-2 

0 

+6 

+7 

+2 

174 Social Progress Index. (2017). Available at: https://www.socialprogressindex.com/definitions/BHN/0/0 
175 Social Progress Imperative. (2017). Social Progress Index 2017- Methodology Report. Available at: 
https://www.socialprogressindex.com/assets/downloads/resources/en/English-2017-Social-Progress-Index-
Methodology-Report_embargo-until-June-21-2017.pdf 
176 Own calculations based on data downloaded from: https://www.socialprogressindex.com/?tab=4  as at May 
7, 2018.  
177 A total of 128 countries were ranked in 2017. 
178 A total of 130 countries were ranked in 2014. 
179 This shows whether the country has improved in its ranking positively, negatively or had the same ranking 
over the period.  
180 The following GSP+ countries were not included in the 2017 ranking of the Social Progress Index: Cape 
Verde  

105 

 
 
 
 
 
 
                                                 
Country 

Pakistan 

Ukraine 

Sri Lanka 

Indonesia 

Uzbekistan 

Ghana 

Tajikistan 

India 

Kenya 

Swaziland 

Ivory Coast 

Nigeria 

Congo 

Cameroon 

Nepal 

Senegal 

Myanmar/Burma 

Bangladesh 

Cambodia 

People’s  Democratic  Republic 
of Lao 

Malawi 

Rwanda 

Lesotho 

Benin 

Tanzania 

Burkina Faso 

Uganda 

Liberia 

Mauritania 

Togo 

Mozambique 

Mali 

Madagascar 

Sierra Leone 

Ethiopia 

Yemen 

Guinea 

Niger 

Angola 

Chad 

Afghanistan 

Central African Republic 

EUROPEAN COMMISSION 

SPI 2014 Rank177 

SPI 2017 Rank178 

Variance179 

109 

Standard GSP Arrangement181 

61 

78 

81 

87 

91 

92 

94 

96 

104 

117 

120 

106 

115 

EBA Arrangement 182 

93 

95 

103 

101 

98 

97 

100 

99 

105 

102 

107 

113 

110 

114 

108 

121 

111 

112 

119 

122 

123 

124 

126 

125 

127 

129 

128 

130 

105 

64 

73 

79 

85 

90 

92 

93 

95 

102 

106 

109 

114 

117 

91 

94 

96 

97 

98 

99 

100 

101 

103 

104 

107 

110 

111 

112 

113 

115 

116 

118 

119 

120 

121 

122 

123 

124 

125 

126 

127 

128 

+4 

-3 

+5 

+2 

+2 

+1 

0 

+1 

+1 

+2 

+11 

+11 

-8 

-2 

+2 

+1 

+7 

+4 

0 

-2 

0 

-2 

+2 

-2 

0 

+3 

-1 

+2 

+5 

+6 

-5 

-6 

0 

+2 

+2 

+2 

+3 

+1 

+2 

+3 

+1 

+2 

As can be noted, Armenia ranks highest in SPI score (59th in rank) in the GSP+ category 
in  2017,  followed  by  Paraguay  (60th)  and  the  Philippines  (68th).  Looking  closer  at  the 

181 The following Standard GSP countries were not included in the 2017 ranking of the Social Progress Index: 
Vietnam, Fiji, Tonga, Syria, Iraq, Cook Islands, Marshall Islands, Micronesia, Nauru, and Niue.  
182 The following EBA countries were not included in the 2017 ranking of the Social Progress Index: Bhutan, 
Samoa, Vanuatu, Zambia, Sao Tome & Principe, Comoros Islands, Timor-Leste, Equatorial Guinea, Solomon 
Islands, Gambia, Djibouti, Guinea-Bissau, Democratic Republic of Congo, Sudan, Burundi, Eritrea, Kiribati, 
Somalia, South Sudan, and Tuvalu. 

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Armenian score, we see improvements in all three dimensions. In terms of Basic Human 
Needs,  the  largest  improvements  have  been  accomplished  in  the  area  of  water  and 
sanitation,  as  citizens  have  increased  access  to  piped  water.  The  level  of  violent  crime 
has  also  decreased,  thus  increasing  personal  safety.  With  regard  to  citizens’  personal 
development,  access  to  basic  knowledge  has  improved,  as  the  adult  literacy  rate  has 
increased.  

Additionally,  Armenia  has  enhanced 
information  and 
communication,  as  the  total  number  of  internet  users  has  increased.  A  further  positive 
development  can  be  seen  in  the  increased  possibility  for  personal  development,  as 
access  to  advanced  education  has  improved.  This  includes  improvements  made  in 
women’s  average  years  in  school,  inequality  in  educational  attainment,  as  well  as, 
average years of tertiary education completed among people over the age of 25.183 

its  citizens’  access 

to 

The  overall  development  among  the  GSP+  countries  is  positive,  with  five  out  of  seven 
countries  improving  their  ranking  with  an  average  of  5.4  places,  in  the  last  few  years. 
Only Paraguay decreased its score. It is noteworthy to mention that Pakistan, the largest 
GSP+  beneficiary,  has  the  worst  ranking  of  all  the  GSP+  countries.  In  2017,  Pakistan 
ranked  105th  of  the  128  countries  assessed,  improving  its  ranking  from  2014  by  four 
places.  While  improvements  have  been  made,  Pakistan  continues  to  underperform  in 
certain areas.  

With  regard  to  the  Basic  Human  Needs  dimension,  personal  safety  issues  seem  to  be 
especially prominent; whereas, the inclusion and tolerance for immigrants, homosexuals, 
and  minorities  are  areas  that  underperform  and  are  closely  linked  with  human  rights. 
Examining the conditions for living a healthy life in Pakistan, inadequate access to basic 
knowledge,  inadequate  access  to  information  and  communication,  as  well  as  poor 
environmental quality, contributes to the low overall score for Pakistan.184 

Among the Standard GSP beneficiaries, Ukraine ranked best performer in 2017, despite 
dropping three places to 64. Looking at the specific scores for Ukraine, while many of the 
areas  performed  within  the  expected  range,  improvements  have  been  made  especially 
with regards to access to advanced education, as it has increased steadily in the last two 
years. However, it is noteworthy to mention the large decrease in the score for tolerance 
and  inclusion  of  minorities,  as  well  as  personal  safety. 185  Of  all  Standard  GSP 
beneficiaries ranked in this group, nine out of thirteen countries improved their ranking 
(Sri  Lanka,  Indonesia,  Uzbekistan,  Ghana,  India,  Kenya,  Swaziland,  Ivory  Coast,  and 
Nigeria),  while  three  out  of  thirteen  decreased  in  ranking  (Ukraine,  Congo,  and 
Cameroon). Only 1 country did move in rankings since 2014, i.e. Tajikistan. The largest 
improvement  in  this  group  was  made  by  Ivory  Coast  and  Nigeria,  improving  their 
rankings by 11 places each. This stems from overall improvements made throughout the 
three dimensions measured. 

Of  all  Standard  GSP  beneficiaries,  Cameroon  performed  worst,  ranking  117th  of  128 
countries  assessed.  This  is  mainly  due  to  the  country  primarily  performing  within  the 
expected  range,  while  having  a  few  underperforming  areas.  Especially,  personal  safety 
issues  stand  out,  meaning  that  the  country  is  facing  challenges  in  terms  of  violent 
crimes,  perceived  criminality  and  political  terror.  Additionally,  Cameroon  underperforms 
with  regards  to  environmental  quality,  especially  in  terms  of  air  pollution  and 
greenhouse  gas  emissions;  decreasing  the  overall  score  for  the  societal  conditions  for 
living  a  healthy  life.  Lastly,  Cameroon  also  scores  low  on  personal  rights,  including 

183 Social Progress Index. (2017). Available at: https://www.socialprogressindex.com/?tab=2&code=ARM 
184 Social Progress Index. (2017). Available at: https://www.socialprogressindex.com/?tab=2&code=PAK 
185 Social Progress Index. (2017). Available at: https://www.socialprogressindex.com/?tab=2&code=UKR 

107 

 
 
 
 
 
 
 
                                                 
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political  rights,  freedom  of  expression,  freedom  of  assembly  and  private  property 
rights.186 

In the EBA category, a large majority of the countries have ranked above 90. Given that 
the EBA countries are the least developed of all the three categories of GSP beneficiary 
countries, the comparatively high rankings and overall low SPI score are therefore not a 
surprise.  Of 
ranked,  18  countries  (Nepal,  Senegal, 
Myanmar/Burma,  Bangladesh,  Lesotho,  Burkina  Faso,  Liberia,  Mauritania,  Togo,  Sierra 
Leone,  Ethiopia,  Yemen,  Guinea,  Niger,  Angola,  Chad,  Afghanistan,  and  Central  African 
Republic)  improved  their  ranking,  while  6  countries  (People's  Democratic  Republic  of 
Lao,  Rwanda,  Benin,  Uganda,  Mozambique,  and  Mali)  declined  in  ranking,  and  the 
remaining 4 performed according to expectations. 

the  28  EBA  countries 

Nepal, ranking 91st, is the most socially progressive country of the ranked EBA countries 
in 2017, while the Central African Republic ranked last, showing an improvement of two 
ranks  from  2014.  Looking  closer  at  Nepal,  we  see  that  large  improvements  have  been 
achieved  within  all  three  dimensions.  With  regards  to  Basic  Human  Needs,  increased 
access  to  nutrition  and  basic  medical  care,  clean  drinking  water,  basic  shelter  and 
decreasing criminality and traffic deaths, are all areas that have improved in the last few 
years,  subsequently increasing  the  overall  score  for  Nepal.  Additionally,  access  to  basic 
knowledge  in  terms  of  increased  secondary  school  enrolment,  lower  suicide  rates, 
increased  tolerance  for  homosexuals,  as  well  as,  a  greater  perception  of  having  a 
community safety net, indicate a positive societal development.187 

On a less positive note, the Central African Republic ranked last in both 2014 and 2017, 
illustrating  stagnating  social  progress.  Taking  a  closer  look,  we  see  that  the  country  is 
underperforming in all areas, except access to water and sanitation as well as access to 
advanced education, in which the result is within the expected range.188 

3.5.1 Overview of progress in case study countries 
Figure 7 below illustrates an overview of the development in Social Progress in the four 
case study countries under investigation: Bolivia, Pakistan, Bangladesh and Ethiopia. As 
can  be  seen,  their  respective  ranking  is  far  from  the  top.  The  Social  Progress  Index 
demonstrates  a  country’s  capacity  to  meet  the  basic  human  needs  of  its  citizens,  build 
the  foundations  that  allow  citizens  to  have  a  good  quality  of  life  and  create  the 
conditions that allow citizens to reach their full potential.  

Comparing the four  countries, Bolivia has made the most progress in addressing issues 
related  to  social  progress  over  the  period  2014-2017.  In  the  2017  SPI  assessment, 
Bolivia  ranked  69th,  improving  its  SPI  score  by  six  places  compared  to  2014.  While  the 
Social  Progress  Index  does  not  touch  upon  employment  and  work  conditions  per  se, 
indicators  capturing  gender  equality,  poverty,  human  rights  and  good  governance  are 
included.  

Looking at gender parity in Bolivia with regard to secondary school enrolment, little to no 
progress  has  been  made  over  the  period  examined.  However,  the  score  for  gender 
equality  in  advanced  education,  including  the  average  number  of  years  of  school 
attended by women, increased slightly. Additionally, while no improvements were made 
in  political  rights,  positive  developments  in  personal  freedom  and  choice,  as  well  as 
tolerance  and  inclusion  for  minorities  was  found,  improving  their  score  from  59.12  to 
60.94  and  54.89  to  60.45  respectively.  With  regards  to  poverty  alleviation,  a  small 
improvement in access  to  nutrition and basic medical service  was made, increasing the 

186 Social Progress Index. (2017). Available at: https://www.socialprogressindex.com/?tab=2&code=CMR 
187 Social Progress Index. (2017). Available at: https://www.socialprogressindex.com/?tab=2&code=NPL 
188 Social Progress Index. (2017). Available at: https://www.socialprogressindex.com/?tab=2&code=CAF 

108 

 
 
 
 
 
 
 
 
                                                 
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score  from  84.24  to  86.16  points.  Lastly,  increased  access  to  information  and 
communication increased from 66.90 to 70.51.189 

SPI Rankings for  Case Study  Countries

60

70

80

90

100

110

120

130

Bolivia

Pakistan

Bangladesh

Ethiopia

2014

75

109

101

123

2015

71

107

98

123

2016

71

106

99

122

2017

69

105

97

121

Bolivia

Pakistan

Bangladesh

Ethiopia

Figure  7:  Overview  of  the  development  in  social  progress  in  the  four  case  study 
countries 

Despite ranking last of the GSP+ beneficiary countries, Pakistan shows a comparatively 
steady,  although  slow,  pace  of  improvement  over  the  last  four  years.  Although  the 
country  has  improved  its  total  score,  it  remains  the  least  developed  GSP+  beneficiary 
country.  The  results  from  the  SPI  show  a  miniscule  improvement  in  gender  equality  in 
terms of education, as well as, a small improvement in poverty alleviation. While access 
to nutrition and basic medical care has increased from 77.57 to 78.34 points, access to 
basic  knowledge  has  increased  from  56.47  to  61.82  points  over  the  review  period. 
Similarly,  the  score  for  personal  rights,  personal  freedom  and  choice,  as  well  as, 
tolerance  and  inclusion  of  minorities  has  improved  slightly.  As  a  main  exporter  of 
textiles,  which  is  a  water  intensive  industry,  Pakistan  is  currently  facing  several 
challenges with regards to industrial waste water  and access to safe drinking water. As 
the SPI takes into account environmental quality as well as water and sanitation in their 
assessments, it is worth noting that Pakistan has improved its scores in both areas.190 

Bangladesh has seen a similar slow but steady development in  social progress over the 
last  few  years.  In  2017,  it  ranked  97th  out  of  128  countries  and  rose  from  an  overall 
score of 51.75 in 2014 to 54.84 in 2017. The scores for the three dimensions assessed in 
the SPI have all improved from 2014. The score for access to nutrition and basic medical 
service has increased from 85.08 to 86.34, while water and sanitation, including access 
to  clean  drinking  water  has  improved  from  55.70  to  57.26.  Considering  the  water 
challenges  the  country  is  facing,  with  rivers  receiving  a  large  quantity  of  untreated 
industrial  waste  water,  access  to  clean  and  safe  drinking  water  is  a  major  challenge 
faced by the country.  

189 Social Progress Index. (2017). Available at: https://www.socialprogressindex.com/?tab=2&code=BOL 
190 Social Progress Index. (2017). Available at: https://www.socialprogressindex.com/?tab=2&code=PAK 

109 

 
 
 
 
 
 
 
 
                                                 
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In line with previous findings, the environmental quality score for Bangladesh increased 
from  47.73  to  48.52,  demonstrating  progress  with  regards  to  wastewater  treatment, 
biodiversity  and  habitat  as  well  as  air  pollution.  Furthermore,  access  to  education  for 
women improved slightly during the review period. While there were no improvements in 
personal  rights,  large  improvements  were  made  in  the  area  of  personal  freedom  and 
choice, as well as, tolerance and inclusion of minorities. The score for personal freedom 
and choice, improved from 45.27 to 49.98, improving their ranking in this category from 
114 to 105. Similarly, the score for Tolerance and Inclusion of minorities improved from 
31.44 to 41.59, thus improving their ranking from 118 to 95, in this area.191 

Ethiopia is the only case study country where social progress seems to have stagnated. 
As  illustrated  in  Figure  7,  Ethiopia  remains  ranked  as  121st,  with  little  social  progress 
made  since  2014.  Being  an  EBA  beneficiary  country,  Ethiopia  largely  benefits  from  the 
GSP  through  its  exports  of  floriculture.  Looking  closer  at  the  different  dimensions  of 
social  progress,  findings  indicate  that  overall  improvements  in  access  to  nutrition  and 
basic medical care, shelter, as well as, water and sanitation have been made. The score 
for  access  to  basic  knowledge  has  increased  from  60.21  in  2014  to  65.75  in  2017.  A 
miniscule  improvement  can  also  be  seen  in  women’s  average  years  spent  in  school. 
Furthermore,  while  the  score  for  personal  rights  decreased  in  2017,  personal  freedom 
and  choice,  as  well  as,  tolerance  and  inclusion  of  minorities  both  improved.  However, 
these improvements are within the expected range and thus the ranking of the country 
is not changed.192 

In conclusion, we have observed that there has been modest social progress in the four 
case-study  countries.  It  is,  however,  challenging  to  formulate  direct  linkages  between 
the GSP and social progress. However, as discussed above, several countries are making 
slow but steady progress. Bolivia, currently ranked first of the four-case study countries, 
has a significant head-start compared to Bangladesh, nearly 30 places behind. Pakistan, 
ranked second to last of the four countries, needs to make further improvements as it is 
the  largest  GSP+  beneficiary,  yet  the  lowest  ranked  of  all  the  GSP+  beneficiaries.  In 
general,  for  GSP+  and  Standard  GSP  countries,  we  see  a  higher  average  decline  in 
rankings, whereas the overall EBA countries seem more stagnant compared to the GSP+ 
and the Standard GSP countries. 

191 Social Progress Index. (2017). Available at: https://www.socialprogressindex.com/?tab=2&code=BGD 
192 Social Progress Index. (2017). Available at: https://www.socialprogressindex.com/?tab=2&code=ETH 

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4  Environmental impact analysis 
This  section  will  discuss  the  environmental  impact  of  the  GSP  on  the  beneficiary 
countries. It will address the following evaluation questions: 

What  has  been  the  impact  of  the  present  scheme  on  developing  countries  and 

(i) 
LDCs? 

(ii)  What are the factors influencing the achievements observed? 

What  unintended  consequences, 

(i) 
implementation, or use of the current GSP? 

if  any,  can  be 

linked  to  the  design, 

It  will  first  analyse  the  literature  on  the  impact  of  the  previous  GSP  Regulation  on  the 
environment  (Section  4.1).  Then  it  will  look  into  more  detail  at  the  environmental 
impact (Section  4.2),  including the impact of the GSP+ arrangement (Section  4.3). A 
following  section  (Section  4.4)  provides  data  and  country  rankings  on  the 
environmental status for the beneficiary countries under investigation using the ND-Gain 
Index.  A  concluding  section  (Section  4.5)  will  draw  together  information  from  these 
sections  as  well  as  further  information  from  the  case  studies  in  a  set  of  conclusions  on 
the environmental impact of the GSP.  

4.1. Lessons learnt from literature 
It has been challenging to comprehensively assess the environmental impact of the GSP 
due  to  a  variety  of  reasons.  Firstly,  tangible  indicators  to  measure  environmental 
impacts are lacking or lagging behind, and secondly, it is difficult to isolate the GSP from 
other  causative  factors  at  play  within  the  wider  domestic,  regional  and  global  contexts. 
Hence,  considering  the  data  available,  the  environmental  impact  assessment  can  only 
provide  insight  into  the  type  and  direction  (positive  or  negative)  of  environmental 
impacts  likely  associated  with  the  GSP.  It  is  not  instead  possible  to  systematically 
quantify the magnitude of these impacts that can be ascribed to the GSP.  

The  majority  of  the  literature  makes  use  of  a  simple  approach  to  assess  the 
environmental  impact  of  the  scheme  –  the  environmental  impact  of  the  GSP  in  a 
beneficiary  country 
ratification  and  effective 
implementation  of  the  respective  environmental  conventions  covered  by  the  GSP+  and 
whether  it  is  abiding  to  the  reporting  requirements. 193 While  the  shortcomings  of  this 
approach  are  evident,  it  has  often  been  used  as  an  appropriate  indicator  for  the 
environmental impact of the scheme due to data paucity.  

is  equated  with 

the  country’s 

Whether  GSP  conditionality  has  a  positive  environmental  impact  in  the  beneficiary 
countries  is,  according  to  the  literature,  difficult  to  measure. 194 In  some  specific  case 
studies,  it  was  found  that  the  ratification  of  conventions  covering  environmental 
protection and climate change was wider, as compared with labour rights conventions.195 
According to the first biennial Commission Report on the GSP+196, one finds that despite 
the fact that the beneficiary countries included in the GSP+ have ratified the respective 
environmental  conventions,  the  vast  majority  of  the  countries  have  compliance  issues 

193CARIS.(2010). Mid-Term Evaluation of the EU’s Generalised System of Preferences; European 
Commission.(2016). (SWD (2016) 8 final). 
194CARIS.(2010). Mid-Term Evaluation of the EU’s Generalised System of Preferences, p. 170. 
195CARIS.(2010). Mid-Term Evaluation of the EU’s Generalised System of Preferences, p. 187. 
196European Commission. (2016). Joint Staff Working Document on the EU Special Incentive Arrangement for 
Sustainable Development and Good Governance ('GSP+') covering the period 2014 – 2015. Available at: 
https://eeas.europa.eu/sites/eeas/files/european_commission._2016._report_on_the_generalised_scheme_of_
preferences_during_the_period_2014-2015.pdf 

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with  the  conventions.  Lack  of  compliance  is  particularly  an  issue  for  the  Stockholm 
Convention on Persistent Organic Pollutants, the Cartagena Protocol on Biosafety and the 
CITES.197 

It  should  be  noted  that  there  is  an  overall  lag  in  data  on  environmental  indicators  and 
the  costs  associated  with  the  monitoring  and  collecting  of  such  data  are  often  high  for 
developing countries facing severe budget constraints. As a result, there is only outdated 
or  incomplete  information  available  on  the  environmental  conditions  and  associated 
impacts of the GSP on the environment in the beneficiary countries in recent years.  

Additionally,  it  can  take  considerable  time  before  the  effect  of  efforts  and  changes  in 
trade become visible. Considering that the reformed scheme entered into force in 2014, 
these  factors  hamper  a  comprehensive  analysis  of  the  environmental  impact  of  the 
scheme. 

4.2. Environmental impact of the GSP 

Product effects 
A  series  of  environmental  effects,  both  positive  and  negative,  are  related  directly  to 
trade  in  products.  These  direct  impacts  can  be  studied  across  the  following  three 
dimensions: 

  Scale  –  Growth  in  trade  for  a  product  (as  for  a  series  of  products)  will  lead  to  an 
increase in the environmental impacts associated with its production, assuming other 
technology, regulation and other dimensions do not change. 

  Composition – Trade liberalisation allows countries to specialise in sectors where they 
enjoy  competitive  and  comparative  advantages,  and  thus  can  change  the 
composition  of  exports.  This  can  lead  to  changes  in  related  environmental  impacts, 
for  example  if  a  country’s  production  shifts  from  raw  materials  to  manufactured 
products. 

  Technology  -  Trade  liberalisation  and  foreign  investment  can  have  positive 
environmental 
less  polluting 
impacts  by  promoting  use  of  more  efficient, 
technologies:  these  may  be  put  in  place,  for  example,  in  response  to  demands  by 
importers in other countries (who may in turn be responding to domestic public and 
stakeholder concerns). 

There may also be distributional changes in terms of environmental effects: for example, 
new  manufacturing  may  increase  impacts  on  urban  dwellers,  while  new  extractive 
activities  such  as  mining  and  fishing  for  export  can  affect  populations  and  economic 
sectors located nearby. 

Structural and regulatory effects 
Trade  can  also  have  an  indirect  but  broad-based  role  as  an  important  facilitator  for 
environmental  protection  and  improvement.  Increased  trade  leads  to  economic  growth, 
increased  incomes,  and  facilitates  a  more  efficient  resource  allocation.  As  such,  more 
resources  can  be  allocated  towards  environmental  protection  and  improvement.  This  is 
particularly true for developing countries and countries in transition, which often lack the 
financial  resources  to  implement  effective  policies  on  environmental  protection  and 
climate change.198 

197European Commission.(2016). (SWD (2016) 8 final). 
198Potier, M. and Tébar Less. (2008). Trade and Environment at the OECD: Key Issues since 1991. Available at: 
http://dx.doi.org/10.1787/235751371440; Yale University (2016). Environmental Performance Index.Available 
at: http://epi.yale.edu/; WTO. An introduction to trade and environment in the WTO. Available at: 
https://www.wto.org/english/tratop_e/envir_e/envt_intro_e.htm 

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In  this  respect,  the  GSP  could  have  a  positive  environmental  impact  in  the  beneficiary 
countries.  With  the  introduction  of  the  reformed  scheme,  imports  from  the  beneficiary 
countries  have  increased  significantly.  This  has  generally  had  a  positive  impact  on  the 
GDP  growth,  which  increased  in  Bangladesh,  Bolivia,  Ethiopia  and  Pakistan.  In  theory, 
this  should  have  increased  the  financial  resources  available  for  environmental 
improvement and protection.  

However, in this sense  trade only has a positive impact on the  environment if effective 
legislation  and  environmental  policies  are  implemented  by  the  government  and 
enforcement institutions have been established. In absence of these, or when there are 
other  disruptive  domestic  policies,  trade  can  in  fact  have  a  negative  impact  on  the 
environment  and  contribute  to  environmental  problems  –  in  addition  to  the  product 
effects described above, economic growth without better environmental governance can 
increase unsustainable patterns of production and consumption. The actual impact of the 
scheme  will  thus  depend  to  a  great  extent  on  the  specific  beneficiary  country,  its 
policies,  institutions  and  the  priorities  implemented. 199 While  this  makes  it  difficult  to 
quantify the impacts that can be ascribed to the GSP, it remains possible to draw insight 
into the direction and type of impacts that derive from the scheme. 

Product  effects  and  structural  and  regulatory  effects  are  of  course  linked:  for  example, 
improvements  in  national  incomes  and  regulation  can  encourage  the  use  of  cleaner 
technology in export industries.  

Examples from the case studies 

The  country  case  studies  have  pointed  towards  differing  environmental  impacts  caused 
by economic development in the four  countries, which leads to increases in production, 
motorised transport and urbanisation. As illustrated by the case of Bangladesh, this has 
led to severe deterioration in air quality, particularly in urban centres. Among others, air 
pollution  contributes  significantly  to  environmental  and  health  problems,  such  as 
respiratory  diseases.  The  production  of  textiles  for  export  under  the  EBA  arrangement 
appears to have contributed to air pollution problems.   

In  Bolivia,  deteriorating  water  quality  has  been  linked  to  the  increased  export 
opportunities:  notably,  the  Bolivian  mining  industry  and  the  untreated  waste  water 
emerging  from  it  have  severe  negative  effects  on  the  surrounding  rivers  and  water 
sources  and  affect  public  health. 200 Mining  products  are  not  part  of  Bolivia’s  exports 
under the GSP+ arrangement, however; EU demand for organic agriculture products and 
sustainable timber appear to be at least part of Bolivia’s GSP+ trade. 

As  demonstrated  in  the  case  study  on  Ethiopia,  deforestation  constitutes  the  country’s 
main  environmental  challenge.  It  remains  unclear  to  which  extent  the  increased  export 
opportunities  resulting  from  the  EBA  arrangement  (e.g.  in  the  floricultural  sectors) 
contribute  to  the  deforestation  practices  in  the  country.  However,  reports  suggest  an 
indirect impact of the scheme, as land conversion from forested to agricultural occurs, in 
particular to convert forests into plantations and farmland.201 

One  of  Pakistan’s  main  environmental  issues  is  related  to  increased  cotton  production. 
Reportedly,  the  cotton  leaf  curl  virus  disease  and  insect  pests,  as  a  result  of  inefficient 
plant  protection  measures,  have  led  to  excessive  use  of  pesticides.  The  environmental 

199Potier, M. and Tébar Less. (2008). Trade and Environment at the OECD: Key Issues since 1991. Available at: 
http://dx.doi.org/10.1787/235751371440 
200Yale University.(2016). Environmental Performance Index. Available at: http://epi.yale.edu/ 
201Food and Agriculture Organization of the United Nations.(2001). Forest Outlook Study for Africa. Available 
at: ftp://ftp.fao.org/docrep/fao/004/AB582E/AB582E00.pdf 

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harm  in  form  of  soil  pollution  constitutes  a  major  challenge  for  the  country’s 
environmental  conditions.202 As  described  in  section  7.2.3,  textiles  made  from  domestic 
cotton,  together  with  raw  cotton,  are  among  Pakistan’s  most  important  export  areas 
under the GSP+ arrangement.  

These  detrimental  impacts  on  the  environment  in  the  beneficiary  countries  may  be 
caused  and  are  affected  by  numerous  factors  and  processes.  Many  human  activities, 
including  trade  and  production,  may  have  a  negative  impact  on  the  environment.  The 
increase  in  trade  and  demand  from  the  EU  can  expand  the  production  in  beneficiary 
countries. And as their economies grow, so does the footprint the countries leave on the 
environment.  If  there  are  no  effective  policies  in  place  to  counter  this  impact,  the  GSP 
could thus negatively affect the environment in the beneficiary countries.  

This is  particularly  true  for  certain  sectors  that  have  a  severe  detrimental  effect  on  the 
environment. In this sense, the environmental impact of the scheme can be assessed by 
analysing the footprint of the main import products under the scheme.  

The main products imported by the EU under the GSP are textiles and apparel. Between 
2011  and  2016,  the  total  EU  imports  of  textiles  and  apparel  has  increased  by  15.7  per 
cent from EUR 92.4 billion to EUR 106.9 billion. The import of textiles and apparel under 
the  GSP  increased  from  EUR  34.6  billion  to  EUR  39.1  billion  –  an  increase  of  12.9  per 
cent. The most significant increase occurred for EBA imports, which almost doubled since 
2011 and made up more than half of the GSP import in 2016. The main export countries 
are EBA beneficiaries – Bangladesh, Cambodia, Myanmar/Burma, Madagascar and Laos. 

The  textile  industry  is  important  for  developing  countries  due  to  their  competitive 
advantage in terms of low wages and proximity to natural resources.203 The industry has 
had  a  positive  social  impact  in  terms  of  income  generation  for  both  men  and  women, 
employment opportunities and economic development in developing countries. However, 
the industry generally has a negative impact on the  environment.204 The  Environmental 
Impact  of  Products  Study  indicated  that  textiles  and  apparel  have  a  significant 
environmental impact. Its environmental impact is ranked fourth, after food and drinks, 
transport  and  housing.205 The  extent  of  the  environmental  impact  depends  on  the  fibre 
and the processing methods used, but in general, the negative impact relates to energy-
intensive  and  water-intensive  production  methods,  GHG  emissions,  resource  depletion, 
high waste generation and the use of chemicals.206 

To  be  able  to  export  to  the  EU  markets,  producers  have  to  comply  with  the  REACH 
Regulation,  which  limits  and  prohibits  the  use  of  certain  chemical  substances  in  textile 
products.  In  this  respect,  the  EU  can  have  a  positive  impact  on  the  use  of  hazardous 
chemicals,  such  as  mercury  phosphate  and  tris  phosphate,  in  the  textile  production 
process.207 However, this impact is limited to the chemicals in imported articles and does 
not extend to the overall sustainable management of the production process.  

202 Cotton Advisory Committee(2013). Country report for Pakistan at the 72nd Meeting. Available at: 
https://www.icac.org/getattachment/mtgs/Plenary/72nd-Plenary/Documents/Country-Statements/Pakistan.pdf 
203Kim, J-O.et al. (2010). The Textile and Apparel Industry in Developing Countries. Available at: 
http://www.tandfonline.com/doi/abs/10.1533/tepr.2006.0003 
204Keane, J. and Te Velde, D.W. (2008). The role of textile and clothing industry in growth and development 
strategies. Available at: https://www.odi.org/sites/odi.org.uk/files/odi-assets/publications-opinion-
files/3361.pdf 
205European Commission. (2006). Environmental Impact of Products (EIPRO): Analysis of the life cycle 
environmental impact related to the final consumption of the EU-25. Available at: 
http://ec.europa.eu/environment/ipp/pdf/eipro_report.pdf 
206Retail Forum for Sustainability.(2013). Sustainability of textiles. Available at: 
http://ec.europa.eu/environment/industry/retail/pdf/issue_paper_textiles.pdf; Claudio, L. (2007). Waste 
Couture. Available at: https://pdfs.semanticscholar.org/6db0/e4463a5e6617689ff16a2f9082d99c4dc972.pdf 
207European Commission. (2016). Consolidated version of the REACH Regulation. Available at: http://eur-
lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:02006R1907-20161011&from=EN 

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The  case  studies  on  Bangladesh  and  Pakistan  demonstrate  inadequate  efforts  for  a 
sustainable  production  and  adherence  to  environmental  standards.  As  a  result,  the 
textile industry has a significant negative impact on water quality through the insufficient 
management  of  wastewater  polluted  with  chemicals.  Additionally,  the  industry  has  a 
negative impact on soil and landfilling due to the large amount of waste produced as well 
as emissions of GHG affecting air quality.  

The potential positive environmental impact of the GSP is limited because conditionality 
in  the  GSP  for  Standard  GSP  and  EBA  beneficiaries  is  restricted  to  labour  and  human 
rights. While the GSP Regulation includes a clause on temporary withdrawal in the case 
of the systematic violation of labour and human rights, it does not extend this clause to 
environmental  protection  and  compliance  with  international  conventions.  As  such, 
eligibility of Standard GSP and EBA benefits does not provide an incentive to comply with 
international  environmental  agreements  and  conventions  and  related  environmental 
standards.  The  GSP+  arrangement,  on  the  other  hand,  does  contain  conditionality 
related to global environmental agreements: this is discussed in the next section.  

Biofuel exports under GSP 

The EU’s imports of biofuels and biofuel feedstocks have represented an important issue 
in  debates  and  analysis  concerning  coherence  between  environment  and  trade  policies. 
Under  GSP  arrangements,  the  EU  imports  biofuels  and  related  feedstocks.  The  largest 
imports  in  the  period  2014  to  2016  were  bioethanol,  mainly  from  Bolivia  and  Pakistan. 
Although the EU imports about EUR 4 billion a year of palm oil, and it is estimated that 
half  of  this  has  been  used  as  a  feedstock  for  biofuels,  a  small  and  declining  share  of 
these imports have been under GSP: by 2016, this share had fallen to about 1% of total 
EU imports. This topic is addressed in Annex VII. 

4.3. Environmental impact of the GSP+ 
The conditionality of the GSP+ arrangement had a limited environmental impact on the 
GSP+  beneficiary  countries  under  the  reformed  scheme.  The  beneficiaries  had  already 
ratified  the  required  UN  conventions  on  climate  change  and  environmental  protection 
long  before  their  admission  to  the  scheme.  Additionally,  other  countries  that  benefitted 
from the GSP+ under the previous Regulation had already ratified and implemented the 
list of conventions, which remained the same in the new Regulation. 

impact  the  ratification  and 
However,  the  EU  has  the  potential  to  positively 
implementation  of  international  conventions  through  the  conditionality  of  the  GSP+. 
About half of the Standard GSP beneficiaries that are eligible for the arrangement have 
not  yet  signed  or  ratified  the  fundamental  conventions  on  climate  change  and 
environmental protection. This is shown in Table 29 below. 

An illustrative example of this positive impact is Tajikistan, a Standard GSP beneficiary. 
In  2015,  the  Government  of  Tajikistan  adopted  a  post-WTO  accession  plan  which  sets 
out  its  priorities  related  to  trade.  In  the  plan,  the  Government  expresses  its  desire  to 
become  a  GSP+  beneficiary  and  lists  the  actions  that  need  to  be  undertaken  in  this 
respect.208 As  a  result,  Tajikistan  has  recently  ratified  the  Convention  on  International 
Trade in Endangered Species of Wild Fauna and Flora (CITES) and the Basel Convention 
in 2016. Along with the adoption of the Convention on the Prevention and Punishment of 
the  Crime  of  Genocide  in  2015,  the  country  has  ratified  all  required  international 
conventions. 

208UN Economic and Social Council. (2015). Tajikistan: World Trade Organization post accession plan. Available 
at: https://www.unece.org/fileadmin/DAM/trade/SCTCS_2015/ECE_CTCS_2015_014E.pdf 

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Table 29: Ratification of international conventions on climate change and environmental 
protection by GSP+ eligible countries209 

Country 

Ratification of international conventions 

Congo 

Ratified all UN conventions on climate change and environmental protection 

Cook Islands  Ratified  all  UN  conventions  on  climate  change  and  environmental  protection, 
except  the  Convention  on  International  Trade  in  Endangered  Species  of  Wild 
Fauna and Flora and the Cartagena Protocol 

Micronesia 

Ratified  all  UN  conventions  on  climate  change  and  environmental  protection, 
except  the  Convention  on  International  Trade  in  Endangered  Species  of  Wild 
Fauna and Flora and the Cartagena Protocol 

Nauru 

Ratified  all  UN  conventions  on  climate  change  and  environmental  protection, 
except  the  Convention  on  International  Trade  in  Endangered  Species  of  Wild 
Fauna and Flora 

Nigeria 

Ratified all UN conventions on climate change and environmental protection 

Niue 

Ratified  all  UN  conventions  on  climate  change  and  environmental  protection, 
except  the  Convention  on  International  Trade  in  Endangered  Species  of  Wild 
Fauna and Flora and the Basel Convention 

Syrian Arab 
Republic 

Tajikistan 

Ratified all UN conventions on climate change and environmental protection 

Ratified  all  UN  conventions  on  climate  change  and  environmental  protection, 
most  recently  the  Convention  on  International  Trade  in  Endangered  Species  of 
Wild Fauna and Flora in 2016 and the Basel Convention in 2016 

Ukraine 

Ratified all UN conventions on climate change and environmental protection 

Uzbekistan 

Ratified  all  UN  conventions  on  climate  change  and  environmental  protection, 
except the Cartagena Protocol and the Stockholm Convention 

In terms of adherence with the reporting requirements under the conventions, the GSP+ 
beneficiaries  are  lagging  behind  with  reporting  on  environmental  conventions  as 
compared  with  the  human  rights  and  labour  rights  conventions.  The  2016  Commission 
Report  on  the  GSP+  observes  that,  in  general,  beneficiaries  mostly  lack  in  compliance 
with  reporting  obligations  under  the  environmental  conventions  (see  table  below). 
Except  for  Georgia,  the  beneficiary  countries  lagged  behind  for  the  environmental  and 
climate change conventions. The countries mainly face difficulties in reporting on CITES, 
the Basel Convention, the Cartagena Protocol and the Stockholm Convention.210 

Table 30: Shortcomings in the implementation of relevant conventions by GSP+ 
beneficiaries211 

GSP+ beneficiary 

Shortcoming in the implementation of relevant environmental 
conventions 

209UN Treaty Collection. Available at: https://treaties.un.org/Pages/ParticipationStatus.aspx?clang=_en 
210European Commission.(2016). The EU Special Incentive Arrangement for Sustainable Development and 
Good Governance (‘GSP+’) covering the period 2014-2015. Available at: 
https://eeas.europa.eu/sites/eeas/files/european_commission._2016._report_on_the_generalised_scheme_of_
preferences_during_the_period_2014-2015.pdf 
211European Commission.(2016). (SWD (2016) 8 final). 

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GSP+ beneficiary 

Shortcoming in the implementation of relevant environmental 
conventions 

Armenia 

Bolivia 

Cape Verde 

Mongolia 

Pakistan 

Paraguay 

o 

o 

o 

o 

o 

o 

o 

o 

o 

o 

o 

Failure to comply with reporting obligations under CITES, UNFCCC, 
Basel Convention and Cartagena Protocol on Biosafety. 

Not clear whether national legislation fully implemented CITES and 
whether an effective sanctioning regime is in place. 

There is a ‘lack of information on measures taken or foreseen to 
effectively implement’ the Basel Convention and the Stockholm 
Convention. The national implementation of the Cartagena Protocol 
on Biosafety is only partial. 

Failure to comply with reporting obligations under CITES, Basel 
Convention, Cartagena Protocol on Biosafety, Stockholm Convention 
on Persistent Organic Pollutants and UNFCCC. 

Failure to enact adequate legislation to implement the Convention on 
Biological Diversity. 

Need to encourage the implementation of measures to reduce CO2 
emissions. 

Failure to comply with reporting obligations under CITES, Cartagena 
Protocol on Biosafety, Stockholm Convention on Persistent Organic 
Pollutants and the Convention on Biological Biodiversity.  

Scarce information on the implementation of the Stockholm 
Convention, the Convention on Biological Diversity and the Basel 
Convention.  

Legislation to implement CITES should be strengthened. 

Failure to comply with reporting obligations under CITES, Basel 
Convention, Cartagena Protocol on Biosafety and Stockholm 
Convention on Persistent Organic Pollutants. 

National legislation does not fully meet the requirements for 
implementation of CITES. 

o  More information and guarantees on the initiatives to comply with 

environmental conventions is needed.  

o 

o 

o 

o 

o 

o 

Failure to comply with reporting obligations under CITES, Basel 
Convention, Cartagena Protocol on Biosafety and Stockholm 
Convention on Persistent Organic Pollutants. 

National legislation should be amended to fully meet the 
requirements for the implementation of the CITES Convention. 

Lack of progress on the implementation of the Stockholm 
Convention. 

Failure to comply with reporting obligations under CITES, Basel 
Convention, Cartagena Protocol on Biosafety, Convention on 
Biological Biodiversity and Stockholm Convention on Persistent 
Organic Pollutants. 

The process to adopt legislation to comply with CITES should be 
accelerated. 

Need to identify and adopt measures to implement Intended 

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EUROPEAN COMMISSION 

GSP+ beneficiary 

Shortcoming in the implementation of relevant environmental 
conventions 

Nationally Determined Contributions (INDCs) under the UNFCCC. 

Philippines 

o 

Failure to comply with reporting obligations under CITES, Cartagena 
Protocol on Biosafety and Stockholm Convention on Persistent 
Organic Pollutants. 

o 

The country is a transit route for illegal ivory trade. 

There  are  also  notable  differences  between  the  beneficiary  countries.  The  GSP+  case 
studies  on  Bolivia  and  Pakistan  show  that  Bolivia  only  partially  fulfils  its  obligations  in 
terms  of  reporting,  though  it  has  made  an  effort  in  2016  to  submit  the  outstanding 
reports  under  the  Basel  Convention.  Pakistan,  on  the  other  hand,  has  generally 
submitted the latest reports in compliance with its obligations and has recently made an 
effort to catch up on its reporting by submitting missing and overdue reports.  

Overall,  the  lack  of  compliance  could  be  linked  to  a  lack  of  capacity  and  financial 
resources required for data gathering, processing and reporting. However, governments 
can in some cases receive financial and technical assistance to comply with the reporting 
requirements. 

implementation  of  the  conventions 

The lack of adherence to the reporting requirements creates an obstacle in assessing the 
in  the  beneficiary  countries.  The 
effective 
Commission  monitors  and  promotes  the  implementation  of  the  conventions  through  an 
ongoing  “GSP+  dialogue”  with  beneficiary  countries  and  “scorecards”  assessing  each 
country’s  compliance  with  the  conventions.212 Moreover,  Commission  monitoring  on  the 
effective  implementation  of  the  conventions  is  based  on  input  from  the  relevant  UN 
monitoring  bodies,  the  European  Parliament,  the  EU  Delegations  in  the  beneficiary 
countries,  the  EU  Member  States  and  civil  society  organisations.  In  turn,  the  UN 
monitoring  bodies  largely  base  their  assessment  on  national  reporting  on  the 
conventions.  As  such,  national  reporting  as  required  by  the  conventions  has  so  far  not 
been  up  to  standard  to  be  the  basis  of  strong  conclusions  or  recommendations.  This 
deficit in  up-to-date  and  verifiable  data  undermines  some  of  the  incentives  attached  to 
the GSP+ arrangement. 

Additionally,  the  level  of  implementation  is  dependent  on  the  transposition  of  the 
conventions’  provisions  into  national  legislation.  This  varies  per  country  and  per 
convention,  making  it  difficult  to  draw  a  direct  link  to  the  GSP+  conditionality.  An 
illustrative case in this respect is Bolivia. The Government of Bolivia in 2012 adopted the 
Law  of  the  Rights  of  Mother  Earth,  which  constitutes  a  comprehensive  basis  for 
environmental protection, respect for biodiversity and treatment of hazardous and toxic 
substances.213 However,  a  direct  causal  link  between  this  law  and  the  GSP+  cannot  be 
identified.  The  case  study  on  Bolivia  notes  areas  of  non-compliance  with  global 
environmental  agreements,  including  a  lack  of  national  implementing  legislation  for 
some CITES provisions. 

In  principle,  non-compliant  countries  could  be  removed  from  the  list  of  GSP+ 
beneficiaries or suffer a temporary withdrawal of tariff preferences.214 The expectation is, 

212European Commission. (2016). (SWD (2016) 8 final).Our desk research did not find the scorecards online. 
213World Future Fund.Law of Mother Earth. Available at: 
http://www.worldfuturefund.org/Projects/Indicators/motherearthbolivia.html 
214 Some stakeholders, including Justice and Peace, havepraised the European Commission’s dialogue with 
GSP+ beneficiary countries, but noted that the availability of only two courses of actions (granting or 

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EUROPEAN COMMISSION 

however, that beneficiaries ‘show ownership and political commitment and  continuously 
improve their compliance over time’.215 

Based  on  the  information  available,  it  cannot  be  confirmed  that  the  GSP+  entry 
mechanism,  monitoring  mechanism  and  withdrawal  procedure  have  placed  determinant 
pressure  on  eligible  countries  to  implement  relevant  environmental  conventions, 
realising the expected positive environmental outcomes for GSP+ beneficiary countries. 

Another  observation  to  be  made  with  respect  to  the  GSP+  arrangement  is  that  Bolivia 
and  Pakistan  are  facing  environmental  challenges  that  are  not  covered  by  the 
fundamental  conventions  on  environmental  protection  and  climate  change.  These 
challenges include, among others, deteriorating water quality and increased soil pollution 
and degradation. Overgrazing and unsustainable cultivation methods in combination with 
intensive  use  of  chemical  fertilisers  endanger  the  environment  and  cause  harm  to  the 
sustainable  development  in  the  countries.  Further,  the  widespread  lack  of  waste  water 
management  and  the  resulting  pollution  seems  to  be  among  the  main  detrimental 
environmental and public health challenges caused by increased economic activity.  

4.4. Review of environmental progress using the ND-GAIN Index 
To  attempt  to  formulate  the  linkages  between  GSP  preferences  and  environmental 
progress  in  GSP  beneficiary  countries,  we  will  review  the  extent  of  environmental 
progress  that  has  taken  place  in  GSP  countries  over  the  review  period  using  the  ND-
GAIN  index.  It  is  noted  above  that  environmental  indicators  may  lag  behind  trade 
development  (See  Section  4.1).  The  ND-GAIN  index  provides  comparative  data  which 
may be used to describe the context of environmental change and adaptation.  

The ND-GAIN index is a proxy that is used to capture a country’s vulnerability to climate 
change  and  other  global  challenges  as  well  as  its  readiness  to  absorb  adaptation 
investments and initiatives. The ND-GAIN index comprises 45 indicators in total, among 
which 36 are used to measure vulnerability, and 9 are used to measure readiness.216 As 
illustrated in Table  31, vulnerability indicators are used to assess a country's exposure, 
sensitivity  and  capacity  to  adapt  to  the  negative  effects  of  climate  change,  taking  into 
account 6 life-supporting sectors: food, water, health, ecosystem service, human habitat, 
and infrastructure.  

Table 31: Overview of vulnerability indicators under the ND-GAIN Index 

EXPOSURE 

SENSITIVITY 

 CAPACITY  

Projected change of 
cereal yields 

Food import 
dependency 

Agricultural capacity 
(use of fertilizer, 
irrigation, pesticide, 
tractor Use) 
Child malnutrition 

Projected population 
change 
Projected change in 
annual groundwater 
runoff 
Projected change of 
annual groundwater 
recharge 
Projected change in 
vector-borne diseases 
Projected change in 

Rural population 

Fresh water 
withdrawal rate 

Access to reliable 
drinking water 

Water dependency 
ratio 

Dam capacity 

Slum population 

Medical Staff  

Dependency on 

Access to improved 

SECTOR 

FOOD 

WATER 

HEALTH 

withdrawing tariff preferences) is too narrow. The creation of roadmaps and the possibility of increases in 
tariffs on non-compliant sectors were proposed as possible alternatives. 
215European Commission. (2018). (COM(2018) 36 final). 
216ND-GAIN Index (2017). Available at: http://index.ndgain.org/about/methodology# 

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EUROPEAN COMMISSION 

ECOSYSTEM 
SERVICES 

HUMAN HABITAT 

deaths from climate 
change induced 
diseases 
Projected Change of 
biome distribution 
Projected change in 
marine biodiversity 

Projected change of 
warm periods 

Projected change of 
flood hazard  

INFRASTRUCTURE  Projected change of 

hydropower 
generation capacity 
Projection of sea level 
rise impacts 

external resources 
for health services 

Dependency on 
Natural Capital 
Ecological footprint 

sanitation facilities 

Protected Biomes 

Engagement in 
international 
environmental 
conventions 

Urban concentration  Quality of trade and 

Age dependency 
ratio 
Dependency on 
imported energy 

transport-related 
infrastructure 
Paved roads 

Electricity Access 

Population living 
under 5m above sea 
level 

Disaster 
preparedness 

Source:  Notre  Dame  Global  Adaption  Initiative  (ND-Gain  Index).  Available  at:  http://gain.nd.edu/our-
work/country-index/.   

Furthermore,  readiness  indicators  are  used  to  assess  the  ease  with  which  a  country  is 
able  to  leverage  investments  and  convert  them  to  adaptation  actions,  taking  into 
account 3 components: economic readiness, governance readiness and social readiness. 
This is illustrated in Table 32. 

Table 32: Overview of readiness indicators under the ND-GAIN Index 

INDICATORS 
Doing Business (one indicator considering the following 10 sub-
indicators) 
Starting a 
Business 

Getting 
Electricity 

Registering 
Prosperity 

COMPONENT 
Economic 
Readiness 

Governance 
Readiness 

Dealing with 
Construction 
Permits 
Protecting 
Investors 

Control of 
Corruption 

Getting Credit 

Enforcing Contracts 
Political Stability 
and non-
Violence 
Social Inequality 

Paying Taxes 

Trading Across 
Borders 

Resolving Insolvency 
Rule of Law  

Regulatory 
Quality 

Social Readiness 

ICT 
Infrastructure 
Source:  Notre  Dame  Global  Adaption  Initiative  (ND-Gain  Index).  Available  at:  http://gain.nd.edu/our-
work/country-index/.   

Innovation 

Education 

To  scale  indicators,  the  ND-GAIN  index  follows  a  “proximity-to-goalpost”  approach  with 
score  values  that  range  from  0  to  1.217 For  each  indicator  that  measures  vulnerability, 
the score reflects a country’s distance from a target of zero (the lowest possible score). 
Likewise, for each indicator that measures readiness, the score reflects how far a country 
is  from  a  target  readiness  of  one  (the  highest  possible  score).  Consequently,  if  a 
country’s vulnerability score increases, this indicates that the country is becoming more 
vulnerable to the effects of climate change. On the other hand, as a country’s readiness 
score  increases,  this  signals  that  the  country  is  significantly  improving  its  capacity  to 

217 ND-GAIN index (2017). Available at: http://index.ndgain.org/methodology# 

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EUROPEAN COMMISSION 

take advantage of investments and to  convert them into adaptation actions. The actual 
ND-GAIN index is calculated as follows:218 

(Readiness index - Vulnerability index + 1) x 50 

Scores  range  from  0  to  100,  with  100  being  the  highest  possible  score.  In  2015,  181 
countries were assessed and were ranked based on their overall index scores. Denmark 
was  ranked  as  number  1  based  on  a  score  of  81.3,  while  the  Central  African  Republic 
was  ranked  as number  181 based  on its score  of 24.9.  Table  33 illustrates the  overall 
ranking  of  GSP  beneficiary  countries  under  this  index.  It  can  be  seen  that  Ukraine  was 
the best performer of all the Standard GSP beneficiaries in 2015, ranking 65 out of 181 
countries.  This  was  followed  by  Vietnam  (92nd)  and  Indonesia  (96th).  All  the  remaining 
Standard GSP countries ranked over 100. In this group, the Congo had the lowest score, 
ranking  167  of  the  181  countries.  In  the  GSP+  category,  Armenia  had  the  most 
impressive  score,  ranking  64th.  This  was  followed  by  Kyrgyzstan  (80th)  and  Mongolia 
(82nd).  

It is noteworthy to mention that Pakistan, the largest GSP+ beneficiary, and Bolivia had 
the  lowest  rankings  of  all  the  GSP+  countries.  Pakistan  was  ranked  125th,  while  Bolivia 
was ranked 127th. In the subsequent section, we will see that even though Pakistan and 
Bolivia are the lowest ranking of the group, their vulnerability and readiness scores have 
progressively increased since 2011.  

In  the  EBA  category,  all  countries  have  ranked  below  100.  This  does  not  come  as  a 
surprise  given  that  the  EBA  beneficiaries  are  the  most  vulnerable  of  all  the  three 
categories  of  GSP  beneficiary  countries.  Bhutan  has  been  found  to  be  the  least 
vulnerable to climate change and other global challenges, and the most adaptable on the 
economic,  social  and  governance  fronts,  ranking  113th.  In  contrast,  the  Central  African 
Republic  was  not  only  ranked  as  the  most  vulnerable  and  least  adaptable  of  the  EBA 
countries, but had the lowest overall score of all the ranked countries.  

Overall,  the  GSP+  countries  were  the  best  performing  countries  of  all  the  GSP 
beneficiary countries. 

Table 33: Country ranking under ND-GAIN Index (2015) 

Standard GSP219 

65. Ukraine  
92. Vietnam  
96. Indonesia  
102. Fiji  
105. Ghana   
106. Tonga  
109. Tajikistan 
112. Uzbekistan 
119. India  
134. Syria 
134. Iraq 
138. Cameroon 
138. Cote d’Ivoire  
144. Nigeria  
147. Swaziland 
152. Kenya 
167. Congo 

GSP+ 

EBA220 

64. Armenia 
80. Kyrgyzstan 
82. Mongolia  
94. Sri Lanka  
95. Cape Verde  
97. Philippines  
99. Paraguay 
125. Pakistan  
127. Bolivia  

113. Bhutan  
114. Samoa 
120. Nepal  
122. People’s Democratic 
Republic Lao 
125. Vanuatu 
130. Cambodia   
132. Senegal 
133. Zambia 
136. Rwanda 
136. Sao Tome and Principe 
140. Comoros Islands 
141. Timor-Leste  
142. Bangladesh 
143. Tanzania 
144. Equatorial Guinea  
146. Ethiopia  

218 ND-GAIN index (2017). Available at: http://index.ndgain.org/about 
219The following Standard GSP countries were not included in the 2015 ranking of the ND-GAIN index: the Cook 
Islands, Marshall Islands, Micronesia, Nauru and Niue. 
220The following EBA countries were not included in the 2015 ranking of the ND-GAIN index: Kiribati, Somalia, 
South Sudan and Tuvalu.  

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147. Solomon Islands 
149. Guinea  
151. Benin 
153. Sierra Leone 
153. Mozambique  
155. Malawi 
156. Togo 
157. Gambia 
158. Mali 
159. Djibouti 
159. Myanmar/Burma 
161. Burkina Faso 
161. Lesotho 
164. Angola  
165. Madagascar  
166. Liberia 
167. Niger 
169. Guinea-Bissau  
170. Haiti 
171. Uganda  
172. Mauritania 
174. Democratic Republic of 
Congo  
175. Afghanistan 
176. Yemen 
177. Sudan 
178. Burundi 
179. Eritrea 
180. Chad    
181. Central African Republic 

Source:  Notre  Dame  Global  Adaptation  Initiative  (ND-Gain  Index).  Available  at:  http://gain.nd.edu/our-
work/country-index/.   

4.4.1. Overview of progress in case study countries 
Figure  8  below  reflects  an  overall  improvement  in  the  environmental  situation  of  the 
four  case  study  countries  under  investigation:  Pakistan,  Bolivia,  Bangladesh,  and 
Ethiopia.  However,  their  respective  scores  are  still  far  from  100.  Their  ND-GAIN  index 
country  scores  denote  great  need  for  investment  and  innovation  to  improve  country 
readiness, and urgency for action.221 Importantly, we are unable to assess the full extent 
of progress following GSP reform as data is only available up to the year 2015.  

It  is  however  evident  that,  over  the  period  2010-2015,  Ethiopia  has  made  the  most 
progress in addressing national environmental issues,  owing to an overall improvement 
in its readiness index scores. Its overall score in 2015 increased by 2.3 points compared 
to 2010. Ethiopia largely benefits from the EBA in exports of flowers, coffee, and textiles. 
The industries that mostly benefit from the GSP, such as floriculture, make extensive use 
of water, consequently reducing water supply. Although Ethiopia has generally improved 
in  terms  of  vulnerability  and  readiness,  its  situation  is  still  rather  critical.  In  2015, 
Ethiopia  was  classified  as  the  36th  most  vulnerable  country  and  the  40th  least  ready 
country to adapt to  climate change, and overall146th in the ND-GAIN country index  out 
of the 181 listed countries222. 

221 ND-GAIN index (2017). Available at: http://index.gain.org/country/pakistan 
222 ND-GAIN index (2017). Available at: http://index.gain.org/country/ethiopia 

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45
44
43
42
41
40
39
38
37
36
35

Pakistan

Bolivia

Bangladesh

Ethiopia

2010

43,1

42,8

39,9

37,7

2011

43,3

43,7

40,1

38

2012

44

43,7

40,2

38,1

2013

43,9

44,2

40,2

39,2

2014

44,3

43,9

41

39,8

2015

44,4

44

41

40

Pakistan

Bolivia

Bangladesh

Ethiopia

Figure 8: ND-GAIN Index for selected countries (2010-2015)223 

Pakistan, on the other hand, shows a comparatively steady improvement of 1.3 points in 
2015 compared to 2010. Although the readiness index score of Pakistan increased from 
0.334  in  2012  to  0.342  in  2015,  the  country  remains  substantially  vulnerable  to  the 
negative effects of climate change.  

A  similar  trend  was  also  witnessed  in  Bolivia,  which  saw  modest  improvements  in  its 
scores (1.2 points increase in 2015 compared  to 2010).  In contrast to Pakistan, Bolivia 
registered a tiny decline in its readiness score in 2015 compared to 2012, approximately 
0.003 points. There were also significant improvements in its vulnerability index in 2015.  

Bolivia’s  natural  ecosystems  remain  increasingly  vulnerable  as  evidenced  by  its  score  - 
0.533  points  -  on  the  vulnerable  scale  index.  The  consequences  of  such  ecosystem 
degradation  reflect  in  species  loss,  and  loss  of  resilience  to  change.  The  agro-industry 
expansion,  and  its  poorly  managed  extractive  industries  and  inadequate  infrastructure, 
will continue to reduce forest coverage and to provoke fragmentation in the ecosystems.  

Bangladesh  is  noted  as  one  of  the  world’s  most  environmentally  vulnerable  places, 
despite  slight  improvements  in  its  vulnerability  and  readiness  index  scores  in  2015.  It 
ranked 145 out of 181 listed countries in 2015. Bangladesh rose from a score of 39.9 in 
2010 to a score of 41.0 in 2015224, demonstrating the ability to steadily adjust and adapt 
to climate change challenges in spite of major difficulties such as a very high population 
density,  vulnerability  arising  from  its  geographic  location  as  well  as  political  instability. 
Water  pollution  in  Bangladesh  is  a  substantial  environmental  issue,  representing  the 
biggest threat to the vulnerability index score of the country.  

In  2015,  Bangladesh  had  a  score  of  0.600  in  the  water  component,  followed  by  health 
with  0.589,  and  food  0.551.  Challenges  in  the  water  storage  are  currently  threatening 
more  than  200  Bangladeshi  rivers225.  These  rivers  directly  or  indirectly  receive  a  large 
quantity  of  untreated  industrial  wastes  and  effluent,  and  the  limitations  in  the  dam 
capacity  continuously  degenerate  as  indicated  in  the  vulnerability  index.  In  2015,  the 

223Source: Notre Dame Global Adaption Initiative (ND-Gain Index). Available at: http://gain.nd.edu/our-
work/country-index/. 
224 ND-GAIN index (2017). Bangladesh. Available at: http://index.gain.org/country/bangladesh 
225Environmental Pollution Of Bangladesh – It’s Effect and Control. Available at: 
http://www.bangladeshenvironment.com/index.php/polution-s/294-environmental-pollution-of-bangladesh-it-
s-effect-and-control 

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ND-GAIN  revealed  that  Bangladesh  has  increased  its  ‘dam  capacity’  indicator  score  by 
0.992 in cumulative storage capacity.  

In  conclusion,  we  have  observed  that  there  have  been  modest  environmental 
improvements in the four case-study countries. It is, however, very difficult to formulate 
more  direct  linkages  between  the  GSP  and  environmental  progress.  However,  we  can 
see  where  countries  are  making  strides  towards  environmental  improvement  and 
protection  on  a  yearly  basis.  Although  Ethiopia  has  the  lowest  score  of  all  the  four 
countries, it has demonstrated the most progress over the period of all the four countries. 
Pakistan  has  the  highest  overall  score  of  the  four,  but  still  needs  to  make  further 
improvements as it is the largest GSP+ beneficiary yet the lowest ranked of all the GSP+ 
beneficiaries. 

4.5. Conclusions from the environmental impact analysis 
This section draws together key conclusions from the analysis presented above and from 
the information provided in the EBA and GSP+ case studies.  

Environmental impact of the present scheme 

One  of  the  objectives  of  the  GSP  reform  was  to  promote  sustainable  development  and 
good governance. Consequently, environmental protection is among its goals. According 
to  the  intervention  logic,  this  objective  was  to  be  achieved  by  simplifying  GSP+  entry 
mechanisms,  developing  credible  and  efficient  temporary  withdrawal  procedures,  and 
establishing  a  more  effective  and  transparent  monitoring  mechanism.  The  GSP+  was 
expected  to  increase  pressure  to  effectively  implement  international  environmental 
conventions 226  and  thereby  strengthen  support  for  sustainable  development.  The 
Standard GSP and EBA arrangements instead do not include environmental requirements 
or provisions. 

As  described  in  Section  4.2,  trade  has  a  multiplicity  of  potential  impacts  on  the 
environment, and these will be seen through all aspects of the GSP.  

The  case  studies  have  identified  direct  links  between  rising  exports  under  the  EBA  and 
GSP+ arrangements and increased environmental impacts, seen for example in: textiles 
and  cotton  production  in  Pakistan,  whose  exports  under  GSP+  have  grown;  garment 
production in Bangladesh, with increased exports under EBA; and live trees and flowers 
produced in Pakistan, also exported under EBA. In these  examples, water pollution and 
other impacts have grown. The case studies indicate that these scale effects have been 
quite  important  in  at  least  Bangladesh  and  Ethiopia  under  the  EBA  arrangement  and 
Pakistan under the GSP+ arrangement.  

The  case  studies  have  provided  some  evidence,  mostly  anecdotal  information  from  the 
stakeholder  consultation,  that  trade  under  the  GSP  may  be  linked  to  improvements  in 
production  technology  and  techniques:  textile  production  in  Bangladesh;  the  use  of 
chemicals  in  Ethiopia  that  meet  REACH  requirements;  and  the  export  of  organic 
agriculture and sustainable forestry products from Bolivia.  

The economic impact analysis section (see Chapter  2) shows that participation the GSP  
has led to some diversification in exports, though countries in the EBA arrangement have 
diversified less than those in the other two arrangements. The case studies and data are 
not  sufficient,  however,  to  indicate  whether  the  changes  in  the  composition  of  exports 
has led to positive or negative changes in trade-related environmental impacts.  

Trade  can  also  have  structural  impacts,  for  example  as  bringing  economic  resources  to 
better  address  environmental  challenges.  This  study  looked  at  a  broad  index  (the  ND-

226 See Annex VIII to the GSP Regulation. 

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GAIN index) which comprises 45 indicators reflecting a country’s vulnerability to climate 
change and other environmental pressures as well as its readiness to absorb adaptation 
investments and initiatives. The analysis showed that EBA countries generally had worse 
scores  than  GSP+  countries.  Focusing  on  case-study  countries,  it  appears  that  some 
improvements were recorded over the period 2010-2015 (the last year for which data is 
available).  However,  it  is  difficult  to  univocally  attribute  improvements  in  the  index  to 
the  GSP,  which  is  only  one  of  the  many  factors  affecting  the  situation  in  beneficiary 
countries. For one case study country, Bangladesh, another synthetic measurement, the 
Environmental Performance Index, saw a decrease in recent years. Moreover, there are 
often  time  lags  between  actions  to  address  environmental  issues  and  measurable 
improvements: consequently, GSP-related actions and reforms for the environment may 
not see results in the short time-frame of the evaluation. 

Factors influencing these changes 

This section investigates several potential factors influencing impacts on the environment: 
the  scale  of  exports  under  the  GSP;  the  role  of  awareness  in  the  exporting  countries; 
and the role of the GSP+ arrangement.  

For  three  of  the  four  case  study  countries,  one  of  the  key  factors  related  to  direct 
environmental impacts has been an increase in exports in recent years under the GSP: 
this  is  seen  for  Bangladesh  and  Ethiopia  under  the  EBA  arrangement  and  for  Pakistan 
under  GSP+.  Bolivia  has  not  seen  a  steady  growth  in  its  exports  under  the  GSP+ 
arrangement.  Moreover,  for  Bangladesh  and  Pakistan,  nearly  all  exports  to  the  EU  are 
under the GSP (for Bolivia and Ethiopia, the share is less than half).   

In  terms  of  changing  production  technology  and  techniques,  awareness  can  be  a  key 
factor. The case studies, in particular the local stakeholder workshops, suggest that the 
theme  of  sustainable  development  has  become  increasingly  important  in  the  policy 
dialogue.  Both  literature227 and  stakeholder  input228 indicate  that  multinationals  can  be 
key  drivers  of  environmental  improvements  through  investment  and  supply  chain 
sustainability  initiatives.  There  are  also  indications  that  export-oriented  producers  have 
better environmental performance than those focused on domestic markets as they seek 
to meet the expectations of environmentally conscious consumers in developed countries.  

According to the intervention logic for this evaluation, the GSP+ arrangement is intended 
to  play  a  key  role  in  attaining  positive  environmental  outcomes  through  its  entry 
mechanisms, a credible and efficient temporary withdrawal process and a more effective 
and  transparent  GSP+  monitoring  mechanism.  The  GSP+  arrangement  was  thus 
expected to create incentives for beneficiary countries to ratify and effectively implement 
relevant environmental conventions. While these conventions do not directly affect some 
environmental impacts associated with exports, such as air and water pollution, they do 
address key environmental issues that are vital at both national and global scales, such 
as biodiversity.  

The  entry  mechanism  may  have  had  some  positive  influence,  as  described  in  Section 
4.3 for Tajikistan’s ratification of CITES and the Basel Convention. It appears that some 
other GSP+ eligible countries, however, have already ratified some of these conventions.  

One of the factors that can influence the impacts of the GSP+ is the different approaches 
taken  by  beneficiary  countries  in  implementing  relevant  conventions.  Pakistan,  for 
example, introduced administrative arrangements (governmental units and a GSP+ Task 
Force)  to  ensure  progress  towards  fulfilling  GSP+  requirements.  Treaty  Implementation 
Cells were established within the federal and local governments to supervise, coordinate 
and  support  the  implementation  of  conventions.  However,  a  further  step,  the 

227Trucost Plc, Natural capital at risk: The top 100 externalities of business, 2013. 
228Justice and Peace. 

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establishment of a GSP+ Support Mechanisms Unit to cooperate with the private sector 
and NGOs, has not yet been put in place.  

Additionally,  the  case  study  shows  that  Pakistan  has  stepped  up  its  compliance  efforts 
under  the  global  environmental  agreements  covered  by  the  GSP+  arrangement,  for 
example  by  catching  up  on  reporting.  These  efforts  are  less  apparent  in  Bolivia,  which 
despite its Law of the Rights of Mother Earth has important areas of non-compliance with 
the global agreements.  

Based on the evidence available, it cannot be confirmed that the GSP+ entry mechanism, 
monitoring mechanism and withdrawal procedure have increased pressure to implement 
relevant environmental conventions, resulting in the expected positive outcomes for the 
environment in GSP+ beneficiary countries. 

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5  Case studies on textile and machinery sectors   
This section will provide an in-depth overview of the impact of the scheme on the textiles 
and machinery sectors. It will seek to analyse the impact of the GSP on producers and 
industries in the EU and in the beneficiary countries.  

5.1  Impact of GSP on textile sector 

This analysis will focus on the textile and clothing industry. Textile and clothing products 
are  accounted  for  under  GSP  Sections  S-11a  and  S-11b  for  textiles  and  clothing, 
respectively. They fall under the following HS Chapters: 

Table 34: Designated HS chapters for textiles and clothing  

HS  Description 

S-11a 

50  Silk 

51  Wool, fine or coarse animal hair; horsehair yarn and woven fabric 

52  Cotton 

53  Other vegetable textile fibres; paper yarn and woven fabrics of paper yarn 

54  Man-made filaments 

55  Man-made staple fibres 

56 

Wadding, felt and nonwovens; special yarns; twine, cordage, ropes and 
cables and articles thereof 

57  Carpets and other textile floor coverings 

58 

59 

Special woven fabrics; tufted textile fabrics; lace; tapestries; trimmings; 
embroidery 

Impregnated, coated, covered or laminated textile fabrics; textile articles of 
a kind suitable for industrial use 

60  Knitted or crocheted fabrics 

S-11b 

61  Articles of apparel and clothing accessories, knitted or crocheted 

62  Articles of apparel and clothing accessories, not knitted or crocheted 

63 

Other made up textile articles; sets; worn clothing and worn textile articles; 
rags 

5.1.1  The textile and clothing sector in the EU market 
In  this  section,  we  provide  an  overview  of  the  textile  and  clothing  sector  in  the  EU 
market,  highlighting  the  overall  contribution  of  the  sector  to  economic  growth  and 
development in the EU market.  

The  textile  and  clothing  sector  is  part  of  the  manufacturing  sector  and  covers  a  wide 
range  of  activities  from  fibres  transformation  to  the  production  of  clothing  and  home 
textiles,  technical  textiles  and  industrial  filters.  In  2013,  the  EU  textile  and  clothing 
sector  employed  around  1.7  million  persons,  which  accounted  for  6  per  cent  of  total 
employment in the manufacturing industry. Around 90 per cent  of the workforce in the 
sector  is  employed  in  small  businesses  with  less  than  50  employees.  These  small 

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businesses generate around 60 per cent of the value added in the sector and are hence 
the stronghold of the European textile and clothing industry.229  

The  European  textile  and  clothing  industry  produces  a  variety  of  products,  with  its 
largest  product  category  being  clothing  and  accessories.  Products  in  this  category  fall 
under  HS  Chapters  61,  62,  42  and  65,  and  contributed  to  36  per  cent  of  the  sector’s 
turnover of EUR 171 billion in 2016.230 Fabrics is another important product in the sector, 
which  contributed  to  18  per  cent  of  turnover  in  2016,  while  industrial  and  technical 
textiles, and home textiles both contributed to 15 per cent of turnover in the same year.   

The textile and clothing sector is spread out over all EU Member States. However, there 
are  differences  in  terms  of  the  scale  of  activities  and  specialisation  employed  in  each 
Member  State.  The  largest  producers  are:  Italy,  which  produces  45  per  cent  of  all 
clothing made in the EU; Germany, which produces 24 per cent of all technical textiles; 
and France, which specialises in the production of both textiles and clothing. Austria is a 
leading producer of cellulosic fibres and Belgium is an important producer of carpets and 
home textiles.231  

The  sector  has  undergone  significant  changes  over  the  past  decades  as  a  result  of 
different  developments,  including  the  increasingly  interconnected  global  economy  and 
the  large  global  differences  in  labour  costs.  In  this  context,  the  European  textile  and 
clothing  sector  has  strived  to  remain  competitive  by  increasing  its  productivity  and 
competitive  strength.  The  sector  has  heavily  invested  in  innovation,  quality,  creativity, 
and design and branding. Additionally, European companies have enhanced their market 
position  by  focusing  on  higher-value  added  products,  such  as  technical  textiles,  and 
increased their competitiveness by expanding the variety of products.232   

The  technological  changes  and  increased  importance  of  global  value  chains,  as  well  as 
the  emergence  of  international  competitors,  have  markedly  shaped  the  industry  in 
Europe. It has contributed to the leading position of European companies as producers of 
technical  and  industrial  textiles,  and  non-woven  products  such  as  industrial  filters  and 
hygiene  products.  Textiles  produced  in  Europe  are  also  used  in  the  automotive  and 
medical sectors.233  

5.1.2  EU trade in textile and clothing 
In this section, we will explore the impact of the GSP arrangements on EU producers and 
industries  using  or  competing  with  goods  imported  under  GSP  preferences,  as  well  on 
their global competitiveness. 

The EU is the world’s second largest exporter of textile and clothing, following China. In 
2015,  it  accounted  for  24  per  cent  of  global  textile  exports  and  26  per  cent  of  global 
clothing  exports.234 The  main  export  destinations  for  the  EU’s  textile  products  are  the 
United  States,  China,  Turkey,  Morocco,  and  Switzerland;  while  the  main  export 
destinations  for  its  clothing  products  are  Switzerland,  the  United  States,  Russia,  Hong 
Kong and Japan.  

229 European Commission. (2017). Textiles and clothing in the EU. Available at: 
https://ec.europa.eu/growth/sectors/fashion/textiles-clothing/eu_en  
230 Euractiv. (2017). European Textiles and Fashion: facts & Figures. Available at: 
http://euratex.eu/pages/infographics/  
231 Euractiv. (2016). European Textiles and Fashion: facts & Figures. Available at: 
https://www.euractiv.com/section/innovation-industry/infographic/european-textiles-and-fashion-facts-figures/  
232 European Commission. (2017). Textiles and clothing in the EU. Available at: 
https://ec.europa.eu/growth/sectors/fashion/textiles-clothing/eu_en  
233 European Commission. (2017). Textiles and clothing in the EU. Available at: 
https://ec.europa.eu/growth/sectors/fashion/textiles-clothing/eu_en  
234 EURATEX. (2015). Annual Report. Available at: http://euratex.eu/press/key-data/  

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The top three exporting economies – China, the EU and India – account for almost two-
thirds  of  world  exports.  In  recent  years  however,  the  top  ten  exporting  countries  have 
experienced export declines. The largest export decline was experienced by the EU, with 
a  decline  by  14  per  cent  in  2015  as  compared  to  2014,  and  Turkey  with  a  13  per  cent 
decline.235  

On the other hand, the EU is the world’s top importer of textiles and clothing. In 2015, 
EU  imports  represented  22.1  per  cent  of  global  textile  and  clothing  imports.  This  was 
followed by the US and China, which respectively accounted for 9.6 and 6.1 per cent of 
global imports.236 As shown in Figure  9 below, EU imports have been relatively volatile 
since 2011, but have increased annually since 2014. Between 2011 and 2016, imports of 
textile  and  clothing  (HS  Chapters  50-63)  increased  by  15.7  per  cent  to  EUR  106,869 
million.  The  majority  of  these  imports  were  clothing,  falling  under  GSP  Section  S-11b 
(HS  Chapters  61-63),  while  textiles  under  GSP  Section  S-11  (HS  Chapters  50-60) 
accounted  for  less  than  20  per  cent  of  total  imports.  Textile  and  clothing  products  are 
mainly  imported  under  MFN  arrangements  in  the  EU  market  imports.  In  2016,  MFN 
imports  accounted  for  around  40  per  cent  of  total  EU  imports  of  textile  and  clothing 
products. 

R
U
E
N
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I

120.000

100.000

80.000

60.000

40.000

20.000

0

2011

2012

2013

2014

2015

2016

Figure 9: EU imports of textile and clothing products (2011-2016)237 

Global value chains play a significant role in the European textile and clothing industry. 
The industry is globally integrated and sources raw materials as well as finished products 
from economies outside the EU market. The extent of integration varies according to the 
specific  products  and  ranges  from  production  sharing  and  supply  chains  to  production 
outsourcing  and  vertical  integration.  Due  to  the  diversity  of  the  industry,  European 
companies can either benefit from or compete with textile and clothing imports.238 

235 WTO. (2016). World Trade Statistical Review. Available at: 
https://www.wto.org/english/res_e/statis_e/wts2016_e/wts2016_e.pdf  
236 WTO. (2016). Statistical Tables. Available at: 
https://www.wto.org/english/res_e/statis_e/wts2016_e/wts16_chap9_e.htm  
237 Source: own calculations based on trade data supplied by the European Commission. 
238 Stakeholder contribution, 6 February 2017 

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The  global  value  chain  approach  has  proven  particularly  beneficial  for  the  EU  clothing 
industry.  The  production  of  garments  is  geographically  widespread  and  garments 
designed in Europe are produced from raw material obtained and further transformed in 
outside markets.239 European producers benefit from the increased import opportunities 
and  the  possibility  to  outsource  this  particularly  labour-intensive  production.  The 
European clothing industry complements its production with imports obtained under the 
GSP  or  other  market  access  instruments.240 The  positive  impact  of  these  developments 
has  to  be  considered  in  the  context  of  the  overall  restructuring  of  the  EU  industry  and 
the shift in products produced by the EU.241 

Stakeholders have argued that the effects of increased textile and clothing imports on EU 
competitiveness  have  been  diverse  across  different  segments  of  the  industry.  It  is  also 
important  that  there  is  differentiation  between  the  clothing  and  the  textile  producing 
industry.  The  former  generally  benefits  from  low-cost  imports  of  textiles  through  the 
global value chain and incorporates textiles as inputs in the production process, while the 
latter is negatively affected by increasing competitive pressures as a result of increased 
imports.  Additionally,  the  EU  textile  sector  is  research  and  machinery  intensive,  which 
makes  delocalisation  of  the  production  less  interesting  for  companies.  Hence,  the 
production  chain  in  this  sector  is  mainly  located  within  the  EU.242 Overall,  it  has  been 
found  that  the  textile  sector  faces  increased  competition  from  outside  markets,  which 
has significantly impacted the production of textile in the EU. Home textile production in 
Belgium  was  cited  as  an  example  of  a  segment  of  sector  that  faces  significant 
competitive pressures.243 

EU producers of premium-fashion brands are also negatively impacted by the increasing 
textile and clothing imports.  While these high-end producers benefit from cheap fabrics 
imported  from  abroad,  they  produce  their  garments  in  the  EU,  mainly  in  Romania  and 
Bulgaria.  Stakeholders  that  participated  in  interviews  with  the  Project  Team  noted  that 
high quality and more expensive products face increase competition from the abundance 
of cheap clothing imports.244 

5.1.3  Trade in textile and clothing under the GSP  
In  this  section,  we  will  explore  the  impact  of  the  GSP  arrangements  on  producers  and 
industries  in  beneficiary  countries,  including  the  impact  of  the  reduction  of  beneficiary 
countries post reform. 

Imports of textiles and clothing under Sections S-11a and S-11b are the main category 
of  imports  under  the  GSP.  The  Sections’  share  in  the  total  GSP  imports  has  increased 
significantly  from  22  per  cent  between  2011  and  2013,  to  42  per  cent  in  2014  and  50 
per cent in 2016. 

In 2016, EU imports of textile and clothing from GSP beneficiaries accounted for 36.6 per 
cent  of  global  EU  textile  and  clothing  imports.  Table  35  reveals  that  there  are  large 
differences in the value of imports from countries under the different GSP arrangements. 
These differences are mainly influenced by the number of countries in each arrangement 
and  the  ability  of  these  countries  to  compete  at  the  global  level.  We  can  see  where 
imports significantly increased from both EBA and GSP+ beneficiaries between 2011 and 

239 European Commission. (2011). The textile and clothing sector and EU trade policy. Available at: 
http://trade.ec.europa.eu/doclib/docs/2011/october/tradoc_148259.pdf  
240 Stakeholder contribution, 28 April 2017  
241 Stakeholder input, 28 April 2017; Stakeholder input 6 February 2017 
242 European Commission. (2011). The textile and clothing sector and EU trade policy. Available at: 
http://trade.ec.europa.eu/doclib/docs/2011/october/tradoc_148259.pdf  
243 Stakeholder Contribution, 6 February 2017  
244 Stakeholder input, 28 April 2017; Stakeholder input 6 February 2017 

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2016.  In  2016,  imports  from  EBA  beneficiaries  accounted  for  18  per  cent  of  textile 
imports, while imports from GSP+ beneficiaries amounted to 4.8 per cent. On the other 
hand,  imports  from  Standard  GSP  beneficiaries  have  progressively  decreased  from  EUR 
20,808 million in 2011 to EUR 14,046 million in 2016. Their imports accounted for 13.1 
per cent of the EU’s textile imports in 2016.   

Table 35: EU imports of textiles and clothing from GSP beneficiaries in millions of euros 
(2011-2016) 

Arrangement 

2011 

2012 

2013 

2014 

2015 

2016 

Imports from Standard 
GSP beneficiaries 
Imports from GSP+ 
beneficiaries 
Imports from EBA 
beneficiaries 

Total imports from 
GSP beneficiaries 

Total imports with 
GSP preferences 
Total textile and 
clothing imports 

20,808 

18,799 

18,451 

13,271 

13,804 

14,046 

3,708 

3,298 

3,511 

4,319 

5,055 

5,140 

10,127 

11,295 

12,569 

14,494 

18,075 

19,932 

34,642 

33,392 

34,530 

32,084 

36,934 

39,118 

20,589 

20,456 

21,126 

24,908 

29,309 

31,216 

92,366  88,285  88,308  96,351  105,839  106,869 

   Source: Authors’ calculations based on trade and tariff data supplied by the European Commission 

Imports  from  beneficiary  countries  can  further  be  broken  down  into  two  categories: 
imports  under  the  GSP  preferences  and  imports  under  MFN/other  preferential 
arrangements.  Importantly,  of  all  the  textile  and  clothing  exported  by  all  GSP 
beneficiaries in 2016, 80 per cent were exported using GSP preferences, while the other 
20 per cent were exported under MFN/ other preferential arrangements.   

As illustrated in Figure  10 below, Standard GSP countries utilised their preferences the 
least  and  exported  55  per  cent  of  their  textile  and  clothing  exports  under  MFN 
arrangements  in  2016.  GSP+  and  EBA  beneficiary  countries  largely  exported  under  the 
GSP in 2016. GSP+ beneficiaries exported 92.4 per cent of their goods under GSP, while 
EBA  beneficiaries  utilized  GSP  preferences  for  93.8  per  cent  of  their  exports.  Table  35 
reflects  the  trends  and  different  levels  in  textile  imports  under  the  three  different  GSP 
arrangements. 

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GSP+ Countries

Standard GSP Countries

EBA countries

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Under GSP Regime

Under MFN Trade

Figure 10: EU imports of textiles and clothing from GSP beneficiary countries by tariff 
regime (2016)245 

There are several possible explanations as to why beneficiaries export under MFN instead 
of GSP, for example a lack of awareness about GSP preferences. Furthermore, difficulties 
in  meeting  the  RoO  criteria  can  lead  to  limited  preference  usage.  An  additional 
explanation  for  limited  preference  utilisation  can  be  the  amount  of  work  that  goes  into 
applying  for  preferences  compared  to  the  benefits  it  provides.  The  preference  margins 
for  textile  and  clothing exports  are  relatively  low  for  Standard  GSP  beneficiaries  due  to 
the  classification  as  ‘sensitive  products’.  For  Standard  GSP  beneficiaries,  the  average 
preference  margin  is  1.62  per  cent.  EBA  and  GSP+  beneficiaries  benefit  from  a 
significantly  higher  average  preference  margin  of  8.01  per  cent,  applicable  across  both 
arrangements. This difference can result in the relatively lower utilisation of preferences 
by Standard GSP beneficiary countries.  

Standard GSP arrangement 
Imports  from  Standard  GSP  beneficiaries  accounted  for  13.1  per  cent  of  the  total  EU 
imports  of  textiles  and  clothing  in  2016.  The  largest  exporter  under  the  Standard  GSP 
arrangement was India. In 2016, India exported EUR 7,641 million worth of textile and 
clothing  to  the  EU,  of  which  EUR  5,733  million  were  exported  under  GSP  preferences. 
India’s  exports  to  the  EU  have  steadily  increased  under  the  review  period,  especially 
after the reformed scheme was introduced in 2014. This finding is noteworthy due to the 
fact that from January 2014, India was no longer eligible to receive GSP preferences for 
a  number  of  product  sections,  including  S-11a  for  textiles.  Figure  11  below  shows  a 
progressive  increase  in  exports  from  India  under  the  Standard  GSP  arrangement  since 
2012.  India’s  export  values  over  the  period  were  substantially  higher  than  other 
competitors in this arrangement, namely Indonesia, Sri Lanka, Vietnam, Uzbekistan, and 
Tajikistan.  

245 Source: own calculations based on trade data supplied by the European Commission. 

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Tadjikistan

Uzbekistan

Vietnam

Sri Lanka

Indonesia

India

0

1.000

2.000

3.000

4.000

5.000

6.000

7.000

2016

2015

2014

2013

2012

2011

Figure 11: EU imports of textiles and clothing under Standard GSP (2011-2016)246 

Figure  12 below illustrates a progressive increase in India’s share in EU’s total imports 
from  Standard  GSP  countries  over  the  years  2011-2016.  Importantly,  the  value  of 
India’s textile exports increased despite of its graduation from Section 11-a preferences 
in 2014.  Over the period 2011-2013, average exports in this category amounted to EUR 
6,639  million  compared  to  EUR  7,376  million  over  the  period  2014-2016.  Increased 
trade  was  a  major  factor  contributing  to  the  increase  in  its  share  in  this  category, 
coupled with the exit of a number of competing countries from the GSP after 2014. 

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%

2011

2012

2013

2014

2015

2016

EU Imports of Textiles from India

Total Imports of Textiles under Standard GSP Regime

Figure 12: Share of EU imports of textiles and clothing from India (2011-2016)247 

GSP+ arrangement 
Figure  13  below  indicates  that  the  annual  growth  rate  of  textile  and  clothing  exports 
from  selected  GSP+  beneficiaries,  namely  Pakistan,  Philippines  and  Mongolia,  have 
varied over the years 2011-2016. Pakistan and the Philippines have been comparatively 
consistent  in  reflecting growth  over  the  period,  with  the  exception  of  2012  for  Pakistan 
and  2013  for  the  Philippines.  Importantly  in  the  post-regulation  period,  all  countries 
have consistently increased their exports, with the exception of Mongolia in 2016. It can 

246 Source: own calculations based on trade data supplied by the European Commission. 
247 Ibid. 

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also  be  observed  that  there  was  a  significant  increase  in  Pakistan’s  exports  in  2014 
(amounting to approximately 25 per cent), primarily due to its transition from Standard 
GSP status to GSP+ status.    

S
E
G
A
T
N
E
C
R
E
P
N
I

30,0%

20,0%

10,0%

0,0%

-10,0%

-20,0%

-30,0%

2011

2012

2013

2014

2015

2016

PAKISTAN

PHILIPPINES

MONGOLIA

Figure 13: Annual growth rates of textiles and clothing exports for GSP+ beneficiaries 
(2011-2016)248 

The  value  of  exports  under  GSP+  has  also  varied  significantly  between  the  top  4 
exporting  countries.  This  is  illustrated  by  Figure  14  below,  which  shows  that  Pakistan 
was by far the leading GSP+ beneficiary in textile and clothing exports for all the years 
under  investigation.  Pakistan  exported  EUR  4.6  billion  worth  of  textile  and  clothing  in 
2016,  making  up  97.7  per  cent  of  the  total  imports  under  the  GSP+  arrangement.  The 
Philippines exported EUR 213 million, which accounted for only 1.8 per cent of the total 
exports  under  the  arrangement  in  2016.  The  third  largest  exporting  country  was 
Mongolia,  which  exported  EUR  45  million  and held  a  value  share  of  0.3  per  cent  in  the 
same year, followed by Cape Verde, which exported EUR 6 million and had a share of 0.1 
per cent. 

248 Source: own calculations based on trade data supplied by the European Commission. 

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Cape Verde

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Mongolia

Philippines

Pakistan

0

500

1.000

1.500

2.000

2.500

3.000

3.500

4.000

4.500

5.000

2016

2015

2014

2013

2012

2011

Figure 14: EU imports of textiles and clothing under GSP+ (2011-2016)249 

Notably,  utilisation  of  GSP  preferences  has  also  fluctuated  amongst  the  main  GSP+ 
exporters. In 2016, Cape Verde had the highest utilisation rate, with almost 100 per cent 
of its exports in this category being labelled as GSP exports. However, it is important to 
recall  that  Cape  Verde’s  exports  represented  only  0.3  per  cent  of  total  textile  and 
clothing exports from GSP+ countries in 2016.  Pakistan also makes significant use of its 
preferences  under  the  scheme,  exporting  95.9  per  cent  of  its  products  in  2016  under 
GSP+  preferences.  The  rates  were  significantly  lower  for  Mongolia  and  the  Philippines, 
which exported 31.61 per cent and 36.93 per cent of their textile and clothing products 
under GSP+, respectively.  

Cape Verde

Mongolia

Philippines

Pakistan

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

GSP+ Exports

Total Exports to the EU

Figure 15: EU imports of textile and clothing from GSP+ beneficiary countries by tariff 
regime (2016)250 

Since  January  2014,  Pakistan  has  benefitted  from  GSP+  preferences  and  has  steadily 
increased  its  exports  to  the  EU.  Pakistan’s  textile  and  clothing  exports  to  the  EU  have 
increased from EUR 3,850 million in 2014 to EUR 4,525 million in 2015 – an increase of 

249 Ibid. 
250 Source: own calculations based on trade data supplied by the European Commission. 

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EUROPEAN COMMISSION 

17.5 per cent. However in 2016, annual export growth fell to 6.87 per cent, amounting 
to  EUR  4,837  million.  Nevertheless,  Figure  16  below  demonstrates  the  progressive 
increase in Pakistan’s share in total EU imports from GSP+ beneficiaries, moving from a 
little over 88 per cent in 2011 to 94 per cent in 2016. 

100%

98%

96%

94%

92%

90%

88%

86%

84%

82%

80%

2011

2012

2013

2014

2015

2016

EU Imports of Textiles from Pakistan

Total Imports of Textiles from GSP+ Countries

Figure 16: Share of EU imports of textile and clothing goods from Pakistan (2011-
2016)251 

Over the course of stakeholder consultations, it was revealed that there was a significant 
increase in Pakistan’s exports  of textile and clothing  products after 2013 in anticipation 
of the change in its status from Standard GSP beneficiary to GSP+ beneficiary.252 It was 
found that there was 24.3 per cent increase in exports in 2014 compared to 2013, which 
is in fact higher that the annual rates of growth during the subsequent years 2015-16.  

EBA arrangement 
Textile and clothing imports from EBA beneficiaries have steadily increased from 2010 to 
2016. From  Figure 17,  we can see that textile and  clothing imports increased by 55 per 
cent  between  2010  and  2011,  which  is  significantly  higher  than  the  growth  that  was 
evidenced  between  2013  and  2014  when  the  GSP  reform  entered  into  force.  The  high 
export growth in 2011 can be explained by introduction of the reformed RoO, which were 
retained  in  the  2014  GSP  reform.  The  reformed  RoO  relaxed  the  requirements  for  EBA 
countries, allowing them to export based on single transformation in the country instead 
of  double  transformation.  Post-GSP  reform,  export  growth  was  highest  between  2014 
and 2015, when exports increased from EUR 13,491 million to EUR 17,139 million. 

251 Source: own calculations based on trade data supplied by the European Commission. 
252 Stakeholder contribution, 16 May 2017 

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55.41 

27.04

14.03

12.10

16.61

9.14

60

50

40

30

20

10

0

S
E
G
A
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C
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20000,00

18000,00

16000,00

14000,00

12000,00

10000,00

8000,00

6000,00

4000,00

2000,00

0,00

R
U
E
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O
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L
L
I
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I

2010

2011

2012

2013

2014

2015

2016

Figure 17: Value and annual growth rate of textile and clothing imports under EBA 
(2010-2016)253 

Top exporters of textile and clothing products under the EBA are Bangladesh, Cambodia, 
Myanmar/Burma,  Laos  and  Nepal.  The  differences  in  export  values  among  these 
countries are significant as Bangladesh and Cambodia together account for 91.6 per cent 
of total exports from EBA beneficiaries. Myanmar/Burma, Laos and Nepal exported EUR 
873  million  worth  of  goods,  accounting  for  4.67  per  cent  of  the  total  exports  in  2016. 
The  EU  reinstated  EBA  preferences  for  Myanmar/Burma  in  July  2013,  after  which  the 
country has rapidly increased its textile and clothing exports to the EU. 

Nepal

Laos

Myanmar/Burma

Cambodia

Bangladesh

0

2.000

4.000

6.000

8.000

10.000

12.000

14.000

16.000

IN MILLION EUR

2016

2015

2014

2013

2012

2011

Figure 18: EU imports of textiles and clothing under the EBA (2011-2016)254 

Bangladesh’s exports of textile and clothing products under the EBA regime have almost 
doubled under the review period, from EUR 7,852 million in 2011 to EUR 14,608 million 
in 2016.  In 2016, its exports increased by 33.7 per cent compared to 2014. Cambodia 

253 Source: own calculations based on trade data supplied by the European Commission. 
254 Ibid.   

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EUROPEAN COMMISSION 

has also significantly increased its exports under the EBA, moving from EUR 964 million 
in 2011 to EUR 3,159 million in 2016, an increase of 227.7 per cent. 

As illustrated in  Figure  19 below, the main exporters under the EBA have significantly 
utilized  their  preferences  in  the  exportation  of  textile  and  clothing  products  to  the  EU. 
Bangladesh  had  the  highest  utilisation  rate  of  this  group  of  countries  in  2016,  followed 
by Myanmar/Burma which exported 95.7 per cent of its products under the EBA. Further, 
Cambodia  has  exported  EUR  3,159  million  of  textile  and  clothing  products  using  EBA 
preferences, constituting 93.4 per cent of its eligible exports in 2016.  

Nepal

Laos

Madagascar

Myanmar/Burma

Cambodia

Bangladesh

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

EBA Exports

Total Exports to the EU

Figure 19: EU imports of textile and clothing from EBA beneficiary countries by tariff 
regime (2016)255 

Importantly, Bangladesh is not only the main exporter of textile and clothing under the 
EBA, but also across the whole GSP. The country has continuously increased its exports 
under  the  arrangement.  Since  2014,  its  exports  under  the  EBA  have  increased  by  33.7 
per cent to EUR 14,608 million in 2016. As illustrated by  Figure  20 below, Bangladesh 
has  consistently  held  a  large  share  in  the  total  textile  and  clothing  imports  under  the 
EBA.  In 2011, the country accounted  for 82.4  per cent  of all EBA textile imports in the 
EU market. However, its share has been slightly decreasing, on average by 1.22 per cent 
per year since 2011. In 2016, Bangladesh’s textiles exports accounted for 76.3 per cent 
of all EBA exports. 

255 Source: own calculations based on trade data supplied by the European Commission. 

138 

 
 
 
 
 
 
 
                                                 
 
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R
U
E
N
O
I
L
L
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100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

2011

2012

2013

2014

2015

2016

Total EU Imports of Textiles under EBA

Total EU Imports of Textiles from Bangladesh

Figure 20: Share of EU imports of textile and clothing goods from Bangladesh (2011-
2016)256 

Global exporters of textiles to the EU 
We  further  investigate  the  global  competitiveness  of  GSP  textile  exporters  in  the  EU 
market.  As  displayed  in  Figure  21  below,  the  top  10  exporters  to  the  EU  market  are 
China,  Turkey,  Bangladesh,  India,  Pakistan,  Cambodia,  Vietnam,  Morocco,  Tunisia,  and 
USA. China has consistently been the lead exporter of textiles to the EU market over the 
period under investigation.  

In  2016,  China’s  exports  of  textile  to  the  EU  market  accounted  for  approximately  EUR 
36,  971  million,  with  Turkey  (EUR  14,  326  million),  Bangladesh  (EUR  15,  213  million), 
and India (EUR 7, 641 million) falling behind. The remaining countries’ exports fell within 
a similar range, between EUR 3,000 million to EUR 7,000 million.  

256 Source: own calculations based on trade data supplied by the European Commission. 

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EUROPEAN COMMISSION 

R
U
E
N
O
I
L
L
I

M
N
I

40000,00

35000,00

30000,00

25000,00

20000,00

15000,00

10000,00

5000,00

0,00

Pre-Regulation

Post-Regulation

China

Turkey

Bangladesh India

Pakistan

Cambodia

Vietnam

Morocco

Tunisia

USA

Figure 21: Top 10 exporters of textiles to the EU market257 

Bangladesh, India, Pakistan, Cambodia and Vietnam are all GSP beneficiary countries 
that fall within the top ten global exporters of textiles and clothing to the EU market. 
Importantly, all of them were able to increase their exports in the post-regulation period. 
Cambodia is the most notable with respect to pre-regulation and post-regulation 
differences. Cambodia has seen a substantial growth in exports (approximately 99 per 
cent) in the second period.   

257 Source: own calculations based on trade data supplied by the European Commission. 

140 

 
 
 
 
 
 
 
                                                 
 
 
EUROPEAN COMMISSION 

120,00%

100,00%

80,00%

60,00%

40,00%

20,00%

0,00%

-20,00%

Figure 22: Top 10 exporters of textiles to the EU market: pre- and post-reform 
changes258 

% Change

5.1.4  Impact of GSP on producers in the EU 
In this section, we will assess how the GSP has impacted competition in the textile and 
clothing  sectors  in  the  EU  market.  Furthermore,  we  will  examine  the  impact  on 
production costs and overall competitiveness for EU producers that rely on imports under 
GSP preferences, as well as the impact on overall costs for EU consumers.  

Under the GSP, duties on non-sensitive products are altogether suspended, while duties 
on  sensitive  products  are  entitled  to  tariff  reductions.  This is  done  in  order  to  ensure  a 
satisfactory  utilisation  rate,  while  taking  into  account  the  impact  on  EU  industries. 
Typically, ad-valorem duties are reduced by a flat rate of 3.5 percentage points from the 
MFN  duty  rate  for  sensitive  products.  However,  special  measures  apply  for  textile  and 
clothing  products  where  a  20  per  cent  ad  valorem  duty  reduction  on  common  customs 
tariff  is  applied.  Additionally,  automatic  safeguard  mechanisms  can  be  triggered  when 
imported  products  will  cause  or  threaten  to  cause  serious  disturbance  to  the  Union 
markets,  in  particular  to  one  or  more  of  the  outermost  regions  or  these  markets’ 
regulatory mechanisms. 259  

The RoO play an important role in the textile and clothing industry. These rules specify 
operations that must be carried out in the beneficiary country for an exported good to be 
conferred  originating  status  and  be  eligible  for  GSP  preferences.  Textile  and  clothing 
production  includes  a  sequence  of  production  steps  such  as  fibre  processing  and 
spinning,  weaving  yarn  into  fabrics  and  sewing  and  cutting  fabrics  into  garments.  The 
RoO specify that these production stages must be conducted in a beneficiary country to 
confer originating status. For textile and clothing, the RoO require double transformation 
for  goods  exported  under  GSP,  i.e.  fabric  producers  have  to  spin  fibres  into  yarn  and 
weave  yarn  into  fabrics.  The  arrangement  has  more  relaxed  RoO  for  EBA  beneficiaries, 

258 Source: own calculations based on trade data supplied by the European Commission. 
259 European Commission. (2012). Regulation (EC) 978/2012. Available at: 
http://trade.ec.europa.eu/doclib/docs/2012/october/tradoc_150025.pdf  

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for which only a single transformation is required.260 The reformed RoO were retained in 
the 2014 GSP reform and have facilitated the utilisation of the GSP by producers in EBA 
beneficiary countries. 

As  the  textile  and  clothing  industry  is  diverse,  and  the  production  chain  is  varied,  the 
impact  of  the  GSP  on  producers  in  the  EU  differs.  European  producers  are  both 
competing  with  and  benefitting  from  imports  under  the  GSP.  The  most  significant 
changes introduced by the reform can be taken as a point of departure to look into the 
impact  on  the  textile  and  clothing  industry  in  the  EU.  The  reform  significantly  reduced 
the number of countries eligible for the preferences. The reform has further adapted the 
threshold  and  administrative  measures  to  apply  the  safeguard  mechanism  under  the 
regulation.  

Stakeholders have argued that the reduction of beneficiary countries has not reduced the 
competitive pressure the industry is facing. This is  explained by the fact that increased 
export  opportunities  from  remaining  GSP  beneficiary  countries  have  been  well-utilised. 
The inclusion of Pakistan as a GSP+ beneficiary is a prime example of that process. As a 
result  of  its  duty-free  access  to  the  EU  market  since  becoming  a  GSP+  beneficiary  in 
2014, Pakistan has increased its exports to the EU, in particular for home textiles. This 
has significantly increased the competitive pressure faced by the European home textile 
industry.  The  increase  in  imports  for  that  product  category  has  been  significant, 
accounting for 23.38 per cent between 2014 and 2016.261  

Additionally,  the  GSP  reform  introduced  a  simplified  safeguard  mechanism.  However, 
stakeholders  have  argued  that  the  changes  to  the  safeguard  mechanism  have  not 
brought along significant improvements and protection for the  EU industry. Despite the 
administrative  simplification,  triggering  the  safeguard  mechanism  is  unlikely  due  to  the 
high thresholds.262 To trigger the safeguard mechanism, the average value of imports of 
such  products  should  exceed  47.2  per  cent  of  the  total  imports  for  three  consecutive 
years 263  or  should  increase  by  13.5  per  cent  in  volume  compared  to  the  previous 
calendar year. This does not apply to EBA beneficiaries, such as Bangladesh, or countries 
whose  share  in  the  total  EU  imports  does  not  exceed  6  per  cent. 264  Furthermore, 
stakeholders argued that the lack of timely and consistent trade data creates difficulties 
for the industry to monitor trade patterns under GSP and react accordingly.265 

5.1.5  Conclusions 
In  summary,  it  can  be  concluded  that  the  GSP  reform  has  had  varying  impacts  across 
different  segments  of  the  textile  and  clothing  industry,  which  has  been  confirmed 
through  the  stakeholder  consultation  process.  Overall,  we  have  witnessed  a  positive 
economic  and  social  impact  on  the  GSP  beneficiary  countries,  especially  in  large  textile 
producers  such  as  Pakistan  and  Bangladesh.  In  Pakistan,  for  example,  the  clothing 
industry employs almost 40 per cent of the industrial work force and better employment 
conditions  and  safety  standards  have  been  promoted  through  the  GSP,  contributing  to 
social  progress.  In  like  manner,  the  EU  has  also  initiated  the  Sustainability  Compact  in 
Bangladesh’s  RMG  industry  to  further  promote  labour  rights  and  factory  safety. 
Furthermore,  in  Cambodia,  we  see  a  substantial  growth  during  the  post-regulation 
period of 99 per cent in the textile industry.  

260 European Commission. (2015). L343/339. Available at: 
http://ec.europa.eu/taxation_customs/sites/taxation/files/resources/documents/customs/customs_duties/rules
_origin/preferential/annex_22-03_en.pdf  
261 Data obtained from EUROSTAT.  
262 Stakeholder contribution, 6 February 2017 
263 European Commission. (2015). Commission Delegated Regulation (EU) 2015/1978. Available at: 
http://trade.ec.europa.eu/doclib/docs/2016/march/tradoc_154347.pdf  
264 European Commission. (2012). Regulation (EU) No. 978/2012. Available at: 
http://trade.ec.europa.eu/doclib/docs/2012/october/tradoc_150025.pdf  
265 Stakeholder contribution, 6 February 2017  

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On  the  economic  front,  we  have  witnessed  an  increase  in  total  EU  imports  under  GSP 
preferences over the period under review, even with the exit of China from the GSP and 
the  graduation  of  India  from  Section  11-a  from  GSP  preferences.  As  it  relates  to  EU 
producers in the textiles and clothing industry, there have been divergent interests with 
regards  to  the  scheme.  Some  EU  clothing  producers  benefit  from  the  increased 
opportunity to manufacture products outside the EU and import them under GSP. Hence, 
these  producers  have  an  interest  in  simplifying  the  RoO  to  provide  less  restrictive 
measures  towards  the  import  of  textile  and  clothing  products,  including  a  shift  from 
sensitive to non-sensitive product. On the other hand, interests in the textile producing 
industry continue to lobby for greater protection within the GSP as a result of increased 
competition.  

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5.2  Impact of GSP on machinery sector 

Machinery can be defined as “an assembly of components, at least one of which moves, 
joined together  for a  specific application. The  drive system  of machinery is powered by 
energy other than human or animal effort.”266 

This analysis will focus on the machinery industry. Machinery is accounted for under GSP 
Section S-16, which includes products under the following HS chapters: 

Table 36: Designated HS chapters for machinery  

HS   Description 

84  Nuclear reactors, boilers, machinery and mechanical appliances, and parts thereof 

85 

Electrical machinery and equipment and parts thereof; sound recorders and reproducers; 
television image and sound recorders and reproducers, and parts and accessories of such 
articles 

5.2.1  The machinery sector in the EU market 
In  this  section,  we  provide  an  overview  of  the  machinery  sector  in  the  EU  market, 
highlighting the overall contribution of the sector to  economic growth  and development 
in the EU market. 

The machinery sector is part of the engineering sector, which more broadly is part of the 
manufacturing  sector.  The  EU  machinery  sector  has  been  successful  over  the  past 
decades  and  realised  a  revenue  growth  of  5  per  cent  per  year  between  2010  and 
2014.267 In 2013, the machinery and equipment sector was the main contributor to value 
added in the European  manufacturing industry – with a share of almost 12 per  cent.268 
Approximately 92 thousand companies were active in the sector in 2013.269 

In  terms  of  employment,  the  machinery  and  equipment  sector  is  the  third  most 
important  manufacturing  industry  in  the  EU  –  with  a  share  of  almost  10  per  cent.270 In 
2013,  the  sector  employed  more  than  2.9  million  persons. 271  More  than  half  of  the 
workforce in the sector is employed in micro, small and medium-sized enterprises which 
generate almost 45 per cent of the value added in the sector.272 

The most specialised EU Member State and the largest contributor to the sector’s value 
added is Germany. In terms of specialisation, Germany held a 5.6 per cent share in the 
total  non-financial  business  economy  value  added  in  the  EU.  In  terms  of  highest  value 
added, the country contributed 41.9 per cent to the EU-28 value added in this sector.273 

On  a  global  level,  the  European  machinery  and  equipment  industry  is  one  of  the  main 
players.  China is  the  main producer  of  machinery  and  holds  a  38  per  cent  share,  while 
the EU is the second largest producer with a 26 per cent share. The third largest player 

266 European Commission. Machinery. Available at: http://ec.europa.eu/growth/sectors/mechanical-
engineering/machinery_en 
267 VDMA and McKinsey & Company. (2016). How to succeed: Strategic options for European machinery. 
Available at: https://www.mckinsey.de/files/vdma_european_machinery_2016.pdf  
268 Eurostat. (2013). Figure 1: Sectoral analysis of manufacturing. Available at: 
http://ec.europa.eu/eurostat/statistics-explained/index.php/Manufacturing_statistics_-_NACE_Rev._2  
269 Eurostat. (2013). Table 2a: Sectoral analysis of key indicators, manufacturing. Available at: 
http://ec.europa.eu/eurostat/statistics-explained/index.php/Manufacturing_statistics_-_NACE_Rev._2   
270 Eurostat. (2013). Figure 1: Sectoral analysis of manufacturing. Available at: 
http://ec.europa.eu/eurostat/statistics-explained/index.php/Manufacturing_statistics_-_NACE_Rev._2  
271 Eurostat. (2013). Table 2a: Sectoral analysis of key indicators, manufacturing. Available at: 
http://ec.europa.eu/eurostat/statistics-explained/index.php/Manufacturing_statistics_-_NACE_Rev._2  
272 Eurostat. (2013). Figure 5: Sectoral analysis of employment by enterprise size class, manufacturing; Figure 
6: Sectoral analysis of value added by enterprise size class, manufacturing. Available at: 
http://ec.europa.eu/eurostat/statistics-explained/index.php/Manufacturing_statistics_-_NACE_Rev._2  
273 Eurostat. (2013). Table 3: Largest and most specialised EU Member States in manufacturing. Available at: 
http://ec.europa.eu/eurostat/statistics-explained/index.php/Manufacturing_statistics_-_NACE_Rev._2  

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in  the  market  is  the  US,  which  accounts  for  around  14  per  cent  of  the  global 
production.274 

5.2.2  EU trade in machinery 
In this section, we will explore the impact of the GSP arrangements on EU producers and 
industries using or competing with goods imported under GSP preferences, as well as on 
their global competitiveness. 

The European machinery and equipment sector is highly export-oriented; approximately 
66 per cent of its revenues are generated abroad.275 In 2016, EU exports to the rest of 
the world accounted for EUR 449.8 billion – an increase of 1 per cent compared to 2013. 
The  exports  mainly  fall  under  HS  Chapter  84,  which  made  up  two-thirds  of  the  EU 
machinery  exports  in  2016.  The  main  destinations  for  EU  exports  were  the  US, 
accounting for 19.8 per cent, followed by China with 11.5 per cent. Russia, Turkey and 
Switzerland had a combined share of 4.8 per cent.276 

450.000

400.000

350.000

300.000

250.000

200.000

150.000

100.000

50.000

0

R
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16,74

4,54

0,15

-3,10

-0,55

2011

2012

2013

2014

2015

2016

Total imports of machinery

Annual growth in percentages

25

20

15

10

5

0

-5

S
E
G
A
T
N
E
C
R
E
P
N
I

Figure 23: Value and annual growth rate of EU machinery imports (2011-2016)277 

However, the EU also depends on imports of machinery, including parts of machinery for 
its  own  production.  Figure  23  above  shows  the  value  and  annual  growth  rate  of  EU 
machinery  over  the  period  2011-2016.  While  overall  there  has  been  an  increase  in  the 
value of imports since 2011, growth rates have fluctuated. Between 2011 and 2016, the 
total  imports  have  increased  by  17.8  per  cent  –  from  EUR  323.6  billion  to  EUR  381.2 
billion. The main machinery imports from the world include telephones, automatic data-
processing machines, voice recording and regeneration devices, turbojet parts and turbo 
propellers, processors and printers.  

274 VDMA and McKinsey & Company. (2016). How to succeed: Strategic options for European machinery. 
Available at: https://www.mckinsey.de/files/vdma_european_machinery_2016.pdf 
275 VDMA and McKinsey & Company. (2016). How to succeed: Strategic options for European machinery. 
Available at: https://www.mckinsey.de/files/vdma_european_machinery_2016.pdf 
276 Eurostat. (2017). EU trade since 1988 by HS2-HS4. Available at: 
http://ec.europa.eu/eurostat/web/international-trade-in-goods/data/database  
277 Source: own calculations based on trade data supplied by the European Commission. 

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5.2.3  Trade in machinery under the GSP 
In  this  section,  we  will  explore  the  impact  of  the  GSP  arrangements  on  producers  and 
industries  in  beneficiary  countries,  including  the  impact  of  the  reduction  of  beneficiary 
countries post reform. 

Imports of machinery under Section S-16 are the third largest category of imports under 
the GSP, following Section S-11 on textiles and clothing and Section S-12 on footwear, 
headgear, umbrellas and similar products. The Section’s  share in the  total GSP imports 
has remained relatively constant over the period 2011-2016, fluctuating between 7 and 
9 per cent. In 2016, the share of machinery in total GSP imports was 8 per cent. 

The  main  sectoral  imports  from  GSP  beneficiary  countries  are  different  from  those 
imported  from  the  rest  of  the  world.  Under  the  GSP,  the  EU  mainly  imports  ignition 
wiring sets, internal combustion piston engine parts, and static converters, parts of taps, 
cocks, valves, video recording devices, smoothing irons, and electric accumulators.  

Table 37: EU imports of machinery from GSP beneficiaries in millions of euros (2011-
2016) 

Arrangement 

2011 

2012 

2013 

2014 

2015 

2016 

Imports from Standard 
GSP beneficiaries 
Imports from GSP+ 
beneficiaries 
Imports from EBA 
beneficiaries 

Total imports from 
GSP beneficiaries 

Total imports with GSP 
preferences 
Total machinery 
imports 

43,011 

45,907 

49,011 

23,927 

22,392 

24,936 

5,333 

5,714 

5,511 

5,488 

4,442 

3,806 

66 

69 

67 

102 

187 

287 

48,410 

51,690 

54,589 

29,517 

27,021 

29,029 

6,955 

7,326 

7,641 

5,493 

4,425 

4,694 

323,627  324,106  314,064  328,325  383,289  381,195 

Source: Authors’ calculations based on trade data supplied by the European Commission. 

EU  imports  of  machinery  from  GSP  beneficiaries  were  relatively  small  over  the  period 
under  investigation  –  they  accounted  for  less  than  20  per  cent  of  total  EU  imports  of 
machinery from 2011 to 2013 and, since 2014, for less than 10 per cent. While the total 
imports experienced an upward trend over the past years, 

Table  37 shows that the imports from GSP beneficiaries significantly declined since the 
reformed  scheme  was  introduced.  Imports  steadily  increased  from  2011  to  2013; 
however in 2014, imports from GSP beneficiary countries dropped by almost 45 per cent 
compared to 2013. This sharp decline can be explained by the reduction in the number 
of beneficiary countries post GSP reform. As a result of the tightened eligibility criteria, a 
number  of  the  dominant  exporters  of  machinery  to  the  EU  –  such  as  Malaysia,  Mexico, 
Tunisia  and  Costa  Rica  –  no  longer  met  the  scheme’s  eligibility  criteria.  The  decline  in 
2015  can  be  further  explained  by  the  graduation  of  Thailand  from  the  GSP  in  2015. 
Notably in 2014, Thailand exported EUR 7,129 million worth of machinery to the EU. 

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GSP+ Countries

Standard GSP Countries

EBA Countries

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Under GSP Regime

Under MFN Trade

Figure 24: EU imports of machinery from GSP beneficiary countries by tariff regime 
(2016)278 

Figure  24  reveals  that  GSP  beneficiaries  largely  export  their  products  under  MFN 
arrangements  rather  than  under  the  GSP.  Standard  GSP  beneficiaries  utilized  their 
preferences the most of all the three categories of beneficiaries. As previously shown in 
Table 36, of the EUR 29,029 million worth of machinery imports from GSP beneficiaries in 
2016,  only  EUR  4,694  million  were  imported  using  GSP  preferences.  This  amounted  to 
16  per  cent  of  total  imports  from  GSP  beneficiary  countries.  There  are  several  possible 
explanations for this, for example a lack of awareness about GSP preferences, difficulties 
in  meeting  the  RoO  criteria  or  limited  benefits  from  using  the  scheme  due  to  low 
preference  margins  or  time-consuming  paperwork.  The  preference  margins  for 
machinery  are  relatively  low  compared  to  some  other  GSP  Sections  –  on  average  2.06 
per  cent  for  Standard  GSP  and  2.32  per  cent  for  GSP+  and  EBA.  This  is  only  a  slight 
decrease from the margin in 2011, which was 2.07 per cent for Standard GSP and 2.35 
per cent for GSP+ and EBA.  

278 Source: own calculations based on trade data supplied by the European Commission. 

147 

 
 
 
 
 
                                                 
EUROPEAN COMMISSION 

R
U
E
N
O
I
L
L
I
M
N
I

9.000

8.000

7.000

6.000

5.000

4.000

3.000

2.000

1.000

0

2011

2012

2013

2014

2015

2016

Figure 25: EU imports of machinery under GSP (2011-2016)279 

In 2011, the  EU imported  EUR 6,955 million worth  of machinery with GSP preferences, 
which  decreased  to  EUR  4,964  million  in  2016.  The  EU  mainly imported  from  Standard 
GSP beneficiaries under the scheme, which was evidenced by the relatively high import 
value  and  high  utilisation  rates.  More  than  half  of  the  imports  under  the  scheme  came 
from India, followed by Indonesia at almost 20 per cent and Ukraine with almost 13 per 
cent.  The  Philippines  was  the  only  significant  GSP+  beneficiary  country  which  exported 
under the scheme over the period, which accounted for a 4.8 per cent share in 2016.  EU 
imports of machinery under the GSP (by beneficiary country) for the years 2011 to 2016 
are depicted in Figure 26 below.  

279 Source: own calculations based on trade data supplied by the European Commission. 

148 

 
 
 
 
 
                                                 
 
 
EUROPEAN COMMISSION 

0,2%

0,6% 4,8%

12,1%

50,5%

12,9%

18,9%

India

Indonesia

Ukraine

Vietnam

Sri Lanka

Philippines

Other

Figure 26: EU imports of machinery under GSP from selected beneficiary country 
(2016)280 

Standard GSP arrangement 
Between  2011  and  2013,  machinery  imports  from  Standard  GSP  beneficiaries  steadily 
increased  by  13.9  per  cent.  Figure  27  demonstrates  that  the  machinery  imports  from 
Standard  GSP  beneficiaries  decreased  by  more  than  half  after  the  introduction  of  the 
reformed scheme due to the exclusion of Standard GSP beneficiaries that no longer met 
the scheme’s eligibility criteria. The decrease in actual imports with GSP preferences was 
less  significant  –  from  EUR  7,423  million  in  2013  to  EUR  5,292  million  in  2014.  This 
further  decreased  due  to  the  exclusion  of  Thailand  to  EUR  4,459  million  in  2016. 
However  between  2015  and  2016,  overall  imports  from  Standard  GSP  beneficiaries 
increased by 6.9 per cent, while imports with GSP preferences increased by 6.1 per cent. 
Nevertheless,  this  increase  was  not  sufficient  to  reach  to  the  amount  of  trade  prior  to 
GSP reform. 

280 Ibid. Pie chart is to be read in a clock-wise direction.  

149 

 
 
 
 
 
 
 
                                                 
EUROPEAN COMMISSION 

60.000

50.000

40.000

30.000

20.000

10.000

R
U
E
N
O
I
L
L
I
M
N
I

0
2011

2012

2013

2014

2015

2016

Total imports

Imports under GSP

Figure 27: EU machinery imports from Standard GSP beneficiaries by tariff regime 
(2011-2016)281 

Over  the  period  2011-2016,  the  five  main  exporters  under  the  Standard  GSP 
arrangement  were  India,  Indonesia,  Ukraine,  Vietnam  and  Sri  Lanka,  as  displayed  in 
Figure  28  below.  Other  beneficiary  countries  exported  less  than  EUR  1  million  of 
machinery  to  the  EU  in  2016.  With  the  exception  of  Sri  Lanka,  all  the  aforementioned 
four  countries  have  managed  to  increase  their  exports  under  the  GSP  since  2014.  The 
utilisation  of  preferences  by  Standard  GSP  beneficiaries  is  relatively  high  compared  to 
GSP+  and  EBA  beneficiaries.  Both  India  and  Ukraine  exported  more  than  half  of  their 
machinery  products  under  the  GSP  in  2016,  while  for  Indonesia,  GSP  exports  in  this 
category  was  more  than  40  per  cent.  Sri  Lanka  used  preferences  for  approximately  25 
per cent of its exports. However, Vietnam exported less than 5 per cent of its products 
under GSP. 

281 Source: own calculations based on trade data supplied by the European Commission. 

150 

 
 
 
 
 
                                                 
 
 
 
EUROPEAN COMMISSION 

Sri Lanka

Vietnam

Ukraine

Indonesia

India

0,0

500,0

1.000,0

1.500,0

2.000,0

2.500,0

IN MILLION EUR

2016

2015

2014

2013

2012

2011

Figure 28: EU machinery imports under Standard GSP from selected Standard GSP 
countries (2011-2016)282 

Due  to  the  low  utilisation  of  GSP  preferences  by  Vietnam,  Figure  28  provides  a 
somewhat distorted view of machinery imports from Vietnam. In fact, Vietnam is by far 
the largest exporter of machinery of all the GSP beneficiaries. However, the majority of 
its  machinery  products  are  exported  under  MFN  arrangements  rather  than  under  the 
GSP.  

Since 2011, Vietnam has managed to increase its exports to the  EU  by almost 400 per 
cent – from EUR 3,467 million in 2011 to EUR 17,268 million in 2016. In fact, the share 
of  imports  from  Vietnam  in  total  EU  imports  from  Standard  GSP  beneficiaries  has 
increased from less than 10 per cent in 2011 to more than 20 per cent in 2013, and has 
further  increased  to  almost  70  per  cent  in  2016  (see  Figure  29).  This  has  been 
predominantly due to an increase in the exports of telephones for cellular networks (CN 
85171200).  

Exports of telephones for cellular networks accounted for 70 per cent of Vietnam’s total 
machinery exports to the EU in 2011, and were valued at EUR 2, 411 million. By 2016, 
exports of these products increased to approximately EUR 10, 554 million and accounted 
for  61  per  cent  of  Vietnam’s  total  machinery  exports  to  the  EU.  Importantly,  these 
cellular  telephones  are  eligible  for  MFN  duty-free  treatment  in  the  EU  market;  hence, 
there  is  no  preference  margin  under  the  GSP.  Further  research  has  also  revealed  that 
the top three machinery exports from Vietnam in 2016 entered the EU at MFN duty-free 
rates. These exports represented almost 78 per cent of Vietnam’s machinery exports in 
2016.  

Similar to its MFN exports to the EU exports, Vietnam’s GSP exports have also increased 
from  EUR  100  million  in  2011  to  EUR  566  million  in  2016.  However,  owing  to  the  fact 
that  the  EU  and  Vietnam  have  concluded  an  FTA  in  February  2016,  Vietnam  will  soon 
become  ineligible  for  GSP  preferences.  Vietnam  will  cease  to  benefit  from  GSP 
preferences two years after provisional application of the FTA. 

282 Source: own calculations based on trade data supplied by the European Commission. 

151 

 
 
 
 
 
 
 
                                                 
EUROPEAN COMMISSION 

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

2011

2012

2013

2014

2015

2016

Total EU Imports of Machinery from Standard GSP Countries

EU Imports of Machinery from Vietnam

Figure 29: Share of EU machinery imports from Vietnam (2011-2016)283 

GSP+ arrangement 
As  demonstrated  by  Table  37above,  machinery  imports  from  GSP+  beneficiaries  have 
declined over the period. However, the downward trend only started in 2015. This can be 
explained by the gradual reduction of exports from Costa Rica as it transitioned to a free 
trade  agreement  regime  with  the  EU.  Nevertheless,  it  is  revealed  in  Figure  30  that 
GSP+ countries utilized their preferences more in 2016 compared to 2011, moving from 
EUR 127 million to EUR 229 million. 

R
U
E
N
O
I
L
L
I
M
N
I

6.000

5.000

4.000

3.000

2.000

1.000

0

2011

2012

2013

2014

2015

2016

Total imports

Imports under GSP+

Figure 30: EU machinery imports from GSP+ countries (2011-2016)284 

283 Ibid.  
284 Source: own calculations based on trade data supplied by the European Commission. 

152 

 
 
 
 
 
 
 
 
                                                 
 
 
EUROPEAN COMMISSION 

In 2016, the two main exporters under the GSP+ arrangement were the Philippines and 
Pakistan, as displayed in Figure 31 below. In 2015, Armenia also exported machinery to 
the EU under the GSP+ arrangement, but only for EUR 70,000 worth of goods. While the 
Philippines  have  steadily  increased  their  machinery  exports  under  the  GSP+,  Pakistan’s 
machinery  exports  have  remained  relatively  stable  despite  the  additional  preferences 
received  when  the  country  was  granted  GSP+  status  in  2014.  This  performance  of 
Pakistan’s  machinery  exports  could  reflect  supply  and  capacity  constraints  in  the 
machinery industry. 

Utilisation  of  GSP  preferences  in  the  exportation  of  machinery  has  been  low  for  GSP+ 
beneficiary  countries.  In  2016,  Pakistan  exported  approximately  17  per  cent  of  its 
machinery products under the GSP+, while the Philippines and Armenia used preferences 
for  7  and  6  per  cent  of  their  exports,  respectively.  Other  GSP+  beneficiaries  –  notably 
Mongolia, Paraguay, Cape Verde and Bolivia – exported machinery to the EU in the years 
under  investigation,  but  did  not  utilise  GSP+  preferences.  This  may  reflect  that  GSP+ 
preference margins for Section XVI were comparatively low at 1.7 per cent (see Chapter 
2 above) and furthermore that some products benefitted from duty-free treatment under 
MFN (e.g. under the Information Technology Agreement). 

Figure 31: EU machinery imports under GSP+ from selected GSP+ countries (2011-
2016)285 

Figure  32  reveals  the  dominance  of  machinery  imports  from  the  Philippines  post  GSP 
reform  compared  to  other  GSP+  beneficiary  countries.  Imports  have  been  generally 
volatile  over  the  review  period;  however,  the  value  of  the  imports  was  greater  in  2016 
compared  to  2011.  The  Philippines  increased  its  machinery  exports  by  23.9  per  cent 
from  EUR  3,044  in  2011  to  EUR  3,773  million  in  2016.    The  GSP+  arrangement 
facilitated these increased machinery exports. 

285 Source: own calculations based on trade data supplied by the European Commission. 

153 

 
 
 
 
 
                                                 
EUROPEAN COMMISSION 

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

2011

2012

2013

2014

2015

2016

EU Imports of Machinery from the Philippines

Total EU Imports of Machinery from GSP+ Countries

Figure 32: Share of EU machinery imports from the Philippines (2011-2016)286 

EBA arrangement  
The  share  of  imports  from  EBA  beneficiaries  in  the  total  machinery  imports  is  small  – 
0.075 per cent in 2016. Similarly, the EBA beneficiaries accounted for only 0.92 per cent 
of the total machinery imports from GSP beneficiaries.  

Table  37  shows  that  EU  machinery  imports  from  EBA  beneficiaries  have  steadily 
increased  since  2011,  with  a  significant  increase  in  imports  since  2014.  Between  2011 
and  2013,  imports  increased  by  1.7  percent;  while  between  2014  and  2016,  imports 
increased by 182.2 per cent. In terms of value, imports increased from EUR 66.4 million 
in  2011  to  EUR  287.9  million  in  2016.  This  can  partly  be  attributed  to  the  revised 
eligibility criteria under the reformed scheme, which excluded a number of big exporters 
of  machinery.  Total  EU  machinery  imports  with  EBA  preferences  have  also  significantly 
increased  –  by  51.6  per  cent  between  2011  and  2013  and  by  128.3  per  cent  between 
2014 and 2016. Machinery imports with EBA preferences make up 0.11 per  cent of the 
total machinery imports with GSP preferences. 

286 Ibid.  

154 

 
 
 
 
 
 
                                                 
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300

250

200

150

100

50

R
U
E
N
O
I
L
L
I
M
N
I

0
2011

2012

2013

2014

2015

2016

Total imports

Imports under EBA

Figure 33: EU machinery imports under EBA (2011-2016)287 

There  are  only  five  EBA  beneficiary  countries  that  exported  a  significant  part  of  their 
products  using  preferences:  Myanmar/Burma,  Cambodia,  Laos,  Bangladesh  and  Nepal. 
Myanmar/Burma’s  exports  under  EBA  have  rapidly increased  since  its  preferences  were 
reinstated  in  2013.  For  other  EBA  beneficiaries,  exports  under  the  scheme  have  either 
heavily fluctuated or decreased over the years. 

287 Source: own calculations based on trade data supplied by the European Commission. 

155 

 
 
 
 
 
 
                                                 
 
 
EUROPEAN COMMISSION 

Nepal

Bangladesh

Laos

Cambodia

Myanmar/Burma

0,0

0,2

0,4

0,6

0,8

1,0

1,2

1,4

1,6

1,8

2016

2015

2014

2013

2012

2011

Figure 34: EU machinery imports under EBA from selected EBA countries (2011-2016)288 

Utilisation  of  preferences  has  been  particularly  low  for  EBA  beneficiaries  compared  to 
Standard GSP and GSP+ beneficiaries. While all EBA countries export some machinery to 
the  EU,  only  13  countries  use  EBA  preferences.  Myanmar/Burma,  Cambodia  and 
Bangladesh  exported  approximately  10  per  cent  of  their  machinery  products  using  EBA 
preferences.  Nepal  used  preferences  for  14.6  per  cent  of  its  exports.  On  the  contrary, 
Laos utilised preferences for 80 per cent of its machinery exports. 

Due  to  the  low  utilisation  rate  of  preferences  by  some  EBA  beneficiaries,  Figure  35  
reveals  the  trends  of  machinery  exporting  EBA  countries,  particularly  those  that  hold  a 
more significant share in the total EBA imports. Of these countries, Ethiopia, and Angola 
exported more than EUR 5 million worth of goods to the EU.  

288 Source: own calculations based on trade data supplied by the European Commission. 

156 

 
 
 
 
 
 
 
                                                 
EUROPEAN COMMISSION 

R
U
E
N
O
I
L
L
I
M
N
I

150

125

100

75

50

25

0

2011

2012

2013

2014

2015

2016

Ethiopia

Angola

Figure 35: Machinery imports from Ethiopia and Angola in millions of euros (2011-
2016)289 

Ethiopia  and  Angola  have  managed  to  significantly  increase  their  machinery  exports  to 
the  EU  without  any  significant  utilisation  of  EBA  preferences.  Imports  from  Angola 
decreased  between  2011  and  2013  by  26.6  per  cent  after  which  they  significantly 
increased  by  252.5  per  cent  between  2014  and  2016.  Angola's  share  in  total  EBA 
imports decreased over the review period, from 21.5 per cent to 14.9 per cent. Similarly, 
Ethiopia’s  exports  first  decreased  by  7.1  per  cent  between  2011  and  2013.  Between 
2014 and 2016, Ethiopia expanded its exports by 5584.6 per cent, from EUR 2.6 million 
to  EUR  147.8  million.  Shiferaw  (2017)  provides  an  analysis  of  productive  capacity  and 
economic growth in Ethiopia and emphasizes the importance of direct foreign investment 
as well as economic zones. 290 

289 Ibid. 
290 See https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/publication/CDP-bp-2017-
34.pdf  

157 

 
 
 
 
 
                                                 
 
 
EUROPEAN COMMISSION 

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

2011

2012

2013

2014

2015

2016

EU Imports of Machinery from Ethiopia

Total EU Imports of Machinery from EBA Countries

Figure 36: Share of EU machinery imports from Ethiopia (2011-2016)291 

Global exporters of machinery to the EU 
We further investigate the global competitiveness of GSP machinery exporters in the EU 
market.  As  displayed  in  Figure  37  below,  the  top  10  exporters  to  the  EU  market  are 
China,  Japan,  Malaysia,  South  Korea,  Switzerland,  Taiwan,  Thailand,  Turkey,  USA,  and 
Vietnam. China has consistently been the lead  exporter of machinery to the  EU market 
over the period under investigation.  

In  2016,  China’s  exports  of  machinery  to  the  EU  market  accounted  for  EUR  162,700 
million  to  the  EU,  with  the  USA  (EUR  36,900  million),  and  Japan  (EUR  24,300  million) 
falling behind. The remaining countries’ exports fell within a similar range, between EUR 
14,000 to 31,000.  

291 Source: own calculations based on trade data supplied by the European Commission. 

158 

 
 
 
 
 
 
                                                 
EUROPEAN COMMISSION 

R
U
E
N
O
I
L
L
I

M
N
I

180000

160000

140000

120000

100000

80000

60000

40000

20000

0

Pre-Regulation

Post-Regulation

China

Japan

Malaysia

South Korea Switzerland

Taiwan

Thailand

Turkey

USA

Vietnam

Figure 37: Top 10 exporters of machinery to the EU market292 

Vietnam,  as  illustrated  in  Figure  38  below,  is  most  notable  with  respect  to  pre-
regulation  and  post-regulation  differences.  After  the  reform,  Vietnam  has  seen  a 
substantial  growth  of  approximately  83  per  cent  in  exports  of  machinery  to  the  EU 
market293, while Japan seems to see diminishing growth of approximately -10 per cent. 
The average growth for most of the top 10 is fluctuating from 3 to 23 per cent.  

292 Source: own calculations based on trade data supplied by the European Commission. 
293 The majority of these machinery exports from Vietnam following the reform in 2014 were not exported 
using GSP preferences. In fact, in 2016, only 3.2 per  cent of Vietnamese machinery exports were exported 
using Standard GSP preferences.  

159 

 
 
 
 
 
 
                                                 
 
 
EUROPEAN COMMISSION 

100,00%

80,00%

60,00%

40,00%

20,00%

0,00%

-20,00%

Figure 38: Top 10 exporters of machinery to the EU: pre- and post-reform changes294 

% Change

5.2.4  Impact on producers in the beneficiary countries 
In this section, we will explore how the GSP has impacted competition in the machinery 
sector  in  the  EU  market.  Furthermore,  we  will  examine  the  impact  on  production  costs 
and  overall  competitiveness  for  EU  producers  that  rely  on  imports  under  GSP 
preferences, as well as the impact on overall costs for EU consumers. 

EU imports of machinery have been relatively volatile under the review period. However, 
overall  there  has  been  an  upward  trend  in  machinery  imports.  EU  machinery  imports 
from  GSP  beneficiary  countries  increased  until  2014,  when  several  main  exporting 
countries  were  excluded  from  the  scheme.  The  recent  exclusion  of  Thailand  further 
contributed to this downward trend. This development is reflected in the trend in imports 
using  GSP  preferences,  which  similarly  declined  in  2014  and  2015  and  only  increased 
again in 2016. However, due to the low utilisation of preferences, the impact on imports 
using GSP preferences was less significant.  

There is a significant difference in the imports from different beneficiary groups. Imports 
from Standard GSP beneficiaries were most affected by the exclusion of beneficiaries and 
followed  a  trend  similar  to  the  one  described  above.  Imports  from  GSP+  beneficiaries 
increased  until  2014,  after  which  they  continued  to  decrease.  However,  the  imports 
using GSP+ preferences have increased since 2014. The imports from EBA beneficiaries 
have rapidly increased from 2014 onwards. 

The low utilisation of preferences under all three arrangements, but in particular the EBA 
and GSP+ arrangements, makes it difficult to assess the extent to which the scheme has 
positively  contributed  to  the  expanding  exports  from  the  beneficiary  countries.  Some 
beneficiary  countries,  such  as  Vietnam  (Standard  GSP),  the  Philippines  (GSP+)  and 
Ethiopia  (EBA),  have  significantly  expanded  their  exports  to  the  EU,  especially  since 
2014.  However,  these  countries  mostly  or  completely  export  their  products  to  the  EU 
under MFN. It is therefore doubtful whether this success can be ascribed to the scheme 

294 Source: own calculations based on trade data supplied by the European Commission. 

160 

 
 
 
 
 
                                                 
EUROPEAN COMMISSION 

at all. Other factors may have a more significant impact on their expansion of machinery 
exports. For example, in the case of Ethiopia, the Government actively seeks to promote 
its manufacturing industry through its Growth and Transformation Plans (GTPs). 

It  is  furthermore  difficult  to  assess  whether  these  countries  have  been  able  to  expand 
their exports as a result of the reduction in the number of beneficiaries. Due to the low 
utilisation  of  preferences,  the  exclusion  of  beneficiaries  had  a  limited  impact  on  the 
imports under the scheme. Additionally, because these countries do not fully utilise their 
preferences,  they  continue  to  compete  on  an  equal  basis  under  MFN,  as  for  most 
excluded countries there is no other preferential market access arrangement in place. 

The low utilisation of preferences does provide potential for beneficiaries to benefit from 
the scheme. The GSP can provide an important opportunity and incentive for beneficiary 
countries to diversify their exports towards machinery. 

5.2.5  Impact on producers in the EU 
In this section, we will assess how the  GSP has impacted competition in the machinery 
sector  in  the  EU  market.  Furthermore,  we  will  examine  the  impact  on  production  costs 
and  overall  competitiveness  for  EU  producers  that  rely  on  imports  under  GSP 
preferences, as well as the impact on overall costs for EU consumers.  

The  negative  impact  of  the  scheme  on  producers  in  the  EU  is  expected  to  be  relatively 
limited for a number of reasons. First of all, the EU only imports a small percentage of its 
machinery products from GSP beneficiary countries. This has further decreased since the 
reformed  scheme  entered  into  force  in  2014,  as  a  number  of  main  exporting  countries 
were excluded from GSP preferences. In 2016, only 7.6 per cent of the total machinery 
imports originated from GSP beneficiaries. 

Secondly,  the  average  preference  margin  for  GSP  Section  S-16  is  relatively  low  and 
decreased  further  as  compared  to  2011.  As  such,  the  actual  duty  reduction  and 
suspension  can  provide  producers  in  the  beneficiary  countries  only  with  a  relatively 
limited competitive advantage – which they would not have had without the GSP – vis-à-
vis  EU  producers.  The  exception  could  be  for  goods  included  under  the  product  lines 
“Reception apparatus for radio-broadcasting” and “Monitors and projectors”, which have 
MFN tariffs of more than 10 per cent. 

Thirdly, the utilisation of preferences by the beneficiary countries is particularly low. This 
is especially true for GSP+ and EBA beneficiaries, which receive duty free access to the 
EU  market  for  all  products  covered  under  HS  Chapters  84  and  85.  Instead,  beneficiary 
countries  export  their  machinery  products  under  MFN.  Since  2014,  there  has  been  no 
significant increase in the utilisation of GSP preferences by the beneficiary countries. The 
machinery products imported with preference only made up 1.2 per cent of the total EU 
machinery  imports.  Thus,  only  a  small  number  of  products  that  enter  the  EU  market 
benefit from duty reduction or suspension through the scheme. 

A  number  of  beneficiaries  –  most  notably  Vietnam  (Standard  GSP),  the  Philippines 
(GSP+)  –  have  rapidly  increased  their  exports  of  machinery  products  to  the  EU  under 
the  review  period.  However,  these  countries  are  characterised  by  a  particularly  low 
utilisation  of  preferences.  The  scheme  could  have  had  a  more  substantial  impact  on 
producers in the EU if these countries were able to fully utilise their preferential access 
to the EU market. 

The positive impact of the reform regarding reduced competitive pressures faced by the 
EU  industry  is  also  expected  to  be  relatively  limited.  The  revised  eligibility  criteria 
introduced by the reform excluded some of the main machinery exporting countries from 
the  scheme,  which  could  have  a  positive  impact  on  reducing  the  competitive  pressures 
faced by EU industry. Some countries, including Costa Rica, were excluded on the basis 

161 

 
 
 
EUROPEAN COMMISSION 

of  other  preferential  market  access  arrangements  with  the  EU.  As  such,  their  exclusion 
will have a limited impact on reducing competitive pressures for EU industry. 

However,  other  countries  were  excluded  due  to  their  status  as  upper-middle  income 
country.  Without  any  other  market  access  arrangements  in  place,  these  countries  are 
subject to the Common Customs Tariff on their exports to the EU. Examples of these are 
Malaysia,  which  in  2013  exported  EUR  1,117  million  to  the  EU  using  preferences,  and 
Thailand,  which  in  2014  exported  EUR  1,538  million  to  the  EU  under  the  scheme. 
However, as mentioned above, the preference margin and the utilisation of preferences 
are  low  and  the  exclusion  of  these  countries  is  thus  only  expected  to  have  a  limited 
impact. 

The EU industry mainly faces competitive pressures from China, which is able to produce 
faster  and  at  lower  costs  than  the  EU. 295 However,  China  had  already  graduated  for 
exports  under  GSP  Section  S-16  since  Regulation  (EC)  No.  980/2005  due  to  its  high 
competitiveness  in  this  industry  and  could  thus  no  longer  benefit  from  GSP 
preferences.296 As such, the exclusion of China as a GSP beneficiary after the GSP reform 
has had no impact on the EU industry. 

The GSP provides benefits to the EU industry, which is relying on imports of machinery 
parts for its own production process. Among the ten main import products under the GSP 
are: ignition wiring sets and parts for internal combustion engines, taps and valves and 
electric  accumulators.  The  duty  reduction  and  suspension  granted  by  the  GSP  provides 
the  industry  with  lower  import  costs  and  as  such  lowers  the  production  costs  of 
machinery in the EU.297 

295 VDMA and McKinsey & Company. (2016). How to succeed: Strategic options for European machinery. 
Available at: https://www.mckinsey.de/files/vdma_european_machinery_2016.pdf 
296 Council. (2005). Council Regulation (EC) No. 980/2005 of 27 June 2005 applying a scheme of generalised 
tariff preferences. Available at: http://eur-
lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2005:169:0001:0043:EN:PDF  
297 GSP imports under section XVI as a share of total EU imports declined from 2.28 per cent to 1.35 per cent 
after the GSP reform. Hence, the aggregate impact of the GSP imports on the machinery sector is limited.   

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6  Case Studies on EBA countries 
This  section  will  provide  an  in-depth  overview  of  the  impact  of  the  EBA  on  Bangladesh 
(Section  6.1)  and  Ethiopia  (Section  6.2).  The  economic,  social  and  human  rights,  as 
well as environmental impacts of the scheme will be discussed. This will be followed by 
discussions on the distribution of gains and the unintended consequences of the scheme.  

6.1  Impact of the EBA on Bangladesh 

6.1.1  Economic impact 

The EU is a long-term trade and development partner for Bangladesh, as Bangladesh has 
enjoyed preferential access to the EU market since 1971 under the GSP. Bangladesh has 
benefitted from the Everything but Arms Arrangement (EBA) since 2001. The country is 
the  largest  beneficiary  of  the  EBA  arrangement,  accounting  for  66.2per  cent  of  all  EBA 
exports to the EU in 2016. 

Additionally, the EU is the main destination for Bangladesh’s exports, accounting for 43.3 
per cent of its total exports in 2016.298 In the same year, the value of exports to the EU 
amounted  to  EUR  16,245  million,  constituting  an  increase  of  80.4  per  cent  since  2011 
and  50.1  per  cent  since  2013.  Figure  39  below  illustrates  this  significant  increase  in 
export value.  

R
U
E
N
O
I
L
L
I

M
N

I

18.000

16.000

14.000

12.000

10.000

8.000

6.000

4.000

2.000

0

2011

2012

2013

2014

2015

2016

Figure 39: Bangladesh’s total exports to the EU (2011-2016)299 

The EBA gives Bangladesh an important competitive advantage vis-à-vis its competitors 
such as China, India, Turkey and Vietnam that do not enjoy similar preferential access, 
especially  in  the  ready-made  garment  (RMG)  sector.  In  this  sense,  the  scheme  has 
played an important role in expanding Bangladesh’s exports to the EU.  

As  illustrated  by  Figure  40below,  Bangladesh’s  export  basket  is  relatively  undiversified. 
It  consists  mainly  of  clothing,  textile  and  food  products.  HS  Chapters  61  and  62  are 

298European Commission. (2017). Available at: 
http://trade.ec.europa.eu/doclib/docs/2006/september/tradoc_113349.pdf 
299Source: own calculations based on trade data supplied by the European Commission. 

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EUROPEAN COMMISSION 

dominant in  Bangladesh’s  exports  to  the  EU  and  accounted  for  over  90  per  cent  of  the 
EU’s  total  imports  from  Bangladesh  in  2016.  The  value  of  these  exports  has  steadily 
increased over the years. 

38,51%

53,15%

2,26%

1,93%

1,90%

0,40%

0,27%

0,20%

0,18%

Apparel and clothing
(crocheted)

Apparel and clothing
(not crocheted)

Footwear

Other made up textiles

Fish and crustaceans

Vehicles

0,85%

Articles of leather

Raw hids and skins

Headgear

Tobacco and tobacco
substitues

Other

0,34%

1,50%

Figure 40: Composition of Bangladesh’s exports under EBA by HS Chapter (2016)300 

Other  EU  imports  include  fish  and  crustaceans  (HS  Chapter  3)  and  leather  goods  (HS 
Chapters  41  and  42).  These  goods  are  imported  to  a  significantly  lesser  extent  than 
textile products.  

Bangladesh has a high preference utilisation rate under the EBA. Out of the EUR 16,182 
million  eligible  exports  in  2016,  EUR  15,559  million  were  exported  using  EBA 
preferences. This constitutes an average utilisation rate of 96.35 per cent. As illustrated 
by Figure  41 below, the utilisation rate has increased by 1.76 percentage points since 
2011.  Through  the  stakeholder  consultation  process,  it  has  become  evident  that  the 
country  has  benefitted  from  the  reformed  RoO  requirements,  which  resulted  in  an 
increased  utilisation  of  EBA  preferences,  especially  for  woven  products. 301 Before  the 
reformed RoO were introduced in 2011, the utilisation rate was only 80.9 per cent. 

300 Source: own calculations based on trade data supplied by the European Commission. Pie chart is to be read 
in a clockwise direction. HS Chapters description: 3: Fish and crustaceans, molluscs and other aquatic 
invertebrates; 24: Tobacco and manufactured tobacco substitutes; 41: Raw hides and skins (other than 
furskins) and leather; 42: Articles of leather; saddlery and harness; travel goods, handbags and similar 
containers; articles of animal gut (other than silk-worm gut); 61: Articles of apparel and clothing accessories, 
knitted or crocheted; 62: Articles of apparel and clothing accessories, not knitted or crocheted;63: Other made 
up textile articles; sets; worn clothing and worn textile articles; rags. 64: Footwear, gaiters and the like; parts 
of such articles; 65: Headgear and parts thereof; 87: Vehicles other than railway or tramway rolling-stock, and 
parts and accessories thereof. 
301 Stakeholder Workshop Bangladesh, 7 February 2017 

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97,50%

96,06%

96,35%

95,64% 95,70%

S
E
G
A
T
N
E
C
R
E
P
N
I

98,00%

97,50%

97,00%

96,50%

96,00%

95,50%

95,00%

94,50%

94,00%

93,50%

93,00%

R
U
E
N
O
I
L
L
I
M
N
I

18000,00

16000,00

14000,00

12000,00

10000,00

8000,00

6000,00

4000,00

2000,00

0,00

94,59%

2011

2012

2013

2014

2015

2016

Total EU Exports

GSP Eligible Exports

GSP Preferential Exports

Utilisation Rate

Figure 41: Bangladesh’s EBA preferential exports (2011-2016)302 

A  more  detailed  analysis  of  the  utilisation  rate  for  specific  export  products  shows  that 
utilisation  is  generally  high.  Despite  the  relatively  low  export  value  of  fish  and 
crustaceans, HS Chapter 3 had the highest utilisation rate in 2016 (99.9 per cent).  The 
average  utilisation  rate  for  HS  Chapters  61  to  64  in  2016  was  95.9  per  cent,  while  HS 
Chapter 53 (other vegetable textile fibres; paper yarn and woven fabrics of paper yarn) 
had the lowest utilisation rate of all the HS Chapters displayed in Figure  42. Almost 85 
per cent of these exports did not use EBA preferences. 

S
R
E
T
P
A
H
C
S
H

Other vegetable textile fibers

Headgear and parts thereof

Raw hides and skins (other than furskins) and leather

Articles of leather

Vehicles other than railway

Fish and crustaceans

Other made up textile articles

Footwear

Articles of apparel (not crocheted)

Articles of apparel (crocheted)

Bangladesh's total exports to the EU

Bangladesh's total exports under EBA

0,0

2000,0

4000,0

6000,0

8000,0 10000,0

IN MILLION EUR

Figure 42: Bangladesh’s EBA preference utilisation for top ten exports in 2016303 

302 Source: own calculations based on trade data supplied by the European Commission. 

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EUROPEAN COMMISSION 

Bangladesh  has  experienced  steady  economic  growth  over  the  past  decade,  with  an 
average  GDP  growth  of  6.2  per  cent  per  year.  Between  2011  and  2015,  the  country’s 
GDP increased from USD 128.6 billion (EUR 118.2 billion) to USD 195 billion (EUR 179.2 
billion).  In  the  same  period,  the  per  capita  GDP  increased  on  average  by  5.05  percent 
per  year,  from  USD  838.55  (EUR  770.66)  in  2011  to  USD  1211.70  (EUR  1113.59)  in 
2015.304 Overall, it can be stated that Bangladesh’s GDP growth is highly correlated with 
its export-led strategy. 

250.000.000

200.000.000

150.000.000

100.000.000

50.000.000

D
S
U
N
O
I
L
L
I
M
N
I

0

6,6

6,5

6,4

6,3

6,2

6,1

6

5,9

5,8

5,7

S
E
G
A
T
N
E
C
R
E
P
N
I

2011

2012

2013

2014

2015

GDP

GDP growth

Figure 43: GDP and GDP growth in Bangladesh (2010-2015)305 

generating 

Bangladesh’s  steady  GDP  growth  has  been 
supported  by  a  growing  industrial  sector  in  the 
country.  The  trade  facilitation  has  had  an  impact 
on  economic  development  and  poverty  reduction 
increased 
by 
investment. 
commercial 
the  EU, 
Through 
its 
Bangladesh’s 
competitiveness  by  acquiring  finance  through 
investments  and  increase  the  value  added  of  the 
country’s  produced  goods.  The  services  sector  is 

opportunities 
the  market  access 

to 
enhance 

through 
and 

industry 

growth 

can 

Figure 44: Added value of different 
sectors as percentage of Bangladesh’s 
GDP (2011, 2015) 
 Source: World Bank 

the  most  important  sector  for  Bangladesh  and  is 
consistently  accounting  for  56  per  cent  of  the 
added  value  to  the  GDP  in  both  2011  and  2015. 

303 Source: own calculations based on trade data supplied by the European Commission. HS Chapters 
description: 3: Fish and crustaceans, molluscs and other aquatic invertebrates; 41: Raw hides and skins (other 
than furskins) and leather; 42: Articles of leather; saddlery and harness; travel goods, handbags and similar 
containers; articles of animal gut (other than silk-worm gut); 53: Other vegetable textile fibers; paper yarn 
and woven fabrics of paper yarn; 61: Articles of apparel and clothing accessories, knitted or crocheted; 62: 
Articles of apparel and clothing accessories, not knitted or crocheted; 63: Other made up textile articles; sets; 
worn clothing and worn textile articles; rags; 64: Footwear, gaiters and the like; parts of such articles; 65: 
Headgear and parts thereof; 87: Vehicles other than railway or tramway rolling-stock, and parts and 
accessories thereof. 
304World Bank.(2016). World Development Indicators. Available at: 
https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?locations=BD 
305World Bank.(2015). World Development Indicators. Available at: 
http://data.worldbank.org/indicator/NY.GDP.MKTP.CD?locations=BD 

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Industry is the second most important sector and has slightly increased to 28 per cent of 
the  value  added  in  2015,  in  contrast  to  26  per  cent  in  2011.  The  agriculture  sector 
decreased from 18 per cent to 16 per cent in 2015.306 

In Bangladesh, foreign investments are protected under the Foreign Private Investment 
(Promotion and Protection) Act of 1980 which secures investments against expropriation 
by the state and state acquisition and repatriation of proceeds from sales of shares and 
profit.  Foreign  Direct  Investment  (FDI)  into  the  country  has  increased  from  USD  1,264 
million  (EUR  1,161  million)  in  2011  to  USD  3,380  million  (EUR  3,106  million)  in 
2015.307Overall,  there  seems  to  be  a  positive  correlation  between  increased  FDI  since 
2011 and the sustained increased in GDP and GSP exports over the period.  

4.000.000

3.500.000

3.000.000

2.500.000

2.000.000

1.500.000

1.000.000

500.000

0

2011

2012

2013

2014

2015

Figure 45: FDI inflows into Bangladesh (2011-2015)308 

As can be seen in Figure  45, FDI flows to Bangladesh in 2015 have increased by more 
than 167 per cent compared to 2011. This has been facilitated by a variety of incentives 
for  foreign  investors  such  as  (i)  tax  exemption  on  royalties,  technical  knowhow  and 
technical  assistance  fees  (ii)  tax  exemption  on  interests  on  foreign  loans  (iii)  tax 
exemptions on capital gains from transfer of shares by the investing company.309 

6.1.2  Social impact 

Bangladesh  is  the  eighth  most  populated  country  in  the  world,  with  an  estimated 
population of 160.1 million in 2015. Since 2010, Bangladesh’s population has grown by 
approximately 1.6 per cent per year with a continuously declining fertility rate to around 
2.1  births  per  woman.310 This  population  growth  constitutes  considerable  challenges  in 

306World Bank.(2015). World Development Indicators. Available at: 
http://data.worldbank.org/indicator/NV.SRV.TETC.ZS?locations=BD 
307World Bank.(2015). World Development Indicators. Available at: 
http://data.worldbank.org/indicator/BX.KLT.DINV.CD.WD?locations=BD 
308World Bank.(2015). World Development Indicators. Available at: 
http://data.worldbank.org/indicator/BX.KLT.DINV.CD.WD?locations=BD 
309Abdin MJ. (2015). Foreign Direct Investment (FDI) in Bangladesh: Trends, Challenges and 
Recommendations. Available at: https://www.omicsonline.com/open-access/foreign-direct-investment-fdi-in-
bangladesh-trends-challenges--recommendations-2162-6359-1000276.pdf 
310World Bank. (2016). Available at: http://data.worldbank.org/indicator/SP.DYN.TFRT.IN?locations=BD 

167 

 
 
 
 
 
 
                                                 
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terms  of  resources,  employment  opportunities,  income  distribution,  poverty  and  social 
protection.  

In  this  section,  we  will explore  the  impact  of  the  EBA  arrangement  on  employment,  on 
the  four  pillars  of  the  Decent  Work  Agenda  (job  creation,  labour  standards,  social 
protection and social dialogue), on working conditions, on poverty reduction, on human 
rights and on gender equality in Bangladesh. 

Employment  
Labour  is  one  of  the  main  factors  of  production  in  Bangladesh  and  constitutes 
Bangladesh’s comparative advantage in labour-intensive manufacturing. Bangladesh has 
an estimated total labour force of 72.027 million people. ILO estimates suggest that 43.2 
per cent of the female population was active in paid labour in 2016, which constitutes an 
increase of 2.2 per cent compared to 2010. The labour market participation rate for the 
male population is higher and stands at 81.05 per cent.311 

The informal economy is a significant factor  of the country’s growth dynamics and now 
contributes to 43 per cent of GDP. Wages in the informal economy are on average 8 per 
cent  lower.  The  female  population  is  particularly  affected,  as  women’s  wages  are  only 
two-thirds of men’s earnings in the country. The informal economy is dominating private 
households  and  sectors  such  as  agriculture,  mining  and  construction.  Additionally,  the 
informal economy is more prevalent in rural areas than in the urban areas.312 

The overall unemployment rate has remained relatively stable, on average 4.2 per cent 
between  2011  and  2016. 313  However,  it  has  been  found  that  unemployment  affects 
young workers (14-24) more than other groups. Notably, the unemployment rate for this 
category  has  increased  from  8.4  per  cent  in  2011  to  10.5  per  cent  in  2016,  with 
unemployment  among  young  female  workers  being  higher  than  that  of  young  male 
workers.314In  the  midst  of  slowing  job  creation  in  dominant  sectors  such  as  the  RMG 
sector,  the  results  suggest  that  youth  may  be  disproportionally  affected  by  the  slow-
down, thus threatening the inclusiveness of the Bangladeshi labour market.315 

According  to  statistics  retrieved  from  the  ILO,  employment  in  the  agricultural  sector  in 
Bangladesh  is  continuously  decreasing,  while  employment  in  the  industrial  and  service 
sector is increasing.316 In 2011, employment in agriculture was recorded at 46.7 percent 
of total employment in Bangladesh, falling to 40.6 percent in 2017. While employment in 
agriculture  has  decreased,  employment  in  the  industrial  sector  has  increased.  In  2011, 
the  industry  sector  accounted  for  17.6  percent  of  total  employment,  increasing  to  19.1 
per  cent  in  2017.  The  gender  composition  in  the  aforementioned  sectors  is  also 
noteworthy.  The  share  of  women  in  agriculture  is  much  higher  than  that  of  men,  while 
the share of women in the industrial sector is increasing.317 

The RMG sector employs about 4.2 million workers in Bangladesh and indirectly supports 
40  million  Bangladeshi  (25  per  cent  of  the  population).318 Despite  continuous  economic 
growth,  the  pace  of  job  creation  in  Bangladesh  has  fallen  sharply  in  recent  years. 
According to a recent report by the World Bank, one of the reasons for the slowdown in 

311 World Bank (2016) Available at: http://data.worldbank.org/indicator/SL.IND.EMPL.MA.ZS?locations=BD 
312Ulandssekretariatet.(2014). Bangladesh Labour Market Profile. Available at: 
http://www.ulandssekretariatet.dk/sites/default/files/uploads/public/PDF/LMP/lmp_bangladesh_2014_final_ver
sion.pdf 
313World Bank. Available at: http://data.worldbank.org/indicator/SL.UEM.TOTL.ZS?locations=BD 
314World Bank. Available at: http://data.worldbank.org/indicator/SL.UEM.TOTL.NE.ZS?locations=BD 
315ILO. (2017). Available at: http://www.ilo.org/ilostat/faces/ilostat-home/home?_adf.ctrl-
state=12azrduusn_70&_afrLoop=10587144780320#! 
316Ibid. 
317 Ibid. 
318European Commission. (2016). Bangladesh Sustainability Compact: Technical Status Report. Available at: 
http://trade.ec.europa.eu/doclib/docs/2016/august/tradoc_154841.pdf 

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employment  is  the  stagnation  of  job  growth  in  the  RMG  sector.319 The  average  number 
of jobs added per year in the RMG and textiles sectors has declined from over 300,000 
between 2003 and 2010 to only around 60,000 since 2010. This slowdown in job growth 
in the RMG sector is suggested to have contributed to the stagnating female labour force 
participation.320 Between 2011 and 2013, female labour force participation in Bangladesh 
grew  by  0.5  percent,  from  44.0  to  44.5.  During  the  review  period,  2014-2016,  female 
labour force participation grew by 0.1 percent. 

The RMG sector has an inherent gender dimension as nearly 80 per cent of the employed 
workforce  is  made  up  of  women.321 Women  benefit  from  the  employment  opportunity, 
which has a significant effect on empowerment and social change in the country.322 The 
RMG sector therefore has had positive effects on freedom, wealth and empowerment of 
Bangladesh’s female population and decreases women’s vulnerability and the possibility 
of domestic violence.323 

Despite  the  dominance  and  profitability  of  Bangladesh’s  garment  sector,  wage 
development in the sector has stagnated in recent years. In 2013, there was an increase 
in  the  monthly  minimum  wage  from  BDT  3000  (around  34  EUR)  to  5300  BDT  (around 
EUR  60).  This  was  immediately  following  the  Rana  Plaza  collapse.  However,  recent 
demands for increased wages have been met by arrests and other sanctions against the 
workers. 324 One  major  problem  in  Bangladesh  concerns  safety  conditions  in  the  RMG 
factories  across  the  country.  The  loss  of  1,136  lives  in the  Rana  Plaza  collapse  in  2013 
has  directed  attention  towards  the  devastating  consequences  of  neglected  safety 
standards.  The  disaster  made  clear  to  the  Government  and  producers  alike  that  safety 
standards needed to be revised and that there was a need for fundamental changes with 
regards to compliance and monitoring. Since 2013, a variety of measures have been put 
in place to guarantee and strengthen factories’ safety.325 

Reportedly,  the  international  pressure  resulting  from  the  Rana  Plaza  collapse  has 
resulted in social improvements in the country. Action has been taken to facilitate trade 
union  registration  in  the  country  and  increased  efforts  on  occupational  safety  can  be 
detected.  The  significant  international  pressure  by  governments  as  much  as  consumers 
in combination with increased corporate responsibility has to be taken into account when 
looking into the improvements of workers’ rights and labour standards in the country.326 

In  this  context,  the  EU  has  initiated  the  Sustainability  Compact,  aiming  to  further 
promote labour rights and factory safety in Bangladesh’s RMG industry. In a coordinated 
effort  by  the  EU,  Bangladesh,  the  US,  Canada  and  the  ILO  short-  and  long-term 
commitments have been set.327 

319The World Bank.(2017). Bangladesh Development Update. Towards more, better and inclusive jobs. 
Available at: http://documents.worldbank.org/curated/en/710651506517681504/pdf/120089-WP-PUBLIC-
BDU-September-27-2017.pdf 
320 Ibid. 
321 Rahman M.H & Siddiqui S.A. (2015). Female RMG worker: Economic Contribution in Bangladesh. Available 
at: http://www.ijsrp.org/research-paper-0915/ijsrp-p4579.pdf 
322Rahman M.H & Siddiqui S.A. (2015). Female RMG worker: Economic Contribution in Bangladesh. Available 
at:  http://www.ijsrp.org/research-paper-0915/ijsrp-p4579.pdf 
323ILO. (2014). A quiet revolution: Women in Bangladesh. Available at: http://www.ilo.org/global/about-the-
ilo/newsroom/news/WCMS_234670/lang--en/index.htm 
324 Development and Cooperation (2017) One law for all. Available at: 
https://www.dandc.eu/en/article/bangladeshs-labour-legislation-has-improved-more-needs-happen. Clean 
Clothes Campaign (2016) Wage struggle in Bangladesh. Available at: 
https://cleanclothes.org/resources/background/background-wage-struggle-bangladesh-december-2016 
325Barua U & Ansary M.A. (2016). Workplace safety in Bangladesh Ready-made garment sector: 3 years after 
the Rana Plaza collapse. Available at: 
http://www.tandfonline.com/doi/abs/10.1080/10803548.2016.1251150?needAccess=true&journalCode=tose2
0 
326Stakeholder Contribution, 6. February 2017; Stakeholder Contribution 21 March 2017  
327European Commission. (2016). Bangladesh Sustainability Compact: Technical Status Report. Available at: 
http://trade.ec.europa.eu/doclib/docs/2016/august/tradoc_154841.pdf 

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Stakeholders  have  also  emphasized  that  safety  conditions  have  also  improved  in 
factories  in  Bangladesh  since  the  Rana  Plaza  disaster. 328  It  was  noted  that  safety 
conditions  have  improved  as  a  result  of  increased  monitoring  from  international  buyers 
and  through  the  Bangladesh  Sustainability  Compact.  In  relation  to  the  former,  it  was 
also noted that vigilance varies according to the type of factories. First, there is the main 
factory  that  maintains  direct  contact  with  external  buyers  and  has  to  be  compliant. 
Second, there are  sub-factories that are less accountable. These are  established during 
intense  production  due  to  tight  deadlines.  They  generally  do  not  maintain  very  good 
compliance, and therefore should be better regulated.  

On another note, there seems to be persistent mistrust between employers and workers. 
Despite the fact that the number of registered trade unions has increased considerably, 
significant  barriers  in  communication  remain  between  employers  and  workers.  This 
mistrust  is  further  increased  by  the  fact  that  only  50  trade  unions  have  established 
successful dialogue between workers and employers to improve working conditions.329 

Stakeholders  also  commented  that  workers  may  not  have  significant  bargaining  power 
because  the  demand  for  jobs  is  much  higher  than  the  offers. 330  However,  positive 
changes in the governance process are allowing more workers to collectively claim their 
rights.  It  was  further  recommended  that  industries  in  Bangladesh  should  employ  more 
corporate social responsibility practices.  

Poverty reduction 
Bangladesh is experiencing a uniform and steady decline in poverty rates due to changes 
in demographics and growth in labour income. The most recent World Bank data shows, 
that  poverty  at  the  national  poverty  lines  has  declined  from  48.9  per  cent  in  2000  to 
31.5  per  cent  in  2010.331 This  constitutes  a  decline  in  the  number  of  poor  people  from 
nearly 63 million in 2000 to 47 million in 2010.332  During the period under review, using 
the  international  extreme  poverty  line,  poverty  fell  from  18.5%  in  2010  to  13.8%  in 
2016.  The  World  Bank  has  expressed  the  opinion  that  the  country  is  on  track  to  reach 
the first Sustainable Development Goal of eradicating extreme poverty by 2030.333 

Additionally, further data reveals that there have been positive developments in poverty 
rates  in  more  recent  years.  According  to  the  Global  Multidimensional  Poverty  Index 
(MPI)334,  49.5  per  cent  of  the  population  in  Bangladesh  suffered  from  multidimensional 
poverty in 2011. By 2014, this figure decreased to 40.7 per cent. 

As mentioned during the Stakeholder Outreach Workshop on the EU’s GSP in Bangladesh, 
the  EBA  arrangement  has  positively 
infrastructure  development  and 
productivity, which has further reduced the poverty rate in Bangladesh.335 

impacted 

328The Institute for Policy, Advocacy, and Governance (IPAG) Stakeholder Contribution. 
329 Stakeholder Workshop Bangladesh, 7 February 2017  
330 Anonymous Stakeholder Contribution 
331World Bank. (2016). Available at: http://data.worldbank.org/indicator/SI.POV.NAHC?locations=BD 
332World Bank. (2013). Bangladesh Poverty Assessment: A decade of Progress in Reducing Poverty. Available 
at: http://www.worldbank.org/en/news/feature/2013/06/20/bangladesh-poverty-assessment-a-decade-of-
progress-in-reducing-poverty-2000-2010 
333 See http://www.worldbank.org/en/news/feature/2017/10/24/bangladesh-continues-to-reduce-poverty-but-
at-slower-pace 
334 The Global Multidimensional Poverty Index (MPI) developed by the Oxford Poverty & Human Development 
Initiative and the UNDP, examines poverty by identifying overlapping deprivations suffered by individuals at 
the same time, across three dimensions: health, education and standard of living. The MPI value, which ranges 
from zero to one, is calculated by multiplying the incidence of poverty by the average intensity of poverty. The 
MPI shows the proportion of deprivations that a country’s poor people experience out of the total possible 
deprivations that would be experienced if every person in the society were poor and deprived in every 
indicator. 
335 Stakeholder Workshop Bangladesh, 7 February 2017  

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According  to  a  stakeholder  who  participated  in  an  interview  with  the  Project  Team,  an 
effective  way  to  reduce  poverty  is  by  creating  employment  opportunities  for  the 
impoverished  people.  The  industrialisation  process  of  the  RMG  sector  has  created 
millions  of  new  job  opportunities  for  the  people.  An  estimated  4.2  million  people  work 
directly in the RMG  sector  and almost 40  million peoples’ incomes are generated either 
directly  or  indirectly  by  this  sector,  subsequently increasing  the  per  capita income.  The 
development  of  the  RMG  sector  has  had  a  considerable  impact  on  improving  the 
purchasing power capacity of low-income people, particularly for women that come from 
rural communities who tend to seek employment in factories in urban areas. The growth 
of  the  sector  has  also  led  to  improvements  in  infrastructure,  which  has  positively 
impacted productivity in the country.336 

Other  stakeholders  that  have  participated  in  the  interview  process  have  further 
highlighted  that  the  development  of  the  manufacturing  sector  has  both  directly  and 
indirectly contributed to the reduction of poverty in the country.  Given the dominance of 
production  and  exports  emanating  from  RMG  factories  in  this  industry,  it  can  be 
concluded  that  this  development  can  to  a  great  extent  be  attributed  to  the  EBA 
arrangement provided by the EU. 337 

Human rights 

In Bangladesh, human rights, political rights and civil liberties have been under pressure 
due  to  turmoil  in  the  country.  Bangladesh  has  been  the  location  of  a  highly  volatile 
political environment, political violence and severe instances of opposition and repression. 
Between  2011  and  2017,  Bangladesh  received  scores  between  3.5  and  4.0  338in  both 
Freedom House indicators for political rights and civil liberties. These scores indicate that 
the country’s human rights conditions have been trending downwards, which is explained 
by a series of high-profile murders by Islamist militants, increasing restrictions on critical 
journalists, and censorship of media content.339 

In  Bangladesh,  freedom  of  expression  and  assembly  are  formally  guaranteed. 
Nonetheless, a variety of instances point towards these freedoms being heavily restricted 
in  the  country.  Reportedly,  opposition  activists  have  been  restrained  and  opposition 
gatherings  forbidden  prior  to  the  elections.  The  repression  of  the  opposition  in 
Bangladesh has a long-standing history and has been exercised by both major parties.340 

The World Bank Worldwide Governance Indicators demonstrate perceptions on a number 
of  systemic features, including (i) voice and accountability: citizen political participation 
and civil freedoms; (ii) political stability and absence of violence or terrorism; (iii) rule of 
law:  confidence  in  the  Government,  judicial  system  and  society;  and  (iv)  control  of 
corruption: use of public power for personal gain. Bangladesh scores  particularly low in 
terms of political stability and incidence of violence. This can be explained by the failure 
to  contain  violent  extremism  and  the  re-occurring  political  violence.341 Bangladesh  also 
scores low on the indicator for control of corruption and the rule of law. There is strong 
influence in judicial affairs and widespread practices of politicization and corruption in the 
judicial branch in Bangladesh. 

A  stakeholder  who  participated  in  an  interview  with  the  Project  Team  also  emphasized 
the lack of procedural fairness in law in the country, highlighting a specific case in which 
a  union  has  been  waiting  for  five  years  to  become  recognized,  despite  existing  judge 

336 Bangladesh Knitwear Manufacturers and Export Association, Stakeholder Contribution 
337 Bangladesh Foreign Trade Institute, Stakeholder Contribution 
338 Scores range from 1 (most free) to 7 (least free).  
339Freedom House.(2017). Freedom in the World – Bangladesh profile. Available at: 
https://freedomhouse.org/report/freedom-world/2017/bangladesh 
340 Crisis Group. (2015). Mapping Bangladesh’s Political Crisis. Available at: 
https://www.crisisgroup.org/asia/south-asia/bangladesh/mapping-bangladesh-s-political-crisis 
341World Bank.Worldwide Governance Indicators Interactive Data Access. Available at: 
http://info.worldbank.org/governance/wgi/index.aspx#reports 

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rulings in favour of the recognition. Additionally, challenges with regards to civil liberties 
not being respected, exist. In 2016, 40 trade unionists were arrested but later released 
without being charged.342 

In  2016,  Transparency  International  ranked  Bangladesh  145th  out  of  176  countries  on 
the  Corruption  Perception  Index  (CPI).  The  country’s  ranking  has  been  slightly 
decreasing in the past years and the score shows that Bangladesh’s population does not 
trust the Government’s ability to tackle corruption in the country.343 

In Bangladesh, widespread corruption continues to hinder the country’s good governance 
dimension. The political system is endemically impeded by features such as the misuse 
of  public  office  for  personal  gain  and  close  links  between  politicians,  law  enforcement 
authorities and bribery. Despite the establishment of the Anti-Corruption Commission in 
the  country,  this  situation  has  not  improved  because  the  Commission  as  such  is 
reportedly highly politicized.344 

Gender equality  
Bangladesh  is  the  leading  South  Asian  country  with  regards  to  gender  equality.  In  the 
2016  Global  Gender  Gap  Report,  Bangladesh  ranked  72nd  out  of  144  countries,  with  an 
overall score of 0.698 (0.0= imparity, 1.0=parity). Comparing the results to 2006, when 
Bangladesh ranked 91st of 115 countries with a score of 0.627, the country has improved 
its  score  in  political  empowerment  of  women,  health  and  survival,  educational 
attainment.  However,  the  score  for  economic  participation  and  opportunity  has  slightly 
decreased.  This  partly  stems  from  the  limited  presence  of  women  as  legislators,  senior 
officials and managers, where nearly perfect imparity exists.  

Additionally,  the  number  of  women  as  professional  and  technical  workers  remains  low, 
partly illustrating the large feminization of agriculture and certain industries, such as the 
RMG  industry.  With  regards  to  educational  attainment,  no  gender  gap  is  found  in 
enrolment  in  primary  and  secondary  education;  however,  women  in  Bangladesh  are 
underrepresented in the enrolment in tertiary education.345 In terms of wage equality for 
similar work between genders, Bangladesh rank 122nd out of 144 countries, with a score 
of 0.535, thus indicating a quite substantial gender wage gap. In 2013, the country had 
a similar score of 0.53, thus showing no improvements in the last years.346 

According  to  a  stakeholder  who  participated  in  an  interview  with  the  Project  Team, 
growth  in  the  export-oriented  sectors,  mainly  the  RMG,  has  significantly  impacted  the 
social  status  of  women  and  helped  break  down  the  social  stigma  against  women  in 
Bangladesh.  Increased  employment  opportunities  for  women  and  subsequent  economic 
empowerment  have  made  their  voices  stronger,  both  in  household  decisions  and  in 
society.  Women  have  more  access  to  and  control  of  resources,  prejudices  against 
employment of women are diminishing and women are excelling in managerial positions. 
Thus, gender inequality in Bangladesh has significantly reduced.347 

6.1.3  Environmental impact 
In this section, we will assess the impact of the EBA on the environment in Bangladesh. 
The  section  first  reviews  overall  trends,  drawing  on  indicators  of  environmental 

342 UNI Global Union, Stakeholder Contribution 
343Transparency International.(2016). Bangladesh. Available at: http://www.transparency.org/country/BGD 
344 Bertelsmann Stiftung. (2016). BTI Bangladesh Country Report. Available at: http://www.bti-
project.org/fileadmin/files/BTI/Downloads/Reports/2016/pdf/BTI_2016_Bangladesh.pdf 
345World Economic Forum. (2016). The Global Gender Gap Report 2016. Available at: 
http://reports.weforum.org/global-gender-gap-report-2016/economies/#economy=BGD 
346World Economic Forum. (2013). The Global Gender Gap Report 2013. Available at: 
http://www3.weforum.org/docs/WEF_GenderGap_Report_2013.pdf 
347 Bangladesh Foreign Trade Institute, Stakeholder Contribution 

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performance,  natural  resources,  biodiversity,  climate  change,  air  pollution  and  solid 
waste.  The  section  then  considers  environmental  impacts  associated  with  key  products 
that are exported under the GSP. 

Some  evidence  suggests  that  the  GSP  has  led  exporters  to  improve  the  environmental 
performance of their production processes.348 For example, as a result of the EBA, textile 
factories in Bangladesh have introduced more environmentally friendly technologies (e.g. 
for water re-use). 

Environmental quality  
The  Environmental  Performance  Index  (EPI)  illustrates  Bangladesh’s  performance  on 
meeting environmental policy targets for priority issues. The  EPI assesses the country’s 
ecosystem  vitality,  by  analysing  the  protection  of  the  ecosystem  and  natural  resource 
management.  It  also  examines  environmental  health,  that  is,  the  protection  of  human 
health  from  environmental  harm.  In  2016,  the  country  ranked  173rd  out  of  the  180 
countries analysed. Compared to 2014, when Bangladesh ranked 169th of 178 countries, 
the overall EPI score for Bangladesh has declined slightly. This is mainly due to increased 
air pollution, the degradation of farm land and decreased fish stock.349 

The  environmental  impact  of  the  recent  economic  growth  in  Bangladesh  is  the  most 
evident  in  air  and  water  quality  degradation,  as  well  as  in  increased  Greenhouse  Gas 
emissions  (GHG).  Bangladesh’s  CO2  emissions  have  more  than  doubled  over  the  past 
two decades.350 

In line with global green initiatives, a large number of factories in Bangladesh have made 
efforts  to  mitigate  the  environmental  damage  resulting  from  the  increased  production. 
Markedly, Bangladeshi companies are applying for green certifications and EU producers 
increasingly  ask  for  sustainable  production  practices  from  their  trading  partners  in  the 
country. 351  This  improvement  has  been  supported  by  increased  consumer  awareness 
particularly in the  EU. Large  EU garment brands have reacted to consumer criticism on 
environmentally  degrading  production  practices  and  developed  corporate  responsibility. 
These  companies have  invested in production sites in Bangladesh to improve the water 
filtration mechanisms and address other environmentally degrading practices.352 

Despite  recent  efforts  to  fight  environmental  degradation,  when  looking  closer  at 
renewable energy consumption in Bangladesh, we can see that it has steadily decreased 
during 2010-2014, from 41.1 to 37.5 per cent of total final energy consumption.353 Due 
to lack of long-term data on electricity production from renewable sources, it is difficult 
to  assess  usage  overtime.  However,  data  from  2013  and  2014  shows  that  electricity 
from  renewable  sources,  excluding  hydroelectric,  account  for  approximately  0.26  per 
cent of total electricity production. In 2014, 98.68 per cent of total electricity production 
came from oil, gas and coal, which is a slight increase from 2010, when it stood at 98.21 
per cent.354 

The  usage  of  biofuels  is  still  limited  in  Bangladesh;  thus  no  reliable  data  exists. 
Furthermore, the Agriculture Minister of Bangladesh has not been in favour of the idea of 

348 This is an example of the “technique effect”: trade liberalisation and foreign investment allow the transfer of 
environmentally friendly technologies, thus producing positive environmental effects. See Grossman G. M. and 
Krueger A. B., Environmental impacts of a North American free trade agreement, 1991, 
http://www.nber.org/papers/w3914.pdf 
349Yale University.Environmental Performance Index. Available at: http://epi.yale.edu/ 
350World Bank. Available at: http://data.worldbank.org/indicator/EN.ATM.CO2E.KT?locations=BD 
351 Stakeholder Workshop Bangladesh, 7 February 2017  
352 Stakeholder Contribution, 7 April 2017  
353The World Bank. (2017). Available at: https://data.worldbank.org/indicator?tab=all 
354 Ibid. 

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cultivating crops for biofuels as it is a water intensive industry, and additionally it would 
reduce food cultivation.355 

Waste water and solid waste 
Industry  related  waste  water  and  extensive  aquaculture  farming  have  caused 
encroachment of  rivers  and other water bodies in the country. Reports suggest that 11 
per cent of Bangladeshi rivers are polluted, mainly due to industry waste. One example 
can  be  seen  in  the  Buringanga  River,  where  lethal  levels  of  dissolved  oxygen  among 
other pollutants like plastics, sewage and dead animals have been detected.356 

RMG  products  are  the  dominant  exports  for  Bangladesh  and,  therefore,  have  an 
important  impact  on  the  environmental  conditions  in  the  country.  The  centres  for  the 
RMG industry are Chittagong, Khulna, around Dhaka and Narayanganj city, where 75 per 
cent  of  the  garment  factories  are  located.  The  industry’s  main  environmental  impact 
manifests  itself  through  externalities  and  waste  generation.  In  Narayanganj  city  alone, 
120 to 125 tons of waste is generated on a daily basis.357 

While there is little official data on waste collection and waste treatment in Bangladesh, 
it has been estimated that, due to lack of motivation, awareness, commitment, expertise 
as  well  as  money,  around  40-60%  of  the  waste  in  Bangladesh  is  not  properly  stored, 
collected  or  disposed  in  the  designated  places.358 In  addition  to  the  environmental  and 
health  hazards  the  open  disposal  and  dumping  is  causing,  the  uncollected  waste  also 
creates a heavy drainage problem, especially in the monsoon season.359 

Further  evidence  suggests  that  crop  production,  fish  processing,  food  and  beverage 
processing,  tanning  and  leather  finishing,  and  textile  manufacturing  all  contribute  to 
water pollution, as well as organic and inorganic waste production in Bangladesh.  

Natural resources  
Chemical  pollutants  from  the  RMG  industry  impact  Bangladesh’s  rivers,  coastal  and 
marine  environment  through  high  waste  water  generation.  Furthermore,  it  affects  the 
soil  through  land  filling,  as  well  as  the  air  and  atmosphere  in  the  cities.360 The  main 
causes  that  allow  for  this  detrimental  effect  on  the  environment  are  improper  waste 
management and the lack of enforcement of regulations. 

Forest  area,  as  per  cent  of  total  land  area,  has  continuously  decreased  during  the  last 
years. In 2011, forest covered 11.06 per cent of total land area; however, in 2015 it had 
declined to 10.98 per cent. A similar decrease can be seen in agricultural land which has 
decreased from 70.12 per cent in 2011, to 69.90 per cent in 2014. 

Data  from  the  World  Bank  indicates  that  the  total  fisheries  production  has  increased 
from  3.1  million  metric  tons  in  2011  to  3.7  million  metric  tons  in  2015.361 Turning  the 
focus  to  the  situation  of  fish  stock  in  Bangladesh,  the  EPI  index  illustrates  a  worrying 

355Biofuels International. (2015). Bangladesh Agriculture Minister bashes biofuels. Available at: http://biofuels-
news.com/display_news/9902/bangladesh_agriculture_minister_bashes_biofuels/ 
356Kibria, M. G. et al. (2015). Buriganga River Pollution: Its Causes and Impacts. Available at: 
https://www.researchgate.net/profile/Md_Nurul_Kadir/publication/287759957_Buriganga_River_Pollution_Its_
Causes_and_Impacts/links/5679220b08ae2786c5535d33/Buriganga-River-Pollution-Its-Causes-and-
Impacts.pdf 
357 Ahmed, A & Shahnaz H. (2013)0 Available at: 
http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.681.8915&rep=rep1&type=pdf 
358Suraiya, Y & Md Imranur, R. (2017). A Review of Solid Waste Management Practice in Dhaka City, 
Bangladesh. Available at: http://article.sciencepublishinggroup.com/pdf/10.11648.j.ijepp.20170502.11.pdf 
359 Ibid. 
360Md. Masud Alom. (2016). Effects on Environment and Health by Garments Factory Waste in Narayanganj 
City, Dhaka 
361The World Bank. (2017). Available at: https://data.worldbank.org/indicator?tab=all 

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development.  The  percentage  of  fishing  stocks  overexploited  and  collapsed  from 
exclusive economic zones increased from 0.94 in 2007 to 2.36 in 2010.362 

Water is another natural resource that is limited in Bangladesh. Looking at the ND-Gain 
index,  we  can  see  that  vulnerability  in  terms  of  water,  including  projected  change  of 
annual runoff, projected change of annual groundwater recharge, fresh water withdrawal 
rate,  water  dependency  ratio,  dam  capacity,  and  access  to  reliable  drinking  water,  has 
declined slightly from 0.602 in 2013 to 0.600 in 2015.363 Looking at water resources, we 
can see that the renewable internal freshwater resources per capita have decreased from 
674 cubic meters in 2012 to 658 cubic meters in 2014.364 

With regard to the land tenure system in Bangladesh, it has been estimated that 58% of 
the  farmland  is  operated  by  owners  (who  do  not  rent  out  any  land),  40%  by  owner-
tenants,  and  just  2%  by  pure  tenants.  Bangladesh  has  an  underdeveloped  system  of 
land  tenure  and  property  rights,  rendering  many  of  its  poorest  landless.  Such  families 
end up living on sandbars or swamplands that disappear during even minor floods. Due 
to  the  frequent  natural  disasters  in  Bangladesh,  a  growing  number  of  citizens  are 
incapable of fully recovering from such economic grievances.365 

Biodiversity  
Due  to  the  geographic  location  of  Bangladesh,  it  is  one  of  the  most  ecologically 
significant  and biologically  diverse  landscapes.  Despite  having  a  number  of  policies  and 
institutions to protect and conserve forests and wildlife in place, as well as, a system of 
protected  areas,  including  national  parks,  wildlife  sanctuaries  and  ecologically  critical 
areas,  lack  of  enforcement  has  resulted  in  severe  degradation  and  loss  of  natural 
habitats  and  ecosystems.366 The  natural  ecosystem  of  Bangladesh  can  be  divided  into 
forests,  inland  water  ecosystems  and  coastal  and  marine  ecosystems.  The  small 
remaining  forest  ecosystems  of  the  country  are  biodiversity  rich;  however,  it  has  been 
estimated to decline with the  rate 2,600 hectares per year. The inland wetlands, which 
cover  roughly  25  per  cent  of  the  total  land  surface,  are  home  to  numerous  species  of 
plants,  fish  and  wildlife  and  wintering  grounds  for  migratory  birds.367 In  2014,  2.5  per 
cent  of  all  territorial  waters  were  marine  protected  areas.  Similarly,  4.6  per  cent  of  all 
land area was protected.368 

The  Environmental  Performance  Index  suggests  that  biodiversity  and  habitat  protection 
have improved slightly from a score of 61.95 in 2013, to 63.77 in 2016. However, during 
the  last  10  years,  it  seems  that  the  overall  development  of  terrestrial  protected  areas 
and national species protection has become worse.369Some products exported under EBA, 
notably shrimp, are linked to impacts on biodiversity. 

Air pollution  
In Bangladesh, air pollution constitutes a significant environmental and health problem. 
In Dhaka, the  recorded share  of lead in the atmosphere  exceeds the  UN recommended 

362Yale University.(2016). Environmental Performance Index. Available at: 
http://epi.yale.edu/country/bangladesh 
363ND-Gain Index. (2015). Available at: http://index.gain.org/ 
364The World Bank. (2017). Available at: https://data.worldbank.org/indicator?tab=all 
365Tenaw, S. et al. (2009).Effects of land tenure and property rights on agricultural productivity in Ethiopia, 
Namibia and Bangladesh. Available at: 
http://www.fao.org/fileadmin/user_upload/fsn/docs/HLPE/Discussion_Paper_33.pdf 
366United States Agency for International Development.(2016). Bangladesh tropical forests and biodiversity 
assessment. Available at: https://www.usaid.gov/sites/default/files/documents/1865/Bangladesh-Tropical-
Forests-and-Biodiversity-Assessment-2016.pdf 
367 Ibid. 
368The World Bank. (2017). Available at: https://data.worldbank.org/indicator?tab=all 
369 Yale University. (2016). Environmental Performance Index. Available at: 
http://epi.yale.edu/country/bangladesh 

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safe  levels  by  a  factor  of  over  a  100. 370 The  bad  air  quality  in  the  urban  centres  is 
reportedly caused by vehicle and industrial emissions. The traffic-caused air pollution is a 
result of the lack of standards on engine emissions; whereas the industrial emissions are 
largely due to emission of fumes, dusts and gases, such as hydrogen sulphide, ammonia 
and chlorine.371 The large scale of air pollution in Bangladesh also manifests itself in the 
WHO  statistics  ranking  respiratory  and  pulmonary  related  diseases  among  the  highest 
causes of deaths in the country.372 

The  Environmental  Performance  Index  illustrates  the  development  of  air  quality  in 
Bangladesh.  The  2016  report  indicates  that  air  quality  has  declined  during  the  last  ten 
years, and currently Bangladesh is ranked last of all 180 countries assessed, in terms of 
air quality. This is mainly driven by extremely high levels of exposure to PM2.5. Although 
the  most  recent  data  is  from  2011,  it  seems  that  nitrogen  dioxide  emissions  have  also 
increased in Bangladesh, from 0.52 in 2010 to 0.57 in 2011.373 

As  described  at  the  end  of  this  section,  products  linked  to  Bangladesh’s  exports  under 
EBA,  in  particular  ready-made  garments  (RMG)  and  other  textiles,  are  linked  to  air 
pollution.  

Climate change  
Bangladesh is highly vulnerable to climate change and the global rising of temperatures. 
From  1994-2014,  a  total  number  of  222  natural  events  related  to  climate  change  have 
occurred in Bangladesh.374 With its vast coastline, low-lying land and abundance of rivers, 
the  country  faces  extreme  risks  as  sea  levels  rise  and  natural  calamities,  such  as 
cyclones, floods and droughts, are expected to intensify.  

Bangladesh’s  vulnerability  towards  the  impacts  of  climate  change  has  decreased  since 
1995 but has stagnated in recent years. The country’s readiness indicating its ability to 
leverage  investments  and  convert  them  to  adaptation  actions  has  increased  over  the 
same time span.   

Nitrous  oxide  emissions  are  emissions  from  agricultural  biomass  burning,  industrial 
activities, and livestock management. The most recent data from the World Bank shows 
increasing  levels  of  such  emissions  in  2012.  In  2010,  nitrous  oxide  emissions  had 
increased  by  61.46  per  cent  compared  to  year  1990.  In  2012,  the  percentage  change 
from 1990 for nitrous oxide emissions was 64.6 per cent, illustrating an increasing trend. 
Similarly, methane emissions (% change from 1990) have increased steadily from 18.36 
per cent in 2010 to 20.72 per cent in 2012.375 

Looking closer at the CO2 emissions, it seems that those from manufacturing industries 
and construction have  decreased  slightly from 17.3 per cent  of total fuel combustion in 
2011  to  16.34  per  cent  in  2014.  The  biggest  CO2  emissions  come  from  electricity  and 
heat production which have increased from 47.44 in 2011 to 52.80 per cent of total fuel 
combustion in 2014.376 

Lastly, looking at the total greenhouse gas emissions, as a per cent change from 1990, a 
clear increase can be seen.  In 2010, the total greenhouse gas  emissions in Bangladesh 

370Masukujjaman, M. et al. (2016).Economy-environment nexus for development: is Bangladesh on the right 
track? Available at: http://www.science-gate.com/IJAAS/Articles/2016-3-2/06%202016-3-2-pp.25-29.pdf 
371Hasem A. et al. (2015). Gaseous Air Pollutants and its Enviornmental effect- Emitted from the Tanning 
Industry at Hazaribagh, Bangladesh. Available at: http://www.ajer.org/papers/v4(05)/P04501380143.pdf 
372World Health Organization. (2012). Bangladesh: WHO statistical profile. Available at: 
http://www.who.int/gho/countries/bgd.pdf?ua=1 
373Environmental Performance Index. (2016). Available at: http://epi.yale.edu/country/bangladesh 
374Kreft, Sönke, et al. (2015). Global Climate Risk Index 2016: Who Suffers Most From Extreme Weather 
Events? Weather-related Loss Events in 2014 and 1995 to 2014.  
375The World Bank. (2017). Available at: https://data.worldbank.org/indicator?tab=all 
376 Ibid. 

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had  increased  by  40.1  per  cent  from  1990,  in 2012  the  percentage  change  from  1990, 
was 44.67. 377 

The  ND-GAIN  Index,  which  assesses  a  country's  vulnerability  to  climate  change  and 
other global challenges in combination with its readiness to improve resilience, indicates 
a  somewhat  steady  progress  over  the  years.  In  2015,  Bangladesh  ranked  137th  of  182 
countries assessed. Looking closer at the vulnerability score of the ND-Gain index, which 
measures a country's exposure, sensitivity and ability to adapt to the negative impact of 
climate change, we see that it has decreased over time, thus showing progress.  

The  readiness  aspect  of  the  ND-GAIN  Index  measures  a  country’s  ability  to  leverage 
investments  and  convert  them  to  actions.  While  a  general  upward  trend  can  be  seen, 
Bangladesh is still ranked 151st of 185 countries assessed, with regards to readiness.378 

Direct impacts of key products exported under EBA 
The  previous  parts  of  this  section  have  looked  at  evidence  of  overall  environmental 
changes  in  Bangladesh,  which  could  be  influenced  by  structural  changes  induced  by 
trade, including under the EBA arrangement. The following paragraphs focus on impacts 
directly related to products exported under EBA.  

As  shown  in  (Figure  40),  the  main  products  exported  by  Bangladesh  to  the  EU  under 
EBA are apparel and other textiles. Footwear and leather articles make up smaller shares 
of exports, as do fish and crustaceans. Moreover, Bangladesh’s exports in all these areas 
increased  from  the  2011-13  period  to  the  2014-16  period.  The  potential  environmental 
impacts of these exports are described in the following paragraphs. 

Bangladesh exported EUR 13,046m per year of textile products to the EU in 2014-16 (a 
49%  increase  over  2011-13).  Half  of  its  garment  exports  go  to  the  EU 379  and  the 
stakeholder consultation highlighted that the export growth  of  knitwear during the past 
20  years  has  been  closely  linked  with  the  EBA  arrangement380.  There  are  about  6500 
textile  factories  in  Bangladesh,  75%  of  which  in  Dhaka,  the  country’s  capital.  The 
industry,  which  generates  200-300  metric  tons  of  water  pollution  per  ton  of  fabric 
produced,  is  the  second-largest  contributor  to  industrial  pollution  of  the  Dhaka 
watershed,  threatening  the  supplies  of  drinking  water  for  80%  of  Dhaka’s  12m 
inhabitants.381 Another study found large quantities of effluents discharged without prior 
treatment by the textile industry in Narayanganj City, with potentially high toxicity and 
physicochemical pollutant contamination, and associated public health impacts.382  

As noted above, in interviews conducted by the Project Team with local stakeholders, it 
has been mentioned that garment factories around Dhaka are known to contribute to air 
pollution.383However,  one  stakeholder  suggested  that  trade  with  the  EU,  in  particular 

377 Ibid. 
378ND-Gain Index. (2015). Available at: http://index.gain.org/ 
379 Islam M. et al. Assessment of Environmetal Impacts for Textile Dyeing Industries in Bangladesh, 2011, 
available at 
http://www.academia.edu/21276822/Assessment_of_environmental_impacts_for_textile_dyeing_industries_in
_Bangladesh 
380 Bangladesh Knitwear Manufacturers & Exporters Association (BKMEA), 2017 
381 Natural Resources Defense Council (NRDC), Standout Practices at High-Performing Bangladeshi Textile Mills: 
How Top Resource-Efficient Factories in Bangladesh Save Money and Curb Pollution, 2012, available at 
https://www.nrdc.org/sites/default/files/cbd-textile-mills-standout-practices-bangladesh.pdf Also see The 
World Bank, How Dialogue is Shifting Bangladesh’s Textile Industry from Pollution Problem to Pollution 
Solution, 2017, available at http://www.worldbank.org/en/news/feature/2017/02/15/how-dialogue-is-shifting-
bangladeshs-textile-industry-from-pollution-problem-to-pollution-solution 
382Alom M., Effects on Environment and Health by Garments Factory Waste in Narayanganj City, Dhaka, 2016, 
available at http://article.sciencepublishinggroup.com/html/10.11648.j.ajce.20160403.13.html 
383 Institute for Policy, Advocacy, and Governance, 2017. 

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under  the  EBA  arrangement  prompted  textile  factories  to  introduce  technological 
upgrades (e.g. for water re-use) to reduce their environmental impact.384 

Bangladesh  exports  footwear  (EUR  293m  a  year  on  average  in  2014-16,  a  104% 
increase over 2011-13), raw hides and skins (EUR 60m a year on average in 2014-16, a 
24% increase over 2011-13) and articles of leather (EUR 42m a year on average, a 124% 
increase  over  2011-13)  under  the  EBA.  Tannery  industries  have  been  crucial  to  the 
economy  of  Bangladesh,  yet  they  have  discharged  untreated  wastewater  containing 
heavy  metal  chromium.385 There  were  113  tanneries  in  Bangladesh  in  2013,  producing 
180 million square feet of hides and skins per year and generating about 20,000 m3 of 
tannery  effluent  and  232  t  of  solid  waste  per  day.  The  majority  did  not  have  effluent 
treatment plants.386 The stakeholder consultation indicated that the growth in the export 
of leather goods has increased pollution (waste products and chemicals) in Hazaribagh, 
where most tanneries are located.387 

According  to  a  2012  Human  Rights  Watch  Report,  tanneries  discharge  21,000  cubic 
metres per day of untreated waste into the Buriganga River. The government has taken 
initiatives to relocate tanneries from Hazaribagh to the Savar Tannery Village, where the 
Leather  Industrial  Park  is  equipped  with  facilities  to  reduce  environmental  impacts  by 
recycling waste water and materials388. 

Fish  is  a  diet  staple  in  Bangladesh,  providing  about  60%  of  animal  protein  intake.  It 
plays  a  key  role  in  local  diets  and  livelihoods. 389  The  country  has  extensive  water 
resources  in  the  form  of  ponds,  lakes,  rivers,  etc.  covering  4.56  m  ha.390 Aquaculture 
production  exceeds  2  m  metric  tons  per  year,  and  small-scale  fishery  production  totals 
around  1.5  m  metric  tons.391 In  2014-16,  Bangladesh  exported  fish  and  crustaceans  to 
the  EU  for  a  total  annual  average  value  of  EUR  311m  under  the  EBA  (a  17%  increase 
over  2011-13):  over  half  of  these  exports  were  shrimp.  The  stakeholder  consultation 
highlighted that the access to the EU market through the EBA arrangement has led to an 
increase  of  shrimp  cultivation  in  Bangladesh.392 For  instance,  more  than  75%  of  frozen 
black tiger and fresh water shrimps are exported to the EU.393 

In  Bangladesh,  aquaculture  has  contributed  to  environmental  degradation,  biodiversity 
and disease control becoming major issues especially in coastal farming operations. The 
collection of shrimp post larvae is estimated to destroy nearly 100 other species of flora 
and  fauna  during  collection  activities.  Moreover,  mangrove  forests  are  destroyed  for 
coastal shrimp culture. The development of semi-intensive aquaculture farms has made 
the introduction of viral diseases a major concern. Inland aquaculture has contributed to 
habitat destruction and the introduction of diseases. It has been accompanied by use of 

384Bangladesh Knitwear Manufacturers & Exporters Association (BKMEA), 2017 
385Ahmed T. and Chowdhury Z., Environmental Burden of Tanneries in Bangladesh, 2016, available at 
http://conferences.iaia.org/2016/Final-Papers/Ahmed,%20Tanvir%20-
%20Environmental%20Burden%20of%20Tanneries%20in%20Bangladesh.pdf 
386 Paul H. L. et al., Bangladeshi Leather Industry: An Overview of Recent Sustainable Developments, 2013, 
available at 
https://www.researchgate.net/publication/235609270_Bangladeshi_Leather_Industry_An_Overview_of_Recent
_Sustainable_Developments 
387 Bangladesh Foreign Trade Institute, September 2017. 
388 Bangladesh Foreign Trade Institute, 2017. 
389 WorldFish, Bangladesh, 2015, available at https://www.worldfishcenter.org/country-pages/bangladesh 
390 FAO, Fishery and Aquaculture Country Profiles, no date, available at 
http://www.fao.org/fishery/countryprofiles/search/en 
391 WorldFish, Bangladesh, 2015, available at https://www.worldfishcenter.org/country-pages/bangladesh 
392 Bangladesh Foreign Trade Institute, Impact of the Everything-But-Arms (EBA) Scheme on Bangladesh - 
Comments for the 
Mid-Term Evaluation of the European Union’s Generalised Scheme of Preferences (GSP), September 2017. 
393Bangladesh Frozen Foods Exporters Association (BFFEA), 2017. 

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insecticides.394 The inter-governmental Bay of Bengal Large Marine Ecosystem (BOBLME) 
Project confirmed the negative impact of aquaculture on mangroves in the Bay of Bengal. 
It identified export-driven aquaculture as a direct driver of mangrove habitats conversion. 
Moreover, aquaculture is considered to contribute to water pollution in the Bay of Bengal 
through nutrients emissions into the water395. The stakeholder consultation for the GSP 
evaluation also noted that, while Bangladesh has taken steps to tackle pollution from the 
textile  sector,  it  has  done  less  to  counteract  the  negative  environmental  impacts  of 
shrimp cultivation.396 

In summary,  environmental conditions in Bangladesh highlights the country’s high level 
of  pressures,  which  are  affecting  air  quality,  biodiversity,  fisheries,  solid  waste  and 
freshwater resources. While Bangladesh’s score under the ND-GAIN index has improved 
slightly,  its  Environmental  Performance  Index  has  not;  for  both  indices,  Bangladesh 
scores  low.  The  links  between  overall  environmental  conditions  in  Bangladesh  and  the 
country’s exports under EBA will be at best indirect  – however, these EBA exports have 
grown rapidly, in particular in key sectors.   

The  country’s  main  exports  under  EBA  –  textiles,  including  garments;  footwear  and 
leather products; and fish and crustaceans – are related to direct environmental impacts. 
Moreover,  while  the  scale  of  exports  has  increased,  evidence  was  not  found  to  indicate 
that  environmental  impacts  were  mitigated  by  structural  or  regulatory  changes  in  the 
period.  At  the  same  time,  the  stakeholder  consultation  provided  indications  that  trade 
with the EU, in particular relations with EU purchasers, has encouraged the use of more 
environmentally friendly techniques in the textile industry.   

6.1.4  Distribution of gains 

As a developing country, it is not unusual to see an unequal distribution of gains, where 
the gap between rich and poor is extremely large. However, the recent economic growth 
caused  by  increased  production  and  subsequent  increased  income  has  also  contributed 
to  the  increased  quality  of  life  for  many  people  in  Bangladesh.  The  improved  economy 
has  created  positive  spill-over  effects  for  the  whole  society,  and  the  middle-class  has 
recently emerged.397 

Some  stakeholders  who  participated  in  interviews  with  the  Project  Team  have  opined 
that  while  gains  have  been  enjoyed  by  everyone  related  to  the  RMG  sector  to  some 
extent,  factory  owners  have  clearly  enjoyed  a  much  greater  proportion  of  the  gains 
compared  to  the  workers.398Workers  tend  to  earn  very  low  wages  even  as  the  industry 
continues  to  thrive.  Similarly,  this  point  was  supported  by  trade  unionists  and  human 
rights activists who participated in a meeting with the Project Team. 399 

The Household Income and Expenditure Survey 2016 presents a picture of the changes 
in  the  distribution  of  income  for  each  decile  of  the  population  compared  with  the 
previous  survey  conducted  in  2010,  coinciding  closely  with  the  period  under  review  in 
this evaluation.  Over the period 2010 to 2016, monthly income per capita, measured in 
Bangladesh Taka, increased by 54.1 per cent in nominal terms to Bangladesh Taka 3936 
(45.71 EUR at market exchange rates). The urban to rural income gap remained largely 

394 FAO, Fishery and Aquaculture Country Profiles, no date, available at 
http://www.fao.org/fishery/countryprofiles/search/en 
395 Bay of Bengal Large Marine Ecosystem, Transboundary Diagnostic Analysis – Vol. 1, 2012, available at 
http://www.boblme.org/documentRepository/BOBLME-2012-TDA-Volume_1.pdf 
396Madaripur Legal Aid Association, 2017. 
397 Anonymous Stakeholder Contribution 
398 The Institute for Policy, Advocacy, and Governance (IPAG), Stakeholder contribution 
399 Anonymous Stakeholder Contribution 

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unchanged  over  the  period,  with  average  per  capita  urban  incomes  remaining  76  per 
cent above the rural incomes. 

The  distribution  of  income  over  the  period  under  review  became  significantly  more 
unequal.    The  deciles  1  to  5  of  lowest  income  households  in  2016,  comprising  50  per 
cent  of  the  population,  shared  only  19.24  per  cent  of  total  income,  a  share  which  had 
declined further from 20.33 per cent of total income in 2010. The bottom 20 percent of 
the households had an income share of 5.22 per cent in 2010, which fell further to only 
3.84 per cent in 2016. The share of middle-income households in the deciles 4 to 8 did 
slightly increase by 0.2 per cent of total income, from 38.9 percent in 2010 to 39.1 per 
cent in 2016.  

In  contrast, the top 5 per  cent households had a share in total income in 2016 of 27.9 
per cent, which had increased by 3.3 per cent from 24.6 per cent in 2010. If we compare 
the average income between the top 5 per cent and the bottom 5 per cent, the average 
income  was  32  times  higher  in  2010  and  this  ratio  further  increased  to  121  times  in 
2016. The Gini-coefficient, which summarizes the overall income inequality, continues to 
increase from an already high level of 0.458 in 2010 to 0.483 in 2016.     

Over the years, Bangladeshi exports to the EU have continuously increased, resulting in 
increased  income,  economic  growth  and  government  revenue  for  the  country.  Workers 
have  definitely  benefitted.  However,  most  of  the  gains  have  accrued  to  the 
entrepreneurs.400 

Owing  to  government  initiatives  to  improve  social  security,  particularly  programmes 
focusing on health, education, and food distribution, inequality in the country is currently 
increasing,  albeit  at  a  slow  pace.  Comparing  the  situation  with  its  neighbouring 
countries, such  as  India and Sri Lanka, Bangladesh is performing better. Moreover, the 
distribution of gains has also improved in terms of gender. Due to the growth in several 
sectors,  women’s  economic  opportunities  have  increased,  and  subsequent  economic 
empowerment. 

While  the  wage  rate  in  Bangladesh  is  quite  low  compared  to  its  competitor  countries, 
wages  in  the  export-intensive  manufacturing  industries  tend  to  be  higher  than  that  of 
the  local  ones.  In  Bangladesh,  factory  owners  often  offer  workers  very  low  wages  and 
hardly any additional benefits, thus retaining the major  share of profits for themselves. 
Thus, as shown above, the level of inequality is rising fast.  

Not  only  has  the  growth  in  the  RMG  sector  directly  benefitted  people  working  in  that 
sector,  but  it  has  also  generated  a  whole  new  set  of  linkage  industries  and  facilitated 
expansion  of  many  service  sector  activities. 401  The  RMG  sector  has  thus  not  only 
propelled  the  growth  of  its  own  but  also  rendered  large  externalities  by  contributing  to 
other  economic  activities  in  different  areas  such  as  banking,  insurance,  real  estate, 
trade,  packaging,  recycling,  consumer  goods,  transportation,  as  well  as  utility  services 
and  the  hotel  and  tourism  industry.  Moreover,  the  RMG  sector  also  employs  a 
considerable number of subcontractors as well as people in its supply chain that provide 
fabrics,  yarn  and  other  ancillaries. 402  Thus,  a  large  amount  of  people  benefit  either 
directly or indirectly from the increased exports in the RMG sector under the EU’s GSP. 

400 Madaripur Legal Aid Association, Stakeholder Contribution 
401 Bangladesh Knitwear Manufacturers and Exporters Association, Stakeholder Contribution 
402 Ibid. 

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While  the  RMG  sector  is  dominating  the  exports  under  the  GSP,  the  fishing  industry  is 
also a large beneficiary. According to a stakeholder who participated in an interview with 
the Project Team, the EU’s GSP benefits many from workers to end-consumers. While EU 
consumers can buy Bangladeshi products at cheap prices, the Bangladeshi exporters can 
better  compete  with  other  developing  countries  exporting  their  products  to  the  EU 
market. Additionally, shrimp and fish farmers can sell their products at better prices, and 
workers in Bangladesh get better wages.403 

6.1.5  Unintended consequences 

Preferential  market  access  under  the  EU’s  GSP  has  led  to  both  positive  and  negative 
unintended consequences for Bangladesh. 

The EBA has created significant export opportunities to the EU market and has supported 
the  country’s  economic  growth.  Through  this  strong  economic  impact,  the  EBA  has 
created  an  incentive  for  the  Government  of  Bangladesh  to  engage  and  commit  in 
dialogues  with  the  EU  on  social,  human  rights,  environmental  and  good  governance 
dimensions. The EBA has thus strengthened the EU’s role in the country and has proved 
to be a useful instrument for EU conditionality.  

An  additional  side  effect  of  the  increased  economic  relationship  between  the  EU  and 
Bangladesh has led to a stronger role for consumers. As a result of the increased media 
attention,  following  the  Rana  Plaza  collapse,  consumer  awareness  on  degrading 
environmental  and  labour  standards  in  the  country  has  increased.  The  consumer 
awareness in combination with the corporate responsibility has brought along intensified 
efforts  by  Bangladesh’s  private  sector  to  uphold  labour  and  workers’  rights  as  well  as 
environmental standards. In the same line, international pressure and the benefits of the 
preferential market access have facilitated more trade union registration in the country. 
However, trade unionists and human rights activists continue to  call for increased trade 
union registrations across the country. 

Unlike the GSP+, the EBA does not condition its beneficiaries to sign ILO Conventions. It 
has  however  been  shown  that  the  legal  conditionality  to  adhere  to  fundamental  labour 
rights and human rights (Article 19) and the positive economic impact on the RMG sector 
has provided the EU with considerable leverage to address labour rights and freedom of 
association  with  the  Government  of  Bangladesh.  This  effect  has  been  shown  when  the 
Commission issued a warning of withdrawal of the preferences in March 2017, to which 
the Bangladeshi Government has reacted with working towards an action plan, including 
the development of a database to file complaints against violations of labour rights.   

On  the  other  hand,  this  increasing  pressure  can  result  in  a  negative  unintended 
consequence.  The  precarious  role  of  trade  and  workers’  unions  in  the  country  can 
potentially  worsen.  Given  that  the  country  is  heavily  dependent  on  EBA  preferences  in 
order to further drive economic growth, trade unionists have noted that the government 
is  particularly  wary  of  any  negative  publicity  that  may  hinder  the  continuance  of  this 
preferential treatment.  Due to the significance of the RMG sector in Bangladesh’s overall 
exports  to  the  EU  and  increased  international  attention  on  this  sector,  trade  unionists 
have noted that this has resulted in additional pressure for workers’ unions.  

The  EBA  in  Bangladesh  has  positively  impacted  the  role  of  women  in  the  society  via 
encouraging  female  employment  in  the  country.  This  is  particularly  a  result  of  the 
increased  apparel  exports  to  the  EU.  The  apparel  sector  is  significant  for  female 
employment in the country, as 80 to 85 per cent of the workers are  women. While the 
share  of  men  and  women  employed  in  manufacturing  is  roughly  the  same,  the  vast 

403 Bangladesh Frozen Foods Exporters Associations, Stakeholder contribution. 

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majority  of  RMG  sector  workers  are  female.  Hence,  the  importance  of  the  RMG  sector 
due  to  the  EBA  facilitated  increased  exports  to  the  EU  has  had  a  significant  impact  on 
gender equality in the country. It remains to be seen if gender-responsive labour market 
policies  will  be  sufficiently  implemented  to  further  strengthen  the  positive  impact  on 
female empowerment in the country.  

The strengthening of the RMG sector in Bangladesh has further had a positive impact on 
the  domestic  demand  for  apparels.  Reportedly,  demand  for  apparel  products  by 
Bangladeshi consumers has increased and so strengthened the domestic economy. 

With  regards  to  the  environment,  the  EBA  had  negative  unintended  consequences  in 
Bangladesh.  The  increased  garment  production  as  a  result  of  increased  exports  under 
the  EBA,  in  combination  with  the  lack  of  effective  environmental  standards,  has 
contributed to the degrading water, air and soil quality. While the environmental impact 
cannot  solely  be  attributed  to  the  EBA  or  the  exports  to  the  EU  overall,  it  has  an 
important  impact  given  the  dominant  role  of  the  scheme  and  its  importance  for  the 
country’s exports. 

One  positive  spill-over  effect  is  technology  transfer.  The  EU’s  GSP  has  facilitated  the 
development  of  manufacturing  sectors,  including  the  RMG,  leather  products,  light 
engineering etc. Due to the increased demand for goods from Bangladesh, these sectors 
have adopted the latest technologies to increase productivity and remain competitive in 
the  global  market.  As  automated  production  techniques  have  been  adopted  and  new 
machinery  imported,  it  has  subsequently  contributed  to  the  overall  technological 
development of the country.404 

Another  unintended  consequence  of  the  EU’s  GSP  is  its  contribution  to  rural  to  urban 
labour force migration. As most of the industrial economic activities are concentrated in 
the urban areas like Dhaka, rural labourers have migrated to the cities in large numbers. 
This  pool  on  the  one  hand  has  supported  the  industries,  but  on  the  other,  has 
overpopulated  the  cities.  The  cities  are  not  prepared  for  accommodating  such  large 
population and therefore the living conditions for a large number  of people in the cities 
are most unsatisfactory. This is translated into a rise in inequality within the urban areas. 
Moreover, social security, health hazards, access to sanitation and other basic needs etc. 
get worsened in the cities due to overpopulation. The rise in urban crime rates may also 
be attributed, to a large measure, to the huge influx of rural people to the urban areas 
like Dhaka. 

An  increasing  trend  of  migration  from  rural  to  urban  areas  and  from  agricultural  to 
industrial  sectors  have,  however,  created  some  shortage  of  labour  in  the  agricultural 
sector.  As  a  result,  wages  in  the  agricultural  sector  have  increased,  creating  a  positive 
impact on the rural economy.  

It may, however, be said in broad terms that the EU-GSP has been giving a competitive 
edge to made in Bangladesh products in the  EU  market. As a  result, exports to the  EU 
are  rising.  New  firms  are  entering  into  operation  and  producing  goods  that  are  being 
exported to the EU. This is causing rapid industrialisation in Bangladesh, increasing both 
national  and  per  capita  income,  raising  the  living  standards  of  people,  ensuring  gender 
equality  and  reducing  the  unemployment  rate.  As  a  result,  the  overall  development 
scenario of Bangladesh has steadily been improving. In summary, it may unequivocally 
be said that the EU-GSP has made a significant positive impact on Bangladesh. 

Another  stakeholder  raised  their  concern  over  the  long-term  impacts  of  the  EBA 
arrangement, as Bangladesh is so heavily dependent on the EU for their current exports. 

404 Bangladesh Foreign Trade Institute, Stakeholder Contribution 

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As  Bangladesh  will  no  longer  be  considered  an  LDC  after  2024,  and  will  thus  not  be 
eligible  for  the  EBA  arrangement,  the  lack  of  a  proper  exit  strategy  and  operational 
vision  for  the  future  of  exports  in  Bangladesh  are  somewhat  worrying.  It  has  therefore 
been  suggested  that  the  EU  could  take  a  more  active  role  and  come  forward  with  a 
supportive project on this. However, stakeholders also underlines the many benefits with 
the  current  EBA  arrangement,  which  has  facilitated  young  entrepreneurial  growth,  the 
opportunity to acknowledge new markets, as well as knowledge transfer in terms of skills 
and management.405 

405 Madaripur Legal Aid Association, Stakeholder Contribution 

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6.2  Impact of the EBA on Ethiopia 

6.2.1  Economic impact 

The  EU  is  the  main  destination  for  Ethiopia’s  exports  and  has  accounted  for  about  one 
third of the country’s total exports over the last decade. Exports to the EU increased by 
6.9  per  cent  between  2011  and  2016,  from  EUR  664  million  to  EUR  710  million.  The 
largest export increase took place between 2014 and 2015, when Ethiopia’s total exports 
to the EU increased by 22.8 per cent. 

R
U
E
N
O
I
L
L
I

M
N

I

800

700

600

500

400

300

200

100

0

2011

2012

2013

2014

2015

2016

Figure 46: Ethiopia’s exports to the EU (2011-2016)406 

As  illustrated  by  Figure  46,  exports  to  the  EU  have  steadily  increased  since  2014  by 
29.3  per  cent.  However,  between  2011  and  2013,  exports  decreased  by  almost  25  per 
cent.  This  downward  trend  can  be  explained  by  the  diversification  of  markets.  Ethiopia 
shifted from traditional trade partners, such as the EU, towards emerging markets in the 
Middle East, Asia and other African countries. Additionally, the US is an important export 
destination due to the duty-free and quota-free access provided by AGOA.407 

While  the  EBA  provides  Ethiopia  with  an  important  competitive  advantage  vis-à-vis 
Standard  GSP  beneficiaries  and  other  countries  that  do  not  receive  duty  reduction  or 
suspension,  the  country  is  increasingly  facing  stringent  competition.  Ethiopia  faces 
competition from India, which has larger production and transport facilities, allowing the 
country  to  export  larger  volumes  to  the  EU.408 Additionally,  Ethiopia  faces  competition 
from  other  EBA  and  GSP+  beneficiaries,  such  as  Uganda  and  Zambia,  which  both  have 
similar export profiles. 

406 Source: own calculations based on trade data supplied by the European Commission. 
407 International Trade Centre, Trademap; Stakeholder Meeting Ethiopia, 6 March 2017; Stakeholder Workshop 
Ethiopia, 7 March 2017 
408Stakeholder Meeting Ethiopia, 6 March 2017; Ministry of Trade of Ethiopia. (2017). Workshop 
Presentation:Ethiopia’s Perspective on EBA. Available at: http://www.gspevaluation.com/wp-
content/uploads/2016/12/Ethiopias-Perpective-on-EBA.pdf 

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EUROPEAN COMMISSION 

Figure 47: Composition of Ethiopia’s exports under EBA by HS chapter (2016)409 

As  illustrated  by  Figure  47,  Ethiopia’s  EBA  exports  to  the  EU  mainly  fall  under  HS 
Chapter  6,  live  trees  and  other  plants;  bulbs,  roots  and  the  like;  cut  flowers  and 
ornamental  foliage.  Ethiopia  has  large  floriculture  producers  and  exporters.  The  sector 
accounted for 75 per cent of the country’s total EBA exports to the EU in 2016, and has 
rapidly increased its exports to the EU over the past decades. Between 2011 and 2016, 
flower  exports  to  the  EU  increased  by  32.6  per  cent.  The  second  largest  product  group 
traded under EBA are HS Chapters 61 and HS 63, which compose textile products. These 
exports  accounted  for  11  per  cent  and  2  per  cent  of  the  total  EBA  exports  in  2016, 
respectively. 

409Source: own calculations based on trade data supplied by the European Commission. Pie chart is to be read 
in a clockwise direction. HS Chapters description: 6: Live trees and other plants; bulbs, roots and the like; cut 
flowers and ornamental foliage; 7: Edible vegetables and certain roots and tubers; 9: Coffee, tea, mate and 
spices; 19: Preparations of cereals, flour, starch or milk; pastry cooks' products; 20: Preparations of 
vegetables, fruit, nuts or other parts of plants; 41: Raw hides and skins (other than furskins) and leather; 42: 
Articles of leather; saddlery and harness; travel goods, handbags and similar containers; articles of animal gut 
(other than silk-worm gut); 61: Articles of apparel and clothing accessories, knitted or crocheted; 62: Articles 
of apparel and clothing accessories, not knitted or crocheted; 63: Other made up textile articles; sets; worn 
clothing and worn textile articles; rags. 

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97,14%

97,25%

98,02%

98,62%

76,84%

R
U
E
N
O
I
L
L
I

M
N
I

800

700

600

500

400

300

200

100

0

120%

100%

80%

61,26%

60%

40%

20%

0%

2011

2012

2013

2014

2015

2016

Total EU Exports

GSP Eligible Exports

GSP Preferential Exports

Utilisation Rate

Figure 48: Ethiopia’s EBA preference utilisation (2011-2016)410 

The  share  of  Ethiopia’s  EBA  eligible exports in its total exports to the  EU has increased 
under the review period. In 2011, this share was only 30.5 per cent. By 2016, the share 
of eligible exports increased to 56.1 per cent. Out of the EUR 710.3 million total exports 
to the EU in 2016, EUR 399.1 million was eligible for EBA preferences. 

Ethiopia’s EBA utilisation rate has been relatively volatile – increasing from 97.1 per cent 
in 2011 to 98.02 per cent in 2013, only to decrease to 76.8 per cent in 2015. In 2016, 
the average utilisation rate of Ethiopian exports further decreased to 61.2 per cent. 

Figure 49: Ethiopia’s EBA preference utilisation for top ten exports in 2016 411 

410 Source: own calculations based on trade data supplied by the European Commission. 
411Source: own calculations based on trade data supplied by the European Commission. HS Chapters 
description: 6: Live trees and other plants; bulbs, roots and the like; cut flowers and ornamental foliage; 7: 
Edible vegetables and certain roots and tubers; 9: Coffee, tea, mate and spices; 12: Oil seeds and oleaginous 
fruits: 17: Sugars and sugar confectionery: 41: Raw hides and skins (other than furskins) and leather; 61: 
Articles of apparel and clothing accessories, knitted or crocheted; 62: Articles of apparel and clothing 
accessories, not knitted or crocheted; 63: Other made up textile articles; sets; worn clothing and worn textile 
articles; rags: 84: Nuclear reactors, boilers, machinery and mechanical appliances; parts thereof. 

186 

 
 
 
 
 
                                                 
 
 
EUROPEAN COMMISSION 

Ethiopia’s main export product to the EU, coffee, is exported under the MFN tariff regime, 
where  positive  MFN  tariffs  apply.  Coffee  exports  to  the  EU  were  worth  EUR  269.97 
million in 2016, making up 38 per cent of Ethiopia’s total exports to the EU. 

A  detailed  analysis  of  the  utilisation  rate  of  specific  export  products  shows  that  the 
utilisation  rate  is  very  divergent.  The  highest  utilisation  rate  of  98.9  per  cent  can  be 
found for HS Chapter 6, which represents Ethiopia’s horticultural exports to the EU. The 
utilisation rate for this product category has remained relatively constant. High utilisation 
can  also  be  found  for  HS  Chapters  61,  62  and  63  (textiles),  which  benefitted  from  an 
utilisation rate of 90.6, 89.1 and 95.2 per cent respectively in 2016. For three out of ten 
top  export  products,  EBA  preferences  are  not  utilised,  these  include  coffee  exports,  oil 
seeds and oleaginous fruits and nuclear reactors, boilers and machinery.  

Ethiopian  producers  face  a  number  of  challenges  to  enter  the  EU  market,  several  of 
which  relate  to  technical  barriers  to  trade  and  expectations  of  the  EU  and  its  economic 
operators. 

Firstly,  stakeholders  that  have  participated  in  the  local  consultation  workshop  consider 
the  RoO  to  be  too  demanding  as  they  reported  difficulties  in  meeting  the  originating 
criteria  for  parts  of  their  exporting  goods;  thus,  Ethiopian  producers  face  origin 
compliance  issues.  The  limited  possibility  for  third  country  accumulation  is  particularly 
challenging  for  the  textile  industry,  which  relies  heavily  on  the  import  of  raw  materials 
from China.412 

Secondly, stakeholders also stated that as a result of the increasing number of bilateral 
and  multilateral  trade  agreements  that  grant  preferential  access  to  the  EU  market,  the 
preference margin is eroding. This diminishes the competitive advantage of Ethiopia and 
makes it less worthwhile for Ethiopian producers to export to the EU.413 

Thirdly,  Ethiopian  companies  face  difficulties  in  adhering  to  labour,  environmental, 
corporate  social  responsibility  and  SPS  requirements.  The  high  costs  to  comply  with 
these  standards  and  to  obtain  the  required  certification  can  create  disincentives  for 
manufactures  to  export.  Lastly,  producers  need  to  comply  with  stringent  quantity  and 
quality requirements of EU buyers. The EU market requires bulk production and a steady 
supply, which is particularly challenging for smaller businesses. In addition to this, there 
is a lack of willingness to buy from an LDC like Ethiopia, because the products are often 
perceived to be of a lower quality. This prejudice results in a lack of demand and lower 
prices for Ethiopian products.414 

To  ensure  that  it  remains  beneficial  to  import  to  the  EU  under  the  EBA,  stakeholders 
called  on  the  EU  to  address  the  provisions  for  the  RoO  and  preference  erosion  and  to 
enhance its cooperation with Ethiopia to provide technical support and capacity building 
programmes.  These  support  programmes  could  focus  on  adherence  with  RoO,  SPS  and 
other technical barriers as well as supply-side challenges.415 

Other  challenges  to  enter  the  EU  market  are  presented  by  the  supply-side  and  hamper 
the country’s ability to fully realise the potential of the EBA. These challenges include a 
limited  production  capacity,  low  industrial  development,  weak  global  competitiveness, 
weak linkages in the value-chain, a declining currency, problems with access to finance 
and low levels of technology transfer.416 

412 Stakeholder Meeting Ethiopia, 6 March 2017; Stakeholder Workshop Ethiopia, 7 March 2017 
413 Ibid 
414 Ibid  
415 Ibid 
416 Ibid 

187 

 
 
 
                                                 
EUROPEAN COMMISSION 

One of the main challenges concerns the high transport costs and slow logistics. Due to 
Ethiopia’s landlocked position, producers are therefore dependent on the port of Djibouti. 
However,  the  port  of  Djibouti  is  not  reliable,  shipping  costs  are  high  and  the  container 
waiting  time  is  long.  Additionally  it  is  particularly  challenging  for  Ethiopian  suppliers  to 
arrange insurance, which is often only possible at a high rate.417 

Another  challenge  is  presented  by  the  weak  linkages  with  international  markets. 
Marketing is a relatively new concept in Ethiopia and especially older generations do not 
understand  its  potential.  Producers  therefore  experience  difficulties  in  reaching  out  to 
European buyers and getting their products on the market.418 

A  third  challenge  is  presented  by  incoherence  between  export  promotion  policies  and 
import  substitution  policies  which  ban  or  levy  additional  taxes  on  imported  materials. 
Import  substitution  policies  create  higher  domestic  prices,  creating  a  disincentive  for 
exporting. This is particularly an issue for the textile and leather industries.419 

To  address  these  supply-side  issues,  it  is  important  to  improve  access  to  and  linkages 
with  international  markets,  enhance  the  investment  climate,  improve  production  and 
productivity,  promote  exports,  and  enhance  institutional  and  human  capacity  and  to 
implement policies tailored to the needs of specific sectors.420 

Ethiopia has experienced constant rapid economic growth over the past decade, with an 
average  GDP  growth  of  10.6  per  cent  per  year.  Between  2011  and  2015  average 
economic growth slowed down slightly to 10 per cent per year. GDP in this period almost 
doubled,  from  USD  31.9  billion  (EUR  29.3  billion) 421  to  USD  61.5  billion  (EUR  56.5 
billion). Per capita GDP increased on average by 7.3 per cent per year, from USD 355.59 
(EUR 326.80) in 2011 to USD 619.17 (EUR 569.04) in 2015.422 

D
S
U
N
O
I
L
L
I

M
N

I

70.000

60.000

50.000

40.000

30.000

20.000

10.000

0

1
1
0
2

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

GDP

GDP growth

417 Ibid 
418 Ibid 
419 Ibid  
420 Ibid 
421 Exchange rate of 16 May 2017: 1 USD = 0.91903 EUR from Infoeuro.com 
422World Bank.(2016). World Development Indicators. Available at: 
https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?locations=BD-ET 

12

10

8

6

4

2

0

S
E
G
A
T
N
E
C
R
E
P
N

I
E
T
A
R
H
T
W
O
R
G
P
D
G

188 

 
 
 
 
 
                                                 
 
 
 
 
 
 
EUROPEAN COMMISSION 

Figure 50: GDP and GDP growth in Ethiopia (2011-2015)423 

High  levels  of  economic  growth  have  been  supported  by  the  rapid  growth  in  export 
volume and value and public-sector-led development.424 The Government of Ethiopia has 
pursued an export-led growth strategy since 1991/92. Different policies and plans have 
supported  and  promoted  the  export  sector,  including  the  Agricultural  Development  Led 
Industrialisation  Strategy, 
the  Sustainable 
Development  and  Poverty  Reduction  Programme,  the  Plan  for  Accelerated  and 
Sustainable Development to End Poverty and GTP I and II.425 

Industrial  Development  Policy, 

the 

16%

10%

45%

43%

45%

the 

Until 

country’s 

2019/20, 

In GTP II, the Government has set ambitious 
economic 
targets 
for 
development. 
the 
Government  aims  to  realise  an  average  real 
GDP  growth  of  11  per  cent  per  year  and  an 
average  export  growth  rate  of  36  per  cent 
per  year.  However,  it  is  expected  that  the 
economic  growth  will  slightly  slowdown  in 
the  next  decade,  with  a  projected  real  GDP 
growth of 7 per cent per year until 2025.426 

41%

Services

Industry

Agriculture

The  services  sector  is  the  most  important 
sector  for  Ethiopia  and  provided  for  43  per 
cent  of  the  GDP  in  2015  (outer  circle),  a 
slight  decrease  from  45  per  cent  in  2011 
(inner circle). Agriculture is the second most 
important  sector  and  provided  for  41  per  cent 
of  the  value  added  in  2015,  a  slight  decrease 
from  45  per  cent  in  2011.  The  importance  of 
the  manufacturing  sector  is  increasing,  in  line 
with  the  objectives  of  the  GTP  I  and  II  to  strengthen  Ethiopia’s  manufacturing  sector  – 
value added as a percentage of the  GDP has increased from 10 per  cent in 2011 to 16 
per cent in 2015.427 

Figure 51: Added value of different 
sectors as percentage of Ethiopia’s GDP 
(2011, 2015) 
Source: World Bank 

423World Bank.(2016). World Development Indicators. Available at: 
https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?locations=BD-ET 
424 African Development Bank Group. (2016). African Economic Outlook 2016.Available at: 
https://www.afdb.org/fileadmin/uploads/afdb/Documents/Publications/AEO_2016_Report_Full_English.pdf; 
Getahun, Senait. (2014). The Contribution of Export Earnings to Economic Growth of Ethiopia: A Trend 
Analysis. Available at: 
https://opendocs.ids.ac.uk/opendocs/bitstream/handle/123456789/8690/Senait%20Getahun%20FINAL.pdf?se
quence=1; Stakeholder Workshop Ethiopia, 7 March 2017   
425 Stakeholder Workshop Ethiopia, 7 March 2017 
426Deloitte.(2016). Ethiopia Economic Outlook 2016. Available at 
https://www2.deloitte.com/content/dam/Deloitte/et/Documents/tax/Economic%20Outlook%202016%20ET.pdf 
427World Bank.(2016). World Development Indicators. Available at: 
https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?locations=BD-ET 

189 

 
 
 
 
                                                 
EUROPEAN COMMISSION 

2.500.000

2.000.000

1.500.000

1.000.000

500.000

0

D
S
U
N
O
I
L
L
I

M
N

I

W
O
L
F
N

I

I

D
F

2011

2012

2013

2014

2015

Figure 52: FDI inflows in Ethiopia (2011-2015)428 

Foreign  Direct  Investment  (FDI)  into  the  country  has  significantly  increased  by  almost 
246 per cent between 2011 and 2015.429 FDI is mainly driven by the country’s low labour 
costs,  large  workforce,  market  size  and  potential.  Especially  the  manufacturing  sector 
benefits  from  the  increased  FDI  inflow,  including  the  textile  and  food  and  beverage 
industries. The majority of the FDI in the manufacturing industries comes  from Turkey, 
China and India.430 In 2015, EU FDI inflows to Ethiopia accounted for EUR 0.2 billion.431 

6.2.2  Social impact 
With a score of 0.448 on the UN Human Development Index (HDI), Ethiopia ranked 174th 
out of the 188 countries assessed in 2015, reflecting the country’s poor performance on 
life  expectancy,  education  and  GNI  per  capita.  The  country  is  considered  to  have  low 
human  development.  Between  2000  and  2010,  Ethiopia’s  HDI  improved  on  average  by 
3.79 per cent per year. This trend slowed down between 2010 and 2015, when the HDI 
value increased on average by 1.71 per cent per year. The steady improvement on the 
HDI  can  be  attributed  to  the  high  economic  growth  and  investments  in  health  and 
education.432 

Employment 
International trade and the EBA have had an important impact on expanding production 
and  creating  job  opportunities  for  the  Ethiopian  population.  One  example  of  this  is  the 
horticulture sector, which was able to rapidly expand over the past decade with support 
from the EBA arrangement. This rapid expansion has created employment, in particular 

428World Bank.(2016). World Development Indicators. Available at: 
https://data.worldbank.org/indicator/BX.KLT.DINV.WD.GD.ZS?locations=ET 
429 Ibid. 
430Africa Outlook. (2016). Ethiopia: A Look Beyond the Boom. Available at: 
http://www.africaoutlookmag.com/news/ethiopia-a-look-beyond-the-boom; All Africa. (2017). Ethiopia: 
Towards Making Ethiopia Investment Hub. Available at: http://allafrica.com/stories/201702180276.html 
431European Commission.(2017). Ethiopia. Available at: 
http://trade.ec.europa.eu/doclib/docs/2011/january/tradoc_147264.pdf 
432UNDP. (2015). Briefing Note for Human Development Report 2015. Available at: 
http://hdr.undp.org/sites/all/themes/hdr_theme/country-notes/ETH.pdf 

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for  young  people  and  women.  As  a  result,  the  sector  is  said  to  have  improved  the 
economic and social situation of women in the country.433 

As  a  result  of  rapid  population  growth,  the  country  has  a  large  labour  force  that  has 
expanded exponentially over the past decade. Between 2011 and 2016, the labour force 
grew by 18.8 per cent  to almost 50 million.434 Labour force participation has decreased 
slightly  for  men  from  91.0  in  2011  to  90.4  per  cent  in  2015.  Women’s  labour  force 
participation has on the other hand remained constant at 80.0 per cent.435 

Taking  a  look  at  employment  composition  by  economic  sector,  ILO  data  suggests  that 
total employment in agriculture increased slightly from 69.5 per cent in 2011 to 70.5 per 
cent in 2017. In like manner, employment in the industrial sector has slightly increased 
from  8.2  per  cent  in  2013  to  8.4  per  cent  in  2017,  while  employment  in  the  service 
sector has decreased from 22.3 per cent in 2013 to 21.1 per cent in 2017.436 

While  employment  has  slightly  increased  in  the  agricultural  sector,  it  is  difficult  to 
establish a causal relationship between the GSP and increased agricultural employment. 
However,  as  women’s  share  in  agriculture  has  increased  slightly  in  recent  years,  and 
women represent 70-80 per cent of the labour force in horticulture437, the inference that 
EBA has contributed to the increased employment opportunities in the agricultural sector 
may be drawn. 

Unemployment  is  higher  amongst  women  than  amongst  men.  In  2016,  female 
unemployment  was  8.7  per  cent,  compared  to  3.1  per  cent  for  men. 438 Traditionally, 
unemployment has been higher in urban areas than in rural areas.439 However, there are 
big disparities between national and ILO estimates of unemployment, reflecting different 
in 
categorisations  and  definitions  –  national  estimates 
unemployment from 18.15 per cent in 2013 to 17.64 per cent in 2014.440 

illustrated  a  decrease 

Youth unemployment among 15-24-year-olds has increased from 7.4 per cent in 2011 to 
8.0  per  cent  in  2017.441 Besides  high  gender  inequality,  with  young  women  being  two 
times more likely to be unemployed than men, there is higher rural youth unemployment 
compared to urban youth unemployment.442 

It  has  been  estimated  that  the  number  of  people  employed  in  the  informal  sector  in 
Ethiopia has decreased especially for men, moving from 38.9 in 1999 to 18.1 per cent in 
2013.  For  women,  the  decrease  has  been  as  significant,  going  from  64.8  per  cent  in 

433 Stakeholder Workshop Ethiopia, 7 March 2017 
434World Bank.(2016). World Development Indicators. Available at: 
https://data.worldbank.org/indicator/SL.TLF.TOTL.FE.ZS?locations=ET 
435ILO. (2017). Available at: http://www.ilo.org/ilostat/faces/ilostat-home/home?_adf.ctrl-
state=12azrduusn_70&_afrLoop=10587144780320#! 
436 Ibid. 
437BSR.(2014). Working women and health in East Africa’s Agriculture Sector. Available at: 
https://www.bsr.org/reports/BSR_HERproject_East_Africa_Scoping_Study_2014.pdf 
438World Bank.(2016). Gender Statistics. Available at: 
https://data.worldbank.org/indicator/SL.UEM.TOTL.FE.ZS?locations=ET 
439ILO.(2013). Decent Work Country Profile Ethiopia. Available at: http://www.ilo.org/wcmsp5/groups/public/--
-dgreports/---integration/documents/publication/wcms_237881.pdf 
440World Bank Data. Available at: 
http://data.worldbank.org/indicator/SL.UEM.TOTL.NE.ZS?locations=ET&view=chart 
441ILO. (2017). Available at: http://www.ilo.org/ilostat/faces/ilostat-home/home?_adf.ctrl-
state=12azrduusn_70&_afrLoop=10587144780320#! 
442OECD.(2017). Key Issues affecting Youth in Ethiopia. Available at: 
http://www.oecd.org/dev/inclusivesocietiesanddevelopment/youth-issues-in-ethiopia.htm 

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1999  to  36.5  per  cent  in  2013.443 Women  who  still  work  in  the  informal  sector  tend  to 
hold jobs within family farm work and housekeeping, jobs that are often unpaid.444 

Data  on  average  monthly  earnings  in  Ethiopia  indicates  that  wages  for  women  have 
increased slightly between 2011-2013, moving from USD 43 to 51  (constant 2011 PPP). 
However,  women’s  earnings  remain  under  the  average  monthly  earnings  for  men. 445 
Moreover,  almost  three-quarters  of  youth  earn  below  the  average  monthly  wage,  and 
the majority of employed youth work in the informal sector or as unpaid family work.446 

Importantly,  the  Government  of  Ethiopia  has  ratified  all  fundamental  conventions  on 
labour  rights  and  guarantees  the  rights  of  workers  in  its  Constitution.  However,  there 
remain some challenges with the effective implementation of labour rights and standards. 
One  of  the  main  challenges  concerns  child labour.  The  law  prohibits  children  under  the 
age  of  14  to  work  and  restricts  work  for  children  between  14  and  18  years  to  non-
hazardous  occupations.  The  Government  furthermore  has  adopted  a  number  of  action 
plans  and  strategies  to  tackle  child  trafficking  and  to  eliminate  worst  forms  of  child 
labour.447 

However,  these  programs  have  not  been  sufficiently  targeting  sectors  that  have  a  high 
rate of child labour. Children in Ethiopia are still engaged in agriculture, and in the worst 
forms  of  child  labour  such  as  domestic  work  and  textile  weaving. 448  Data  from  the 
Ethiopian Government’s 2011 Demographic and Health Surveys suggest that 27 percent 
of children aged 5-17 in Ethiopia are involved in child labour. Child labour is even more 
common in rural areas and among boys. Within agriculture, child labour has been found 
in  planting  and  harvesting  apples,  cotton,  bananas  and  sugarcane,  as  well  as,  herding 
cattle  and  fishing.  Additionally,  child  labour  has  been  found  in  gold  mining,  quarrying, 
construction,  pottery  industries,  and  traditional  weaving  of  textiles,  domestic  work, 
street work, as well as forced labour and commercial sexual exploitation.449 Children are 
often trafficked  from rural areas to the traditional weaving industry in Addis Ababa and 
in the GamoGofa and Wolaita Zone for forced labour in the weaving industry.450 

Another  important  challenge  concerns  the  freedom  of  association,  the  right  to  organise 
and the right to collective bargaining. Employees in the civil service and other essential 
sections  of  society,  such  as  teachers  and  hospital  employees,  are  prohibited  by  law  to 
exercise their freedom of association and right to organise. There have reportedly been 
cases in which private employers denied the right of workers to form unions and refused 
to  collectively  bargain  with  trade  unions.  In  some  cases,  the  law  enforcement  bodies 
were  not  able  to  do  prompt  justice.  Due  to  this  negative  attitude  towards  trade  unions 
and workers that joined them, trade union membership is limited. While CETU is said to 
represent two-thirds of the union members, representing 918 basic trade unions, it only 
represents 415,515 workers451, a tiny fraction of the total labour force. 

443 Brookings. (2016). Trends in Ethiopia’s dynamic labor market. Available at: 
https://www.brookings.edu/blog/africa-in-focus/2016/08/17/trends-in-ethiopias-dynamic-labor-market/ 
444BSR.(2014). Working women and health in East Africa’s Agriculture Sector. Available at: 
https://www.bsr.org/reports/BSR_HERproject_East_Africa_Scoping_Study_2014.pdf 
445ILO. (2017). Available at: http://www.ilo.org/ilostat/faces/ilostat-home/home?_adf.ctrl-
state=12azrduusn_70&_afrLoop=10587144780320#! 
446OECD.(2017). Key Issues affecting Youth in Ethiopia. Available at: 
http://www.oecd.org/dev/inclusivesocietiesanddevelopment/youth-issues-in-ethiopia.htm 
447ILO. (2014). Decent Work Country Programme 2014-2015. Available at: 
http://www.ilo.org/public/english/bureau/program/dwcp/download/ethiopia.pdf 
448United States Department of Labor, Bureau of International Labor Affairs.(2015). 2015 Findings on the 
Worst Forms of Child Labor. Available at: https://www.dol.gov/sites/default/files/documents/ilab/reports/child-
labor/findings/2015TDA.pdf 
449 Ibid. 
450 Ibid. 
451CETU.CETU’s Affiliated Industrial Federation and Trade Unions. Available at: 
http://www.cetu.org.et/images/PDF/cetu%20affilated.pdf 

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With  regard  to  working  conditions,  occupational  health  and  safety  (OHS)  services  are 
often  inadequately  organised  and  addressed  at  workplaces  in  Ethiopia. 452  Commonly 
observed hazards in the workplace include occupational noise and dust of various types 
in  manufacturing  sectors  and  chemical  exposures  in  the  flower  industry.  This  might 
partially  be  because  of  limited  practice  in  exposure  assessment  and  monitoring.  Thus, 
injuries  that  often  lead  to  loss  of  productive  working  days  are  common.  Moreover, 
workers often lack knowledge and available information regarding workplace OHS.453 

In  terms  of  flower  production,  working  conditions  in  greenhouses  are  characterised  by 
reduced  exchange  of  air,  high  temperatures  and  high  humidity. 454  Due  to  the  large 
amount of pesticides used in production, female workers working inside the greenhouse 
have been found to have significantly higher prevalence of respiratory symptoms such as 
shortness  of  breath,  morning  cough,  and  dermatological  symptoms  such  as  rash,  than 
female workers outside the greenhouse.455 

The Country Policy and Institutional Assessment (CPIA) social protection rating assesses 
government policies in social protection and labour market regulations in order to reduce 
the risk of becoming poor, help those who are poor, and ensure a certain level of welfare 
to  all  people.  The  rating  ranges  from  1  (low)  to  6  (high).  Ethiopia  has  scored  3.5  from 
2005-2016, thus suggesting a certain stagnation in the institutional development of the 
country.456 

Poverty reduction  

Ethiopia  has  experienced  a  steady  and  significant  reduction  in  poverty  for  the  past 
decades as a result of its rapid economic growth and agricultural development. Between 
2000 and 2011, the number of people living in poverty declined by 33 per cent. Overall, 
this  decline  has  been  more  rapid  than  in  other  African  countries.  In  2011,  the  poverty 
rate  was  29.6  per  cent.  It  is  estimated  that  the  poverty  rate  has  further  decreased  to 
23.4  per  cent  in  2015. 457  Recent  data  on  Ethiopia’s  poverty  rate  is  lacking,  but 
stakeholders have noted positive trends in poverty reduction.  

It  is  reported  that  not  all  segments  of  the  population  have  equally  benefitted  from  the 
country’s  rapid  economic  growth.  However,  when  economies  develop  and  grow, 
governments are provided with more resources to put in place redistributive policies and 
tools to tackle inequality.458 While the EU provides substantial donor funded assistance to 
Ethiopia,  a  stakeholder  who  participated in  an interview  with  the  Project  Team  remains 
critical as to what extent these  contributions are benefitting the people  -  especially the 
poorest.459 

Human rights 

Political  rights  and  civil  liberties  are  very  restricted  in  Ethiopia.  According  to  Freedom 
House  ratings  on  countries  political  rights  and  civil  liberties,  a  rating  in  which  1 

452Kumie, A., et al. (2016). Occupational Health and Safety in Ethiopia: A review of Situational Analysis and 
Needs Assessment. Available at: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5578617/ 
453 Ibid. 
454Mjelde Hanssen, V. (2016). Working conditions and health of workers in Ethiopia flower farms. Available at: 
https://www.omicsonline.org/proceedings/working-conditions-and-health-of-workers-in-ethiopian-flower-
farms-46319.html 
455 Ibid. 
456World Bank.(2016). CPIA social protection rating. Available at: 
https://data.worldbank.org/indicator/IQ.CPA.PROT.XQ 
457World Bank. (2015). Poverty in Ethiopia Down 33 Percent Since 2000. Available at: 
http://www.worldbank.org/en/news/press-release/2015/01/20/poverty-ethiopia-down-33-percent 
458 Stakeholder Workshop Ethiopia, 7 March 2017 
459 Anonymous Stakeholder Contribution 

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represents  the  most  free  and  7  represents  the  least  free,  Ethiopia  had  a  score  of  6  on 
both  indicators  between  2011  and  2015.460 Furthermore,  political  rights  have  worsened 
in  recent  years,  with  a  score  of  7  for  2016  and  2017,  while  the  score  for  civil  liberties 
remained at 6. Countries with a rating of 7 on their political rights reflect a situation with 
severe  government  oppression,  sometimes  in  combination  with  extreme  violence. 
Similarly,  countries  with  a  rating  of  6  on  civil  liberties  strongly  limit  the  rights  of 
expression  and  association  and  frequently  hold  political  prisoners.  However,  some  civil 
liberties,  such  as  religious  and  social  freedoms,  might  still  exist  but  are  extremely 
restricted.461 

There  have  been  reported  cases  of  land  grabbing  and  forced  evictions,  in  particular 
affecting the region of Oromia. The Government has been accused of taking land without 
prior  consultation  or  adequate  compensation  paid  to  the  inhabitants. 462 This  is  often 
related to allocating land to foreign investors, including farmland for the floriculture and 
horticulture  industry.  Forcing  people  off  their  land  has  a  negative  social  and  human 
rights  impact  in  the  sense  that  their  livelihood  is  destroyed,  they  are  being  forced  into 
poverty and the food production is negatively affected.463 

People  who  have  spoken  up  about  the  Government’s  land  grabbing  activities  have 
consistently  been  arrested,  assaulted  and  killed.  Widespread  protests  about  the 
municipal  boundary  of  Addis  Ababa  and  about  displacement  of  farmers  have  led  to  the 
death  of  dozens  and  the  arrest  of  thousands  of  protestors.  Some  land  right  defenders 
remain  in  detention  without  charge  or  access  to  legal  counsel.  There  have  also  been 
claims of torture, arbitrary detention and sexual assault and rape during detention464.  

Another important restriction concerns non-government organisations (NGOs). The Civil 
Society Law CSP No. 621/2009 limits foreign funding for NGOs undertaking human rights 
activities  to  a  maximum  of  10  per  cent  of  their  administrative  funding.  This  severely 
hampers  the  scope  for  the  operations  of  these  organisations  and  limits  their  role  in 
society. It is especially challenging for organisations to raise 90 per cent of their funding 
locally due to the lack of donation culture and the delicate human rights situation in the 
country.  The  law  furthermore  prohibits  human  rights  activities  by  foreign  NGOs  on 
equality, children’s rights, disabled persons’ rights and conflict resolution.465 

The  World  Bank  Worldwide  Governance  Indicators  demonstrate  the  perceptions  on  a 
number of indicators, including (i) voice and accountability: citizen political participation 
and civil freedoms; (ii) political stability and absence of violence or terrorism; (iii) rule of 
law:  confidence  in  the  government,  judicial  system  and  society;  and  (iv)  control  of 
corruption: use of public power for personal gain. Ethiopia scores especially low on voice 
and accountability and political stability and absence of violence, lower than the average 

460Freedom House.Freedom in the World – Ethiopia profile. Available at: 
https://freedomhouse.org/report/freedom-world/2017/ethiopia 
461 Ibid. 
462 Fortin, J. (2016). The Ugly Side of Ethiopia’s Economic Boom. Available at: 
http://ethiopianchronicle.com/2016/03/23/the-ugly-side-of-ethiopias-economic-boom/; Amnesty International. 
Ethiopia 2016/2017. Available at: https://www.amnesty.org/en/countries/africa/ethiopia/report-ethiopia/; 
Stakeholder Workshop Ethiopia, 7 March 2017 
463Jaatee, M,.(2016). Land Grabbing and Violations of Human Rights in Ethiopia. Available at: 
http://genocidewatch.net/2016/02/01/land-grabbing-in-ethiopia/; Mitike Janko, A. Land Grabbing and the 
Socio-Economic and Environmental Destruction of Floriculture Industries in Oromia, Ethiopia. Available at: 
http://www.ayyaantuu.net/land-grabbing-and-the-socio-economic-and-environmental-destruction-of-
floriculture-industries-in-oromia-ethiopia/ 
464Human Rights Watch.(2017). Ethiopia. Available at: https://www.hrw.org/world-report/2017/country-
chapters/ethiopia; ACT Alliance stakeholder contribution 
465Human Rights Watch.(2017). Ethiopia. Available at: https://www.hrw.org/world-report/2017/country-
chapters/ethiopia; Amnesty International. (2012). Stifling Human Rights Work: The Impact of Civil Society 
Legislation in Ethiopia. Available at: http://files.amnesty.org/archives/afr250022012eng.pdf; Stakeholder 
Workshop Ethiopia, 7 March 2017 

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low-income  country.  However,  its  scores  on  rule  of  law  and  control  of  corruption  have 
steadily increased and are above the average of the low-income countries.466 

Gender equality 
On the Gender Gap Index, Ethiopia is listed among the countries with the largest gender 
gap.  However,  the  country’s  score  has  improved  steadily  over  the  years.  In  2011, 
Ethiopia  scored  0.614  and  ranked  116th  out  of  the  135  countries  scrutinized.  In  2013, 
Ethiopia was ranked 118th out of 136 countries with a score of 0.620. In 2016, a score of 
0.662 landed Ethiopia an improved ranking at the 109th position out of 144 countries.467 

Looking  closer  at  the  specific  indicators,  while  the  score  for  economic  participation  and 
opportunity  has  slightly  decreased  since  2013,  improvements  have  been  made  with 
regards  to  health  and  the  reduction  of  mortality  rates,  political  empowerment  and 
educational  attainment.  Although  educational  enrolment  in  primary  education  seems  to 
be  equal  between  genders,  women  are  much  less  likely  to  go  on  to  secondary  and 
tertiary  education  compared  to  men.468 Moreover,  women  in  Ethiopia  are  less  likely  to 
hold  positions  as  legislators,  senior  officials,  and  managers.  Similarly,  women  are  also 
less likely to work as professionals and technical workers. This is also reflected in the low 
numbers who go on to secondary and tertiary education.469 

Moreover, as both the floriculture and horticulture industries are dominated by a female 
labour force, increased  demand for  exports has created new jobs and  has subsequently 
contributed to and enabled women’s economic participation. This can be seen as one of 
the  contributions  of  the  EU’s  GSP  in  Ethiopia.  Furthermore,  research  by  Population, 
Health  and  Environment  Ethiopia  on  the  impact  of  the  floriculture  sector  on  women 
indicates that economic empowerment has positively affected women’s decision-making 
power over household decisions.470 

6.2.3  Environmental impact 

In  this  section,  we  will  firstly  review  overall  trends,  drawing  on  indicators  of 
environmental performance, natural resources, biodiversity, climate change, air pollution 
and  solid  waste.  We  will  then  consider  the  environmental  impacts  associated  with  key 
products that are exported under the GSP. 

industries  have  detrimental  effects  on 

A  range  of  economic  activities  affect  Ethiopia’s  environment.  Both  agriculture  and  the 
light  manufacturing 
the  environment. 
Deforestation  and  soil  erosion  and  degradation,  for  example,  can  be  linked  to  intensive 
agricultural  land  use  and  overgrazing  by  livestock.  Additionally,  the  intensive  use  of 
animal  and  plant  populations  can  lead  to  endangered  flora  and  fauna  species,  such  as 
frankincense  trees.  This  also  has  a  negative  social  impact,  as  it  affects  livelihood. 471 
Furthermore,  agriculture  can  cause  air,  water  and  soil  pollution  through  the  use  of 

466World Bank. Worldwide Governance Indicators Interactive Data Access. Available at: 
http://info.worldbank.org/governance/wgi/index.aspx#reports 
467World Economic Forum.(2011). Global Gender Gap Report 2011.Available at: 
http://reports.weforum.org/global-gender-gap-2011/; World Economic Forum. (2013). Global Gender Gap 
Report 2013.Available at: https://www.weforum.org/reports/global-gender-gap-report-2013;World Economic 
Forum. (2016). Global Gender Gap Report 2016. Available at: http://reports.weforum.org/global-gender-gap-
report-2016/ 
468World Economic Forum.(2016). Global Gender Gap Report 2016.Available at: 
http://reports.weforum.org/global-gender-gap-report-2016/economies/#economy=ETH 
469 Ibid. 
470BSR.(2014). Working women and health in East Africa’s Agriculture Sector. Available at: 
https://www.bsr.org/reports/BSR_HERproject_East_Africa_Scoping_Study_2014.pdf 
471 Daley, B. (2015). Environmental Issues in Ethiopia and Links to the Ethiopian Economy. Available at: 
www.evidenceondemand.info/environmental-issues-in-ethiopia-and-links-to-the-ethiopian-economy; 
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pesticides,  chemical  fertilisers  and  insufficient  resource  and  waste  management 
policies.472 Other industries, instead, can have a positive impact on the environment. In 
this  respect,  the  beekeeping  industry  has  a  positive  effect  due  to  the  role  of  bees  in 
pollination and biodiversity.473 

To  counter  the  negative  impact  of  the  rapid  economic  growth  on  its  environment,  the 
Government  has  committed  to  natural  resource  management  and  environmental 
protection.  In  this  respect,  the  Government  has  increasingly  adopted  strategies  and 
programmes  and  introduced  environmental  management  policies  and  instruments  to 
regulate industrial and commercial pollution.474 The industry and agriculture  sectors are 
additionally making efforts to reduce their impact on the environment. For example, the 
coffee  industry  makes  more  widespread  use  of  drip  irrigation  to  reduce  its  water  use. 
Furthermore, they have banned the use of hard chemicals and pesticides in accordance 
with international conventions.475 

Environmental quality  
light  on  Ethiopia’s  overall 
The  Environmental  Performance  Index  (EPI)  sheds 
performance  on  meeting  environmental  policy  targets  for  priority  issues.  The  EPI 
assesses the country’s  ecosystem  vitality, by analysing the  protection of the  ecosystem 
and  natural  resource  management.  It  also  examines  environmental  health,  that  is,  the 
protection of human health from environmental harm. In 2016, the country ranked 163rd 
out  of  the  180  countries  assessed,  with  an  overall  score  of  45.83  out  of  100. 476 
Compared  to  2014,  the  overall  EPI  score  for  Ethiopia  has  improved  slightly.  In  2014, 
Ethiopia ranked 131st of 178 countries, with an overall score of 39.43.477 

In terms of renewable  energy,  electricity production from  renewable  sources,  excluding 
hydroelectric  has  increased  in  the  last  few  years,  from  0.58  per  cent  in  2011,  to 
accounting  for  roughly  4.27  per  cent  in  2014.  Electricity  production  from  oil,  gas  and 
coal  sources  accounted  for  only  0.093  per  cent  of  total  production  in  2014,  a  decrease 
from  0.622  in  2010. 478 The  majority  of  the  current  electricity  production  comes  from 
hydroelectric,  estimated  to  account  for  86  per  cent  in  2016.479 Using  renewable  energy 
sources reduces climate impact, and contributes to the well-being and health of citizens. 
While  wind  and  solar  energy  do  not  pollute  the  air  or  water  resources,  nor  strain  the 
supply  of  water,  hydroelectric  power  plants  do  impact  river  ecosystems  both  upstream 
and  downstream  from  the  dam.  Thus,  electricity  production  from  renewable  sources  is 
beneficial  due  to  the  lack  of  pollutants  and  emissions;  however,  one  must  be  cautious 
about the impact on ecosystems.  

A  stakeholder  who  participated  in  the  interview  process  with  the  Project  Team 
commented  that  in  the  past  Ethiopia  had  dense  forests  close  to  the  leather  and  flower 
industries  around  the  capital  and  in  the  Central  Rift  Valley.  However,  due  to 

472Ethiopia Environmental and Climate Change policy brief 
473 Stakeholder Workshop Ethiopia, 7 March 2017 
474 Daley, B. (2015). Environmental Issues in Ethiopia and Links to the Ethiopian Economy. Available at: 
www.evidenceonsdemand.info/environmental-issues-in-ethiopia-and-links-to-the-ethiopian-economy; 
Stakeholder Workshop Ethiopia, 7 March 2017 
475 Stakeholder Workshop Ethiopia, 7 March 2017 
476Yale University.(2016). Environmental Performance Index 2016. Available at: 
http://epi.yale.edu/country/ethiopia 
477Yale University.(2014). Environmental Performance Index 2014. Available at: 
http://archive.epi.yale.edu/epi/country-profile/ethiopia 
478The World Bank.(2017). World Development Indicators. Available at: 
https://data.worldbank.org/indicator?tab=all 
479USAID. (2016). Power Africa In Ethiopia. Available at: 
https://www.usaid.gov/sites/default/files/documents/1860/EthiopiaCountryFactSheet__2016.09%20FINAL_0.p
df 

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deforestation, loss of biodiversity and environmental degradation, the area has suffered 
extensively.  Nevertheless,  over  the  last  15  years  the  Government  has  been  trying  to 
rehabilitate the mountains. While improvements have been noticed in the central, north 
and  eastern  parts,  the  western  and  south-western  areas  are  not  improving  due  to  the 
very  high  degradation  and  deforestation.  The  Ethiopian  Government  claims  that  the 
forests are improving, but scientists disagree, as the so-called improvements are related 
to the change of forest definition and not to the actual forest coverage.480 

Another problem experienced in Ethiopia is the pollution in the capital. The stakeholder 
that was interviewed by the Project Team argued that although the EU provides financial 
contributions, they are not enough to tackle the problem. While Ethiopia is suffering from 
air  pollution,  this  is  not  as  significant  and  severe  as  the  water  pollution,  which  is 
affecting  the  rivers  in  the  industrial  areas.  The  heavily  polluted  rivers  affect  the  people 
living close to the leather and flower industries, as they cannot drink the river water or 
eat  the  fish,  due  to  the  contaminated  water.  Moreover,  the  rural  population  does  often 
not have access to filtered water.481 

Agriculture  is  another  sector  causing  severe  land  and  water  resource  degradation,  and 
soil and nutrient loss are all serious problems associated with agriculture in Ethiopia. Soil 
erosion and land degradation are particularly critical because of their knock-on effects on 
food security and resource conflicts. The expansion of commercial agriculture, moreover, 
threatens to produce adverse impacts on soil, flora and fauna, as well as water resources. 
A need for additional research on the impacts of commercial agriculture on the Ethiopian 
environment is however recognised in the literature. 

Waste water and solid waste 

A  large  majority  of  pollutants  threatening  both  ecosystems  and  humans  in  Ethiopia 
comes  from  large  and  small-scale  factories,  such  as  textile,  brewery,  chemical,  thread 
and  garment  factories.  Most  factories  in  Ethiopia  do  not  have  proper  waste  disposal 
systems  and  industrial  wastewater  is  consequently  causing  major  damages  to  the 
environment.  Heavy  metals  are  disposed  straight  into  the  Akaki  River,  and  Abasamuel 
and the Koka  reservoirs. Additionally, tanneries,  oil and flour mills, and other industrial 
services produce large amounts of pollutants in Ethiopia.482 

Natural resources 
Forest area, as per cent of total land area, has increased during the last years. In 2011, 
forest covered 12.34 per cent of total land area; however, in 2015 it increased slightly to 
12.5 per cent. With regards to agricultural land as a percentage of total land, there was 
a slight decrease from 36.32 per cent in 2011 to 36.26 per cent in 2014. The net forest 
depletion  (%  of  gross  national  income)  has,  on  the  other  hand,  decreased  from  14.79 
per  cent  in  2011,  to  12.24  per  cent  in  2015. 483  This  is  a  positive  development 
considering excessive deforestation in the past. Moreover, as climate change is becoming 
a severe threat to Ethiopia, one should not underestimate the importance of forests for 
absorbing carbon dioxide. 

Looking  at  the  ND-Gain  Index,  we  can  see  that  vulnerability  in  terms  of  freshwater, 
including  projected  change  of  annual  runoff,  projected  change  of  annual  groundwater 
recharge,  fresh  water  withdrawal  rate,  water  dependency  ratio,  dam  capacity,  and 
access  to  reliable  drinking  water,  has  declined  slightly  from  0.481  in  2011  to  0.467  in 

480 Anonymous Stakeholder Contribution 
481 Ibid. 
482Government of the Federal Democratic Republic of Ethiopia.(2014). Ethiopia’s Fifth National Report to the 
Convention on Biological Diversity. Available at: https://www.cbd.int/doc/world/et/et-nr-05-en.pdf 
483The World Bank.(2017). World Development Indicators. Available at: 
https://data.worldbank.org/indicator?tab=all 

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2015.484 While this is a positive development, as Ethiopia has become less vulnerable to 
water  shortages,  data  from  the  World  Bank  suggests  a  different  development. 
Renewable  internal  freshwater  resources  per  capita  have  decreased  from  1319  cubic 
meters in 2012 to 1252 cubic meters in 2014.485 

The  largely  rural  Ethiopian  land  tenure  system  can  be  said  to  be  characterized  by  the 
three-decade long collective ownership of land. While the market ban has been partially 
lifted,  which  has  allowed  for  some  land  rental  activities,  tenure  security  has  long 
remained a critical issue in Ethiopia.486 It has been estimated that more than 50 percent 
of district court cases in Ethiopia are associated with land disputes while in the Amhara 
Region of Ethiopia, land disputes make up about 70 percent of all civil cases.  

Biodiversity 
The country’s biodiversity is threatened both directly by deforestation, land degradation, 
overexploitation, invasive  species,  replacement  of  local  varieties  and  breeds,  as  well  as 
climate  change  and  pollution.  Indirect  causes  of  biodiversity  loss  in  the  country  stems 
from  population  growth,  poverty,  inadequate  policy  support  and  law  enforcement,  as 
well as lack of awareness and coordination.487 

The  Environmental  Performance  Index  suggests  that  the  score  for  biodiversity  and 
habitat protection has declined slightly from 83.91 in 2013, to 83.52 in 2016. This result 
is in line with the overall decline in the score for biodiversity and habitat protection over 
the last ten years. While the decline is barely noticeable, -0.61 per cent, it illustrates the 
lack  of  commitment  and  willingness  to  deal  with  such  challenges.488 In  2016,  Ethiopia 
was home to 33 threatened mammal species, 41 plant species and 14 fish species.489 

According  to  a  stakeholder  who  participated  in  an  interview  with  the  Project  Team,  the 
extensive  deforestation  that  took  place  decades  ago,  to  pave  way  for  the  leather  and 
flower industries, has largely contributed to the degradation of biodiversity in Ethiopia.490 

Air pollution 
The light manufacturing industries can cause  air, water and soil pollution. For example, 
tanning  processes  used  in  the  leather  industry  can  release  hazardous  pollutants  and 
heavy  metals  in  its  surroundings  in  absence  of  proper  waste  management  strategies. 
Through  the  value  chains,  these  industries  ultimately  rely  on  agriculture  and  livestock 
production, which should also be factored into their environmental impact.491 

The 2016 EPI Report indicates that overall air quality has improved in recent years, and 
currently  Ethiopia  is  ranked  142nd  of  180  countries  assessed,  in  terms  of  air  quality. 
Comparing the air quality score for Ethiopia we can see that it has slightly improved from 
66.8 out of 100 in 2013, to 67.51 out of 100 in 2016. This improvement is mainly driven 

484ND-Gain Index. (2015). Available at: http://index.gain.org/ 
485The World Bank.(2017). World Development Indicators. Available at: 
https://data.worldbank.org/indicator?tab=all 
486Di Falco, S., et al. (2016). Property Rights and Land Disputes: Theory and Evidence from Ethiopia. Available 
at: http://www.unige.ch/ses/dsec/repec/files/16032.pdf 
487Government of the Federal Democratic Republic of Ethiopia.(2014). Ethiopia’s Fifth National Report to the 
Convention on Biological Diversity. Available at: https://www.cbd.int/doc/world/et/et-nr-05-en.pdf 
488Yale University.(2016). Environmental Performance Index 2016. Available at: 
http://epi.yale.edu/country/ethiopia 
489The World Bank.(2017). World Development Indicators. Available at: 
https://data.worldbank.org/indicator?tab=all 
490 Anonymous Stakeholder Contribution 
491 Daley, B. (2015). Environmental Issues in Ethiopia and Links to the Ethiopian Economy. Available at: 
www.evidenceondemand.info/environmental-issues-in-ethiopia-and-links-to-the-ethiopian-economy; 
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by  progresses  in  Household  Air  Quality,  as  the  average  exposure  to  PM2.5  has  actually 
increased in the last ten years.492 

Climate change 
Climate  change  can  have  pronounced  impacts  on  Africa  and  the  large  zone  around  the 
equator.  While  it  is  still  unknown  what  the  exact  effects  will  be,  it  is  clear  that  sub-
Saharan  Africa  will  need  to  make  changes  and  adapt  its  farming  systems  to 
accommodate  changes  in  rainfall,  and  cropping  season.  Climate  change  could  be 
particularly  damaging  in  Ethiopia,  being  dependent  on  rain  fed  agriculture.  Increasing 
temperatures and natural disasters such as drought could be disastrous.493 

Out of the 181 countries assessed for the ND-GAIN Country Index, Ethiopia was ranked 
the 36th most vulnerable country. In addition to being highly vulnerable to the effects of 
climate change, there is a very low readiness to deal with the impact of climate change. 
Over  time,  Ethiopia’s  vulnerability  has  steadily  decreased  and  its  readiness  has 
significantly  increased. 494  The  2015  World  Bank  Survey  demonstrates  that  there  is 
widespread  awareness  of  the  serious  nature  of  climate  change  and  its  devastating 
impact on Ethiopia.495 

Data  from  the  World  Bank  indicates  that  nitrous  oxide  emissions  have  increased  in 
Ethiopia between 2010 and 2012. When looking at the per cent change from  1990, the 
data  illustrates  that  in  2010,  nitrous  oxide  emissions  had  increased  by  54.56  per  cent 
since  1990.  Comparing  year  2012  to  1990,  nitrous  oxide  emissions  had  increased  by 
57.65  per  cent,  increasing  by  three  percentage  points  in  just  two  years. 496 A  similar 
trend can be seen in methane emissions. In 2010, methane emissions had increased by 
58.11 per cent compared to 1990. In 2012, the equivalent number had further increased 
to 61.27 per cent.497 

Looking closer at the CO2 emissions, these have increased dramatically in recent years in 
Ethiopia.  In  2010  the  yearly  CO2  emissions  was  roughly  6585.9  kt;  while  in  2014,  it 
increased to 11598.7 kt. This reveals that CO2 emissions in Ethiopia have almost doubled 
in just  four  years.  Taking  a  closer  look  at  the  source  of  the  CO2  emissions,  the  biggest 
share,  as  a  per  cent  of  total  fuel  combustion,  comes  from  transport.  In  2011,  it 
accounted for 43.7 per cent of total fuel combustion, increasing to 46.9 per cent in 2014. 
The  second  largest  emitter  is  the  manufacturing  and  construction  industry,  accounting 
for roughly 35.7 per cent in 2011, decreasing slightly to 34.2 per cent in 2014. 

Lastly, looking at the total greenhouse gas emissions, as a per cent change from 1990, 
an  increase  can  be  seen.  In  2010,  the  total  greenhouse  gas  emissions  in  Ethiopia  had 
increased by 171.6 per cent from 1990 levels, in 2012 the percentage change from 1990, 
had  increased  to  175.3  per  cent.  While  emissions  in  Ethiopia  has  increased  in  recent 
years,  it  is  hard  to  establish  to  what  degree  this  what  has  been  caused  by  industries 
benefitting from the GSP, and what is due to domestic and global industry demands. 

Direct impacts of key products exported under EBA 

492Yale University.(2016). Environmental Performance Index 2016. Available at: 
http://epi.yale.edu/country/ethiopia 
493 Helsinki paper 
494ND-GAIN.(2015). Ethiopia. Available at: http://index.gain.org/country/ethiopia 
495World Bank.(2015). FY15 Ethiopia Country Opinion Survey Report. Available at: 
http://documents.worldbank.org/curated/en/281291475055299673/FY15-Ethiopia-country-opinion-survey-
report 
496The World Bank.(2017). World Development Indicators. Data available at: 
https://data.worldbank.org/indicator?tab=all 
497 Ibid. 

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This section focuses on the environmental impacts related to four key types of products 
exported  by  Ethiopia  under  EBA:  live  trees  and  plants,  textile  products,  raw  hides  and 
skins and agricultural products. 

Ethiopia exported a yearly average of EUR 183.2m’s worth of live trees and plants, bulbs, 
roots, flowers etc. (in this report generically referred to as “live trees”) under the EBA in 
2014-16  (a  22%  increase  over  2011-13).  The  trade  code  does  not  distinguish  between 
trees  and  flowers.  The  stakeholder  consultation  however  suggests  that  Ethiopia  mainly 
exports flowers under this code. It was in particular pointed out that the Ethiopian flower 
industry has negative impacts on the environment through water pollution, especially in 
rivers  close  to  industrial  areas,  linked  to  agricultural  chemicals.  Concerns  were  also 
raised about the EU’s limited monitoring of these impacts.498 

Under the EBA, Ethiopia exported EUR 39.6m in textile products each year on average in 
2014-16 (a 30% increase over 2011-13). As in Bangladesh, research shows that textile 
manufacturing  in  Ethiopia  has  caused  significant  water  pollution,  affecting  for  example 
the  aquatic  habitat  of  the  head  of  the  Blue  Nile  River.499 In  addition,  these  exports  are 
linked  to  cotton  production  in  the  country.  The  crop  plays  an  important  role  in  the 
country’s  economy  and  provides  employment  in  the  agricultural  and  industrial  sectors. 
However, there has been an overuse of pesticides and associated environmental impacts. 
The  arid  climate  further  raises  issues  of  water  availability  for  the  industry,  with  water 
competition and scarcity already arising in the Awash River basin in the Afar Region. The 
use of furrow irrigation in both Awash and Omo Valley has caused an increase in salinity 
in soils, flood damage at harvest and water scarcity. Impacts on soils are generally less 
dramatic, notably because producers give low priority to cotton in the use of fertilizers.  

Ethiopia  exports  raw  hides  and  skins  under  the  EBA  (EUR  11.8m  a  year  on  average  in 
2014-16  --  a  19%  decrease  compared  to  2011-13)  as  well  as  articles  of  leather  (EUR 
1.7m  a  year  on  average  in  2014-16  --  a  118%  increase  over  2011-13).  In  2011, 
tanneries  generated  70,104  t  of  solid  waste  and  3,393,600  m3  wastewater  in  the  pre-
tanning  leather  processing  stage,  which  was  largely  disposed  of  into  the  surrounding 
environment  without  proper  treatment.  Studies  on  the  impacts  of  tanneries  on  the 
ecology revealed that in Ethiopia solid wastes and effluents from tanneries are the major 
causes of environmental contamination.500 

In summary, Ethiopia faces a range of environmental pressures, including air pollution in 
major cities and water pollution from agriculture and industry. While its score under the 
Environmental  Performance  Index  has  improved  slightly,  it  remains  low  and  the  ND-
GAIN index shows that the country is vulnerable to climate change. The government has 
made  a  clear  commitment  to  strengthen  environmental  protection,  but  results  are  not 
yet  seen  from  these  indices.  The  links  between  Ethiopia’s  overall  environmental 
conditions and its participation in the EBA arrangement will be at best indirect; indeed, 
EBA exports are under half of Ethiopia’s total volume of exports to the EU.  

The country’s main exports under EBA – live trees and plants, textiles and raw hides and 
leather  products  –  are  all  related  to  direct  environmental  impacts.  The  information 
gathered  in  the  stakeholder  consultation  did  not  indicate  that  Ethiopia’s  participation in 
EBA has led to changes in production techniques that could reduce these impacts.  

Level of awareness of the EBA in Ethiopia 

498Environment, Climate Change and Coffee Forest Forum, 2017. 
499Mehari A. K. et al., Effects of Bahir Dar Textile Factory Effluents on the Water Quality of the Head Waters of 
Blue Nile River, Ethiopia, 2015, available at https://www.hindawi.com/journals/ijac/2015/905247/ 
500Kibret F. and Tulu F. D., Socio-economic Impacts of Bahir Dar Tannery: Bahir Dar, Ethiopia, 2014, available 
at: http://www.hrpub.org/download/20140902/NRC1-14202479.pdf 

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Stakeholders that participated in the local workshop in Ethiopia generally acknowledged 
the  important  advantage  provided  to  Ethiopian  producers  by  the  EBA,  but  also  pointed 
towards  the  lack  of  awareness  and  understanding  of  the  scheme.  Instead,  AGOA  was 
often mentioned as the preferred export scheme. 

Firstly,  Ethiopian  companies  are  not  sufficiently  aware  of  the  EBA.  There  is  a  lack  of 
visibility and awareness because the arrangement is not promoted much in Ethiopia. On 
the contrary, AGOA is highly promoted and enjoys high visibility in Ethiopia.501 

Secondly,  the  rules  governing  the  granting  of  EBA  preferences  are  found  to  be  very 
technical.  In  some  cases,  exporters  find  it  difficult  to  determine  which  rules  apply  to 
them.  Stringent  RoO,  costs  associated  with  compliance,  and  high  standards  present 
challenges  for  the  Ethiopian  producers. 502  However,  producers  are  expected  to 
understand the EBA requirements and rules ahead of discussing trade opportunities with 
EU  operators.  Additionally,  Ethiopian  companies  find  it  difficult  to  comply  with  the  RoO 
requirements. 503 On  the  contrary,  AGOA  provides  support  to  businesses  and  national 
governments.  A  dedicated  website  provides  exporters  with  all  relevant  information  on 
AGOA,  including  on  eligible  products,  RoO  and  exporter  resources. 504 Additionally,  the 
East  Africa  Trade  and  Investment  Hub  is  a  one-stop  shop  that  provides  business  and 
national governments with information on exporting to the US.505 

Lastly,  EBA  rules  are  considered  to  be  less  advantageous  than  AGOA  rules.  While 
stakeholders  acknowledge  that  AGOA  rules  are  more  demanding,  they  also  allow  for 
more  flexibility.  For  example,  for  the  textile  industry  the  possibility  to  accumulate 
preferences  is  essential  because  they  source  a  lot  of  raw  materials  from  China.  AGOA 
applies  the  Third  Country  Fabric  Rule  which  provides  textile  producers  with  a  special 
privilege  to  source  fabrics  from  third  countries. 506  Under  the  EBA,  third  country 
accumulation  of  preferences  is  only  applicable  to  imports  from  other  EBA  beneficiaries 
and only since 2011 – thus excluding Ethiopia’s main source for imports.507 

6.2.4  Distribution of gains 

Over  the  last  decade,  Ethiopia  has  made  remarkable  progress  in  the  area  of  poverty 
reduction,  and  especially  compared  to  other  countries  in  the  region  of  Africa. 
Furthermore, Ethiopia has been reported as a case where there has been no significant 
increase  in  inequality  even  though  poverty  reduction  has  occurred  at  a  rapid  pace.508 
With a Gini coefficient of 30, it is important to note that Ethiopia is regarded among the 
most egalitarian countries in the world. This is mainly due to the fact that the majority of 
the  population  lives  in  the  countryside  and  accounts  for  a  low  rural  Gini  in  the  overall 
national  measure.  Nevertheless,  estimates  reveal  that  the  income  gap  in  the  cities  has 
begun  to  rise  as  a  result  of  the  rising  skill  premia  for  higher  education  and  changes  in 
the household characteristics. 

However, due to the paucity of data and surveys, it is not feasible to determine whether 
the  GSP  has  in  fact  contributed  to  greater  income  inequality  or  has  contributed  to  a 
slowing down of income inequality due to increased labour participation.  

501 Stakeholder Workshop Ethiopia, 7 March 2017; Stakeholder Meeting Ethiopia, 6 March 2017 
502Stakeholder Workshop Ethiopia, 7 March 2017 
503 Stakeholder Workshop Ethiopia, 7 March 2017; Stakeholder Meeting Ethiopia, 6 March 2017 
504www.AGOA.info 
505USAID.Trade Promotion and AGOA. Available at: http://www.eatradehub.org/agoa 
506AGOA’s ‘Wearing Apparel’ Rules of Origin. Available at: https://agoa.info/about-agoa/apparel-rules-of-
origin.html 
507 Stakeholder Workshop Ethiopia, 7 March 2017; Stakeholder Meeting Ethiopia, 6 March 2017 
508International Monetary Fund. 2015. The Federal Republic of Ethiopia: Selected Issues. Available at: 
https://www.imf.org/external/pubs/ft/scr/2015/cr15326.pdf 

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Overall,  stakeholders  that  participated  in  the  interview  process  with  the  Project  Team 
were  not  aware  of  specific  trends  in  the  distribution  of  gains,  and  could  therefore  not 
account  for  developments  to  which  the  EBA  arrangement  would  have  contributed. 
However,  due  to  the  high  rate  of  unemployment  in  Ethiopia,  it  was  noted  that  job 
seekers  may  find  themselves  in  desperate  situations  which  may  force  them  to  accept 
very  low  wages.  The  Project  Team  has  concluded  that  this  may  in  turn  contribute  to  a 
worsening of the gap between the rich and the poor in Ethiopia. 

6.2.5  Unintended consequences 

The EBA has substantially improved export opportunities for Ethiopia and has created job 
opportunities  for  the  country’s  population,  which  are  linked  to  the  objectives  of  the 
scheme.  However,  the  preferential  access  to  the  EU  market  has  had  both  positive  and 
negative unintended consequences in Ethiopia.  

Importantly,  an  expansion  in  production  has  been  particularly  experienced  in  the 
horticulture  and  floriculture  sectors.  The  horticulture  sector  has  faced  increased 
employment  of  women  which  consequently  improved  the  social  situation  of  women  in 
the  country.  On  the  other  hand,  the  floriculture  industry  has  had  substantial  negative 
social,  environmental  and  human  rights  effects  in  the  country.  The  expansion  of  the 
floriculture  industry  is  associated  with  land  grabbing,  destruction  of  livelihood,  which 
increases  instances  of  poverty  and  contributes  to  environmental  pollution.  This  directly 
opposes  the  scheme’s  objectives  to  promote  poverty  eradication  and  sustainable 
development. 

However, as a result of the positive economic impact, the EBA has created an incentive 
for the Government of Ethiopia to promote policies and plans to support and encourage 
the  export  sector.  To  counter  the  negative  impact  of  the  rapid  economic  growth  on  its 
environment,  the  Government  has  committed  to  natural  resource  management  and 
environmental protection. The industry and agriculture sectors are also making efforts to 
reduce their impact on the environment. Furthermore, they have banned the use of hard 
chemicals and pesticides in accordance with international conventions. 

Similarly, although the EBA arrangement does not require beneficiary countries to ratify 
and  implement  international  conventions  as  is  the  case  under  the  GSP+  arrangement, 
the  Ethiopian  government  drafted  the  Employment  Policy  and  Strategy  and  ratified  the 
National  Occupational  Health  and  Safety  Policy  and  Strategy,  and  the  ILO  Tripartite 
Consultation Convention. Furthermore, it has made efforts to encourage an all-inclusive 
labour  market,  to  monitor  the  labour  market  and  working  conditions,  and  to  expand 
employment and social dialogue services. 

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7  Case Studies on GSP+ Countries  
This  section  will  provide  an  in-depth  overview  of  the  impact  of  the  GSP+  on  Bolivia 
(Section  7.1)  and  Pakistan  (Section  7.2).  The  economic,  social,  environmental  and 
human  rights  impacts  of  the  scheme  will  be  analysed.  This  will  be  followed  by 
discussions  on  the  impact  of  the  GSP+  on  the  implementation  of  the  relevant 
international  conventions  and  the  political  resolve  to  implement  and  adhere  to  these 
conventions,  as  well  as  on  the  role  and  associated  impact  of  the  scheme’s  monitoring 
framework.  Lastly,  the  level  of  awareness  of  GSP+  requirements  among  key 
stakeholders will be explored.  

7.1  Impact of the GSP+ on Bolivia 

7.1.1  Economic impact  
The EU is becoming an increasingly important trade partner for Bolivia. In 2016, the EU 
was Bolivia’s fourth largest export destination.  Figure  53 below shows that in terms of 
monetary  value,  exports  to  the  EU  have  increased  by  almost  50  per  cent  since  2011. 
Bolivia’s  exports  to  the  EU  have  continuously  increased  at  an  average  rate  of  
12.5 per cent per year until 2015. This year marked the peak in Bolivia’s exports to the 
EU, with a total export value of EUR 588.8 million. This upward trend abruptly stopped in 
2016, when the export value dropped by 11.25 per cent to EUR 522.6 million. 

700

600

500

400

300

200

100

0

R
U
E
N
O
I
L
L
I

M
N

I

2011

2012

2013

2014

2015

2016

Figure 53: Bolivia’s total exports to the EU (2011-2016)509 

Figure  54 below demonstrates that Bolivia has a relatively diverse export basket under 
GSP+. Its GSP+ exports to the EU are dominated by food and agricultural products, such 
as cereals and preparations of cereals, which accounted for 56 per cent of GSP+ exports 
in  2016.  Several  other  agricultural  and  food  products,  including  beverages,  spirits  and 
vinegar,  have  also  benefitted  from  GSP+  preferences  and  have  increased  in  export 
volume  between  2011  and  2016.  Other  export  products  exported  by  Bolivia  include 
wood, leather products and chemicals. 

509 Source: own calculations based on trade data supplied by the European Commission. 

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1.51%

2.81%

5.47%

2.97%

3.74%

4.07%

4.57%

6.35%

12.18%

32.86%

23.41%

Cereals

Beverages, spirits and vinegar

Vegetables, fruit, nuts
preperations

Wood and Articles of wood

Raw hids and skins

Inorganic chemicals

 Essential oils and resinoids

Preparations of cereals

Articles of apparel and clothing

Cocoa and cocoa preparations

Other

Figure 54: Composition of Bolivia's exports under GSP+ by HS Section (2016)510 

Bolivia’s  main  export  products  to  the  EU,  ores,  slag  and  ash,  are  not  traded  under  the 
GSP+ but under MFN tariffs. When the analysis of the exports to the EU is extended to 
include MFN exports, it becomes evident that export diversification in Bolivia is relatively 
limited, and that its exports to the EU are largely dominated by mineral resources.  Out 
of the total export value in 2016, only EUR 58.3 million, or 11.2 per cent, were eligible 
for GSP+.  

510 Source: own calculations based on trade data supplied by the European Commission. Pie chart is to be read 
in a clock-wise direction. HS Chapters description: 10: Cereals; 18: Cocoa and cocoa preparations;19: 
Preparations of cereals, flour, starch or milk; pastry cooks' products; 20: Preparations of vegetables, fruit, nuts 
or other parts of plants; 22: Beverages, spirits and vinegar; 28: Inorganic chemicals; organic or inorganic 
compounds of precious metals, of rare-earth metals, of radioactive elements or of isotopes; 33: Essential oils 
and resinoids; perfumery, cosmetic or toilet preparations; 41: Raw hides and skins (other than furskins) and 
leather; 44: Wood and articles of wood; wood charcoal; 61: Articles of apparel and clothing accessories, 
knitted or crocheted. 

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97,40%

95,52%

95,78%

95,75%

92,17%

100%

98%

96%

94,03%

94%

2011

2012

2013

2014

2015

2016

GSP+ eligible exports to the EU

Exports under  GSP+

Utilisation rate

Figure 55: Bolivia’s GSP+ preference utilisation (2011-2016)511 

97,40%

95,52%

95,78%

95,75%

92,17%

92%

90%

88%

100%

98%

96%

94,03%

94%

92%

90%

88%

R
U
E
N
O
I
L
L
I
M
N
I

120

100

80

60

40

20

0

R
U
E
N
O
I
L
L
I
M
N
I

120

100

80

60

40

20

0

2011

2012

2013

2014

2015

2016

GSP+ eligible exports to the EU

Exports under  GSP+

Utilisation rate

Figure  55:  Bolivia’s  GSP+  preference  utilisation  (2011-2016)Bolivia  does  not  fully  utilise  the 
preferences  granted  under  the  GSP+.  As  illustrated  in,  the  average  utilisation  rate  has 
decreased since 2013.  In 2016, the utilisation rate was 94 per cent,  a decrease by 1.7 
percentage  points  compared  to  2015  and  by  3.3  percentage  points  compared  to  2013. 
During the local workshop held in Bolivia in April 2017, it became evident that there is a 
lack of awareness about GSP+ preferences and the potential benefits of the arrangement 
on  Bolivia’s  export  growth.  This  limited  awareness  can  partly  explain  why  the 
preferences are not fully utilised. 

A more detailed analysis of the preference utilisation by Bolivia shows that utilisation in 
general  is  relatively  low  among  the  top  10  GSP+  exports.  As  illustrated  in  Figure  56 
below, HS Chapter 20 products (preparations of vegetables, fruit, nuts or other parts of 
plants)  utilise  GSP  preferences  the  most  of  all  the  listed  categories  of  products,  which 

511 Source: own calculations based on trade data supplied by the European Commission. 

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amounted to 100 per cent in 2016. This means that all exports in this category in 2016 
were  covered  under  GSP  preferences.  However,  the  value  of  exports  was  relatively 
small.  The  utilisation  for  exports  under  HS  Chapters  10  and  22,  cereals  as  well  as 
beverages,  spirits  and  vinegar,  was  also  high  at  96.8  per  cent  and  98.7  per  cent, 
respectively.  

Preparations of vegetables

Wood and articles of wood

Oil seeds and oleaginous fruits

Beverages, spirits and vinegar

Cereals

Raw hides and skins

Tin and articles thereof

S
R
E
T
P
A
H
C
S
H

Residues and waste from the food industries

Edible fruits and nuts

Ores, slag, and ash

0,0

50,0

100,0

150,0

200,0

250,0

IN MILLION EUR

Bolivia's Total Exports to the EU

Bolivia's Exports under GSP+

Figure 56: Bolivia’s GSP+ preference utilisation for top ten exports in 2016512 

For  a  large  number  of  products,  Bolivian  exporters  do  not  fully  utilise  the  preferences 
granted  under  the  GSP+.  As  shown  in  Figure  56,  5  out  of  the  top  10  export  products 
had  utilisation  rates  of  almost  0  per  cent  in  2016.  The  significantly  higher  average 
utilisation rate can be  explained by the high utilisation rates under  HS Chapters 20, 22 
and 10, which together accounted for 68 per cent of the country’s GSP+ exports in 2016.  

Bolivia  is  classified  as  a  lower  middle  income  country  by  the  World  Bank.  Bolivia  has 
experienced steady economic growth as a result of high commodity prices and a prudent 
macroeconomic  policy. 513  To  continue 
its  positive  economic  development,  the 
Government  has  set  a  target  in  the  2016-2020  National  Economic  and  Social 
Development  Plan  for  an  average  growth  rate  of  5  per  cent.  To  realise  this  vision,  the 
country  commits  to  increased  public  investments,  continuous  macroeconomic  stability 
and FDI promotion.514  

Between 2011 and 2016, Bolivia has experienced consistent growth in GDP. On average 
the country’s GDP has increased by 5.48 per cent between 2011 and 2015.  The GDP in 
this period increased from almost USD 24 billion (EUR 22 billion) to USD 33 billion (EUR 

512 Source: own calculations based on trade and tariff data supplied by the European Commission. HS Chapters 
description: 8: Edible fruits and nuts; peel of citrus fruits or melons; 10: Cereals; 12: Oils seed and oleaginous 
fruits; miscellaneous grains, seeds and fruit; industrial or medicinal plants; straw and fodder; 20: Preparations 
of vegetables, fruit, nuts or other parts of plants; 22: Beverages, spirits and vinegar; 23: Residues and waste 
from the food industry; prepared animal fodder; 26: Ores, slag and ash 41: Raw hides and skins (other than 
furskins) and leather; 44: Wood and articles of wood; wood charcoal; 80: Tin and articles thereof. 
513 World Bank. (2017). Bolivia Overview. Available at: http://www.worldbank.org/en/country/bolivia/overview  
514 World Bank. (2017). Bolivia Overview. Available at: http://www.worldbank.org/en/country/bolivia/overview 

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30  billion).  The  per  capita  GDP  has  grown,  from  USD  2377.7  (EUR  2185.2)  in  2011  to 
USD 3076.792 (EUR 2827.7) in 2015. This accounts for a total increase of 29 per cent in 
the past 5 years.515 

Despite the improvements on a variety of dimensions, structural and institutional issues 
continue  to  impede  the  overall  economic  development  of  the  country.  The  World  Bank 
reports that the strong  state presence in the economy sector is a challenge for product 
diversification and private investments.516  

D
S
U
N
O
I
L
L
I

M
N

I

35.000.000

30.000.000

25.000.000

20.000.000

15.000.000

10.000.000

5.000.000

0

S
E
G
A
T
N
E
C
R
E
P
N

I

8

7

6

5

4

3

2

1

0

2011

2012

2013

2014

2015

GDP

GDP growth

Figure 57: GDP and GDP growth in Bolivia (2010-2015)517 

49%

54%

33%

39%

12%

13%

Industry

Agriculture

Services

Figure 58: Added value of different 
sectors as percentage of Bolivia's 
GDP 
(2011, 2015) 
Source: World Bank 

Bolivia’s  constant  economic  growth  in  the  past 
decade  has  been  supported  by  high  commodity 
prices  and  increased  gas  exports  to  Brazil  and 
Argentina. Additionally, the Government has used 
the  economic  growth  to  increase  the  country’s 
external  and  fiscal  savings  and  managed  to  pile 
up  large  international  reserves,  currently  at  42 
per  cent  of  GDP. 518 In  recent  years,  these 
commodity prices have gone down, which has led 
to a slow-down in GDP growth from 6.8 per cent 
in  2013  to  4.8  in  2015.  Further,  Bolivia’s  key 
trading  partners,  Brazil  and  Argentina  are 
experiencing political and economic turmoil which 
poses  an  additional  challenge  for  the  country’s 
export sector.519  

The  service  sector  is  the  most  important  for 
Bolivia and provided for 54 per cent of the GDP in 
2015  (outer  circle),  constituting  a  5  per  cent 
from  2011  (inner  circle).  Secondly, 
increase 

515 World Bank data. (2016). Available at: 
http://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?locations=BO  
516 World Bank. (2017). Bolivia Overview. Available at: http://www.worldbank.org/en/country/bolivia/overview 
517 World Bank Data. (2016). Available at: 
http://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?locations=BO 
518 IMF. (2015). Annual Health Check: Bolivia. Available at: 
http://www.imf.org/en/News/Articles/2015/09/28/04/53/socar120815a 
519 IMF. (2015). Annual report on Bolivia. Available at: 
http://www.imf.org/en/News/Articles/2015/09/28/04/53/socar120815a 

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industry has provided for 33 per cent of the value added to the GDP in 2015, a decrease 
of 6 per cent since 2011. The agricultural sector accounts for 13 per cent of value added 
to the country’s GDP in 2015. As the third largest sector in the country, agriculture has 
contributed approximately USD 3.379 billion (EUR 3.105 billion) to Bolivia’s GDP in 2015. 
This  constitutes  a  slight  increase  in  comparison  to  2011  where  agriculture  added  USD 
2.341 billion (EUR 2.151 billion) in value.520  

Between  2011  and  2015,  Foreign  Direct  Investment  (FDI)  into  Bolivia  has  gone  down 
from USD 858.9 million (EUR 789.4 million) to USD 503.4 million (EUR 462.6 million).521 
This constitutes a loss in FDI of 41.4 per cent between 2011 and 2015. 

2.000.000

1.800.000

1.600.000

1.400.000

1.200.000

1.000.000

800.000

600.000

400.000

200.000

0

2011

2012

2013

2014

2015

Figure 59: FDI inflows into Bolivia (2011-2015)522 

As noted above, exports under GSP are small in comparison to total non-GSP exports to 
the EU. The Bolivian economy is considerably dependent on exports of minerals and fuel, 
which  are  non-renewable  resources.  Only  3  to  5  per  cent  of  the  Bolivian  income  is 
generated  from  the  agriculture  sector.  Therefore,  since  the  GSP+  is  mainly  utilized  for 
agricultural and textile products, the impact in Bolivia is perceived  as low. Bolivia seeks 
to diversify its export basket, but right now there is lack of political will to diversify. The 
present government does not do much to encourage exports of agricultural products.  

Nevertheless, stakeholders from the forestry sector have emphasized that the GSP is of 
paramount  importance  for  this  sector  as  the  EU  is  one  of  its  three  most  important 
markets.  In  2016,  USD  139.31  million  of  forestry  products  (including  chestnut  and 
others)  were  exported  to  the  European  Union,  representing  the  best  performance  over 
the  last  decade.  Furthermore,  the  importance  of  the  GSP  is  enhanced  by  the  fact  that, 
from  2011,  Bolivian  exports  to  the  EU,  have  grown  by  an  average  of  16.1%  per  year. 
Thus  the  exports  to  the  EU  provide  a  significant  source  of  foreign  exchange  for  the 
country. 

7.1.2  Social impact 

520 World Bank. Available at: http://data.worldbank.org/indicator/NV.AGR.TOTL.ZS?locations=BO&view=chart  
521 World Bank. Available at:  http://data.worldbank.org/indicator/NV.AGR.TOTL.ZS?locations=BO&view=chart  
522 World Bank. Available at: http://data.worldbank.org/indicator/NV.AGR.TOTL.ZS?locations=BO&view=chart  

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Employment  

Bolivia has an estimated total labour  force  of  5.4 million people.  ILO  estimates suggest 
that  63.88  per  cent  of  Bolivia’s  female  population  was  active  in  paid  labour  in  2016, 
which  constitutes  an  increase  of  1.92  per  cent  since  2011.523 The  participation  rate  for 
Bolivia’s  male  population  is  higher  and  stands  at  82.59  per  cent. 524  Reportedly,  the 
informal sector is large in Bolivia, absorbing 75 per cent of the total employment in the 
non-agricultural sector.525 A large majority of the  agricultural sector in Bolivia is part of 
the informal sector.  

Bolivia  has  experienced  a  large  sectoral  change  in  agricultural  employment,  dropping 
from  39  per  cent  in  2000  to  30.8  per  cent  in  2011.  However,  since  then  it  has  further 
decreased  to  29.5  per  cent  in  2017. 526  Looking  at  the  gender  balance,  women’s 
employment in the agricultural sector has slightly decreased from 26.7 per cent in 2011, 
to  25.5  per  cent  in  2017.  A  similar  development  can  be  seen  for  men,  as  male 
employment in the agricultural sector has decreased from 33.9 per cent in 2011, to 32.6 
per cent in 2017.  

In like manner, employment in the industrial sector decreased for both men and women 
over  the  years  2011-2017.  This  came  as  a  result  of  increased  employment  in  the 
services  sector. 527 Over  the  years  2010-2014,  social  and  personal  services  increased 
from 15 to 17 per cent, and transport,  storage and communication  from 4.3 to 6.6 per 
cent.  With  the  exception  of  traditional  male  sectors  such  as  construction,  mining  and 
transport, women are  well represented on the labour market and not confined to a few 
sectors.528 Overall,  it  seems  that  while  exports  of  agricultural  products  have  increased 
under the GSP, total employment in the sector has been on the decline.  

Bolivia’s  unemployment  rate  increased  from  2.7  to  3.7  per  cent  between  2011  and 
2016.529 A  similar  development  is  found  in  youth  unemployment,  which  has  increased 
steadily in recent years. In 2011, ILO estimated that the total unemployment among 15-
24-year-olds were 6.2 per cent, in 2017 it had increased to 7.7 per cent. Looking at the 
gender  composition,  youth  unemployment  has  increased  for  both  genders.  Between 
2011 and 2017, it has increased from 5.0 to 6.7 per cent for  men and from 7.8 to 9.1 
per cent for women.530 The reported upward trend in youth unemployment is worrying as 
it  points  towards  a  problem  of  getting  young  workers  in  employment  in  the  private 
sector. The recorded youth unemployment may underestimate the extent of the problem.  

To  further  the  goal  of  eradicating  unemployment  in  the  country,  the  Government  has 
outlined  wide  ranging  public  investment  plans  in  the  areas  of  science,  energy  and 
transportations projects, hospitals, airports, and factories.531 It is noted that political will 

523 World Bank. Available at: http://data.worldbank.org/indicator/SL.TLF.CACT.FE.ZS?locations=BO  
524 World Bank. Available at:  http://data.worldbank.org/indicator/SL.TLF.CACT.MA.ZS?locations=BO  
525 Ulandssekretariatet. (2014). Bolivia Labour Market profile. Available at: 
http://www.ulandssekretariatet.dk/sites/default/files/uploads/public/PDF/LMP/lmp_bolivia_2014_final_version_
revised.pdf 
526 ILO (2017) Available at: http://www.ilo.org/ilostat/faces/ilostat-home/home?_adf.ctrl-
state=12azrduusn_70&_afrLoop=10587144780320#! 
527 ILO (2017) Available at: http://www.ilo.org/ilostat/faces/ilostat-home/home?_adf.ctrl-
state=12azrduusn_70&_afrLoop=10587144780320#! 
528 Ulandssekretariatet(2014) Bolivia Labour Market profile. Available at: 
http://www.ulandssekretariatet.dk/sites/default/files/uploads/public/PDF/LMP/lmp_bolivia_2014_final_version_
revised.pdf 
529 Telesure. (2016). Bolivia Plans to Eradicate Unemployment. Available at:  
http://www.telesurtv.net/english/news/Bolivia-Plans-to-Eradicate-Unemployment-by-2020-20160113-
0042.html 
530 ILO (2017) Available at: http://www.ilo.org/ilostat/faces/ilostat-home/home?_adf.ctrl-
state=12azrduusn_70&_afrLoop=10587144780320#! 
531 Telesure. (2016). Bolivia Plans to Eradicate Unemployment. Available at:  
http://www.telesurtv.net/english/news/Bolivia-Plans-to-Eradicate-Unemployment-by-2020-20160113-
0042.html 

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to reduce poverty and unemployment rate is visible, however it is not clear whether the 
agricultural sector is benefitting from these policies and what the unemployment rate is 
in the sector. 

As part of the overall social and economic reform process, the minimum wage has been 
raised by 20 per cent in May 2014 from USD 141 (EUR 133) per month to USD 215 (EUR 
203).532 Existing income inequalities in Bolivia are attributed to differences in urban/rural 
location,  to  race  and  also  to  gender. 533  In  2011,  the  average  monthly  earnings  for 
employees were USD 294, whereas in 2015 it has increased to USD 411. The increase in 
women’s  earnings  has  been  larger;  however,  the  average  monthly  earnings  of  female 
employees are still significantly lower than that of men.534 

According  to  a  stakeholder  that  participated  in  an  interview  with  the  Project  Team,  the 
GSP+  arrangement  has  had  many  positive  social impacts.  One  stakeholder  emphasised 
the  new  social  programs  promoting  school  completion  and  helping  low-income 
families.535 Additional improvements can be found in labour law and wage developments, 
as salary adjustments have been made every year over the last five years. While these 
improvements have contributed to better quality of life for Bolivian workers, these social 
policies are also affecting the viability of some projects as such policies have lowered the 
international competitiveness of some industries. 

Another  stakeholder  that  was  interviewed  mentioned  new  employment  opportunities 
which  have  emerged  as  a  result  of  the  increased  demand  for  exports. 536  The  forest 
industry,  for  example,  is  one  sector  with  a  large  productive  chain  which  generates 
important  direct  and  indirect  employment  opportunities.  Moreover,  the  agricultural 
sector is employing many people in their production chain. Producers and intermediaries 
all benefit from and contribute to the positive social impact generated through the GSP+ 
arrangement.537  

Bolivia adopted its Law No. 548 on the Code for Children and Adolescents, which made it 
legal  for  self-employed  children  to  enter  the  labour  force  from  the  age  of  ten  onwards, 
and  for  employed  children  from  the  age  of  twelve  onwards. 538 While  this  violated  ILO 
Convention 138, the government of Bolivia had defended the reasoning behind this law 
as  it  would  reflect  Bolivia’s  status  as  one  of  the  poorest  countries  in  South  America. 
Under pressure from the international community, a self-initiated country practice review 
has  been  implemented  to  discuss  its  status  as  a  GSP+  beneficiary.  The  government  of 
Bolivia  however  has  taken  action  to  eradicate  child  labour,  among  others  by  signing 
agreements with the governments of Peru and Brazil to combat human trafficking. 539  

Poverty reduction  

532 Ulandssekretariatet(2014) Bolivia Labour Market profile. Available at: 
http://www.ulandssekretariatet.dk/sites/default/files/uploads/public/PDF/LMP/lmp_bolivia_2014_final_version_
revised.pdf  
533 Geiger. (2009). Poverty, Inequality and human development of indigenous people in Bolivia. Available at: 
http://pdba.georgetown.edu/CLAS%20RESEARCH/Working%20Papers/WP17.pdf; IMF. (2015). Explaining 
Inequality in Bolivia. Available at: https://www.imf.org/external/pubs/ft/wp/2015/wp15265.pdf 
534 ILO. (2017). Available at: http://www.ilo.org/ilostat/faces/ilostat-home/home?_adf.ctrl-
state=12azrduusn_70&_afrLoop=10587144780320# 
535 The Bolivian Chamber of Hydrocarbons and Energy, Stakeholder Contribution 
536 Camara Forestal de Bolivia, Stakeholder Contribution 
537 Cabolqui, Stakeholder Contribution 
538 The European Commission, High Representative of the Union for Foreign Affairs and Security Policy. (2018). 
The EU Special Incentive Arrangement for Sustainable Development and Good Governance (‘GSP+’) 
assessment of Bolivia covering the period 2016 -2017. Available at: 
http://trade.ec.europa.eu/doclib/docs/2018/january/tradoc_156539.pdf 
539 Office of the United States Trade Representative. (2017). USTR Announces New Trade Preference Program 
Enforcement Effort. Available at: https://ustr.gov/about-us/policy-offices/press-office/press-
releases/2017/june/ustr-announces-new-trade-preference 

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Economic  growth  and  increased  public  spending  on  social  policies  such  as  health, 
education,  water  and  sanitation  have  been  accompanied  by  a  declining  poverty  rate  in 
the  country.  The  Government  has  set  in  place  a  variety  of  social  and  economic  policies 
including three main wealth redistributive tools (Dignity Pension (Renta Dignidad), Bono 
“Junto  Pinto”  and  Bono  “Juana  Azurduy”).  According  to  the  IMF,  these  measures  have 
reached around 30 per cent of the population.540  

The  investment  in  social  policies  in  the  country  has  been  supported  by  the  increased 
export revenues. The incidence of poverty decreased from 45.1 to 38.6 per cent between 
2011  and  2015.  The  decreasing  poverty  rates  in  Bolivia  have  had  differing  impacts  on 
the  population  in  urban  and  rural  areas.  From  2011  to  2014,  poverty  rates  in  urban 
areas  fell  from  36.8  to  30.6  per  cent  and  for  rural  areas  they  decreased  from  61.3  to 
57.6 per cent.  Despite  these significant improvements,  some stakeholders have argued 
that  poverty  has  increased  in  areas  where  only  natural  resources  like  quinoa  and 
chestnut  are  produced.541 The  levels  of  poverty  and  inequality  in  Bolivia  continue  to  be 
above  the  average  for  Latin  America. 542 Specifically,  it  has  been  suggested  that 
indigenous  people  in  Bolivia  have  significantly  less  access  to  social  services  and  are 
economically disadvantaged in comparison to non-indigenous peoples.543   

Despite  government  efforts,  according  to  the  Global  Multidimensional  Poverty  Index 
(MPI),  20.6  per  cent  of  the  Bolivian  population  is  still  suffering  from  poverty,  while  7.8 
per cent was found to be facing severe multidimensional poverty.544 

The CPIA social protection rating, which assesses government policies in terms of social 
protection  and  labour  market  regulations  in  order  to  reduce  the  risk  of  becoming  poor, 
help those who are poor, and ensure a certain level of welfare to all people, illustrates a 
stagnated institutional development in the country. The rating ranges from 1 (low) to 6 
(high),  and  Bolivia  has  scored  3.5  between  2008-2015,  except  for  year  2012  when  it 
scored  4. 545  In  other  words,  the  recent  economic  growth  has  not  adequately  been 
translated into improved social policies. 

Human rights 

Civil  and  political  rights  have  undergone  a  profound  change  in  Bolivia.  Since  the  new 
constitution  was  adopted,  factual  limits  to  universal  citizenship  of  groups  traditionally 
subject to discrimination including the indigenous majority and the afro Bolivian minority 
have been formally reduced.546 The Freedom House Index rates Bolivia has a “partly free” 
country, scoring 3 out of 7 on both political rights and civil liberties. These scores have 
remained constant between 2011 and 2015.547  

Political participation is high in Bolivia, and is guaranteed through universal suffrage and 
the  universal  right  to  campaign  for  political  offices.  However,  the  country  scores 

540 IMF. (2015). Working Paper – Bolivia. Available at: 
https://www.imf.org/external/pubs/cat/longres.aspx?sk=43471.0 
541 Stakeholder Workshop in Bolivia, 25 April 2017. 
542IMF. (2015). Explaining Inequality and Poverty Reduction in Bolivia. Available at: 
https://www.imf.org/external/pubs/ft/wp/2015/wp15265.pdf 
543 Geiger. (2009). Poverty, Inequality and human development of indigenous people in Bolivia. Available at: 
http://pdba.georgetown.edu/CLAS%20RESEARCH/Working%20Papers/WP17.pdf 
544 Multidimensional Poverty Index. (2017). Available at: http://hdr.undp.org/en/composite/MPI 
545 The World Bank. (2017) Available at: 
https://data.worldbank.org/indicator/IQ.CPA.PROT.XQ?locations=BO&view=chart 
546 Bertelsmann Stiftung. (2016). BTI Bolivia Country Report. Available at: https://www.bti-
project.org/fileadmin/files/BTI/Downloads/Reports/2016/pdf/BTI_2016_Bolivia.pdf 
547 Freedom House Index. (2017). Available at: https://freedomhouse.org/report/freedom-world/2011/bolivia 

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particularly  low  in  the  category  of  political  culture,  with  a  score  of  3.75  in  2016. 548 
Factors that can help to explain the country’s decreasing score in the Democracy Index 
are  (i)  the  limited  financial  and  human  resources  that  impede  effective  governance,  in 
particular with respect  to the  Government’s ability to provide services in areas that are 
difficult to access; (ii) a lack of professionalism coupled with politicization and corruption 
in the judiciary; and (iii) instances of repression and intimidation of the opposition by the 
Government.549  

The freedom of expression is formally guaranteed. With regards to public communication 
all forms of media exist in Bolivia. The relationship between the Government and critical 
private media is however characterised by tensions and discriminating treatment by the 
Government.  Private  media  outlets  and  individual  journalists  sometimes  become  the 
target  of  legal  proceedings.  In  addition,  regulatory  processes  for  broadcast  media  are 
reportedly  politicised  and  non-transparent  and  public  advertising  contracts  are  largely 
awarded to government favoured media outlets.550 The Government is also perceived to 
undermine the credibility of journalists and media outlets.551  

Furthermore,  in  Bolivia  arbitrary  detention  and  overcrowded  prison  facilities  remain  a 
significant impediment to Article 9 of the Human Rights Declaration. Reportedly, 69 per 
cent  of  inmates  in  Bolivia  have  not  been  convicted  of  a  crime  as  of  June  2016. 552 
Moreover, an estimated 1200 children live in prisons alongside their parents who receive 
meals  and  education  under  a  government-sponsored  programme.553 The  excessive  pre-
trial detention as much as disproportionate trial delays contribute to the large number of 
prisoners  in  the  country.  Prison  overcrowding  is  well  over  250  per  cent  in  the  country 
resulting in extremely poor conditions within the detention facilities.554 Steps have been 
taken  to  improve  the  situation  in  regards  to  prisoners,  such  as  the  decrease  of  the 
maximum periods of pre-trial detention in most cases. A number of presidential decrees 
between 2012 and 2015 have reduced sentences and pardoned those convicted of minor 
crimes. However, no relevant national legislation to improve this situation has yet been 
introduced.555 

Finally,  in  the  World  Bank  Worldwide  Governance  Indicators,  Bolivia  scores  particularly 
low on the rule of law indicator. This can be explained by the influence of the executive 
power in legislative and judicial affairs and the widespread practices of politicisation and 
corruption  in  the  judicial  branch.  In  Bolivia,  the  judiciary  is  traditionally  the  weakest 
institution. Restricted independence, wide  spread malpractice of  officials, administrative 
weakness, scarce resources, and competition with indigenous justice systems, corruption 
and political influence all contribute to the institution’s weakness.556  

Gender Equality 

548 The Economist Intelligence Unit. (2016). Democracy Index 2016. Available at: http://pages.eiu.com/rs/783-
XMC-194/images/Democracy_Index_2016.pdf 
549 Bertelsmann Stiftung. (2016). BTI Bolivia Country Report. Available at: https://www.bti-
project.org/fileadmin/files/BTI/Downloads/Reports/2016/pdf/BTI_2016_Bolivia.pdf 
550 Freedom House. (2016). Bolivia – Freedom of the Press. Available at: 
https://freedomhouse.org/report/freedom-press/2016/bolivia 
551 Human Rights Watch. (2015). Bolivia Country Report. Available at: https://www.hrw.org/world-
report/2016/country-chapters/bolivia 
552 Human Rights Watch. (2017). World Report 2017 – Bolivia. Available at: 
http://www.refworld.org/docid/587b585813.html 
553 CYCNET. Bolivia’s prison children. Available at: http://www.cyc-net.org/features/ft-bolivia.html  
554 InSightCrime (2016). Report Highlights Overcrowding, Other Problems in Bolivia Prisons. 
http://www.insightcrime.org/news-briefs/report-highlights-overcrowding-other-problems-in-bolivia-prisons   
555 Human Rights Watch. (2017). World Report 2017 – Bolivia. Available at: 
http://www.refworld.org/docid/587b585813.html 
556 Bertelsmann Stiftung. (2016). BTI Bolivia Country Report. Available at: https://www.bti-
project.org/fileadmin/files/BTI/Downloads/Reports/2016/pdf/BTI_2016_Bolivia.pdf 

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The  Global  Gender  Gap  Index  places  Bolivia  at  23rd  out  of  a  total  of  144  countries. 
Bolivia has  improved  significantly  on  this  dimension  over  the  last  decade  and  is  among 
the  top  two  performers  across  Latin  America. 557 Bolivia  further  ranks  among  the  top 
three  countries  worldwide  in  terms  of  women  representation  in  national  legislative 
branches  along  with  Rwanda  and  Cuba.558 Looking  closer  at  the  different  scores  of  the 
Gender Gap Index, we see that educational attainment and health and survival are close 
to  parity.  However,  within  women’s  economic  participation  and  opportunity,  including 
wage equality for similar work, room for improvements continue to exist.559 

Despite  the  fact  that  Bolivia  has  achieved  progress  in  this  aspect,  gender  inequality 
remains an issue. Women continue to be disadvantaged in comparison to men in various 
dimensions;  including  access  to  endowments  and  economic  opportunity  and  illiteracy 
rate.  In  rural  areas,  65  per  cent  of  women  live  in  poverty560.  Additionally,  the  rate  of 
gender-based violence against women is the highest in the region, 40 per cent of women 
have experienced some kind of violence by their partners.561 In addition to that, surveys 
show that in particular the female population is affected by a lack of awareness of citizen 
rights and the boundaries of discrimination.562  

7.1.3  Environmental impact  
In  this  section,  we  will  firstly  review  overall  trends,  drawing  on  indicators  of 
environmental performance, natural resources, biodiversity, climate change, air pollution 
and  solid  waste.  We  will  then  consider  environmental  impacts  directly  associated  with 
key products that are exported under the GSP. 

While  the  increased  exports  have  benefitted  the  Bolivian  economy  and  subsequently 
improved  the  life  of  many  Bolivians,  it  is  not  as  easy  to  assess  the  impact  on  the 
environment.  Sometimes  environment  protection  efforts  in  one  area  can  have  negative 
impacts  on  other  areas  of  environmental  conservation.  According  to  stakeholders,  the 
Bolivian government is taking several steps to fight climate change by implementing new 
projects and policies in the  energy  sector; however,  such projects need to be executed 
with the rest of the environment in mind as well.563 Hydropower plants have for example 
a  heavy  environmental  toll  in  the  form  of  compromised  landscapes, ecosystems and 
fisheries. 

It has also been suggested that the increased demand  for  organic agricultural products 
in the EU, have had positive environmental effects in Bolivia.  Every year, more than 35 
thousand  tons  of  quinoa  is  produced,  of  which  80  per  cent  is  organic.  This  has  led  to 
increased  financial  investments  in  organic  trade,  which  also  has  positive  environmental 
impacts in Bolivia. This has been recognized by the government and the government has 
an extensive agenda to support organic produce.564 

557 Weforum. Country Profile Bolivia. Available at: http://reports.weforum.org/global-gender-gap-report-
2016/performance-by-region-and-country/ 
558 Inter-Parliamentary Union. (2017). Women in Parliaments. Available at:  http://www.ipu.org/wmn-
e/classif.htm 
559 World Economic Forum. (2017). Available at: http://reports.weforum.org/global-gender-gap-report-
2016/economies/#economy=ETH 
560 Stakeholder Workshop in Bolivia, 25 April 2017. 
561 World Bank Group. (2015). Bolivia: Challenges and Constraints to Gender Equality and Women’s 
Empowerment. Available at: http://documents.worldbank.org/curated/en/339531468190181959/pdf/103087-
WP-P154195-Box394854B-OUO-8-Bolivia-Gender-Report-ENGLISH-WEB.pdf 
562 Ulandssekretariatet. (2014). Bolivia Labour Market profile. Available at: 
http://www.ulandssekretariatet.dk/sites/default/files/uploads/public/PDF/LMP/lmp_bolivia_2014_final_version_
revised.pdf 
563 The Bolivian Chamber of Hydrocarbons and Energy, Stakeholder Conservation 
564 Cabolqui, Stakeholder Contribution 

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Environmental Quality  
The  Environmental  Performance  Index  (EPI)  illustrates  Bolivia’s  improved  performance 
on meeting environmental policy targets for priority issues.  In 2014 Bolivia ranked 87th 
of 178 countries assessed, in 2016 Bolivia improved its score and is currently placed 76 th 
of  180  countries. 565  While  environmental  improvements  have  been  made,  the  rapid 
economic growth in Bolivia has also had negative environmental impacts, reflected in the 
current environmental challenges which the country faces. In rural areas, 50 per cent of 
the population is exposed to extremely vulnerable environment and weather changes.566  

Moreover,  only  a  small  percentage  of  the  land  area  in  Bolivia  is  suitable  for  intensive 
agriculture.  Large  parts  of  the  soil  have  little  depth  and  are  fragile  and  easily  eroded. 
The  area  of  eroded  soil  in  Bolivia  is  estimated  to  account  for  43  million  hectares.  The 
magnitude of eroded soil impedes large-scale augmentation of agricultural productivity in 
the country.567  

Along with growth in exports of agricultural products, the consumption of fertilisers has 
increased. This can be seen in the 13 per cent increase of fertiliser consumption between 
2011 and 2014. In 2011, 8.02 kg of fertiliser was used per hectare of arable land in the 
country. In 2014, this had increased to 9.07 kg.568  

When it comes to the use of renewable sources, data from the World Bank indicate that 
only  a  tiny  part  of  total  electricity  production in  Bolivia  comes  from  renewable  sources. 
In 2011, only 1.69 per cent of total electricity production came from renewable sources, 
excluding  hydroelectric.  In  2014,  the  use  of  renewable  sources  accounted  for  2.29  per 
cent  of  total  electricity  production.  At  the  same  time,  the  use  of  oil,  gas  and  coal  for 
electricity  production  has  increased.  In  2011,  it  accounted  for  65.8  per  cent  of  total 
electricity  production;  while  in  2014,  it  increased  to  72  per  cent.  Increased  power 
demand  has  thus  led  to  an  increase  in  the  use  of  oil,  gas  and  coal  as  sources  for 
electricity  production,  at  the  expense  of  renewable  sources. 569  This  is  inevitably  not 
conducive for a movement towards sustainable development as fossil fuels are known for 
their negative environmental impact. 

Waste water  
According  to  the  Environmental  Performance  Index  (EPI)  only  around  3.5  per  cent  of 
wastewater  was  treated  in  2014  in  Bolivia. 570  Improper  wastewater  treatment,  and 
discharges  from  mining  activities,  agricultural  runoffs,  and  untreated  wastewater  from 
industry  and  households  are  major  contributors  of  water  pollution  in  Bolivia. 
Nevertheless,  mining  is  one  of  the  major  sources  of  water  pollution  causing  high 
concentrations of heavy metals in waterways, which negatively affect agriculture, cattle-
breeding, and fisheries.571 

Natural resources 
Deforestation  has  increased  at  a  rapid  rate  alongside  increased  soil  and  water 
pollution572. The Environmental Risk Exposure (ERE) indicator shows that unsafe water is 

565 Yale University. (2016). Environmental Performance Index. Available at: http://epi.yale.edu/ 
566 Stakeholder Workshop in Bolivia, 25 April 2017. 
567 SIDA. (2013). Environment and Climate Change in Bolivia. Available at: 
http://sidaenvironmenthelpdesk.se/wordpress3/wp-content/uploads/2013/06/Bolivia-Environmental-Policy-
Brief-Final-May-2013.pdf 
568 World Bank. World Development Indicators. Available at: http://data.worldbank.org/indicator  
569 World Bank. World Development Indicators. Available at: https://data.worldbank.org/indicator?tab=all 
570 Yale University. (2016). Environmental Performance Index. Available at: http://epi.yale.edu/ 
571 Smith, B., et al. (2011). Bolivia: Impacts by Sector. Available at: https://www.weadapt.org/knowledge-
base/national-adaptation-planning/bolivia-impacts-by-sector 
572 EEAS. (2007). Bolivia Country Strategy Paper. Available at: 
http://eeas.europa.eu/archives/docs/bolivia/csp/07_13_en.pdf 

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Bolivia’s greatest environmental public health problem.573 Water shortages and dried out 
water  resources  constitute  major  environmental  challenges  for  the  country.  Another 
major  environmental  concern  is  soil  erosion  caused  by  overgrazing,  unsustainable 
cultivation  methods  and  intensive  use  of  chemical  fertilizers,  which  increased  of  13  per 
cent  over  the  period  2011-2014,  thereby  endangering  agricultural  land  and  soil 
quality.574    

Bolivia has an estimated 50 million hectares of forest, and thereby the highest amount of 
forests per  capita in the world. The country is using this wealth of natural resources to 
increase its exports. Bolivia is increasingly exporting timber products under HS 44 Wood 
and  Articles  of  Wood,  Wood  Charcoal,  including  largely  products  such  as  wood,  sheets 
for veneering, doors and builders (6.35 per cent of total exports under GSP). The timber 
industry  mainly  extracts  wood  from  the  Amazon.  This  has  led  to  a  reduction  in  forest 
coverage area, which decreased between 2011 and 2015 from 51.62  per cent to 50.55 
per  cent. 575  An  estimated  800,000  hectares  of  forest  area  is  classified  as  degraded. 
Timber  extraction  has  led  to  degradation  by  removing  and  damaging  biomass.  This  is 
especially  caused  by  illegal  extraction  activities  which  are  not  in  compliance  with 
sustainability requirements and rules.  

The  percentage  of  total  land  that  is  agricultural  land  has  increased  slightly  in  recent 
years. In 2011, 34.66 per cent of all land was agricultural land, in 2014 it had increased 
to 34.80 per cent.576 A partial reason for this might be the increased cultivation of crops 
in  Bolivia  due  to  an  increased  demand.  However,  increased  crop  production  does  have 
both  positive  and  negative  effects.  It  also  tends  to  affect  biodiversity  both  directly  and 
indirectly. Direct impacts include habitat conversion or degradation, water use, pollution, 
introduction  of  invasive  alien  species,  quality  and  availability  of  ecosystem  services. 
Indirect impacts mainly arise from in-migration and land-use changes. 

As  water  is  a  vital  natural  resource  for  both  humans  and  agriculture,  it  is  important  to 
assess  the  renewable  internal  freshwater  resources  in  a  country.  Internal  renewable 
resources  refer  to  internal  river  flows  and  groundwater  from  rainfall.  Looking  at  data 
from the World Bank, we see that the renewable internal freshwater resources per capita 
have  decreased  slightly  from  29641  cubic  meters  in  2012,  to  28734  cubic  meters  in 
2014.577 

Biodiversity 

Bolivia is one of the world’s richest countries in terms of species; however, due to recent 
economic  activity  coupled  with  lack  of  enforcement  with  regards  to  existing  protection, 
the rich diversity is under threat. Around 20 per cent of the total land area in Bolivia is 
protected. 15 per cent of the territory, which is further divided into 22 areas, belongs to 
the  National  System  of  Protected  Areas,  while  departmental  and  municipal  protected 
areas cover an additional 7 per cent. Bolivia is one of the Latin American countries with 
the  highest  share  of  protected  areas.  Thus,  the  challenge  lies  in  the  enforcement  of 
these  protected  areas.  Not  only  are  illegal  logging  and  illegal  settlements  common, 
furthermore, the protected areas are also threatened by large national and multinational 
interest for hydropower and mining projects.578  

573 Yale University. (2016). Environmental Performance Index. Available at: http://epi.yale.edu/  
574 FSD. (2015). Environmental Sustainability Issues in Bolivia. Available at: 
http://www.fsdinternational.org/country/bolivia/envissues; Stakeholder Workshop in Bolivia, 25 April 2017. 
575 World Bank. Available at: http://data.worldbank.org/indicator 
576 World Bank. (2017). Available at: https://data.worldbank.org/indicator?tab=all 
577 Ibid. 
578 SIDA. (2013). Environment and Climate Change in Bolivia. Available at: 
http://sidaenvironmenthelpdesk.se/wordpress3/wp-content/uploads/2013/06/Bolivia-Environmental-Policy-
Brief-Final-May-2013.pdf 

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Poor  enforcement  not  only  results  in  species  loss  but  also  results  in  loss  of  the 
adaptability  to  change  as  well  as increased  vulnerability  and  degradation  of  the  natural 
ecosystems. Furthermore, as wild relatives to many of the cultivated crops in Bolivia can 
be  found  in  the  nature,  agricultural  diversity  is  challenged  by  the  better  performing 
commercial  crops,  and  a  decrease  in  the  varieties  of  potato,  quinoa  and  other 
agricultural products has already been seen.579 

Air pollution 

In  2013,  Bolivia’s  per  capita  CO2  emissions  reached  1.895  metric  tons,  an  increase  of 
29.8  per  cent  in  less  than  a  decade.580 Between  2009  and  2013,  total  greenhouse  gas 
(GHG)  emissions  increased  by  20.03  per  cent  and  total  CO2  emissions  increased  by 
34.52  per  cent.  Despite  the  increase  of  Bolivia’s  emission  of  GHG  and  CO2  they  only 
make up a small part of the global emissions – in 2013, Bolivia’s GHG emissions are 0.10 
per cent of the total, while its CO2 emissions are 0.054 per cent of the total.581  

A similar development  has also been found with regards to methane  emissions, as  well 
as  nitrous  oxide  emissions.  In  2010,  methane  emissions  in  Bolivia  have  increased  with 
1.51 per cent compared to 1990. However, in 2012 it had further increased to 3.54 per 
cent.582 

While  air  pollution  is  not  a  major  problem  in  the  Bolivian  lowlands,  it  poses  a  serious 
threat in the high-altitude cities of La Paz, El Alto and Cochabamba. The vast majority of 
the  pollutants  come  from  motor  vehicles,  industries  such  as  metal  foundries  and  oil 
refineries, as well as from burning household and agricultural waste.583 

Climate change   

Climate change poses a significant threat for Bolivia. Out of the 181 countries assessed 
for  the  ND-GAIN  Country  Index,  Bolivia  was  ranked  the  127th  most  vulnerable  country. 
In addition to being highly vulnerable to the effects of climate change, low readiness to 
deal with the impact of climate change has been reported.584 

As  illustrated  above,  Bolivia’s  vulnerability  to  the  impacts  of  climate  change  has 
decreased  since  1995  but  stagnated  over  the  past  five  years.  The  country’s  readiness 
has  increased  over  the  same  time  span. 585 Overall,  in  Bolivia  the  level  of  awareness 
towards climate change is very high.  

Climate change has caused severe weather variability in Bolivia, the country experienced 
heavy  rain,  hailstorms,  floods,  landslides,  drought,  cold  and  strong  winds  from 
November 2015 in several areas causing deaths and extensive damage586 

Bolivia  is  highly  vulnerable  to  the  effects  of  climate  change  due  to  its  dependence  on 
natural  resources.  Both  agriculture  and  forestry  are  highly  sensitive  to  climate  change. 

579 Ibid. 
580 World Bank. Available at: 
http://data.worldbank.org/indicator/EN.ATM.CO2E.PC?end=2013&locations=BO&start=2004&view=chart  
581 World Resource Institute. CAIT Climate Data Explorer. Available at: http://cait.wri.org/historical  
582 World Bank. (2017). World Development Indicators. Available at: 
https://data.worldbank.org/indicator?tab=all 
583 SIDA. (2013). Environment and Climate Change in Bolivia. Available at: 
http://sidaenvironmenthelpdesk.se/wordpress3/wp-content/uploads/2013/06/Bolivia-Environmental-Policy-
Brief-Final-May-2013.pdf 
584 ND-GAIN. (2015). Bolivia. Available at: http://index.gain.org/country/Bolivia 
585ND-GAIN. (2015). Bolivia. Available at: http://index.gain.org/country/Bolivia  
586 European Commission. Emergency Response and Coordination Centre (ERCC). Available at: 
http://erccportal.jrc.ec.europa.eu/ERCMaps/ECDM_20160324_Bolivia_SevereWeather.pdf 

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Although  mining  is  not  directly  affected  by  climate  change,  it  has  an  impact  on  the 
capacity  of  the  local  people  and  natural  systems  to  cope  with  and  adapt  to  climate 
change. 587 Over  the  past  decades,  changes  in  the  distribution  of  annual  precipitation 
have caused water deficits in many regions in the country. While droughts have affected 
the highlands, floods have instead affected agriculture in the lowlands. As temperatures 
rise,  the  Andean  glaciers  retreat,  causing  increased  stream  flow  during  the  wet  season 
and a decrease of runoff during the dry season. This is causing severe pressure on water 
availability.  

If  water  becomes  scarce,  it  does  not  only  have  negative  consequences  for  agriculture 
and  the  human  population,  but  water  protection  and  quality  improvements  become 
increasingly important. Mining activities must be controlled and regulated even further to 
minimize  the  discharge  of  pollutants  into  rivers.  Rising  temperatures  and  changes  in 
precipitation  distribution  can  also  affect  the  physiology  and  growth  of  crops  as  well  as 
their  sensitivity  to  pests  and  plant  diseases.  Not  only  can  this  lead  to  a  decrease  in 
production  but  it  will  also  have  negative  influences  on  food  security  as  well  as  revenue 
for the local communities.588 

Direct effects of key products exported under GSP+ 
This  section  considers  the  environmental  impacts  related  to  two  areas  of  Bolivia’s 
exports  under  GSP+,  crop-based  products  and  wood.  In  general,  GSP+  exports  appear 
to be a small share of total Bolivian exports to the EU; in these two cases, moreover, the 
direct environmental impacts appear to be limited.  

Bolivia exports various crop-based products to the EU under the GSP+, notably cereals, 
vegetables,  fruits,  for  an  aggregate  export  value  of  EUR  32.1m  per  year  in  2014-16  (a 
105%  increase  over  2011-13).  (Another  major  export  area  comes  from  beverages, 
which  are  derived  from  agricultural  products.)  While  export-oriented  agriculture  has 
been  an  underlying  driver  of  deforestation 589 ,  Bolivia’s  exports  under  the  GSP+  are 
relatively  small.  As  noted  above,  EU  demand  has  led  Bolivia  to  increase  its  exports  of 
organic products; data are not available, however, on the share of organic exports under 
GSP+.  

On average, Bolivia exported an average EUR 3.4m’s worth of wood and articles of wood 
each  year  in  2014-16  (a  13%  increase  over  2011-13)  under  the  GSP+.  The  country 
hosts 53m ha of forested area and a growing forestry industry, which puts pressure on 
forests. Since the mid-90s, sustainable forest management and certification efforts have 
contributed  to  alleviating  the  problem. 590  In  fact,  Bolivia  is  today  one  of  the  world 
leaders  in  certified  natural  forest  management.591   However,  there  are  still  risks  due  to 
possible over-exploitation.592 Nonetheless, Bolivia’s exports under GSP+ have been quite 
small and indeed less than half of all Bolivia’s wood exports to the EU.   

In summary, Bolivia’s  environment faces major pressures, including on water pollution, 
air  emissions  in  highland  cities  and  deforestation,  including  via  illegal  extraction.  The 
country’s  ND-GAIN  index  shows  that  it  is  highly  vulnerable  to  climate  change.  At  the 

587 Smith, B., et al. (2011). Bolivia: Impacts by Sector. Available at: https://www.weadapt.org/knowledge-
base/national-adaptation-planning/bolivia-impacts-by-sector 
588 Ibid. 
589 Müller R. et al., The context of deforestation and forest degradation in Bolivia: Drivers, agents and 
institutions, 2014, available at https://www.cifor.org/library/4600/the-context-of-deforestation-and-forest-
degradation-in-bolivia-drivers-agents-and-institutions/  
590 Yale School of Forestry and Environmental Studies, Forest Governance - Bolivia, no date, available at 
http://globalforestatlas.yale.edu/amazon/forest-governance/bolivia  
591 Smith B. and Devisscher T. (Stockholm Environmental Institute), Bolivia, impacts by sector, 2011, available 
at https://www.weadapt.org/knowledge-base/national-adaptation-planning/bolivia-impacts-by-sector  
592 WWF, Bolivian Forests, no date, available at 
http://wwf.panda.org/who_we_are/wwf_offices/bolivia/our_work/forest_program/   

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same time, Bolivia’s Environmental Performance Index has risen slightly in recent years. 
The  link  between  Bolivia’s  participation  in  the  GSP+  arrangement  and  its  overall 
environmental  conditions  will  be  at  best  indirect;  indeed,  as  shown  in  section  7.1.1, 
Bolivia’s exports under GSP+ represent only a fraction of its total exports to the EU.  

Bolivia’s  main  exports  under  GSP+,  agricultural  products  and  wood  products,  can  have 
important  environmental  impacts  –  however,  it  appears  that  organic  agriculture  and 
sustainably sourced wood are at least partial components of these export categories, and 
their  volume  under  GSP+  has  grown  in  the  period  considered.  The  GSP+  arrangement 
includes conditions related to global environmental agreements: this is discussed in the 
next section of this report.  

7.1.4  Implementation of GSP+ conventions 
Overall,  Bolivia  fails  to  meet  many  of  its  reporting  obligations  under  the  Conventions. 
The  country  has  an  inconsistent  reporting  pattern.  In  terms  of  implementation,  as 
mentioned in the reports, several policies in line with the conventions have been enacted. 
It  has  been  stated  that  Bolivia  made  efforts  to  follow  the  implementation  requirements 
but lags behind in this aspect on several conventions. 

Human rights 
Overall,  Bolivia  is  inconsistent  with  its  reporting  obligations  under  the  human  rights 
conventions.  Several  reports  have  not  at  all  been  submitted  to  the  respective 
committees and reports have often been handed in with delays. The committees further 
note  that  reports  only  partially  conform  to  the  general  reporting  guidelines.  Bolivia 
further  fails  to  effectively  implement  the  conventions  signed.  The  following  overarching 
elements  have  been  identified:  (i)  lack  of  independent  and  impartial  complaint 
mechanism  to  ensure  the  conventions  provisions  (ii)  lack  of  judicial  independence;  (iii) 
lack of detailed and updated information submitted to the committees (iv) severe delays 
in submitting State Party reports. 

The  International  Covenant  on  Civil  and  Political  Rights  is  only  partially  adhered  to  in 
Bolivia. The convention’s implementation is supervised by the Human Rights Committee 
(HRC), a body of independent experts. According to the UN Special Rapporteur brief full 
implementation is impeded by the restrictions to the right to freedom of association, the 
low  barriers  to  revoke  NGOs’  legal  status  on  grounds  of  non-compliance  with  sectorial 
policies and standards. 

The  country  is  currently  in  its  third  reporting  cycle,  having  submitted  its  State  Party 
report in 2011, despite it being due in 1999. In the same line, Bolivia fails to report in a 
timely and consistent way on its efforts to implement the Convention on the Elimination 
of  All  Forms  of  Discrimination  Against  Women.  The  country’s  main  implementation 
shortcomings  relate  in  particular  to  the  severe  cases  of  violence  against  women, 
including  domestic  and  sexual  violence.  Bolivia  has  the  highest  rate  of  physical  and 
sexual violence against women in Latin America, with 53 per cent of all Bolivian women 
being affected. 593    

The  reporting  requirements  on  the  Convention  on  the  Rights  of  the  Child  state  that 
Parties have to submit reports  on the measures adopted, within two years  of the entry 
into force of the convention and thereafter every five years. Bolivia has failed to comply 
with  its  reporting  obligations  and  submitted  its  latest  report  in  2008.  The  country  has 

593 Development and Cooperation. (2015). Violence results from patriarchal attitudes. Available at: 
https://www.dandc.eu/en/article/latin-america-bolivia-reports-most-cases-violence-against-women 

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outstanding reporting obligations since 2015 under the V-VI Reporting Cycle. 594 Despite 
the lack of reporting compliance, several implementation issues have arisen. Among the 
most  prominent  is  the  widespread  phenomenon  of  child  labour,  in  particular  in  rural 
areas.  

Bolivia has passed the Law on Children and Adolescents in 2014 to ensure protection of 
children, with regards to personal integrity and protection against violence, prohibition to 
engage children in various  forms  of hazardous work and facilitation on the  collection of 
data on child labour. Based on Bolivia’s State Party report of 2008, the monitoring body 
has  identified  a  variety  of  issues  that  impede  full  implementation  of  the  convention. 
These  include:  (i)  lack  of  transparency  in  the  allocation  of  resources  (ii)  lack  of 
independent  monitoring  (iii)  lack  of  human  and  financial  resources  to  support 
implementation,  and  (iv)  decentralisation  leading  to  difficulties  in  coordination  between 
national, departmental and municipal levels. 595  

Bolivia  is  also  lagging  behind  in  submission  of  its  third  report  to  the  committee 
overseeing  the  implementation  of  the  UN  Covenant  on  International  Covenant  on 
Economic,  Social  and  Cultural  Rights  and  on  the  UN  International  Convention  on  the 
Elimination of All Forms of Racial Discrimination. 596  

The  reporting  requirements  under  the  Convention  against  Torture  and  other  Cruel, 
Inhuman or Degrading Treatment  or  Punishment have not been  fulfilled by Bolivia. The 
latest  country  report  has  been  submitted  in  October  2011,  being  due  since  2004.  The 
third reporting cycle of the convention requires national reports to be submitted by May 
2017; at the time of writing in Nov 2017, Bolivia had not yet submitted this document. 
597  

Labour rights 
On  all  eight  fundamental  conventions,  the  CEACR  has  issued  Direct  Requests  and 
Observations on Bolivia’s  status  of implementation between 2014 and 2016.  In  these a 
number  of  overarching challenges to the effective implementation have been identified, 
including  (i)  the  lack  of  information  and  detailed  data  on  the  countries  efforts  to 
implement  the  conventions;  (ii)  lack  of  adequate  access  to  appropriate  administrative 
and  judicial  remedies  (iii)  the  need  to  strengthen  capacities  for  prosecution  authorities 
and  judges.  (iv)  the  maintenance  of  national  legislative  provisions  detrimental  to  the 
conventions’  objectives;  (iv)  the  wide  spread  phenomenon  of  child  labour  and  (vi)  the 
outdated  version  of  Bolivia’s  General  Labour  Act  of  1943.  Furthermore,  a  lack  of  public 
awareness  and  adequate  training  on  the  provisions  of  the  ILO  Conventions  has  been 
identified. 

Grave deficiencies in compliance are related to the situation of child labour in the country 
and  more  specifically  Convention  138  concerning  Minimum  Age  for  Admission  to 
Employment  and  Convention  182  concerning  the  Prohibition  and  Immediate  Action  for 
the Elimination of the Worst Forms of Child Labour. With respect to Convention 182, the 

594 United Nations Human Rights. (2017). Ratification, Reporting & Documentation for Bolivia (Plurinational 
State of). Available at: http://tbinternet.ohchr.org/_layouts/TreatyBodyExternal/Countries.aspx 
595 CRC. (2009). Concluding Observations: The Plurinational State of Bolivia. Available at: 
http://tbinternet.ohchr.org/_layouts/treatybodyexternal/Download.aspx?symbolno=CRC%2fC%2fBOL%2fCO%
2f4&Lang=en 
596 CESCR. (2008). Concluding observations of the Committee on Economic, Social and Cultural Rights Bolivia. 
Available at: http://www.refworld.org/publisher,CESCR,CONCOBSERVATIONS,BOL,48d89f8e2,0.html  
597 United Nations Human Rights (2017) Ratification, Reporting & Documentation for Bolivia (Plurinational State 
of). Available at: http://tbinternet.ohchr.org/_layouts/TreatyBodyExternal/Countries.aspx 

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Bolivian  Government  does  not  submit  sufficient  and  complete  information  to  the 
monitoring bodies and further lacks a set of objectives to be achieved. 598  

Environment 
Overall,  Bolivia  is  in  a  situation  of  severe  non-compliance  with  its  reporting  obligations 
under the conventions. The country has consistently submitted its reports very late and 
several  reports  are  yet  to  be  submitted.  The  country  only  partially  fulfils  its  obligations 
under the conventions both in terms of reporting and implementation. 

Bolivia  is  currently  in  a  situation  of  non-compliance  in  regard  to  the  Convention  on 
International Trade in Endangered Species of Wild Fauna and Flora (CITES). The country 
has  not  enacted  the  adequate  legislation  to  implement  the  convention  and  further 
repeatedly failed to comply with the inherent reporting obligations. At the time of writing, 
the  annual  reports  for  2015  and  2016  have  not  been  submitted. 599 In  the  same  vain, 
Bolivia fails to comply with its obligations under the Basel  Convention on the Control of 
Transboundary Movements of Hazardous Wastes and Their Disposal. The annual reports 
for 2001, 2002, 2004 and 2006 have not been submitted and the reports for 2013, 2014 
and 2015 were handed in late to the monitoring body. 

Bolivia has received international assistance to strengthen its national institutions related 
to  the  implementation  of  the  Montreal  Protocol.  As  shown  in  the  monitoring  reports, 
Bolivia is  failing  to  consistently  report  on  its  Hydro  chlorofluorocarbons  consumption  as 
required.  Further,  Bolivia  has  failed  to  update  the  responsible  monitoring  bodies  on  its 
reporting  methodology  and  submitted  inconsistent  data  on  its  advancement  towards 
fulfilling the protocol. 600  

Bolivia  is  a  party  to  the  UN  Framework  Convention  on  Climate  Change  (UNFCCC)  and 
has  signed  the  negotiated  agreements  under  the  framework  convention,  notably  the 
Paris  Agreement  in  2016.  Bolivia  has  outstanding  reporting  obligations  and  has  not 
submitted  the  national  communications  in  due  time.  Bolivia  is  further  lacking  in  its 
obligations  in  respect  to  the  Biennial  Update  Reports.  Bolivia  has  not  committed  to 
specific  CO2  emission  reduction.  As  indicated  in  the  country’s  Intended  Nationally 
Determined  Contribution,  Bolivia  aims  to  address  climate  change  and  its  impacts  via 
improved water, energy and forest management. 601  

Bolivia  is  compliant  with  its  reporting  requirements  under  the  Convention  on  Biological 
Diversity (CBD).  As of 2015 the country has still had deficiencies in adequate data and 
information  gathering  on  its  biodiversity.  With  regards  to  the  Stockholm  Convention  on 
Persistent  Organic  Pollutants  (POPs),  Bolivia  has  only  partially  fulfilled  its  reporting 
obligations as the First and Second National Report are outstanding. 

Good governance 
Bolivia  has  ratified  all  UN  Conventions  on  drug  control  and  control  of  corruption  as 
required for the GSP+ status. 

598 CEACR Observation(2014). Available at: 
http://www.ilo.org/dyn/normlex/en/f?p=NORMLEXPUB:13100:0::NO:13100:P13100_COMMENT_ID:3186215:
NO  
599 EEAS. (2016). The EU Special Incentive Arrangement for Sustainable Development and Good Governance 
(GSP+) Covering the Period 2014-2015. Available at: 
https://eeas.europa.eu/sites/eeas/files/european_commission._2016._report_on_the_generalised_scheme_of_
preferences_during_the_period_2014-2015.pdf 
600 UNEP. (2015). Project Proposal: Plurinational State of Bolivia. Available at: 
http://www.multilateralfund.org/75/English/1/7538.pdf 
601 UNFCCC. Intended Nationally Determined Contribution From the Plurinational State of Bolivia. Available at: 
http://www4.unfccc.int/submissions/INDC/Published%20Documents/Bolivia/1/INDC-Bolivia-english.pdf  

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The  monitoring  body  of  the  three  international  drug  control  conventions,  the 
International  Narcotics  Control  Board  (INCB) 
is  undertaking  treaty  compliance 
monitoring  visits  to  the  Parties.  Bolivia  has  actively  engaged  in  facilitating  these 
monitoring  visits  and  proven  efforts  to  adhere  to  the  Convention’s  monitoring 
requirements. The Government of Bolivia has further worked towards eradication of illicit 
cultivation  of  coca  bush  and  provided  the  INCB  with  contacts  of  the  relevant  ministries 
and departments in the country.602  

In  line  with  the  three  main  Conventions  on  Drug  control,  Bolivia  adopted  a  national 
strategy  to  reduce  drug  trafficking  and  the  surplus  of  coca  crops  in  the  country.  The 
Government commits to regularly conduct drug-abuse surveys to decrease drug abuse in 
the  country.  Drug  control  related  policies  and  the  implementation  of  prevention 
programmes  are  further  part  of  the  national  plan  to  reduce  illicit  drug  consumption  in 
Bolivia.  

Political will to implement and adhere to conventions 

The  2009  Bolivian  Constitution  has  been  characterised  as  reinforcing  the  application  of 
the  conventions  by  the  international  monitoring  bodies,  such  as  the  UN  and  the  ILO, 
which  positively  noted  the  steps  taken  by  the  Government  to  establish  an  inclusive 
society.603 In addition to that, these international monitoring bodies mention the positive 
developments  that  Bolivia  has  undergone  and  also  note  the  National Development  Plan 
as a means to streamline implementation of the human rights conventions in particular 
in respect to economic, social and cultural rights. 

Bolivia  has  made  efforts  to  improve  the  situation,  as  in  2012,  2013  and  2014,  the 
Government  has  adopted  several  Laws  designed  to  guarantee  women  a  life  free  of 
violence  and  women  rights  within  the  family  and  measures  to  reduce  teenage 
pregnancies.604   

The  CEACR  has  pointed  out  that  the  Bolivian  Government  lacks  a  relevant  set  of 
objectives to be achieved and does not submit sufficient and complete information to the 
monitoring  bodies.605 Bolivia  has  taken  measures  with  regards  to  public  awareness  on 
POPs  including  public  awareness  programmes  and  trainings  for  educators,  workers  as 
well as technical and managerial personnel.606  

In  line  with  the  three  main  Conventions  on  Drug  control,  Bolivia  adopted  a  national 
strategy  to  reduce  drug  trafficking  and  the  surplus  of  coca  crops  in  the  country.  The 
Government commits to regularly conduct drug-abuse surveys to decrease drug abuse in 
the country.  

602 INCB. (2016). Available at: https://www.incb.org/incb/en/news/press-
releases/2016/press_release251016.html 
603 CERD. (2011). Consideration of reports submitted by State parties under article 9 of the Convention. 
Available at: 
http://tbinternet.ohchr.org/_layouts/treatybodyexternal/Download.aspx?symbolno=CERD%2fC%2fBOL%2fCO
%2f17-20&Lang=en 
604 CEDAW. (2013). Plurinational State of Bolivia. Available at:  
http://tbinternet.ohchr.org/_layouts/treatybodyexternal/Download.aspx?symbolno=CEDAW%2fC%2fBOL%2f5-
6&Lang=en  
605 ILO. (2016). CEACR Observation. Available at: 
http://www.ilo.org/dyn/normlex/en/f?p=NORMLEXPUB:13100:0::NO:13100:P13100_COMMENT_ID:3186215:
NO 
606 ERS.(2017). Electronic Reporting System of the Stockholm Convention. Available at: 
http://ers.pops.int/ERS-
Extended/FeedbackServer/fsadmin.aspx?fscontrol=respondentReport&surveyid=64&voterid=45876&readonly=
1&nomenu=1 

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The  most  visible  indicator  of  the  country’s  efforts  can  be  seen  in  the  mapping  of 
authorised  coca  cultivation  sites  and  the  eradication  of  around  5  000  ha  of  coca 
cultivation  per  year.  Furthermore,  Bolivia  has  increased  its  institutional  capacities  of 
governmental  bodies  and  social  organisations  to  effectively  implement  programmes  in 
alignment  with  the  Convention,  while  promoting  a  system  of  social  control  of  coca 
production.607  

Bolivia has committed to adhere to the UN Single Convention on Narcotic Drugs of 1961 
as amended by the 1972 Protocol which was re-accessed by Bolivia in 2013. In line with 
the  Convention,  the  country  has  committed  to  take  legal  measures  to  control  the  illicit 
cultivation of coca for the production of narcotic drugs, as well as the illicit consumption, 
use and purchase of narcotic drugs and psychotropic substances.608 In line with Bolivia’s 
commitments  resulting  from  the  Convention  against  Corruption,  the  Ministry  for 
Institutional  Transparency  and  Fight  against  Corruption  and  Transparency  has 
established units within all state and municipal bodies. Bolivia is in compliance with the 
Convention.  The  monitoring  body  has  acknowledged  that  Bolivia  has  carried  out 
legislative  and  institutional  reforms,  which  show  the  commitment  to  combating 
corruption.609  

7.1.5  Stakeholder awareness of GSP+ requirements 
From the consultation activities undertaken by the Project Team, it was revealed that the 
majority  of  Bolivian  stakeholders  had  very  little  knowledge  about  the  GSP.  In  the  local 
stakeholder workshop held in Bolivia, most stakeholders who attended were technocrats 
and, as such, had working knowledge of the scheme. Besides that, it was found that the 
other  stakeholders  were  unaware  of  the  underpinnings  of  the  scheme,  unless  they 
worked directly in an industry where GSP+ preferences were being utilised. Even in this 
case, there was only general knowledge about tariff reductions and no knowledge about 
the specific requirements for entry and retention of GSP+ status. 

607 EEAS. (2016). The EU Special Incentive Arrangement for Sustainable Development and Good Governance 
('GSP+') covering the period 2014 – 2015. Available at: 
https://eeas.europa.eu/sites/eeas/files/european_commission._2016._report_on_the_generalised_scheme_of_
preferences_during_the_period_2014-2015.pdf  
608 United Nations Treaty Collection. Status report. Available at: 
https://treaties.un.org/Pages/ViewDetails.aspx?src=TREATY&mtdsg_no=VI-19&chapter=6&clang=_en  
609 UNDOC. (2014). Executive Summary – Bolivia. Available at: 
http://www.unodc.org/documents/treaties/UNCAC/WorkingGroups/ImplementationReviewGroup/ExecutiveSum
maries/V1408229e.pdf  

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7.2  Impact of the GSP+ on Pakistan  

7.2.1  Economic impact 
The  EU  is  the  main  destination  for  Pakistan’s  exports.  The  EU’s  share  has  increased 
significantly between 2011 and 2016 – from 25.7 per cent to 37.1 per cent. In terms of 
value,  Pakistan’s  total  exports  to  the  EU  increased  by  53.6  per  cent,  from  EUR  4,019 
million in 2011 to EUR 6,173 million in 2016. 

R
U
E
N
O
I
L
L
I

M
N

I

7.000

6.000

5.000

4.000

3.000

2.000

1.000

0

2011

2012

2013

2014

2015

2016

Figure 60: Pakistan’s total exports to the EU (2011-2016)610 

Pakistan’s exports to the EU mainly consist of textile articles. As illustrated by Figure 61 
below,  the  largest  export  sections  fall  under  HS  Chapters  61  to  63,  covered  by  GSP 
Section S-11b.611 Together, exports under these HS Chapters account for 70 per cent of 
Pakistan’s  exports  to  the  EU.  This  illustrates  that  since  obtaining  GSP+  status  in  2014, 
export  diversification  has  remained  relatively  limited.  Other  important  export  products, 
such  as  cotton,  leather,  staple  fibres,  toys,  cereals  and  optical  and  measuring 
instruments, have not shown clear evidence of relevant growth over the past years.  

610 Source: own calculations based on trade data supplied by the European Commission. 
611 HS Chapter 61 includes articles of apparel and clothing accessories, knitted or crocheted, HS 62 includes 
articles of apparel and clothing accessories, not knitted or crocheted, and HS 63 includes other made up textile 
articles; sets; worn clothing and worn textile articles; rags. 

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EUROPEAN COMMISSION 

Figure 61: Composition of Pakistan’s exports under GSP+ by HS Chapter (2016)612 

A  large  share  of  Pakistan’s  exports  to  the  EU  is  eligible  for  GSP+  preferences,  but  the 
country  does  not  fully  utilise  the  preferences.  The  utilisation  rate  has  fluctuated  under 
the  review  period.  In  2016,  the  average  utilisation  rate  was  95.75  per  cent,  meaning 
that EUR 5,509 million out of the EUR 5,753 million eligible exports were exported with 
preferences.  

Figure  62  below  shows  a  significant  decrease  in  the  utilisation  rate  in  2014  when 
Pakistan  was  granted  GSP+  status.  Compared  to  2013,  the  utilisation  rate  dropped  by 
almost 25 percentage points.  

612 Source: own calculations based on trade data supplied by the European Commission. Pie chart is to be read 
in a clockwise direction. HS Chapters description: 39: Plastics and Articles therefor; 41: Raw hides and skins 
(other than furskins) and leather; 42: Articles of leather; saddlery and harness; travel goods, handbags and 
similar containers; articles of animal gut (other than silk-worm gut); 52:Cotton; 55: Man-made staple fibres; 
61: Articles of apparel and clothing accessories, knitted or crocheted; 62: Articles of apparel and clothing 
accessories, not knitted or crocheted; 63: Other made up textile articles; sets; worn clothing and worn textile 
articles; rags; 64: Footwear, gaiters and the like; parts of such articles; 95: Toys, games and sports requisites; 
parts and accessories thereof.  

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94,08%

92,91%

95,45%

96,07%

95,75%

68,47%

7000

6000

5000

4000

3000

2000

1000

0

120%

100%

80%

60%

40%

20%

0%

R
U
E
N
O
I
L
L
I

M
N

I

2011

2012

2013

2014

2015

2016

Total EU Exports

GSP Eligible Exports

GSP Preferential Exports

Utilisation Rate

Figure 62: Pakistan’s GSP+ preference utilisation (2011-2016)613 

As further illustrated in Figure  63 below, for most products in Pakistan’s export basket, 
preferences  have  almost  been  fully  used.  The  highest  utilisation  rates  can  be  found  for 
textiles included under HS Chapters 61 to 63. For products falling under HS Chapters 10 
and 90, exporters have not utilised the GSP+ preferences.  

Raw hides and skins

Optical, medical instruments

Cereals

Toys, games and sports requisites

Man – Made staple fibres

Articles of leather

Cotton

S
R
E
T
P
A
H
C
S
H

Articles of apparel (knitted or crocheted)

Articles of apparel (not knitted or crocheted)

Other made up textile articles

0

200 400 600 800 1000 1200 1400 1600 1800

IN MILLION EUR

Pakistan's total exports to the EU

Pakistan's total exports under GSP+

Figure 63: Pakistan’s GSP+ preference utilisation for the top 10 exports in 2016614 

613 Source: own calculations based on trade data supplied by the European Commission. It should be noted 
that Pakistan benefitted from the Standard GSP preferences from 2011 to 2013, while from 2014 to 2016, it 
benefitted from the GSP+ preferences.  

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EUROPEAN COMMISSION 

Pakistan  has  experienced  fluctuating  economic  growth  over  the  past  decade.  Between 
2008 and 2010, when GDP growth was on average 2 per cent per year, economic growth 
trended upwards to 3.6 per cent between 2011 and 2013, and to 4.7 per cent  between 
2014  and  2015.  GDP  increased  from  USD  213.6  billion  (EUR  196.3  billion)  in  2011  to 
USD  271  billion  (EUR  249.06  billion)  in  2015.  Per  capita  GDP  grew  on  average  by  1.4 
percent between 2011 and 2013 and at 2.5 per cent per year in 2014 and 2015. In value, 
the  per  capita  GDP  increased  from  USD  1229.8  (EUR  1130.23)  in  2011  to  USD  1434.7 
(EUR 1318.54) in 2015.615 

300.000.000

250.000.000

200.000.000

150.000.000

100.000.000

50.000.000

0

D
S
U
S
D
N
A
S
U
O
H
T
N

I

5

4,5

4

3,5

3

2,5

2

1,5

1

0,5

0

S
E
G
A
T
N
E
C
R
E
P
N

I

2011

2012

2013

2014

2015

GDP

GDP growth

Figure 64: GDP and GDP growth in Pakistan (2011-2015)616 

Economic  growth  has  accelerated  despite  a  decline  in  total  exports  since  2011,  with  a 
significant  drop  in  export  value  in  2015.  The  accelerated  economic  growth  can  be 
attributed  to  the  Government’s  economic  reforms  and  the  improved  security  in  the 
country.  Additionally,  GDP  growth  benefited  from  low  inflation  as  a  result  of  low  oil 
prices.617  

614 Source: own calculations based on trade data supplied by the European Commission. HS Chapters 
description: 10: Cereals; 41: Raw hides and skins (other than furskins) and leather; 42: Articles of leather; 
saddlery and harness; travel goods, handbags and similar containers; articles of animal gut (other than silk-
worm gut); 52: Cotton; 55: Man – Made staple fibres; 61: Articles of apparel and clothing accessories, knitted 
or crocheted; 62: Articles of apparel and clothing accessories, not knitted or crocheted; 63: Other made up 
textile articles; sets; worn clothing and worn textile articles; rags: 90: Optical, photographic, cinematographic, 
measuring, checking, precision, medical or surgical instruments and apparatus; parts and accessories thereof; 
95: Toys, games and sports requisites; parts and accessories thereof. 
615 World Bank data. (2016). Available at: 
https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?locations=PK  
616 World Bank data. (2016). Available at: 
https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?locations=PK 
617 Asian Development Bank. (2017). Asian Development Outlook 2017: Transcending the Middle-Income 
Challenge. Available at: https://www.adb.org/publications/asian-development-outlook-2017-middle-income-
challenge   

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EUROPEAN COMMISSION 

To  continue  its  positive  economic  development,  the 
Government  has  set  a  target  in  the  Pakistan  Vision 
2025  for  an  average  8  per  cent  growth  per  year 
between  2018  and  2025.  To  realise  this  ambitious 
goal,  the  country  commits  to  an  export-led  growth 
strategy. Additionally, to ensure sustained, indigenous 
and  inclusive  economic  growth,  the  Government  will 
focus  on  maintaining  macroeconomic  stability, 
promoting  FDIs,  reducing  the  fiscal  deficit,  reforming 
the  tax  system,  increasing  productivity,  mobilising 
domestic 
science, 
resources  and  emphasizing 
technology and innovation.618  

GDP is expected to further increase at 5.2 per cent in 
2017  and  5.5  per  cent  in  2018.  This  is  underpinned 
by  growth  in  the  major  industries,  ongoing  and 
planned infrastructure projects and other investments, 
as  well  as  increased  macroeconomic  stability  and 
improved  economic  fundamentals  by  the  continued 
reform  under  the  IMF  supported  economic  reform  programme.  Additionally,  the  China-
Pakistan  Economic  Corridor  (CPEC)  project  is  expected  to  bring  opportunities  for 
economic growth and development for Pakistan.619 

Figure 65: Added value of different 
sectors as percentage of Pakistan’s 
GDP (2011, 2015) 
Source: World Bank 

The  services  sector  is  the  most  important  sector  for  Pakistan  and  provided  for  55  per 
cent  of  GDP  in  2015,  a  slight  increase  from  53  per  cent  in  2011.  Agriculture  is  the 
second most important sector and provided for 25 per cent of the value added in 2015, a 
slight  decrease  from  26  per  cent  in  2011.  The  importance  of  the  manufacturing  sector 
also slightly decreased, from 21 per cent in 2011 to 20 per cent in 2015.620 

FDI into the country has fluctuated significantly between 2011 and 2015. The total FDI 
inflow decreased by 26.2 per cent from USD 1,326 million (EUR 1218.64 million) to USD 
979 million (EUR 899.73 million). However, compared to 2014, FDI has almost halved.621 
The low investment in Pakistan can be attributed to macroeconomic instability, security 
concerns,  energy  deficits,  poor  infrastructure  development  in  some  regions,  low  skilled 
labour,  comparatively  high  labour  costs,  a  difficult  business  environment,  arbitrary 
administration of laws and regulations – including on land purchasing and registration – 
and administrative resistance to open up to investments.622  

618 Government of Pakistan. (2014). Pakistan Vision 2025. Available at: http://fics.seecs.edu.pk/Vision/Vision-
2025/Pakistan-Vision-2025.pdf 
619 Asian Development Bank. (2017). Asian Development Outlook 2017: Transcending the Middle-Income 
Challenge. Available at: https://www.adb.org/publications/asian-development-outlook-2017-middle-income-
challenge  
620 World Bank data. (2016). Available at: https://data.worldbank.org/indicator/NV.IND.MANF.ZS?locations=PK  
621 World Bank data. (2016). Available at: 
https://data.worldbank.org/indicator/BX.KLT.DINV.CD.WD?locations=PK  
622 Asian Development Bank. (2017). Asian Development Outlook 2017: Transcending the Middle-Income 
Challenge. Available at: https://www.adb.org/publications/asian-development-outlook-2017-middle-income-
challenge; Santander. Pakistan: Foreign Investment. Available at: 
https://en.portal.santandertrade.com/establish-overseas/pakistan/investing; Government of Pakistan. (2014). 
Pakistan Vision 2025. Available at: http://fics.seecs.edu.pk/Vision/Vision-2025/Pakistan-Vision-2025.pdf 

227 

 
 
 
 
 
 
                                                 
EUROPEAN COMMISSION 

R
U
E
D
N
A
S
U
O
H
T
N

I

2.000.000

1.800.000

1.600.000

1.400.000

1.200.000

1.000.000

800.000

600.000

400.000

200.000

0

2011

2012

2013

2014

2015

Figure 66: FDI inflows into Pakistan (2011-2015)623 

FDI is mainly focused on energy, oil and gas, and communication sectors. In 2015/2016, 
the  majority  of  FDI  came  from  China,  Norway  and  the  United  Arab  Emirates.624 EU  FDI 
inflows to Pakistan accounted for EUR 0.1 billion in 2015.625 

The  Pakistan  Vision  2025  aims  to  increase  domestic  and  foreign  investments  by  the 
private  sector  to  realise  private  sector  and  entrepreneurship-led  growth.  In  order  to 
increase  investments,  the  Government  will  seek  to  improve  the  business  environment, 
including through strengthening the state institutions, improving infrastructure, creating 
macroeconomic  stability,  privatising  public  sector  enterprises,  promoting  public-private 
partnerships, facilitating SME growth and improving the coordination and synchronisation 
between policies.626  

7.2.2  Social impact 

Employment 
The country has a large labour force that has rapidly expanded over the past decade as 
a result of the fast-growing  population. Between 2011 and 2016, the labour force grew 
by  12.6  per  cent  to  almost  68  million.  In  this  period,  the  percentage  of  women  in  the 
labour force has slightly increased from 21.8  per cent to 22.2 per cent.627 The majority 
of the population is employed in agriculture, forestry, hunting and fishing. While a vast 
majority of women are employed in agriculture, the majority of men are employed in the 
services industry.628  

Informal employment is a widespread phenomenon in Pakistan, accounting for 72.6 per 
cent  of  non-agricultural  employment  in  2014-2015,  a  1  percentage  point  decline  from 
the  previous  period  (2013-2014).  The  informal  sector  is  larger  in  rural  areas  (76.1  per 

623 World Bank data. (2016). Available at: 
https://data.worldbank.org/indicator/BX.KLT.DINV.CD.WD?locations=PK  
624 Board of Investment. (2017). Foreign Investment. Available at: 
http://boi.gov.pk/ForeignInvestmentinPakistan.aspx  
625 European Commission DG Trade. Pakistan. Available at: 
http://trade.ec.europa.eu/doclib/docs/2006/september/tradoc_111553.pdf  
626 Government of Pakistan. (2014). Pakistan Vision 2025. Available at: http://fics.seecs.edu.pk/Vision/Vision-
2025/Pakistan-Vision-2025.pdf 
627 World Bank. (2016). World Development indicators. Available at: 
https://data.worldbank.org/indicator/SL.TLF.TOTL.FE.ZS?locations=PK  
628 Pakistan Bureau of Statistics. (2016). Labour Force Survey 2014-2015. Available at: 
http://www.pbs.gov.pk/sites/default/files/Annual%20Report%20of%20LFS%202014-15.pdf  

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cent) than in urban areas (69.2 per cent).629 The informal sector accounts for household 
enterprises,  enterprises  owned  and  operated  by  less  than  10  people,  excluding 
enterprises engaged in agricultural activities and non-market production. To the informal 
industries  thus  count,  manufacturing,  construction,  wholesale  and  retail,  transport, 
communications, services and other630. The  ILO  Committee of Experts on Application of 
Conventions  and  Recommendations  (CEACR)  and  trade  unions  have  raised  concerns  on 
the number of people who fall outside the applicability of ILO conventions.631  

The unemployment rate has remained relatively stable, on average 5.9 per cent between 
2011 and 2016, but has been decreasing since 2013. Unemployment is higher amongst 
women  than  amongst  men  –  10.5  per  cent  compared  to  4.5  per  cent  in  2016. 632 
Especially  young  workers  (15-29-year-olds)  face  unemployment,  for  this  age  group 
unemployment  has  increased  in  2014-2015,  compared  to  2013-2014.  The  Pakistan 
Labour Survey demonstrates that unemployment tends to be higher in rural areas than 
in urban areas.633  

The textile and clothing industry employs almost 40 per cent of the industrial work force 
in  Pakistan. 634  The  industry  creates  employment  opportunities  for  both  skilled  and 
unskilled  workers  and  is  the  second  largest  employer  of  women  after  agriculture.  The 
light manufacturing work, such as spinning, stitching and sewing, employs many women. 
In addition to the work largely being regarded as ‘women’s work’, women are often more 
readily available as an untapped labour force.635  

The annual requirement for trained professionals in the textile sector has been estimated 
to  be  around  135  000  per  year,  however,  the  present  availability  of  trained  workers  is 
reported to be only 10 000. Thus, a large gap in supply and demand of skilled workers 
that  can  maintain  and  run  machinery  efficiently  exists,  due  to  lack  of  technical 
educational facilities. This has been argued to constrain the development of the Pakistani 
textile sector.636 

There  are  reports  that  bonded  labour  and  child  labour  are  significant  problems  in 
Pakistan.  Multiple  sources,  including  a  recent  report  by  the  Pakistan  Workers 
Confederation,  have  stated  that  both  bonded  labour  and  child  labour  are  widespread 
throughout  the  country. 637 While  no  recent  official  statistics  exist  on  this  matter,  the 
Global Slavery Index estimates that over 2 million people were living in modern slavery 
in Pakistan in 2016.638 The lack of recent data hampers the attempt to assess the scope 
and prevalence of child labour, however different accounts suggest child labour still exist, 
also in the textile sector.  

629 Pakistan Bureau of Statistics. (2016). Labour Force Survey 2014-2015. Available at: 
http://www.pbs.gov.pk/sites/default/files/Annual%20Report%20of%20LFS%202014-15.pdf 
630 Pakistan Bureau of Statistics. (2016). Labour Force Survey 2014-2015. Available at: 
http://www.pbs.gov.pk/sites/default/files/Annual%20Report%20of%20LFS%202014-15.pdf 
631 Pakistan Workers Federation. (2016). GSP Plus and Labour Standards in Pakistan, Interim Report. 
632 World Bank. (2016). World Development Indicators. Available at: 
https://data.worldbank.org/indicator/SL.UEM.TOTL.FE.ZS?locations=PK   
633 Pakistan Bureau of Statistics. (2016). Labour Force Survey 2014-2015. Available at: 
http://www.pbs.gov.pk/sites/default/files/Annual%20Report%20of%20LFS%202014-15.pdf  
634 Impact of textile sector on Pakistan’s economy. available at: 
http://www.revistadestatistica.ro/supliment/wp-content/uploads/2014/06/RRS01_2014_A5.pdf  
635 Akram, S. and Kashmir, K.A. (2015). Gender dimensions in the textiles and clothing sector in Pakistan. 
Available at: http://basicresearchjournals.org/business/pdf/Akram%20and%20Kashmir.pdf  
636 National Skills Information Systems. (2014). Skills Trend in Textile Industry Pakistan. Available at: 
http://115.186.163.30:8080/skillingpakistan/sites/default/files/reports/LMIS_Report_Final_Textile.pdf 
637 Pakistan Workers Federation. (2016). GSP Plus and Labour Standards in Pakistan, Interim Report.  
638 The Global Slavery Index. (2016). Country Study: Pakistan. Available at: 
https://www.globalslaveryindex.org/country/pakistan/  

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In 2016, the Punjab Provincial Government passed legislation establishing  the age of 15 
as  the  minimum  age  for  employment  and  18  as  the  minimum  age  for  employment  in 
hazardous work. While certain provincial governments have established such regulations 
in compliance with international standards, other provinces, such as Balochistan Province, 
have not.639 

The  Pakistan  Workers  Confederation  emphasises  that  the  lack  of  implementation  of 
labour  standard  legislation  is  the  result  of  a  lack  of  an  adequate  number  of  inspectors, 
estimated  at  340  across  the  whole  country.  At  the  local  stakeholder  workshop  held  in 
Pakistan  in  May  2017,    it  was  observed  that  gaining  GSP+  status  had  not  led  to  an 
increase if the number of labour inspectors.640 In addition, there have been allegations of 
corruption  and  connivance  with  employers. 641  The  ILO  Committee  of  Experts  has 
expressed  concern  on  the  implementation  of  the  Labour  Inspection  Convention  (no.81) 
for the past 6 years.642 

Consumers  of  textile  and  clothing  are  increasingly  aware  of  the  social  conditions  under 
which their products are produced. In response to widespread consumer criticism, large 
textile brands have promoted better employment conditions and safety standards in the 
factories  producing  for  them.  Improvements  in  the  textile  and  clothing  industry  can 
therefore  be  traced  back  to  Codes  of  Conducts  set  up  by  large  textile  brands  and 
companies.643 

In  the  textile  and  clothing  industry,  the  rate  of  unionisation  is  especially  low.  The 
Pakistan  National  Textile,  Leather,  Garments  and  General  Workers  Federation  has 
12,520  members,  representing  approximately  0.83  per  cent  of  the  industry’s  work 
force.644 Surveys have also revealed that in the major districts where  there is significant 
production  of  textiles  to  be  exported  under  the  GSP+  arrangement  -  such  as  Lahore, 
Faisalabad and Sialkot - workers’ rights tend to be abused645. 

Occupational safety and health standards in the manufacturing industry, in particular the 
textile and clothing industry, have become increasingly important since 2012 when fires 
broke out in factories in Pakistan. Despite the increasing recognition of its importance, it 
is argued that occupational safety is still not a priority and is not adequately addressed 
by either the Government or trade unions646.   

While  safety  issues  vary  per  province  and  location,  examples  of  hazardous  working 
environments  can  be  found  across  the  country.  These  examples  include  a  lack  of 
standards  and  safeguards  for  hygiene  leading to  the  spread  of  infectious  diseases,  lack 
of proper fire extinguishing systems and use  of health damaging processing techniques 
such  as  sandblasting  and  chemical  bleaching.647 Whereas  the  social  safety  net  situation 
has  shown  modest  improvements  over  the  past  year,  accounting  for  less  than  20  per 

639 United States Department of Labor. (2016). Child labor in Pakistan. Available at: 
https://www.dol.gov/sites/default/files/images/ilab/child-labor/Pakistan2016.pdf 
640 Stakeholder Workshop in Pakistan, 16 May 2017 
641 Pakistan Workers Federation. (2016). GSP Plus and Labour Standards in Pakistan, Interim Report. 
642 Ahmad, Iftikhar. (2016). Tripartism Trade Labour. Emel Publications. Islamabad, Pakistan. 
643 Clean Clothes Campaign. (2015). Pakistan Country Report 2015. Available at: 
https://cleanclothes.org/resources/publications/factsheets/pakistan-country-report-2-2015.pdf  
644 Ulandssekretariatet. (2014). Pakistan labour market profile. Available at: 
http://www.ulandssekretariatet.dk/sites/default/files/uploads/public/PDF/LMP/lmp_pakistan_2014_final_versio
n_revised.pdf  
645 Stakeholder Workshop in Pakistan, 16 May 2017. 
646 Labour Education Foundation and Asia Monitor Resource Centre. (2013). National Workshop Report on 
Occupational Safety and health. Available at: http://www.anroev.org/wp-content/uploads/2013/05/OSH-
Workshop-Pakistan.pdf 
647 Ibid. 

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cent of workers, the vast majority is still excluded from social security, pension scheme 
and welfare facilities.648 

Poverty Reduction  
Poverty in Pakistan has been gradually decreasing over the years. The Multidimensional 
Poverty  Index  for  Pakistan  (MPI)  indicates  a  strong  decline  in  poverty  over  the  years. 
The  data  suggests  that  the  amount  of  people  living  in  multidimensional  poverty  has 
decreased  from  44.7  per  cent  in  2010/2011,  to  38.8  per  cent  in  2014/2015.  However, 
the progress across different regions in Pakistan is highly uneven. While poverty in urban 
areas  is  9.3  percent,  the  number  for  rural  areas  stands  at  54.6  per  cent.  Moreover, 
deprivation in education seems to contribute the largest, 43 percent, to MPI followed by 
living standards which contribute nearly 32 percent and lastly health, contributing 26 per 
cent.649  

The  average  monthly  earnings  for  employees  in  Pakistan  have  increased  both  for  men 
and  women.  In  2011,  the  average  monthly  earnings  for  men  were  123  USD,  and  for 
women  USD  78.  In  2016,  this  had  increased  to  USD  151  for  men  and  USD  93  for 
women.650 

Although  the  federal  government  has  set  the  monthly  minimum  wage  for  the  working 
class to Rs 14.000 (USD 132) per month, few workers in the garment industry actually 
receive such salaries.651  

Looking  at  the  institutional  environment  in  Pakistan,  the  CPIA  Social  Protection  rating 
which  looks  at  government  policies  in  terms  of  social  protection  and  labour  market 
regulations  in  place  to  reduce  the  risk  of  becoming  poor,  illustrates  a  somewhat 
stagnated social development. In the yearly assessment, Pakistan has scored 3.5 out of 
6 between 2010 and2016 (where 1= low and 6=high). 652 

The decrease in poverty, in terms of MPI, may be related to the boost of exports to the 
EU, but it should be noted that the contribution of these exports to poverty reduction are 
at best relatively moderate. 

Human rights 
Political  rights  and  civil  liberties  remain  relatively  restricted  in  Pakistan.  Between  2011 
and 2017, Pakistan’s score on both Freedom House indicators has remained the same – 
4 out of 7 on political rights and 5 out of 7 on civil liberties. These scores indicate some 
considerable deficiencies in the effective protection of political rights and civil liberties.653 

There  have  been  numerous  instances  pointing  towards  the  violation  of  the  freedom  of 
expression  and  the  Government’s  insufficient  efforts  to  uphold  and  protect  this 
fundamental  freedom.  There  have  been  attacks  on  the  media,  news  outlets  and 

648 Stakeholder Workshop in Pakistan, 16 May 2017. 
649 Government of Pakistan. (2016). Multidimensional Poverty in Pakistan. Available at: 
http://www.pk.undp.org/content/pakistan/en/home/presscenter/pressreleases/2016/06/20/pakistan-s-new-
poverty-index-reveals-that-4-out-of-10-pakistanis-live-in-multidimensional-poverty.html  
650 ILO. (2017). Available at: http://www.ilo.org/ilostat/faces/ilostat-home/home?_adf.ctrl-
state=12azrduusn_70&_afrLoop=10587144780320#! 
651 CNV International. (2016). Pakistan Country Study 2016- Labour standards in the garment supply chain. 
Available at: 
https://www.cnvinternationaal.nl/_Resources/Persistent/3f536c421531517c7ef360f87491a8f6194e278e/CNVI-
0105%20Country%20study%202016%20Pakistan%20extern%20FINAL.pdf 
652 The World Bank. (2017). CPIA social protection rating. Available at: 
https://data.worldbank.org/indicator/IQ.CPA.PROT.XQ?locations=PK&view=chart 
653 Freedom House. Freedom in the World – Pakistan profile. Available at: 
https://freedomhouse.org/report/freedom-world/2017/pakistan  

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journalists  reportedly  aimed  at  impeding  critical  reporting.  As  a  result,  journalists 
reportedly  practice  self-censorship  in  fear  of  retribution  by  militant  groups  or 
government forces.654  Additionally, media outlets are pressured to refrain from reporting 
on human rights violations in the country. 

In  2015,  the  Government  introduced  a  new  policy  to  regulate  international  NGOs. 
Reportedly,  this  policy  has  been  used  to  restrict  NGOs’  work  and  impede  the  efforts  of 
international humanitarian and human rights groups in the country.655 The Human Rights 
Committee  of  Pakistan  has  further  reported  on  state  interference  in  NGOs’  work,  which 
was hindered by legal barriers.656 

Widespread  terrorism  has  had  a  significant  impact  on  human  rights,  and  has  led  to 
instances  of  arbitrary  detention,  torture  and  the  de-facto  reinstatement  of  the  death 
penalty.  There  are  reported  violations  of  human  rights,  including  a  high  number  of 
executions  and  death  row  prisoners,  non-transparent  transfers  from  civilian  to  military 
courts,  non-transparent  hearings  or  convictions  based  on  confessions  obtained  through 
torture,  death  penalty  for  children  and  lack  of  access  to  legal  aid  for  death  row 
prisoners.657   

As a result of the widespread presence of terrorist violence, Pakistan scores very low on 
political  stability  and  the  absence  of  violence,  though  a  slight  improvement  can  be 
observed in recent years. Pakistan scored especially low on the control of corruption, but 
significant improvements can be observed since 2012. 

Gender Equality 
As  it  has  become  clear  from  discrepancies  in  the  social  indicators,  there  is  widespread 
and  persistent  gender  inequality.  Pakistan  has  consistently  ranked  as  third-last  or 
second-last country on the Gender Gap Index. In 2011, Pakistan ranked as 133th out of 
135 countries with a score of 0.588. This score decreased to 0.549 in 2013 with a rank 
of 135th out of 136. In 2016, the score increased to 0.556 and the country ranked 143rd 
out  of  144  countries. 658  Pakistan  scores  highest  on  health  and  worst  on  political 
empowerment,  revealing  complete  imparity  in  terms  of  women  in  ministerial  positions. 
Additionally,  women  seem  to  not  be  represented  in  the  legislative  bodies,  and  women 
tend not to hold managerial or senior official positions.659 

The  patriarchal  structure  of  Pakistani  society  provides  an  important  context  for  this 
gender inequality and gender-directed human rights abuses. Women continue to have a 
lower  social,  economic  and  political  status  in  comparison  to  men,  which  is  enforced  by 

654 Reporters Without Borders. (2017). Pakistan Freedom of the Press. Available at: https://rsf.org/en/pakistan  
655 Human Rights Watch. (2016). Human Rights Watch Report 2016. Available at: https://www.hrw.org/world-
report/2017/country-chapters/pakistan; International Center for Not-for-Profit Law. (2017). Civic Freedom 
Monitor: Pakistan. Available at: http://www.icnl.org/research/monitor/pakistan.html  
656 HRCP. (2014). State of Human Rights. Available at: http://hrcp-
web.org/hrcpweb/data/HRCP%20Annual%20Report%202014%20-%20English.pdf  
657 Human Rights Watch. (2016). Pakistan, Human Rights Watch Report 2016. Available at: 
https://www.hrw.org/world-report/2017/country-chapters/pakistan; European Commission. (2016). The EU 
Special Incentive Arrangement for Sustainable Development and Good Governance (GSP+) Covering the Period 
2014-2015. Available at: http://trade.ec.europa.eu/doclib/docs/2016/january/tradoc_154178.pdf; UNHR. 
(2016). Concluding observations on the fifth periodic report of Pakistan. Available at: 
http://tbinternet.ohchr.org/_layouts/treatybodyexternal/Download.aspx?symbolno=CRC%2fC%2fPAK%2fCO%
2f5&Lang=en 
658 World Economic Forum. (2011). Global Gender Gap Report 2011. Available at: 
http://reports.weforum.org/global-gender-gap-2011/; World Economic Forum. (2013). Global Gender Gap 
Report 2013. Available at: https://www.weforum.org/reports/global-gender-gap-report-2013;World Economic 
Forum. (2016). Global Gender Gap Report 2016. Available at: http://reports.weforum.org/global-gender-gap-
report-2016/  
659 World Economic Forum. (2016). The Global Gender Gap Report 2016. Available at: 
https://www.weforum.org/reports/the-global-gender-gap-report-2016 

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the  feudalist  or  a  tribal  culture  in  parts  of  the  country. 660  Women  face  unequal 
opportunities and treatment in a number of public and private dimensions, ranging from 
education to employment.  

Women  often  have  a  lower  level  of  education,  which  results  in  lower  skills  and  a 
disadvantaged  position  in  the  labour  market.  The  majority  of  women  are  therefore 
employed  for  unskilled and low-paid labour  in agriculture  and  the informal  sector.661 As 
there is no sex-differentiated data specifically for the garment and  textile industry, it is 
difficult to assess gender differences in this sector. Additionally, women often face a less 
favourable  working  environment  due  to  the  limited  access  to  childcare,  the  widespread 
belief  that  women  should  not  work  professionally.  This  often  results  in  workplace 
harassment.662 

There  is  no  legal  framework  stimulating  equal  remuneration  for  men  and  women  in 
Pakistan,  which  the  ILO  committee  of  experts  has  raised  as  a  potential  cause  of  the 
significant level of discrimination observed in the private sector. 663   

7.2.3  Environmental impact 
In  this  section,  we  will  firstly  review  overall  trends,  drawing  on  indicators  of 
environmental performance, natural resources, biodiversity, climate change, air pollution 
and  solid  waste.  We  will  then  consider  environmental  impacts  associated  with  key 
products that are exported under the GSP. 

Environmental quality  
The improved ranking of Pakistan on the Environmental Performance Index illustrates its 
improved performance on meeting environmental policy targets. Pakistan’s performance 
on  environmental  health  particularly  decreased  in  2012  but  has  achieved  consistent 
increases  between  2012  and  2016.  Pakistan’s  performance  on  ecosystem  vitality 
decreased between 2010 and 2014 and has yet to regain 2010 levels.664  

The  main  environmental  challenges  faced  by  Pakistan  are  deforestation  and  forest 
degradation,  soil  degradation,  air  and  water  pollution  and  climate  change.  These 
environmental  challenges  are  caused  by  various  factors,  including  the  rapid  population 
growth,  urbanisation,  inadequate  resources  and  waste  management,  and  economic 
activity.665 

Considering the effects of climate change on Pakistan, we also look at renewable energy 
in  our  environmental  assessment.  Due  to  lack  of  time-series  data  on  electricity 
production  from  renewable  sources,  including  geothermal,  solar,  tides,  wind,  biomass, 
and biofuels but excluding hydroelectric, it is difficult to assess changes. However, data 
from 2013 tells us that only 0.38 per cent of total electricity production emanated from 
renewable  sources.  In  2014  the  number  had  decreased  slightly  to  account  for  merely 
0.37  per  cent.  Instead,  oil,  gas  and  coal  sources  accounted  for  64.47  per  cent  of  total 

660 Tarar, M and Venkat, P. (2014). Patriarchy, Gender Violence and Poverty amongst Pakistani Women: A 
Social Work Inquiry. Available at: http://www.hrpub.org/download/20140405/IJRH8-19200116.pdf  
661 ILO. Promoting Gender Equality for Decent Employment (GE4DE). Available at: 
http://www.ilo.org/islamabad/whatwedo/projects/WCMS_377960/lang--en/index.htm  
662 Ibid.  
663 Pakistan Workers Federation. (2016). GSP Plus and Labour Standards in Pakistan, Interim Report. 
664 Yale University. Environmental Performance Index. Available at: http://epi.yale.edu/ 
665 Salik, M.A.N. (2016). Environment-Development Nexus in Pakistan. Available at: http://issi.org.pk/wp-
content/uploads/2016/08/Final_IB_Ahmad_salik_dated_16-08-2016.pdf; Stakeholder Workshop Pakistan, 16 
May 2017 

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electricity production in 2011, while in 2014 it had increased  slightly to 64.94 per cent. 
Roughly 30 per cent of electricity production comes from hydroelectric sources.666 

Waste 
While  data  on  the  rate  of  wastewater  treatment  is  not  available,  several  qualitative 
accounts  have  been  made  on  the  inadequate  waste  management  systems  in  Pakistan, 
causing  severe  water  pollution  in  the  country.  According  to  a  study  domestic  waste  is 
either discharged directly into sewer systems, a natural drain or water body, nearby field 
or  an  internal  septic  tank.  Most  of  the  municipal  wastewater  is  not  treated,  only 
Islamabad  and  Karachi  have  biological  treatment  processes.  However,  the  capacity  to 
treat  all  wastewater  is  insufficient,  thus  only  around  8  per  cent  of  urban  wastewater  is 
treated in municipal treatment plants. Others claim the capacity is even lower, around 1 
per  cent.  In  rural  areas,  wastewater  treatment  is  even  less  developed,  thus 
contaminating surface and groundwater. 667 

Industrial  wastewater  treatment  has  been  even  lower  due  to  the  lack  of  incentives  for 
industries to take  on that responsibility. It has been  estimated that in Karachi, a major 
industrial  city  accommodating  70%  of  Pakistan’s  industry,  around  70%  of  wastewater 
reaches the Arabian Sea without any form of treatment. 668 

Natural resources 
The  country’s  large  environmental  diversity  and  wealth  of  natural  resources  has 
supported  its  economic  growth  and  development.  In  turn,  this  economic  development 
has had a negative impact on the environment and contributed to the deterioration and 
degradation of natural resources.669 The increased economic activity has led to increased 
air  pollution  through  inadequate  waste  management,  vehicle  exhaust  emissions,  and 
greenhouse gasses (GHG) emissions, primarily originating from small and medium sized 
industrial  plants. 670  The  inadequate  waste  management  systems  have  furthermore 
allowed for severe water pollution. An estimated 99 per cent of wastewater is discharged 
in  drains  and  rivers  without  any  form  of  treatment.671 As  a  result,  water  sources  near 
industrial  centres  are  often  heavily  polluted  with  toxic  metals,  coliforms,  pesticides  and 
other  harmful  substances,  posing  a  threat  to  both  the  flora  and  fauna  and  human 
health.672 

The textile and clothing industry is Pakistan’s main export industry and its exports to the 
EU have increased significantly since obtaining GSP+ status. The production process can 
have  a  detrimental  effect  on  air,  water  and  soil  quality  in  the  absence  of  sufficient 
environmental  management  strategies  due  to  the  use  of  harmful  substances  and  the 
generation of pollutants. The industry uses large amounts of water for bleaching, mixing, 
washing and cleaning – on average 2,000 to 2,500 gallons of water per mill per day.673 
This water is largely untreated and leads to deterioration of water quality in lakes, rivers 

666 World Bank. (2017). World Development Indicators. Available at: 
https://data.worldbank.org/indicator?tab=all 
667 Murtaza, G., et al. (2012). Wastewater Production, Treatment and Use in Pakistan. Available at: 
http://www.ais.unwater.org/ais/pluginfile.php/232/mod_page/content/127/pakistan_murtaza_finalcountryrepo
rt2012.pdf 
668 Ibid. 
669 Salik, M.A.N. (2016). Environment-Development Nexus in Pakistan. Available at: http://issi.org.pk/wp-
content/uploads/2016/08/Final_IB_Ahmad_salik_dated_16-08-2016.pdf; Stakeholder Workshop Pakistan, 16 
May 2017 
670 Stakeholder Workshop Pakistan, 16 May 2017 
671 Government of Pakistan. Brief Water pollution. Available at: 
http://environment.gov.pk/PRO_PDF/PositionPaper/Water%20Pollution.pdf  
672 Nazeer, S. et al. (2016). Water Quality Assessment of River Soan (Pakistan) and Source Apportionment of 
Pollution Sources Through Receptor Modeling. Available at: https://www.ncbi.nlm.nih.gov/pubmed/27000830  
673 Rauf, A. (2015). Environmental impact assessment of the textile industries. Available at: 
https://prezi.com/omuaqhatorwm/environmental-impacts-assessment-of-textiles-industries-by/  

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and  ground  water.674 Furthermore,  the  inadequate  disposal  of  waste  material,  such  as 
plastics,  leads  to  soil  degradation. 675  Considering  that  World  Bank  data  shows  a 
decreasing supply of renewable freshwater resources in Pakistan, wastewater treatment 
and  waste  management,  becomes  even  more  important,  as  water  becomes  an  even 
more  scarce  resource.  Renewable  internal  freshwater  resources  per  capita  decreased 
from 309 in 2012, to 296 cubic meters per person in 2014.676  

Agriculture is another important industry for Pakistan which is having a negative impact 
on  the  environment.  The  percentage  of  agricultural  land  in  Pakistan  increased  from 
46.61 per  cent in 2011 to 47.06 per cent in 2013. However, according to 2014 data, it 
declined  slightly  back  to  47.02  per  cent  in  2014. 677  The  excessive  use  of  chemical 
fertilisers  and  pesticides  in,  for  example,  cotton  production  has  led  to  pollution  and 
degradation of the air, soil and water quality in surrounding areas.  

The  forest  area  in  Pakistan  has  continued  a  steady  decline  from  2.13  per  cent  of  total 
land area in 2011 to roughly account for 1.90 per cent in 2014.678 

Due to lack of recent data on the current fish stocks in Pakistan, it is difficult to ascertain 
the  growing  fishing  industries  impact  on  the  fish  stock.  However,  data  from  2010 
indicate  a  small  improvement,  as  the  percentage  of  fishing  stocks  overexploited  and 
collapsed from exclusive economic zone (EEZ) had declined to 35 per cent from the peak 
years of 2005-2007 when roughly 39 per cent of the fish stock had collapsed. However, 
the 2010 levels are still higher than the pre-2005 levels.679 Looking at more recent World 
Bank data on fish production and aquaculture production in Pakistan, a steady increase 
can be seen in both areas. Total fisheries production increased from 594,935 metric tons 
in  2011,  to  623,022  in  2013,  and  further  to  643,164  metric  tons  in  2015.  Aquaculture 
production saw an increase from 141,935 metric tons in 2011, to 151,174 metric tons in 
2015.680 

The land tenure system in Pakistan has been argued to be one of the main contributors 
to the persistent poverty in the country. Pakistan is characterized by a feudal system of 
landownership,  in  which  an  elite  class  of  landowners  own  large  areas  of  land  that  are 
worked  by  tenant  farmers  living  in  constant  poverty.  The  inequitable  land  distribution 
combined with corruption further marginalizes already poor rural people.681 

Biodiversity 

Pakistan is characterized by a large variety of ecosystems, ranging from coastline in the 
south  to  the  mountain  ranges  of  the  Himalayas  and  Hindu  Kush  in  the  north,  coupled 
with  deserts  and  plains.  A  large  majority  of  the  population  are  dependent  on  these 
natural  assets  for  their  livelihood.  The  rangelands  sustain  the  livestock  industry,  while 
the  coastal  zones  provide  a  thriving  fish  and  shrimp  industry.  However,  due  to  the 
growing  population  and  increased  economic  activity,  the  anthropogenic  pressure  is 

674 Jabeen A. et al. (2015). The challenges of water pollution, threat to public health, flaws of water laws and 
policies in Pakistan. Available at: http://file.scirp.org/pdf/JWARP_2015123113503659.pdf;  Azizullah, A. et al. 
(2011). Water pollution in Pakistan and its impact on public health – A review. Available at: 
http://www.sciencedirect.com/science/article/pii/S0160412010002060; Stakeholder Workshop Pakistan, 16 
May 2017 
675 Sohail, A.D. (2015). Environmental issues in textile industry of Pakistan. Available at: 
https://www.slideshare.net/SohailAD/environmental-issues-in-textile-industry-of-pakistan  
676 World Bank. (2017). World Development Indicators. Available at: 
https://data.worldbank.org/indicator?tab=all 
677 Ibid.  
678 Ibid. 
679 Yale University. (2016). Environmental Performance Index. Available at: http://epi.yale.edu/ 
680 World Bank. (2017). World Development Indicators. Available at: 
https://data.worldbank.org/indicator?tab=all 
681 USAID. (2010). Land Tenure and property rights in Pakistan. Available at: 
http://pdf.usaid.gov/pdf_docs/PA00J77T.pdf 

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threatening  the  ecosystems  in  Pakistan.  Terrestrial  biodiversity  is  threatened  by 
overgrazing,  firewood  collection,  illegal  hunting,  and  habitat  disintegration  due  to 
infrastructure development, while biodiversity of inland waters are mainly threatened by 
pollution  from  industrial  and  municipal  waste.  The  coastal  and  marine  ecosystems  are 
also threatened from water pollution. In addition, the major threat to marine biodiversity 
is  netting  of  juvenile,  for  poultry  feed,  and  catch  of  non-target  species  by  trawler 
fishing.682 According to World Bank data 8.6 per cent of total land area is terrestrial and 
marine protected areas.683 

Air Pollution 
While it is difficult to find data on sulphur and nitrogen emissions in Pakistan, data from 
the  World  Bank  illustrates  well  the  severe  problem  and  challenge  Pakistan  is  facing  in 
terms  of  air  quality.  According  to  World  Bank  data,  100  per  cent  of  the  population  is 
exposed to levels exceeding the WHO guideline value with regards to PM2.5 ( particulate 
matter (PM) that have a diameter of less than 2.5 micrometers).,684 

Climate Change 
The ND-GAIN Country Index685 ranks Pakistan as the 68th most vulnerable country out of 
the  181  countries  assessed.  Due  to  the  high  environmental  vulnerability  and  the 
increased  number  of  climate  change  related  natural  disasters,  there  is  a  high  public 
awareness  of  climate  change  and  its  potential  impact  on  the  country.  The  2015  World 
Bank survey shows that 31 per cent of the population considers climate change to be a 
very big problem; 52 per cent considers it to be a moderately big problem and only 15 
per cent considers it to be a small problem or no problem. 686  

In  addition  to  being  highly  vulnerable  to  the  effects  of  climate  change,  there  is  a  very 
low readiness to deal with the impacts of climate change. However, Pakistan’s readiness 
has  significantly  increased  over  the  years.  The  Government  collaborates  with  various 
international  organisations  to  develop  technical  and  human  capacity  to  address  the 
immediate impacts of climate change. 687 

The  Government  has  further  developed  and  implemented  policies  and  strategies  for 
resource efficiency and green growth.688 In this respect, Pakistan reinstated the Ministry 
of  Climate  Change  to  demonstrate  its  commitment  to  environmental  protection  and 
mitigation of the risks of climate change.689  

Stakeholders  have  argued  that  an  important  obstacle  in  tackling  environmental 
challenges is the lack of strong political will and the limited capacity in terms of financial, 
institutional  and  technological  resources.  Due  to  the  constant  security  threat  presented 
by  terrorism,  the  majority  of  the  resources  are  dedicated  to  security  issues.  Another 

682 Government of Pakistan. (2014). Fifth National Report- Progress on CBD Strategic Plan 2010-2020 and Aichi 
Biodiversity Targets. Available at: https://www.cbd.int/doc/world/pk/pk-nr-05-en.pdf 
683 World Bank. (2017). World Development Indicators. Available at: 
https://data.worldbank.org/indicator?tab=all 
684 World Bank. (2017). World Development Indicators. Available at: 
https://data.worldbank.org/indicator?tab=all 
685 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 
686 World Bank. (2015). Pakistan Country Opinion Survey Report. Available at: 
http://documents.worldbank.org/curated/en/778561475044688175/pdf/108337-WP-ADD-SERIES-PUBLIC-
Pakistan-COS-FY15-Report-Final.pdf  
687 UNDP. Environment and Climate Change. Available at: 
http://www.pk.undp.org/content/pakistan/en/home/ourwork/environmentandenergy/overview.html  
688 Salik, M.A.N. (2016). Environment-Development Nexus in Pakistan. Available at: http://issi.org.pk/wp-
content/uploads/2016/08/Final_IB_Ahmad_salik_dated_16-08-2016.pdf; Government of Pakistan. (2014). 
Pakistan Vision 2025. Available at: http://fics.seecs.edu.pk/Vision/Vision-2025/Pakistan-Vision-2025.pdf; 
Stakeholder Workshop Pakistan, 16 May 2017 
689 Reuters. (2015). Pakistan pushes climate change back up political agenda. Available at: 
http://uk.reuters.com/article/us-pakistan-climatechange-idUKKBN0KU0XL20150121  

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important obstacle is the lack of reliable data, which hampers a comprehensive overview 
of  the  severity  of  environmental  degradation  in  the  country.  This  in  turn  hampers  the 
formulation of effective strategies and policies. 690 

Data from the World Bank illustrates the increase in GHG emissions in Pakistan. Over the 
last decade the GHG emissions have continuously increased. In 2010, the GHG emissions 
had increased by roughly 105 per cent, while in 2012 it had further increased to 114 per 
cent,  compared  to  1990.  A  similar  development  can  be  seen  with  regards  to  nitrous 
oxide emissions, which have increased from roughly 63 per cent in 2010, to 66 per cent 
in  2012,  as  a  percentage  change  from  1990.  And  lastly,  methane  emissions,  increased 
from 70.9 per cent in 2010, to 74.4 per cent in 2012, seen as a percentage change from 
1990. Furthermore, the total CO2 emissions in Pakistan have increased from 161956.7 kt 
in  2011,  to  166298.5  kt  in  2014. 691  This  is  a  rather  worrying  trend  as  all  of  these 
emissions contribute to climate change, which is a serious threat for Pakistan. 

Cotton  production  is  said  to  be  both  a  victim  of  and  contributor  to  climate  change. 
Greenhouse  gas  emissions  in  the  cotton  value  chain  are  derived  mainly  from  the 
consumer  use  phase  and  manufacture,  while  emissions  from  cotton  production  amount 
to only 5%-10% of the total emissions. Pakistan is likely to be one of the countries that 
will  suffer  the  most  from  climate  change  with  regards  to  agriculture  and  cotton 
production. As the Himalayan and Tibetan glaciers and snowfields diminish in size due to 
climate change, the Indus River, which is essential for agriculture, will carry less water, 
subsequently  causing  water  shortages  in  the  country.  Agriculture  in  Pakistan  is 
dependent  on  irrigation  with  water  from  the  Indus  River,  as  cotton  production  can  be 
said  to  already  take  place  in  sub-optimal  conditions  with  respect  to  high  temperatures. 
Further  increases  in  temperature  during  the  growing  season  will  reduce  yield  and 
increase the prevalence of pests and diseases. Changes in precipitation are likely to lead 
to crop failures and production declines. 692 

Direct impacts of products exports under GSP+ 
As  shown  in  Figure  61  above,  the  largest  categories  for  Pakistan’s  exports  to  the  EU 
under  GSP+  are  for  textiles  and  apparel,  followed  by  cotton  and  leather  articles.  The 
production of all of these products has direct environmental impacts.  

Pakistan exported an annual average of EUR 3.6bn’s worth of textile products under the 
GSP+ in 2014-16 (a 69% increase over 2011-13693). The country is the leading exporter 
of  textile  and  clothing  products  from  GSP+  beneficiaries,  experiencing  a  significant 
increase  in  exports  after  passing  from  the  Standard  GSP  to  the  GSP+. 694  Textile 
manufacturing  in  Pakistan  is  associated  with  the  production  of  hazardous  waste  (e.g. 
empty  chemical,  solvent  and  lubricant  drums,  discarded  dyes  and  pigment  pastes,  as 
well as sludge from wastewater treatment plants), which are not systematically disposed 
of in an appropriate manner.  

Available  sources  of  information  indicate  that  Pakistan  does  not  have  any  landfill  or 
treatment  facility  capable  of  safely  managing  this  waste.  Moreover,  the  country  has  no 
mechanism  to  monitor  and  control  the  release  of  persistent  organic  pollutants  which 

690 Stakeholder Workshop Pakistan, 16 May 2017 
691 World Bank. (2017). World Development Indicators. Available at: 
https://data.worldbank.org/indicator?tab=all 
692 International Trade Center. (2011). Cotton and climate change- Impacts and options to mitigate and adapt. 
Available at: http://www.intracen.org/Cotton-and-Climate-Change-Impacts-and-options-to-mitigate-and-
adapt/ 
693 Prior to 2014, Pakistan benefited from the Standard GSP arrangement. 
694 NEC Consultants Pvt., Mapping study: Providing additional insight and roadmap for the Buyers’ Forum, 
2015, available at http://buyersforum.info/uploads/resources/PBF_Mapping_Study_2015.pdf  

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arise from dyeing processes. There are also concerns regarding wastewater, as described 
in the previous pages.695 

Pakistan’s exports of cotton to the EU under GSP+ amounted on average to EUR 531.5m 
per year in the period 2014-16 (53% increase compared to the 2011-13696 value of EUR 
347.4m). (In addition, Pakistan’s exports of textiles can result in higher demand for, and 
production  of  domestic  cotton.)  During  the  stakeholder  consultation,  it  was  noted  that 
increasing export-driven production of cotton has resulted in environmental degradation 
in Pakistan. In particular, the production of cotton is water intensive and reduces water 
availability:  almost  10,000  litres  of  water  can  be  used  to  grow  a  kilo  of  conventional 
cotton. Moreover, a large share of pesticides – three quarters of all pesticide used in the 
country – is employed for cotton production, resulting in river and groundwater pollution 
as  noted  in  the  previous  pages.  Falling  water  levels  and  pollution  have  contributed  to 
biodiversity impacts, notably reducing the number of dolphins in the Indus River697. 

Under the GSP+, Pakistan exports articles of leather (EUR 323.6m a year on average in 
2014-16 -- a 28% increase over 2011-13698), raw hides and skins (EUR 93.3m a year on 
average in 2014-16 -- a 26% increase over 2011-13), as well as footwear (EUR 69.9m a 
year  on  average  in  2014-16  --  a  56%  increase  over  2011-13).  The  leather  industry  is 
the  most  dynamic  export  earning  sector  in  Pakistan,  contributing  5%  of  the  country’s 
GDP  and  employing  over  500,000  people.  In  Pakistan,  over  596  tanneries  are 
established in the formal sector, with an equally large number estimated to exist in the 
informal sector.699 The increasing number of tanneries in Pakistan is considered to be  a 
major cause of environmental degradation due to untreated effluents polluting water.700 

In  summary,  deforestation  and  air  and  water  pollution  are  among  the  major 
environmental  problems  faced  by  Pakistan.  The  country’s  score  in  the  Environmental 
Performance  Index  has  improved  in  recent  years,  but  its  ND-GAIN  index  has  fallen 
slightly,  and  Pakistan  remains  vulnerable  to  climate  change.  The  links  between 
Pakistan’s  participation  in  the  GSP  and  its  overall  environmental  conditions  will  be  at 
best indirect, however. 

The  most  important  products  exported  under  the  GSP+  arrangement  include  textiles, 
cotton and leather articles: their production is related to several environmental impacts, 
including  on  water  resources  and  water  quality.  Moreover,  the  information  gathering, 
including  the  stakeholder  consultation,  did  not  indicate  that  Pakistan’s  participation  in 
the  GSP+  arrangement  had  directly  led  to  the  adoption  of  more  environmentally 
to 
favourable 
international conventions: this is discussed in the next section.  

techniques.  The  GSP+  arrangement 

includes  conditions  related 

7.2.4  Implementation of GSP+ conventions 
In  its  efforts  to  obtain  and  maintain  GSP+  preferential  market  access,  the  Government 
of Pakistan introduced a number of divisions and units. Ahead of obtaining GSP+ status, 
the Government set up a GSP+ Task Force to  ensure that the country fulfilled the EU’s 

695 LEAD Pakistan, 2017. 
696 Prior to 2014, Pakistan benefited from the Standard GSP arrangement. 
697 WWF, Better cotton, viewed 17 October 2017, 
http://wwf.panda.org/what_we_do/how_we_work/our_global_goals/markets/mti_solutions/better_production_
for_a_living_planet/growing_better_cotton_in_pakistan.cfm  
698 Prior to 2014, Pakistan benefited from the Standard GSP arrangement. 
699 ETPI, “Environmental Report of the Leather Sector”, Environmental News, January 2001.  
700 UNIDO, Industrial Policy and the Environment in Pakistan, 2000, available at: 
https://www.unido.org/fileadmin/import/userfiles/timminsk/rio10-ind-pakistan-eng.pdf  

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formal requirements.701 In 2014, Pakistan established a national Treaty  Implementation 
Cell under the Ministry of Commerce to formulate a mechanism to supervise, coordinate 
and  support  the  implementation  of  the  international  conventions  by  the  federal  and 
provincial  governments,  agencies  and  other  stakeholders. 702  Provincial  Treaty 
Implementation  Cells  were  also  set  up.703 A  reform  was  introduced  in  2016  to  enhance 
the  coordination  with  departments  and  agencies  and  to  enable  cooperation  with 
international  partners. 704  Additionally,  the  Government  announced  in  2015  that  they 
would set up a GSP+ Support Mechanism Unit to cooperate with private sector and NGOs 
to  improve  human  rights  in  Pakistan. 705  At  the  time  of  writing,  the  GSP+  Support 
Mechanism Unit has yet to be established. 

Human  rights:  Pakistan  is  largely  compliant  with  the  national  reporting  as  part  of  its 
obligations under the conventions – except for CEDAW for which the latest report was to 
be  submitted  in  March  2017.  In  the  past  years,  Pakistan  has  made  efforts  to  catch  up 
with its reporting requirements. In 2015, the country submitted the CERD report (due in 
2014) and the CRC report (due 2012). The ICESR report (due 2010) and the initial CAT 
report (due 2011) were submitted in 2016. 

The main issue related to the implementation of the CAT is that the domestic penal code 
does  not  define  torture  in  line  with  the  convention’s  definition.  Secondly,  legislation  to 
effectively implement the CAT’s provisions has not yet been enacted. Various civil society 
organisations  have  reported  that  torture  and  cruel,  inhuman  and  degrading  treatment 
and punishment persist in the country, in particular during investigative processes. 706   

To ensure the effective implementation of the provisions under the conventions, Pakistan 
has  implemented  a  variety  of  legislative,  policy  and institutional  measures.  In  February 
2016, the Government of Pakistan adopted an Action Plan for Human Rights. The Action 
Plan prioritises the country’s international commitments to human rights and proposes to 
take action to identify gaps in domestic legislation and mechanisms concerning effective 
implementation.707 

Labour rights: Pakistan has ratified all ILO conventions on labour rights required for the 
GSP+  and  generally  complies  with  the  reporting  requirements  under  the  conventions. 
There is one outstanding out of cycle request of the CEARC on the Right to Organise and 
Collective  Bargaining  Convention.  The  CEARC  has  requested  the  Government  to  take 
action  and  respond  on  the  observations  from  the  Committee,  the  International  Trade 
Union  Confederation  (ITUC)  and  the  Employers  Federation  of  Pakistan  concerning  inter 
alia  the  scope  of  domestic  legislation,  protection  against  anti-union  discrimination  and 
the promotion of collective bargaining.  708 

The Government of Pakistan has made efforts to expand labour rights through legislative 
acts,  including  the  Industrial  Relations  Act  of  2012.  This  Act  aims  to  consolidate  and 

701 Business Recorder. (2012). Procedural EU formalities for GSP-Plus: Prime Minister forms inter-ministerial 
task force. Available at: http://fp.brecorder.com/2012/12/201212051264410/  
702 Government of Pakistan. Treaty Implementation Cell. Available at: 
http://www.cabinet.gov.pk/cabinet/userfiles1/file/TORs-TIC-06-09-2016.pdf  
703 Democracy Reporting. (2016). GSP+ in Pakistan: A brief introduction. Available at: http://democracy-
reporting.org/newdri/wp-content/uploads/2016/05/gsp__in_pakistan._a_brief_introduction..pdf  
704 Government of Pakistan. (2016). PM Restructures TIC to Improve Compliance on International Obligations. 
Available at: http://www.pid.gov.pk/?p=22042  
705 Tribute. (2015). GSP Plus review: Support mechanism unit to be established. Available at: 
https://tribune.com.pk/story/931751/gsp-plus-review-support-mechanism-unit-to-be-established/  
706 Human Rights Commission of Pakistan. (2014). Pakistan: Time for real efforts to eradicate torture and 
implement the Convention Against Torture. Available at: http://hrcp-web.org/hrcpweb/pakistan-time-for-real-
efforts-to-eradicate-torture-and-implement-the-convention-against-torture/ 
707 Government of Pakistan. (2016). Action Plan for Human Rights. Available at: 
http://202.83.164.138/new/userfiles/file/Action%20Plan%20Booklayout.pdf  
708 CEARC. (2017). Observation Convention No. 98 - Pakistan. Available at: 
http://www.ilo.org/dyn/normlex/en/f?p=NORMLEXPUB:13100:0::NO:13100:P13100_COMMENT_ID:3299932:
NO  

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rationalise  the  law  relating  to  forming  trade  unions  and  improvement  of  relations 
between employers and employees. It was adopted in the context of the ILO conventions 
on the freedom of association, the right to organise and collective bargaining. 

Provincial  initiatives  aimed  to  tackle  bonded  labour  through  monitoring,  raids  and 
anti-bonded labour forces.  However, there is a lack of information  on  the legal actions, 
prosecutions,  convictions  and  penalties  applied  against  perpetrators  of  bonded  labour. 
Secondly, 
the  Government,  employers’ 
organisations, workers’ organisations and other relevant partners. 

limited  cooperation  between 

there 

is 

Several  challenges  impede  the  effective  implementation  of  the  conventions  on  freedom 
of  association  and  the  right  to  organise  and  collective  bargaining.  One  of  the  main 
challenges  is  that  domestic  legislation  excludes  employees  in  certain  sectors  from 
forming  unions  and  collective  bargaining,  including  agriculture,  health,  education, 
banking, security and employees of special economic and trade zones. 

To  address  the  issue  of  equal  remuneration  for  men  and  women,  Pakistan  has  set  up 
Ombudsperson  offices  and  established  a  federal  tripartite  consultation  committee  to 
monitor  legislative  and  administrative  steps  taken  by  provincial  governments  to 
implement the provisions of the convention. 

To  implement  the  Conventions  on  the  Minimum  Age  for  Admission  to  Employment  and 
Worst  Forms  of  Child  Labour,  Pakistan  has  adopted  national  policies  and  programmes 
and enhanced its awareness raising activities. However, despite these efforts child labour 
remains an important problem in the country. 

Environment: Pakistan has generally submitted the latest reports in compliance with its 
obligations under the conventions – except for CITES and UNFCCC. It has not submitted 
the  latest  annual  report  for  CITES  and  has  not  submitted  anything  for  UNFCCC  since 
2003.  Some  older  reports  for  CITES,  the  Basel  and  Stockholm  Conventions  and  the 
Cartagena Protocol are still missing. However, the country has made efforts to catch up 
on  its  reporting  in  recent  years  by  submitting  missing  and  overdue  reports  –  i.e.  the 
Cartagena Reports in 2014 (due in 2011) and 2016 (due in 2015) and the 2014 Report 
on  the  Stockholm  Convention  in  2016.  Additionally,  Pakistan  has  increasingly  been 
submitting overdue Annual Reports on the Basel Convention since 2014. 

There are also specific challenges to the effective implementation of certain conventions. 
Regarding  CITES,  the  Government  of  Pakistan  has  to  enact  domestic  legislation  in  line 
with the provisions under the convention. In this respect, the CITES Standing Committee 
sent  a  warning  letter  in  February  2016.  The  Government  responded  by  indicating  that 
the legislative process to fully implement CITES is ongoing.709 

Pakistan’s  National  Biodiversity  Strategy  and  Action  Plan,  launched  in  November  2015, 
was  a  significant  step  for  the  implementation  of  the  CBD.  It  was  based  on  a 
comprehensive  revision  of  the  2010  Strategy  and  Action  Policy,  including  the  Protected 
Areas System; botanical gardens; projects for combating soil erosion in catchment areas 
of large dams; awareness campaigns; and a Centre for Biodiversity Conservation.710 The 
main issue related to the implementation of the CBD is that the Government has not yet 
set national or regional biodiversity targets to successfully implement the CBD Strategic 
Plan 2010-2020 and the Aichi Biodiversity Targets. 

With regards to the effective implementation of the Cartagena Protocol under the CBD, a 
domestic  regulatory  framework  is  partially  in  place.  The  Government  of  Pakistan  has 
adopted  national  biosafety  laws  and  guidelines  and  has  initiated  institutional  reform  by 

709 CITES. (2016). Interpretation and Implementation matters. Available at: 
https://cites.org/sites/default/files/eng/com/sc/67/E-SC67-11.pdf  
710 Ambassador (Retd) Shafqat Kakakhel. (2017). Presentation at Evaluation Workshop: The Environmental 
Impact of GSP+ in Pakistan. Islamabad, Pakistan. 

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setting  up  a  National  Biosafety  Committee,  a  Technical  Advisory  Committee  and 
Institutional Biosafety Committees.711 

In  2012,  the  Government  adopted  a  National  Climate  Change  Policy  to  ensure  that 
Pakistan will be resilient towards climate change and to integrate climate change in the 
economically  and  socially  vulnerable  sectors.  To  reach  this  goal,  the  Government  will 
inter  alia  integrate  climate  change  policy  in  other  national  policies,  encourage  private 
and  public  investment  in  adaptation  measures,  enhance  awareness  of  climate  change 
and ensure water, food and energy security.712  

In 2017, Pakistan passed a bill in line with the National Climate Change Policy to address 
the effects of climate change and to meet its obligations under international conventions 
on  climate  change.  To  this  end,  the  bill  establishes  the  Pakistan  Climate  Change 
Authority, the Pakistan Climate Change Council and the Pakistan Climate Change Fund to 
adopt comprehensive adaptation and mitigation policies and measures.713 

Good  governance:  The  Pakistani  Government  has  created  several  authorities  to 
support the country’s adherence to the GSP+ mandated conventions and its drug control 
policy.  Furthermore,  a  Drug  Demand  Reduction  Cell  within  the  Ministry  of  Interior  has 
been  formed  to  coordinate  and  assist  in  formulating  strategies  and  measures  to  realise 
drug demand reduction and support treatment and rehabilitation of drug users.714 Lastly, 
it  established  the  Drug  Regulatory  Authority  of  Pakistan  in  2012  coordinating  and 
enforcing  the  Drug  Act  of  1976  and  regulating  the  availability  of  drugs  and  substances 
for  medicine  and  science.715Pakistan  has  agreed  to  international  observation  of  its  drug 
control situation by the International Narcotics Control Board (INCB).  

the  Convention  against  Corruption,  Pakistan  adopted 

the  National 
Regarding 
Accountability Ordinance in 1999 to set up the National Accountability Bureau (NAB) to 
“eradicate  corruption  and  corrupt  practices  and  hold  accountable  all  those  persons 
accused of such practices and matters ancillary thereto”.716 The NAB is the central anti-
corruption authority and cooperates with international agencies under the convention. In 
addition  to  the  NAB,  a  dedicated  judicial  system  was  created  to  deal  with  cases  on 
corrupt practices and abuse of public authority. The law governing the NAB is largely in 
line with the provisions of the convention.717    

711 Biosafety Clearing House. (2016). Third National Report on the implementation of the Cartagena Protocol on 
Biosafety. Available at: http://bch.cbd.int/database/record.shtml?documentid=111021   
712 Government of Pakistan. (2012). National Climate Change Policy. Available at: 
http://www.mocc.gov.pk/moclc/userfiles1/file/Moclc/Policy/National%20Climate%20Change%20Policy%20of%
20Pakistan%20(2).pdf  
713 Government of Pakistan. (2016). Bill to address the effects of climate change and meet Pakistan’s 
obligations under international conventions relating to climate change. Available at: 
http://www.mocc.gov.pk/moclc/userfiles1/file/PCCA%20Bill_5%20April_2016_docx%20(1).pdf; Engineering 
and Technology. (2017). Pakistan passes climate change bill after long period of resistance. Available at: 
https://eandt.theiet.org/content/articles/2017/03/pakistan-passes-climate-change-bill-after-long-period-of-
resistance/  
714 European Commission. (2016). The EU Special Incentive Arrangement for Sustainable Development and 
Good Governance ('GSP+') covering the period 2014 – 2015. Available at: 
https://eeas.europa.eu/sites/eeas/files/european_commission._2016._report_on_the_generalised_scheme_of_
preferences_during_the_period_2014-2015.pdf   
715 Drug Regulatory Authority of Pakistan. Vision & Mission. Available at: 
http://www.dra.gov.pk/Home/VisionMission  
716 Government of Pakistan. (2010). National Accountability Ordinance. Available at: 
http://www.nab.gov.pk/Downloads/nao.asp  
717 European Commission. (2016). The EU Special Incentive Arrangement for Sustainable Development and 
Good Governance ('GSP+') covering the period 2014 – 2015. Available at: 
https://eeas.europa.eu/sites/eeas/files/european_commission._2016._report_on_the_generalised_scheme_of_
preferences_during_the_period_2014-2015.pdf   

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7.2.5  Stakeholder awareness of GSP+ requirements 
Compared to stakeholders that participated in the local workshop in Bolivia, stakeholders 
that participated in the local workshop in Pakistan were more aware of the GSP and its 
overall  role  in  the  growth  and  development  of  the  Pakistani  economy.  However,  there 
were still many stakeholders who believe that  preferential  treatment  under the  scheme 
only accrues to the textile and clothing sector. Furthermore, there was knowledge of the 
need  for  Pakistan  to  ratify  and  implement  the  obligations  of  the  27  international 
conventions in order to retain GSP+ status. However, the specific details concerning the 
exact  nature  of  the  conventions  and  the  conditions  necessary  in  order  to  qualify  for 
GSP+ status were generally not known. 

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8  Conclusions and Recommendations  

8.1  Review of Evaluation Questions  

In  order  to  guide  the  analysis  of  the  performance  of  the  GSP,  the  MTE  has  sought  to 
provide answers to the six specific questions, which are listed as follows:  

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 LDCs?  
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  relevant  to  the  development  needs  which  it 

intended to address?  

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

The  Analytical  Framework  of  the  MTE,  presented  in  Annex  IV,  highlights  the  required 
evidence and analysis that the Project Team proposed to utilise in assessing whether the 
objectives  of  the  GSP  are  on  track  to  be  achieved.    To  this  effect,  the  Project  Team 
carried  out  extensive  analysis  on  the  following:  (i)  revised  eligibility  criteria;  (ii)  the 
reduced number of beneficiaries; (iii) the reformed graduation and increased thresholds; 
(iv)  the  simplified  GSP+  entry  mechanism;  (v)  the  GSP+  monitoring  mechanism  and 
progress  in  the  implementation  of  GSP+  conventions;  (vi)  simplified  and  clarified 
safeguard  mechanisms;  and  (v)  redefined  product  sections  and  increased  product 
coverage.  

With  regard  to  the  revision  of  the  eligibility  criteria,  The  MTE  has  found  that  there  has 
been a much improved focus on countries most in need. The graduation of countries and 
sectors  which  were  prime  beneficiaries  under  the  previous  regulations  has  been 
conducive to achieve this impact. For example, it was evident from the economic impact 
analysis conducted that the graduation of China and Thailand from the  scheme, as well 
as India from specific preferences in the textiles sector, have resulted in an expansion of 
exports  from  the  GSP  beneficiary  countries  which  were  retained.  The    remaining  GSP 
beneficiary  countries  have  become  more  able  to  take  advantage  of  preferential  market 
access  opportunities under the scheme as evidenced by the growth of their  EU imports 
under  the  GSP  (See  Chapter  2.1  and  2.2  of  the  Final  Report  for  further  detail).  The 
bilateral gravity model estimates further confirm that countries which have been eligible 
for any of the GSP arrangements throughout the period 2011-2016 tended to trade more 
intensively with the EU. 
Some  stakeholders  who  participated  in  the  interview  process  have  cautioned  that 
although  there  has  been  a  reduction  in  the  number  of  beneficiaries  in  the  GSP,  the  EU 
has  negotiated  or  is  in  the  process  of  negotiating  trade  agreements  with  some  of  the 
graduated countries. As the EU  engages in continued preferential trading arrangements 
with  former  GSP  beneficiaries,  this  may  reduce  the  value  of  GSP  preferences  for  the 

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countries  most  in  need.  Nevertheless,  the  MTE  has  found  that  the  extent  of  preference 
erosion following the introduction of the GSP Regulation (2014-2016) is very small. As a 
result,  there  are  significant  preferential  market  access  benefits  to  be  derived  for 
countries most in need, particularly LDCs (See Chapter 2.2 of the Final Report).  

As a consequence of the simplification of the GSP+ entry mechanism, it has been found 
that  beneficiary  countries  are  now  more  inclined  to  participate  in  this  arrangement, 
notwithstanding the conditionalities attached. Countries like Bangladesh that are seeking 
to  graduate  from  least  developed  country  (LDC)  status  to  regular  developing  country 
status,  initially  at  the  lower-middle-income  bracket,  have  expressed  their  interest  to 
seek  GSP+  status  at  the  earliest  opportunity.  This  was  highlighted  by  the  high-level 
officials  that  participated  in  the  stakeholder  outreach  workshop  that  was  held  in 
Bangladesh.  The  underlying  reason  is  greater  market  access  opportunities  under  the 
GSP+  arrangement,  as  compared  to  the  Standard  GSP  arrangement,  on  par  with  EBA 
preferences across most sectors in which the country is  currently trading.   However, in 
order  to  qualify  for  the  GSP+  arrangement,  all  beneficiary  countries  must  satisfy  the 
‘vulnerability  criteria’,  ratify  and  implement  27  international  conventions,  as  well  as 
abide  by  an  undertaking  to,  inter  alia,  cooperate  with  the  Commission  in  GSP+ 
monitoring. 718 

With regard to the GSP+ monitoring mechanism and the progress on the implementation 
of  the  GSP+  conventions,  the  MTE  has  found  that  there  had  been  a  resultant  positive 
impact  on  social  and  environmental  development,  particularly  in  Pakistan.  Pakistani 
stakeholders  who  participated  in  both  the  local  stakeholder  workshop  and  in interviews 
with  the  Project  Team  reaffirmed  the  unique  nature  of  the  GSP+,  and  positively 
appreciated  the  partnership  that  has  been  engendered  between  the  EU  and  the 
Government of Pakistan towards sustainable development (see Case Studies on GSP+ in 
Chapter  7  of  the  Final  Report).  The  ratification  and  implementation  of  the  27 
international conventions was not considered as onerous or intrusive, but rather seen as 
a driver of the country’s development processes. 

The improved frequency and enhanced scope of the GSP+ monitoring have increased the 
EU’s leverage in the beneficiary countries.  It has allowed for constructive dialogue, and 
has  been  found  to  contribute  to  sustainable  development  and  good  governance. 
Notwithstanding,  civil  society  stakeholders  across  beneficiary  countries  have  observed 
that  the  monitoring  system  employed  by  the  EC  could  be  improved.  Information  about 
the scorecard mechanism is not publicly available. It is understood that this is intended 
to  preserve  confidentiality  as  well  as  to  build  confidence  between  the  EU  and  national 
governments 
in  the  process.  However,  throughout  the  course  of  stakeholder 
consultations,  it  was  consistently  raised  that  greater  transparency,  accountability  and 
standardization of the scorecard mechanism could lead to improved effectiveness of the 
monitoring process.  

718 A beneficiary is considered to be vulnerable due to a lack of export diversification and insufficient integration 
within the international trading system. In this regard, Annex VII of the GSP Regulation stipulates that the 
following thresholds must be met: (i) the seven largest sections of GSP covered exports represent more than 
75 per cent of its total GSP covered exports to the EU as an average during the last three consecutive years; 
and (ii)The beneficiary’s GSP covered imports represent less than 6.5 per cent of the total GSP covered imports 
to the EU as an average during the last three consecutive years. 

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Even  though  more  frequent  than  before,  the  2-year  monitoring  cycle  that  the  EU 
employs is considered to be limited as the time frame needed to implement meaningful 
changes,  in  some  instances,  is  very  short.  It  has  been  noted  that  compliance  reviews 
have been primarily focused on public institutions. However, some stakeholders in local 
workshops,  particularly  in  Pakistan,  have  recommended  that  there  is  also  a  need  to 
focus  more  on  the  private  sector  and  on  compliance  at  the  firm-level.  The  wider 
availability  of  information  and  communications  technology,  including  smart  phone 
applications,  in  the  monitoring  process  was  noted  as  an  opportunity  to  enhance  the 
monitoring processes and reduce its cost. 

One recurring point that emanated from the local stakeholder consultation workshops is 
the dearth of information about the benefits to be derived from participation in the EU’s 
GSP regime.  It was  further  revealed that in some countries it was erroneously believed 
that  the  GSP  was  only  providing  benefits  to  a  few  key  sectors,  particularly  the  textiles 
and clothing sectors in Pakistan and Bangladesh. As a result, it has been recommended 
that  information  exchange  and  stakeholder  sensitisation  programmes  are  promoted  in 
order  to  raise  awareness  about  the  coverage  of  the  GSP+  as  well  as  to  improve  the 
implementation of GSP+ at the country level. 

The  establishment  of  Treaty  Implementation  Cells  (TICs)  in  Pakistan is  recognized  as  a 
forerunner  in  bridging  the  divide  between  state  and  non-state  actors  in  the  effective 
implementation of the conventions. This mechanism can be effectively promoted in other 
GSP+  countries  as  they  seek  to  fulfill  their  treaty  obligations  under  the  GSP+ 
arrangement.  

The  impact  of  the  changed  safeguard  mechanism  remains  unclear  as  it  has  not  been 
triggered  under  the  current  GSP.  Additionally,  in  the  Online  Public  Consultation,  the 
overwhelming  majority  of  stakeholders  have  called  for  a  review  of  the  safeguard 
mechanism,  in  light  of  perceptions  of  inadequate  coverage  of  sensitive  sectors, 
particularly  the  rice  sector.      Since  2009,  rice  has  not  been  considered  as  a  ‘sensitive 
product’  by  the  European  Commission.  Industry  stakeholders  claim  that  rice  imports 
from  Cambodia  and  Myanmar/Burma  under  the  EBA  regime  cause  disruptions  in  the 
European  rice  industry.  Hence,  they  called  for  the  need  to  institute  an  automatic 
safeguard clause as is the case for other sensitive products.    

In  order  to  further  improve  the  application  of  the  GSP  Regulation,  some  selected 
stakeholders in the civil society dialogues have also expressed their support to lower the 
thresholds  to  trigger  the  use  of  the  GSP  withdrawal  mechanism.  They  propose  that 
withdrawal  of  preferences  is  triggered  when  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. 

Economic Impact 

Exports  from  the  80  GSP  beneficiary  countries  under  investigation  in  the  MTE  have 
increased  in  the  post-reform  period  compared  to  the  pre-reform  period.  However,  the 

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full  extent  in  terms  of  coverage,  utilisation  and  export  diversification  differs  per 
beneficiary country and per arrangement.  

It  has  been  found  that  the  80  GSP  beneficiary  countries  that  benefitted  from  GSP 
throughout the period 2011-2016 have increased their total exports under the respective 
arrangements.  This  has  been  especially  the  case  for  the  49  EBA  countries  and  the  8 
GSP+ countries. There has been a small increase in the exports of the 23 Standard GSP 
countries which remained eligible after the introduction of the GSP regulation as of 2014. 

The  Standard  GSP  and  GSP+  countries  in  the  aggregate  experienced  an  increase  in 
diversification. The EBA countries in the aggregate also experienced an increase, from a 
very  low  initial  base,  but it  was  also  found  that  diversification  of  trade  originating  from 
29 EBA countries did not improve. It is noted that the determinants of diversification are 
macro-  and  micro-economic  policies  in  the  exporting  countries,  relating  to  investment 
regulation, the 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  GSP  reform.  The  Regulation  provides  market  access,  but  cannot 
determine the domestic policies to be put in place to realize market entry. 

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  2011-2014,  the  average  utilisation  rate  was  slightly  over  80  per 
cent.  During  the  post-reform  period  2014-2016,  following  the  implementation  of 
Regulation  978/2012,  the  average  utilisation  rate  increased  by  around  10  percentage 
points for the EBA countries. This was primarily due to an increase in preferential exports 
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 in the case study countries that have prevented the 
full  utilisation  of  preferential  access  under  the  GSP.  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  (TBT)  and  rules  of 
origin (RoO) 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.  

Social Impact 

The 2012 GSP Regulation aimed to strengthen the support for sustainable development 
and  good  governance  in  the  beneficiary  countries,  including  through  inclusive  social 
development and respect for human rights. 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. 

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In most instances, GSP reform can be considered to have had a positive impact on social 
and human rights in the beneficiary countries. The increase in exports has supported the 
economic growth, employment and social development in the beneficiary countries.  

Nevertheless,  in  some  cases,  increased  exports  and  economic  opportunities  have  also 
had unintended negative indirect impacts on fundamental rights and social development. 
One example of this relates to land grabbing for the purpose of industrial development. 
In  Ethiopia,  there  have  been  reported  cases  of  land  grabbing  or  inadequate 
compensation  to  grant  land  to  companies  in  the  floriculture  industry.  Another  example 
concerns  the  lack  of  compliance  with  labour  rights  in  order  to  maintain  a  competitive 
advantage, which was found to be the case for Bangladesh. 

The GSP+ arrangement specifically includes conditionality to comply with 15 ILO and UN 
conventions  on  labour  and  human  rights.  As  such,  the  EU  has  leverage  to  directly 
contribute to positive social development and adherence to international conventions by 
GSP+ beneficiaries. In this respect, the Commission has successfully affected Sri Lanka’s 
compliance with the UN human rights conventions. Additionally, 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 duty-free access to the EU 
market.  The  prospect  of  GSP+  status  has  led  to  the  ratification  and  implementation  of 
human rights conventions in Pakistan and Tajikistan.  

Under  the  Standard  GSP  and  EBA  arrangements,  there  exists  a  more  limited 
conditionality to adhere to fundamental labour and human rights. The EU may decide to 
withdraw  trade  preferences  in  case  of  serious  and  systematic  violations  of  fundamental 
rights,  which  creates  an  incentive  for  governments  to  better  guarantee  these  rights  for 
their people. This is particularly true for countries that have a strong dependence on the 
EU  market.  However,  in  practice  the  EU  is  perceived  as  not  having  effectively  applied 
this  approach  in  cases  of  labour  and  human  rights  violations.  Instead  of  withdrawing 
preferences, which could severely harm the beneficiary’s economy, the Commission has 
engaged in a structured dialogue where feasible and meaningful in light of the leverage 
it  has.  Some  stakeholders  argue  that  EU  should  more  readily  apply  the  temporary 
withdrawal mechanism to address instances of severe and systematic violations.  

The  four  country  case  studies  suggest  that  all  four  beneficiary  countries  have  made 
progress on a number of social and human rights indicators. However, there is a lack of 
evidence  that  this  has  translated  into  increased  government  expenditure  in  areas  such 
as education and health.  

Environmental Impact 

The 2012 GSP Regulation aimed to strengthen the support for sustainable development 
in the beneficiary countries, including respect for natural resources and 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 

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to  support  and  promote  environmental  protection  and  address  environmental 
degradation. 

Overall,  the  2012  GSP  Regulation  must  be  considered  to  have  had  only  a  limited  and 
tangential  impact  on  sustainable  development  in  the  beneficiary  countries.  In  general, 
the increase in exports has supported economic growth and production in the beneficiary 
countries, but with a negative impact on the environment.  

Under  the  Standard  GSP  and  EBA  arrangements,  there  is  no  conditionality  to  propel 
beneficiary  countries  to  adhere  to  environmental  standards,  and  to  comply  with 
international conventions on climate change and environmental protection. As such, the 
EU has very limited leverage to directly contribute to environmental sustainability in the 
beneficiary countries.  

Under  the  GSP+  arrangement,  there  exists  conditionality  for  beneficiary  countries  to 
comply  with  8  UN  conventions  on  climate  change  and  environmental  protection.  Out  of 
these 8 UN Conventions, only 3 are related to international trade (the CITES, Montreal, 
and  Basel  Conventions),  even  though  only  in  an  indirect  way.  Stakeholders  at  the 
national  workshop  in  Pakistan  have  observed  that  traders  and  industrialists  are  not 
aware  about  the  link  between  GSP+  concessions  and  the  implementation  of  the 
environmental  conventions.  Therefore,  there  is  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.  Additionally,  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  the 
process of becoming a GSP+ beneficiary.  

The  case  studies  and  national  stakeholder  workshops  confirm  that  the  theme  of 
sustainable  development  has  become  increasingly  important  in  the  policy  dialogue. 
There is 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 
the  greater  political  commitment is  the  strong  focus  on  sustainable  development  in  the 
countries’  development  strategies  and  the  recent  establishment  of  new  ministries  and 
agencies to implement this.  

8.1.2  What are the factors (positive and negative) influencing the 

achievements observed?  

The conditionalities associated with participation in GSP+ as well as the resulting export 
expansion  have  led  to  increased  adherence  to  fundamental  labour  and  human  rights. 
This has been especially due to the requirement to adhere to reporting obligations under 
these  conventions.  These  conditionalities  for  the  GSP+  countries  have  also  resulted  in 
better informed and deeper structural dialogues with the EU, which have contributed to 
improving  the  implementation  of  the  ratified  conventions.  The  steps  taken  to  improve 

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compliance  with  the  conventions,  have  improved  the  associated  positive  impacts  in  the 
eligible  country.  Thus,  the  GSP  Regulation  has  positively  influenced  the  achievements 
and contributed to sustainable development and good governance.   

The  GSP  has  been  lauded  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.  This  has  in  turn  led  to  the  employment  of  a  significant 
number  of  women  in  the  sector.  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.  

The available evidence, largely based on case-studies, also suggests that trade has had 
some  positive  effects  on  the  environment  in  beneficiary  countries  through  changes  in 
production technologies and supply chain sustainability. These changes have been made 
possible by the initiatives of private corporations to adopt cleaner and safer technologies. 
This  has  directly  benefitted  workers  through  better  occupational  safety  and  health 
provisions.  It  has  also  indirectly  influenced  the  environmental  impact,  although  in  this 
regard the negative impact of the scale factors (more pollution and emissions of GHGs) 
has  dominated  the  positive  impact  of  the  technology  factors  (greater  energy  efficiency 
and  sustainable  use  of  natural  resources).  Thus,  the  evidence  does  not  allow  us  to 
conclude  that  the  GSP  has  had  significant  positive  impacts  on  the  environment  in 
beneficiary  countries,  even  in  the  countries  which  have  ratified  and  implemented 
environmental conventions in order to obtain or retain GSP+ status. 

Unlike  the  situation  with  GSP+  beneficiary  countries,  there  are  no  conditionalities 
attached  to  the  Standard  GSP  and  EBA  arrangements  that  compel  these  countries  to 
implement  environmental  conventions,  nor  for  companies  to  adhere  to  environmentally 
sound practices. 

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

implementation, or use of the current GSP? 

The  GSP  Regulation  has  created  a  pathway  for  the  EU  to  dialogue  with  national 
authorities  on  social,  human  rights,  environmental  and  good  governance  issues.  As  a 
result,  this  has  strengthened  the  EU’s  role  in  beneficiary  countries,  in  particular  GSP+ 
countries,  which  has  proved  to  be  an  important  instrument  for  promoting  sustainable 
development and good governance.  

The  scope for structured dialogue in the context of the  GSP does also exist in relations 
with  Standard  GSP  and  EBA  countries.  Following  the  Rana  Plaza  factory  collapse  in 
Bangladesh,  increased  media  and international  pressure  from  the  EU  authorities  on  the 
matter has heightened consumer awareness on the degrading environmental and labour 
standards  prevailing  in  the  country.  In  addition,  consumer  awareness  and  corporate 
responsibility  have  also  intensified  the  efforts  of  Bangladesh’s  private  sector  to  uphold 
labour  and  workers’  rights  as  well  as  environmental  standards.  Mounting  international 
pressure and the threat of withdrawal of the benefits of preferential market access under 

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the  EBA  arrangement  have  also  facilitated  greater  freedom  to  register  trade  unions  in 
the country.  

The GSP has significantly impacted 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;  the  case  studies  in  Chapters  6  and  7  provide  further 
evidence.719 

Another  positive  spill-over  effect  is  technology  transfer.  The  EU  GSP  has  facilitated  the 
development  of  manufacturing  sectors,  including  the  RMG,  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.  During  stakeholder 
consultations,  it  was  revealed  that  EU  industries  face  increased  competition  from  a 
number  of imports that benefit from GSP preferences and are cheaper on the domestic 
market, thereby threatening the stability of sectors of interest to the EU. The majority of 
respondents  that  participated  in  the  Online  Public  Consultation,  who  were  associated 
with the rice industry, stressed that due to large import volumes of cheap rice from EBA 
beneficiaries,  such  as  Myanmar/Burma  and  Cambodia,  there  has  been  a  perceived 
negative  impact  on  the  EU  rice  industry.  In  this  context,  it  has  been  argued  that  the 
design  of  the  safeguard  clause  in  the  GSP  Regulation  does  not  allow  for  adequate 
protection of EU interests in sensitive sectors such as the rice sector. 

Stakeholders  from  the  EU  tyre  industry  have  also  argued  that  in  cases  of  highly  price 
sensitive  competing  imports,  the  graduation  mechanism  does  not  sufficiently  protect 
their interests. In the current scenario, the graduation mechanism is only applied at the 
relatively  highly  aggregated  product  section  level.  Business  representatives  propose  a 
review  of  the  graduation  mechanism  whereby  graduation  should  be  carried  out  at  the 
disaggregated  product  level  with  specific  product  IDs  and  related  customs  tariff  lines, 
rather than at the much more aggregated level of product sections.  

From a conceptual point of view, the negative indirect environmental impacts of the GSP 
due  to  scale  effects  may  be  can  be  considered  as  unintended.  These  impacts  could  be 
reduced  and  better  managed  through  initiatives  supporting  beneficiary  countries  in 
monitoring and minimising adverse environmental effects. Although not required by 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. 

719See in particular Chapter 6 sections 6.1.5 and 6.2.5.  

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8.1.4  Efficiency – To what extent is the current GSP efficient? 
Improvements in the utilisation rate of preferences offered through the scheme are one 
pertinent  indicator  of  enhanced  efficiency:  a  greater  impact  is  achieved  without 
additional inputs, thus improving the underlying cost/benefit ratios. The economic impact 
analysis  has  shown  that  preference  utilisation  rates  have  remained  broadly  unchanged 
over time. The regression analyses of the preference  utilisation rate model confirm that 
preference  margins  are  a  significant  positive  determinant  of  the  preference  utilisation 
rate.  Our  analysis  shows  that  preference  utilisation  rates  and  preference  margins  have 
remained  largely  unchanged.  It  is  therefore  argued  that  the  efficiency  of  the  GSP  has 
also remained largely unchanged.  

Another  pertinent  indicator  of  the  efficiency  of  the  GSP  is  how  decisions  on  changes  in 
the  implementation  of  the  regulation  are  made.  The  GSP  relies  very  extensively  on 
assessments  carried  out  by  relevant  third  party  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  ILO.  Similarly,  whether  a  country 
qualifies  to  graduate  from  the  LDC  category  and  therewith  loses  its  EBA  eligibility  is 
assessed  by  the  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 eligibly for GSP preferences, is determined by the World 
Bank  Group  on  an  annual  basis.  As  these  GSP  implementation  modalities  have  not 
changed,  it  is  argued  that  the  efficiency  of  the  GSP  has  therefore  has  also  remained 
unchanged.    

It  has  been  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 linked 
to the main sector that utilise GSP preferences to export to the EU market. Hence, there 
is  need  to  employ  the  use  of  educational  and  awareness  programmes  and  other  such 
initiatives  to  further  inform  stakeholders  about  the  full  range  of  available  opportunities 
under the GSP.  

In  comparison  with  the  previous  GSP  Regulation,  one  important  innovation  is  that  the 
monitoring  of  economic,  social  and  environmental  impact  of  the  GSP  arrangements  in 
the  beneficiary  countries  has  been  substantially  upgraded  and  intensified  in  terms  of 
frequency  and  scope.  It  is  observed  and  acknowledged  throughout  this  study  that  this 
has  contributed  to  positive  impact  of  the  GSP,  in  particularly  in  GSP+  beneficiary 
countries.  In  this  respect,  the  present  GSP  should  be  considered  more  effective  as 
compared with its predecessors.       

It is recommended below that the EU monitoring may be enhanced beyond the present 
GSP+  arrangement,  in  view  of  the  positive  impact  of  the  EU  monitoring  on  social  and 
human  rights  in  beneficiary  countries.  This  would  inevitably  require  more  human 
resources      and  thus  have  cost  implications.  It  is  suggested  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).  

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The  costs  of  such  enhanced  monitoring,  undertaken  by  dedicated  Commission  staff  in 
cooperation  with  the  EEAS  and  EU  Delegations,  are  not  negligible.  It  is  not  feasible  to 
conduct any formal cost-benefit analysis in the absence of detailed cost-estimates of EU 
staff  inputs  required  across  the  EU  institutions  to  manage  the  scheme.  It  is  expected 
that the monitoring of the GSP Regulation requires an increase of staff inputs and hence 
an increased cost.  

While  noting  the  desirability  of  further  detailed  cost-estimates,  the  preliminary 
conclusion is that the efficiency of the scheme has either improved, or at least remained 
stable during the period of implementation of the new GSP Regulation.   

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

policies?  

The  current  GSP  is  found  to  be  mostly  coherent  with  and  complementary  to  the  EU’s 
trade, development and foreign policies.  

With  regard  to  the  coherence  of  EU’s  policies  in  the  area  of  development,  it  has  been 
found that the EU actively incorporates development objectives in all of its policies 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.720 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  LDCs  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+ arrangement 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.  The 
MTE  has  found  that  this  objective  has  been  achieved  to  a  great  extent,  especially  in 
terms of boosting the exports of EBA beneficiary countries.   

With regard to the synergies between the EU’s Trade for All (TFA) strategy and the GSP, 
it  has  been  observed  that  both  reflect  an  overall  EU  policy  that  is  geared  towards  the 
promotion of human rights, environmental protection and sustainable development. This 
is seen as applicable to the EU as well as to its external partners.  

The TFA acknowledges that unilateral trade arrangements such as the GSP are required 
to assist countries most in need. This is seen as essential to encourage fairness in global 
trade.  Bearing  this  in  mind,  it  is  important  to  recall  that  one  of  the  main  objectives  of 

720European Commission. Policy Coherence for Development. Available at: 
https://ec.europa.eu/europeaid/sectors/economic-growth/trade/trade-policy-coherence-development_en 

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GSP  reform  was  to  focus  on  the  countries  most  in  need.  The  graduation  of  prime 
beneficiary  countries  with  effect  of  2014  has  led  to  an  increased  focus  on  the  most 
vulnerable developing countries as well as the LDCs.  

The  TFA  highlights  the  needs  of  consumers,  workers  and  SMEs  as  priorities  in  the 
formulation  of  trade  policy  in  the  EU.  It  recognizes  that  trade  openness  can  result  in 
major economic benefits for them. However, 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  EU  small  businesses.  As  pressures  mount  on  small 
businesses, this may result in job losses for workers in affected sectors and a squeeze on 
profit margins. Over the course of consultations, stakeholders from the EU rice and tyres 
industries have articulated such concerns.  

Another  key  objective  of  the  TFA  is  to  promote  fair  and  ethical  trading  schemes.  While 
the GSP+ actively promotes social and environmental standards through conditionalities, 
the  EBA  and  Standard  GSP  arrangements  have  only  limited  conditionality  to  adhere  to 
fundamental  labour  and  human  rights.  Throughout  the  course  of  stakeholder 
consultations,  it  has  been  recommended  that  similar  conditionalities  and  monitoring 
mechanisms  to  the  GSP+  arrangement  be  put  in  place  for  all  beneficiary  countries  in 
order to ensure that fair and ethical trade is more comprehensively promoted.  

The  EU’s  foreign  and  security  policies  have  also  been  found  to  be  coherent  with  GSP 
reform,  especially  as  it  relates  to  respect  for  human  rights  and  fundamental  freedoms.  
The promotion and protection of human rights have been actively touted under the GSP, 
especially  under  the  GSP+  arrangement  where  beneficiary  countries  are  obligated  to 
ratify and implement several human rights conventions. In the case of severe violations 
of  human  rights,  beneficiary  countries  may  also  be  withdrawn  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  significant  emphasis  on  human  rights  and 
fundamental freedoms.  

The EU is an important export destination for bioethanol from GSP+ countries, especially 
Bolivia and Pakistan. These are mainly produced from sugarcane, the cultivation of which 
is  associated  with  negative  impacts  on  forests,  air,  water,  soil,  and  greenhouse  gas 
emissions.  Bioethanol  can  also  be  made  from  maize  and  wheat,  which  the  EU  mainly 
imports from Ukraine. Bioethanol is not the main type of biofuel used in the EU, so it can 
be  expected  that  EU  biofuel  demand  in  general,  and  the  part  of  it  benefiting  from  the 
GSP in particular, are not the main drivers  of  maize and wheat production and trade in 
these  countries.  Positive  environmental  impacts  have  been  associated  with  biofuels 
compared to other fuels (eg. reduced CO2 emissions) in the consuming countries, but its 
production  can  have  negative  effects  in  the  producing  country  (e.g.  on  biodiversity). 
Sustainability  criteria  in  the  Renewable  Energy  Directive  and  Fuel  Quality  Directive,  if 
appropriately  implemented,  could  help  to  avoid  deforestation,  peatland  conversion  and 
significant  biodiversity  loss.  However,  they  do  not  address  the  full  array  of 
environmental impacts. 

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8.1.6  To what extent is the current GSP relevant to the development needs 

which it is intended to address? 

The current GSP is highly relevant to the development needs of beneficiary countries and 
addresses  sustainable  development  and  poverty  eradication  objectives.  This  has  been 
elaborated above in Section 6.1 above.  

Additional  evidence  and  insight  about  the  relevance  of  the  GSP  is  gained  from  the 
stakeholder  interviews  conducted  in  the  four  case  study  countries.  The  overwhelming 
majority has 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  Bangladeshi  economy.  It  has  also  been  noted  that  the  EBA  has  helped 
Bangladesh  to  solidify  its  export  base,  and  has  helped  Bangladesh  to  prepare  for 
graduation from the LDC 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  utilise 
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  recognize  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.  In  like 
manner, 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.  

In practice, the extent of 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 
inherent in 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. 

8.2  Conclusions  

This section presents the conclusions of the Mid-Term Evaluation of the EU’s GSP. These 
have  been  reached  through  quantitative  and  qualitative  analysis  of  a  broad  range  of 
data,  literature  review,  country  and  sector  case  studies  as  well  as  stakeholder 
consultations.  The  conclusions  draw  on  Section  8.1  above  which  provides  answers  to 
the six evaluation questions. 

The  conclusions  use  four  OECD  DAC  criteria  for  evaluating  development  assistance. 721 
These are relevance (is the Regulation suited to the priorities and policies of the target 

721 For the DAC criteria for evaluating development assistance, see 
http://www.oecd.org/dac/evaluation/daccriteriaforevaluatingdevelopmentassistance.htm.   

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group?),  effectiveness  (does  the  Regulation  attain  its  objectives?),  efficiency  (does  the 
Regulation  use  the  least  costly  resources  to  achieve  the  desired  results?)  and  impact 
(what  are  the  positive  and  negative  changes  produced  by  the  Regulation,  directly  and 
indirectly as well as intended or unintended?).   

The  conclusions  assess  impact  covering  a  broad  spectrum  of  areas  across  economic, 
social,  human  rights  and  environmental  dimensions.  Possible  unintended  consequences 
associated with the scheme’s implementation are identified. The GSP’s effectiveness and 
efficiency,  in  light  of  its  objectives,  are  assessed.  The  relevance  of  the  scheme  with 
respect to the developmental and other needs of developing countries, and in particular, 
of LDCs is also assessed.  

Furthermore,  going  beyond  the  DAC  criteria,  the  conclusions  assess  the  scheme’s 
coherence with EU foreign, trade and development policies. The potential for regulatory 
simplification  and  burden  reduction  for  the  EU  and  beneficiary  countries  is  identified. 
Finally, possible infringements and abuses of the GSP are assessed. 

8.2.1  Economic Impact 
The 2012 GSP Regulation improved the focus of the preferences on the countries most in 
need. The following are the main conclusions about the economic impact.  

EU Imports under GSP 
Between  2011  and  2016,  trade  under  preferential  arrangements  (GSP,  FTAs/PTAs  and 
Other Agreements) ranged between 16.0 to 17.9 per cent of total EU  imports per year. 
FTA/PTA  imports  exhibited  an  upward  trend,  while  imports  under  GSP  arrangements, 
accounting  for  5.9  per  cent  on  average  for  the  three  year  period  2011-14,  declined 
markedly to 4.0 per cent on average during the period 2014-16 (Table 3). 

Although  the  share  of  GSP  imports  in  total  EU  imports  has  declined, the  data  for  those 
countries that remained eligible throughout the period under review show an increase of 
EU  imports  originating  from  countries  under  the  three  arrangements  post  GSP-reform 
(Figure  2).  This  was  particularly  the  case  for  the  49  EBA  countries,  whose  three-year 
average exports increased from EUR 12.9 billion to EUR 20.9 billion, or 62.1 per cent in 
the post-regulation period compared with the pre-regulation period 2011-2013 (average 
annual  EU  imports  for  the  three  year  periods).  For  the  8  GSP+  countries  the  same 
showed an increase of 53.8 per cent, from EUR 4.5 billion to EUR 6.9 billion.  This finding 
is consistent with the objectives of the GSP reform to target export expansion especially 
amongst  the  developing  countries  most  in  need  and  most  vulnerable.  While  there  has 
been  a  small  absolute  increase  in  the  exports  of  the  23  Standard  GSP  countries  since 
2014,  their  three-year  average  annual  post-reform  imports  declined  by  0.3  per  cent 
compared  with  pre-reform  period  2011-2013.  It  is  noted  that  the  increases  of  imports 
under GSP were realized in a context of a flat EU import demand around EUR 1.55 trillion 
per annum.  

Erosion of Preference Margins 
During  the  period  under  review  some  changes  in  preference  margins722 that  existed  in 
the  pre-  and  post-reform  periods  did  occur.  Preference  margins  were  the  highest  for 
agriculture and foodstuffs, textiles and clothing and footwear imports, while the margins 
were negligible for works of art, pulp of wood and other  fibrous  cellulosic material, and 
pearls,  precious,  semi-precious  stones.  In  Section  XVII  (vehicles,  aircraft,  vessels  and 
transport) the erosion of the preference margin723 ranged between 1.0 to 2.6 per cent, in 

722A margin of preference is the difference between the duty payable under a GSP arrangement and the duty 
that would be accessible under MFN conditions.  
723Preference erosion refers to the process by which the preferences granted to a specific good loses its 
nominal or relative value.  

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Section  XVII  (base  metals  and  articles  thereof)  it  ranged  between  1.5  to  1.8  per  cent 
and  in  Section  VI  (products  of  the  chemical  and  allied  industries)  preference  margins 
eroded  by  3.0  to  3.5  per  cent.  During  the  period,  reductions  of  MFN  tariffs  were 
relatively  modest  and  hence  the  overall  the  extent  of  preference  erosion  was  quite 
limited.  For  13  out  of  21  sections,  including  main  items  imported  from  eligible  GSP 
countries  (e.g.  textiles,  footwear  and  leather)  there  was  no  erosion  of  preferences 
between 2011 and 2016.           

Utilisation of Preferences 
EBA  countries  achieve  consistently  high  preference  utilisation  rates. 724 Both  EBA  and 
GSP+ beneficiary countries have significantly increased their preference utilisation rates 
since 2014, indeed by more than 10 percentage points on average. Nevertheless, 10 out 
of 49 EBA countries experienced a reduction of their preference utilisation rate by more 
than  10  percentage  points.    For  Standard  GSP  beneficiary  countries  eligible  throughout 
the  period  2011-2016,  utilisation  rates  decreased  on  average  by  3  percentage  points 
following the GSP reform, with only 10 out of the 23 countries improving their preference 
utilisation rates.  

Export Diversification 
The level of  export diversification725, measured by number  of tariff lines for which non-
zero imports have been recorded, has been the highest for Standard  GSP beneficiaries. 
This  group  of  countries  also  continued  successfully  to  diversify  its  exports,  with  only  a 
few exceptions.  

Diversification  for  GSP+  countries,  measured  by  the  number  of  tariff  lines,  increased 
considerably,  while  the  EBA  beneficiary  countries  taken  together  also  experienced  an 
increase in the diversification of their exports to the EU.   

Despite  this  indication  of  increased  export  diversification,  calculations  of  Herfindahl 
indices726 across the three GSP arrangements also  confirm that EBA countries still have 
the  least  diversified  export  portfolios,  measured  at  either  the  product  or  the  sector 
levels.  Out  of  the  EBA  eligible  countries,  18  countries  experiencing  an  improvement  in 
diversification  during  the  period  of  review  while  29  countries  eligible  throughout  the 
period under  review727 did not  realize any  change or  even  faced a deterioration in their 
export diversification profiles at the product level. 

Bilateral gravity model estimates 
 The  bilateral  gravity  model  estimates  confirm  that  tariffs  negatively  affect  EU  import 
values,  whereas  preference  margins  positively  affect  bilateral  EU  imports.  The  methods 
used  also  assess  whether  those  countries  that  have  been  eligible  for  any  of  the  GSP 
arrangements  throughout  the  period  2011-2016  tended  to  trade  more  intensively  with 
the EU. The gravity modelling reconfirms that the GSP reform has increased their trade 
under GSP. 

There  is  some  tentative  evidence  of  a  negative  impact  on  trade  with  the  EU  for  those 
countries  that  ceased  to  be  eligible  for  GSP  preferences  after  the  reform  that  entered 

724 Preference utilisation rate refers to a country’s preferential exports divided by its eligible preferential 
exports. 
725Export diversification refers to changes in a country’s export structure, which is typically reflected in the 
range of goods that is exported from the same sector or from different sectors.  
726The Herfindahl Index is calculated as the sum of shared squares of each product in total export. A country 
with a perfectly diversified export portfolio will have an index close to zero, whereas a country which exports 
only one export will have a value of 1, in effect least diversified.  
727 Myanmar/Burma and South Sudan have been excluded from this analysis. Myanmar/Burma was reinstated 
into the GSP in 2013 and South Sudan became eligible for GSP preferences in 2013. 

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into force in 2014. Those countries that switched to having a trade agreement during the 
period  (from  previously  trading  under  Standard  GSP  or  MAR  arrangements)  may  have 
experienced a negative impact on their trade with the EU. This may be due to country-
specific  circumstances,  but  could  be  an  'unintended'  effect  of  the  2012  GSP  Regulation 
which warrants further examination. 

Summary economic impact 
In  summary,  it  is  concluded  that  the  economic  impact  of  the  reforms  has  been  overall 
positive  for  the  target  group  of  countries.  As  intended,  these  countries  continued  to 
increase  their  exports  to  the  EU  markets.  The  extent  of  preference  erosion  during  the 
period  under  review  was  limited.  Utilisation  of  preferences  by  EBA  and  GSP+  countries 
improved on average, although it declined for Standard GSP beneficiary countries.  

The  Standard  GSP  and  GSP+  countries  in  the  aggregate  experienced  an  increase  in 
diversification. The EBA countries in the aggregate also experienced an increase, from a 
very  low  initial  base,  but it  was  also  found  that  diversification  of  trade  originating  from 
29 EBA countries did not improve. It is noted that the determinants of diversification are 
macro-  and  micro-economic  policies  in  the  exporting  countries,  relating  to  investment 
regulation, the 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  GSP  reform.  The  Regulation  provides  market  access,  but  cannot 
determine the domestic policies to be put in place to realize market entry. 

8.2.2  Social and Human Rights Impact  
The 2012 GSP Regulation aimed to strengthen the support for sustainable development 
and  good  governance  in  the  beneficiary  countries,  including  through  inclusive  social 
development and respect for human rights. 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. 

Overall, the GSP reform must be considered to have had a positive impact on social and 
human  rights  in  the  beneficiary  countries.  In  general,  the  increase  in  exports  has 
supported the economic growth, employment  and social development in the beneficiary 
countries, for example through providing greater employment opportunities to women in 
industry and services.  

Under the GSP+ arrangement, there exists conditionality to comply with 15 ILO and UN 
conventions on labour and human rights. As such, the EU has some leverage to directly 
contribute to positive social development and adherence to international conventions by 
GSP+  beneficiaries.  In  this  respect,  the  GSP+  arrangement  has  had  an  impact  on 
compliance with the UN human rights conventions in some eligible  countries, e.g. in Sri 
Lanka.  

Additionally,  the  GSP  Regulation  can  provide  incentives  to  current  Standard  GSP 
beneficiaries  to  ratify  and  effectively  implement  the  conventions  on  labour  and  human 
rights  in  exchange  for  enhanced  duty-free  access  to  the  EU  market.  The  prospect  of 
GSP+ status has led to the ratification and implementation of human rights conventions 
in Pakistan and Tajikistan.  

However in several instances, economic growth and enhanced export opportunities have 
not gone hand-in-hand with greater adherence to fundamental labour and human rights. 
One example of this relates to land grabbing for the purpose of industrial development. 

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In  Ethiopia  and  Cambodia  there  have  been  reported  cases  of  land  grabbing  or 
inadequate  compensation  to  grant  land  for  companies  in  respectively  the  floriculture 
sector and commercial agro-industry. Another example concerns the lack of compliance 
with  labour  rights  in  order  to  maintain  and  prolong  a  low-wage  competitive  edge.  This 
may be argued to have been the case for Bangladesh. 

The GSP reform, in particular with respect to the GSP+, has improved the scope for the 
promotion  of  social  and  human  rights,  especially  through  improved  monitoring  of 
adherence  and  effective  implementation  of  ratified  conventions.    The  impact  of  GSP  on 
social  and  human  rights  in  beneficiary  countries  remains  indirect  and  continues  to  be 
largely  determined  by  domestic  public  policies  and  the  effective  functioning  of  national 
institutions  and  monitoring  bodies,  including  the  judiciary,  the  parliament,  the  social 
dialogue partners and civil society organizations, including media. 

8.2.3  Environmental Impact 
The 2012 GSP Regulation aimed to strengthen the support for sustainable development 
in the beneficiary countries, including respect for natural resources and 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  2012  GSP  Regulation  must  be  considered  to  have  had  only  a  limited  and 
tangential  impact  on  sustainable  development  (in  its  environmental  dimension)  in  the 
beneficiary countries. In general, the increase in exports has supported economic growth 
and  production  in  the  beneficiary  countries,  but  with  a  negative  impact  on  the 
environment.  

The  Standard  GSP  and  EBA  arrangements  do  not  provide  conditionalities  to  propel 
beneficiary  countries  to  adhere  to  environmental  standards,  and  to  comply  with 
international conventions on climate change and environmental protection. As such, the 
EU  has  very  limited  leverage  to  directly  contribute  to  sustainable  development  in  the 
beneficiary countries under these arrangements.  

Under  the  GSP+  arrangement,  there  exists  conditionality  for  beneficiary  countries  to 
comply  with  8  UN  conventions  on  climate  change  and  environmental  protection.  Under 
this  arrangement,  the  EU  has  some  leverage  to  directly  contribute  to  sustainable 
development  and  adherence  to  international  environmental  principles  by  GSP+ 
beneficiaries.  

The four country case studies confirm that there is a difference in the level of adherence 
and implementation, depending on the country’s reliance on the EU market. Additionally, 
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 the 
context of potentially becoming a GSP+ beneficiary.  

The case studies also reveal that all four beneficiary countries have experienced negative 
impacts of increased trade and economic growth, which becomes visible in a number of 
environmental  indicators.  In  some  cases,  particular  export  products  can  have  a 
detrimental  effect  on  the  environment  in  the  absence  of  adequate  environmental  and 
waste  management  mechanisms.  This  is  particularly  true  for  the  main  import  products 
under the GSP: textile and clothing. For example, Pakistan and Bangladesh, which both 

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produce and  export large volumes  of textile and clothing, face negative impacts  on air, 
water and soil quality.  

Despite the increased economic growth as a result of the expansion of exports, there is 
no  strong  evidence  that  the  additional  resources  have  directly  been  used  to  improve 
environmental  protection,  natural 
resource  management  and  environmental 
management.  For  most  LDCs  and  developing  countries,  the  priority  first  and  foremost 
lays with supporting economic growth and poverty reduction.728  

There  is  some  evidence  to  suggest  that  the  GSP  has  led  exporters  to  improve  the 
environmental  performance  of  their  production  processes.729 For  example,  stakeholders 
noted  that,  as  a  result  of  the  EBA,  textile  factories  in  Bangladesh  introduce  more 
environmentally  friendly  technologies  (e.g.  for  water  re-use).  Multinationals  are  key 
drivers of environmental improvements in beneficiary countries through investment and 
supply  chain  sustainability  initiatives.  There  are  also  indications  that  export-oriented 
producers have better environmental performance as they seek to meet the expectations 
of  environmentally  conscious  consumers  in  developed  countries.  This  dynamic  may 
however be more prominent in segments of the market focusing on consumer products 
(e.g. textile products) than others focusing on the production of intermediate products.  

The case studies and national stakeholder workshops further  confirm  that the theme  of 
sustainable  development  has  become  increasingly  important  in  the  policy  dialogue. 
There is increased awareness about the need to find the right balance between economic 
development and environmental protection, especially because most countries recognize 
their  dependence  on  their  natural  resource  base  to  sustain  economic  growth.  An 
important  indicator  of  greater  political  willingness  to  tackle  environmental  degradation 
and  climate  change  is  the  strong  focus  on  sustainable  development  in  the  countries’ 
development  strategies  and  the  recent  establishment  of  new  ministries,  agencies  and 
programmes to implement these strategies.  

GSP’s effectiveness and efficiency 

Effectiveness:  The  aggregate  share  of  EU’s  import  under  the  GSP  has  decreased, 
comparing the averages of 2011-13 with those of 2014-16. This is a direct consequence 
of the GSP reform. The number of eligible countries was reduced and the application of 
thresholds for specific products and sectors were amended (see Chapter 1 section 1.3.1 
above). While the coverage in terms of EU’s import under the scheme has been reduced, 
this may not be equated with reduced effectiveness of the scheme. On the contrary, the 
Mid-term Evaluation finds that the effectiveness of the scheme for those countries which 
were  eligible  throughout  the  period  of  investigation  has  increased,  albeit  to  a  limited 
extent. This is confirmed by Figure 2, Table 4, and the positive coefficients found in the 
gravity modeling (Section 2.3).  

The Mid-term evaluation also finds that the EU monitoring of  GSP+ countries under the 
Regulation has positively contributed to social and human rights impact in the countries 
under this arrangement. 

728 In Chapter 4, a composite index was used (the Notre Dame Global Adaptation Initiative, referred to as the 
ND-GAIN Index) which comprises 45 indicators to assess a country’s vulnerability to climate change and other 
environmental pressures, as well as its readiness to absorb adaptation investments and initiatives. The analysis 
showed that EBA countries generally had worse scores than GSP+ countries. 
729 This is an example of the technology effect: trade liberalisation and foreign investment allow the transfer of 
environmentally friendly technologies, thus producing positive environmental effects. See Grossman G. M. and 
Krueger A. B., Environmental impacts of a North American free trade agreement, 1991, 
http://www.nber.org/papers/w3914.pdf 

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Overall,  there  is  evidence  to  support  the  view  that  the  effectiveness  of  the  GSP  has 
increased. Firstly, this occurred because of increased trade with the EU for all countries 
eligible under the GSP, and secondly because of the improved EU monitoring mechanism 
for GSP+ countries. 

Efficiency:  Improvements  in  the  utilisation  rate  of  preferences  offered  through  the 
scheme are one pertinent indicator of enhanced efficiency: a greater impact is achieved 
without  additional  inputs,  thus  improving  the  underlying  cost/benefit  ratios.  The 
economic  impact  analysis  has  shown  that  preference  utilisation  rates  have  remained 
broadly unchanged over time. The regression analyses of the preference  utilisation rate 
model  confirm  that  preference  margins  are  a  significant  positive  determinant  of  the 
preference  utilisation  rate.  Our  analysis  shows  that  preference  utilisation  rates  and 
preference  margins  have  remained  largely  unchanged.  It  is  therefore  argued  that  the 
efficiency of the GSP has also remained largely unchanged.  

Another  pertinent  indicator  of  the  efficiency  of  the  GSP  is  how  decisions  on  changes  in 
the  implementation  of  the  regulation  are  made.  The  GSP  relies  very  extensively  on 
assessments  carried  out  by  relevant  third  party  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  ILO.  Similarly,  whether  a  country 
qualifies  to  graduate  from  the  LDC  category  and  therewith  loses  its  EBA  eligibility  is 
assessed  by  the  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 eligibly for GSP preferences, is determined by the World 
Bank  Group  on  an  annual  basis.  As  these  GSP  implementation  modalities  have  not 
changed,  it  is  argued  that  the  efficiency  of  the  GSP  has  therefore  has  also  remained 
unchanged.    

It is recommended below that the EU monitoring may be enhanced beyond the present 
GSP+  arrangement,  in  view  of  the  positive  impact  of  the  EU  monitoring  on  social  and 
human  rights  in  beneficiary  countries.  This  would  inevitably  require  more  human 
resources  and  thus  have  cost  implications.  It  is  suggested  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).  

Possible unintended consequences associated with the Scheme’s 
implementation 

The  GSP  Regulation  has  created  additional  pathways  for  the  EU  to  engage  in  dialogue 
with national authorities on social and human rights, as well as environmental protection 
and good governance principles.     

The GSP has significantly impacted 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  contributes  to  poverty  eradication and  sustainable  development.  This is  an 
unintended  positive  consequence  of  the  GSP,  to  be  welcomed;  the  case  studies  in 
Chapters 6 and 7 provide further evidence.730 

Along  with  increases  in  production  and  exports  in  beneficiary  countries,  environmental 
degradation in beneficiary countries has accelerated. This is an unintended consequence 
of greater exports to major markets, such as those of the EU.       

730 See in particular Chapter 6 sections 6.1.5 and 6.2.5.  

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The relevance of the GSP 

The  scheme  remains  highly  relevant  for  vulnerable  developing  countries  and,  in 
particular for the least developing countries (LDCs).  

The  Istanbul  Programme  of  Action  called  for  the  building up  of  productive  capacity  and 
for graduation of countries from the LDC category. 

To  take  the  example  of  Bangladesh,  at  its  2018  annual  meeting  the  Committee  for 
Development Policy assessed that Bangladesh had reached the thresholds for graduation 
from the LDC category, subject to the customary transition period. Statements made by 
senior  officials,  business  associations  and  civil  society  organizations  at  the  national 
workshop convened for this evaluation confirm that the EU’s GSP has been of enormous 
importance in the economic growth and social development of Bangladesh to this stage. 

The scheme’s coherence with EU foreign, trade and development policy 

The econometric analyses of the determinants of bilateral trade flows and the impact of 
changes  in  trade  regime  status  finds  that  countries  leaving  the  GSP  and  MAR 
arrangements  do  not  necessarily  experience  an  increased  value  of  their  exports  to  the 
EU. These findings are preliminary and warrant further examination, taking into account 
a  longer  time-frame  and  examining  country-specific  circumstances.  In  general,  there 
need  to  be  sufficient  incentives  for  countries  to  graduate  from  the  EBA  to  the  GSP+ 
status as well as from GSP+ to other reciprocal FTA/PTA arrangements.  

The potential for regulatory simplification and burden reduction 

The  burden  of  the  Regulation  on  GSP  beneficiary  countries  and  the  EU  is  considered  to 
be  low  overall.  The  only  exception  is  the  EU  monitoring  for  the  GSP+.  This  monitoring 
can be quite involving both for the administration of the EU and the beneficiary country. 
However,  the  EU  monitoring  of  GSP+  countries  adds  to  the  effectiveness  of  the 
Regulation. Therefore the scope for burden reduction is limited. However, there may be 
some  scope  for  reducing  the  burden  by  introducing  a  monitoring  cycle  every  3  or  4 
years, instead of every 2 years.    

Infringements and abuses of the GSP 

Stakeholder  consultations  undertaken  for  the  evaluation  suggest  that  there  is  a 
perception  that  the  GSP  is  in  some  instances  abused  for  imports  originating  from 
countries  which  engage  in  unfair  trade  practices  involving  artificially  lowering  of  wages 
and/or other costs in their production for export to the EU. This evaluation cannot assess 
the  validity  of  such  claims  and  perceptions.  However,  it  is  noted  that  the  Regulation 
provides  adequate  and  relevant  safeguards,  including  the  possibility  of  launching  of  an 
investigation into the validity of such claims.  

Summary Conclusion 
In summary, the conclusion of this Mid-Term Evaluation is that the relevance of the GSP 
remains strong. Its aggregate trade impact has reduced but it remains positive and vital 
for  those  countries  most  in  need  of  support  for  their  market  access,  notably  LDCs  and 
other vulnerable countries. The effectiveness of the GSP has been enhanced by focusing 
better  on  countries  most  in  need.  Effectiveness  has  also  been  enhanced  through 
improved monitoring by the EU of adherence to and effective implementation of relevant 
international conventions in GSP+ countries.  

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The  efficiency of the  GSP has  remained largely unchanged, as  utilisation of preferences 
remained  largely  unchanged  during  the  period  under  review.  Efficiency  in  the 
implementation  of  the  GSP  by  the  EU  has  also  been  achieved  through  the  reliance  and 
strategic  partnership  with  the  relevant  monitoring  bodies  in  the  implementation  of  the 
Regulation.  

Unintended  consequences  are  both  positive  and  negative.  On  the  positive  side,  the 
evaluation  notes  the  creation  of  female  employment  opportunities  and  improved 
participation  of  women  in  the  labour  force  in  export  industries  trading  with  the  EU.  On 
the negative side, the accelerated environmental degradation linked to export industries 
in beneficiary countries is emphasized. 

The regulatory burden on the EU and the beneficiary countries is not excessive for GSP+ 
countries and negligible for Standard GSP and EBA beneficiaries. The scope for reducing 
the  regulatory  burden  is  limited.  There  remains  a  risk  of  increasing  the  regulatory 
burden  on  the  EU  and  beneficiary  countries  through  extending  and  intensifying  the  EU 
monitoring  to  a  broader  group  of  beneficiary  countries.  While  this  is  likely  to  further 
enhance the effectiveness of the GSP, especially with regard to social and human rights, 
it is also likely to raise costs and reduce the efficiency of its implementation.  

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8.3  Recommendations 

This  final  section  of  the  Report  presents  the  recommendations  of  the  Mid-Term 
Evaluation  of  the  EU’s  Generalised  Scheme  of  Preferences.  The  recommendations  take 
into  consideration  four  of  the  DAC  criteria  for  evaluation  of  development  assistance 
interventions,  namely  relevance,  effectiveness,  efficiency  and  impact.  Coherence  with 
other  relevant  EU  policies  is  also  considered.  The  feasibility  of  the  recommendations  is 
considered from the points of view of efficiency and minimizing the burden placed on the 
EU and beneficiary countries.   

The  recommendations  have  been  formulated  incorporating  insights  gained  from  (i)  the 
quantitative  and  qualitative  analyses  undertaken,  covering  economic,  social, 
environmental,  human  rights  and  governance  issues;  (ii)  the  four  country  case  studies 
Bangladesh,  Bolivia,  Ethiopia  and  Pakistan;  (iii)  the  two  sector  case  studies  covering 
textiles and machinery; (iv) suggestions received at national workshops convened in EBA 
and  GSP+  countries;  as  well  as  (v)  extensive  online  stakeholder  consultation, 
complemented by targeted interviews. The recommendations build on the answers to the 
evaluation  questions  as  well  as  the  conclusions  of  the  evaluation  presented  in 
respectively Chapters 7 and 8 above. The recommendations have also been informed by 
the broad policy direction as outlined in Trade for All which seeks to use, inter alia, trade 
preference  programmes  as  levers  to  promote  values  like  sustainable  development, 
human rights, fair and ethical trading and the fight again corruption.731 

The recommendations are presented in two sets.  A first set of recommendations focuses 
on  the  implementation of  the  current  GSP  regulation  978/2012  and may  be  considered 
for  adoption  and  follow-up  during  the  period  of  validity  of  the  current  Regulation.  The 
second  set  of  recommendation  addresses  a  possible  reformulation  and  enhancement  of 
the Regulation.  For reasons of predictability and legal certainty, it is recommended that 
the second set of recommendations are only considered for adoption and follow-up after 
expiry  of  the  Regulation  (with  respect  to  Standard  GSP  and  GSP+)  on  31  Dec  2023. 
Neither  of the two  sets of  recommendations will require amendments of the Regulation 
at the present stage of its implementation. 

9.1. 

Recommendations for implementation during the current GSP 

The Mid-Term Evaluation Project Team presents the following recommendations for 
follow-up during the current implementation phase of the GSP Regulation:  

o  Improve  transparency  of  EU’s  GSP+  monitoring:  The  higher  frequency  and 
improved scope  of the  monitoring of the  GSP+  arrangement has increased the EU’s 
leverage in the beneficiary countries. It has allowed for constructive dialogue and has 
been  found  to  contribute  to  sustainable  development  and  good  governance.    While 
this  positive  impact  has  been  well  appreciated,  civil  society  organizations  in  GSP+ 
beneficiary  countries  have  also  noted  that  information  about  the  EU  monitoring  and 
GSP+  compliance reviews has   been very limited.  The  GSP+ monitoring undertaken 
by the EU could be made more transparent.  Information about the issues discussed 
in  GSP+  dialogues  (‘the  scorecard’)  is  not  publicly  available.  It  is  recommended 
that  there  be  greater  transparency  about  the  list  of  issues  (‘scorecard’)  for  the 
dialogues which the EU conducts with the authorities of GSP+ beneficiary countries. 
In practical terms, the  agenda for the dialogues could be published and a summary 
report  of  the  dialogues  could  be  placed  on  EU  websites.  This  would  contribute  to 
improved  effectiveness  of  the  EU’s  monitoring.  The  practice  would  fully  align  the 

731 See ‘Trade for All, Towards a more responsible trade and investment policy’, foreword by Cecilia 
Malmstrom, EU Trade Commissioner, Oct 2015.  

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implementation of the GSP Regulation with the Trade for All policy, which recognizes 
that a more open policy making process is fundamental to better regulation.732  

o  Promote  greater  awareness  of  GSP  in  beneficiary  countries:  National 
workshops  convened  in  EBA  and  GSP+  countries  showed  that  a  lack  of  information 
and,  in  some  instances,  misconceptions  about  the  GSP  continue  to  persist.  These 
related, inter alia, to perceptions that EBA does not cover all sectors (except arms) 
or  that  GSP+  requires  only  ratification  of  conventions,  without  effective 
implementation.  It  is  recommended  that  information  exchange  and  stakeholder 
sensitization programmes are promoted in order to raise awareness about the GSP. 
Such  initiatives  would  enhance  the  effectiveness  and  impact  of  the  GSP  and  could 
contribute to an improvement of preference utilisation. 

o  Safeguard  provisions  to  be  more  effectively  used:  The  amendments  to  the 
safeguard  provisions  in  the  Regulation  have  not  been  used:    re-introduction  of 
normal Common Customs Tariff duties has not been initiated under the current GSP 
Regulation. EU stakeholders, responding to the public consultation, have argued that 
the design of the safeguard and surveillance chapter in the GSP Regulation does not 
allow for an adequate response to threats of serious difficulty to Union producers in 
specific  sensitive  sectors  e.g.  in  particular  the  EU’s  domestic  rice  sector.  The 
evaluation  holds  the  view  that  the  GSP  Regulation’s  Chapter  VI  on  safeguard  and 
surveillance provisions mandates the Commission with adequate delegated authority 
to  initiate  an  investigation  to  determine  whether  or  not  Common  Customs  Tariff 
duties should be re-introduced. It  is recommended that the European Commission 
launches an investigation into the EU rice imports in accordance with its mandate733 
and provide notice of its procedures, deadlines, and findings.  

o  Temporary withdrawal of tariff preferences to be more effectively used: The 
EU  can  decide  to  withdraw  trade  preferences  in  case  of  severe  and  systematic 
violations of fundamental rights. This creates an incentive for governments to better 
guarantee these rights for their people. EU civil society stakeholders expressed their 
support for a temporary withdrawal mechanism that can be triggered when evidence 
is  brought  forward  by  third  actors/stakeholders  on  human  rights  and  labour  rights 
violations  in  a  beneficiary  country.  The  GSP  Regulation  978/2012  and  the 
Commission Delegated Regulation (EU) No 1083/2013734 establish the rules related 
to the procedure for temporary withdrawal of tariff preferences. However, since the 
implementation  of  the  GSP  Regulation  in  2014,  the  EU  did  not  withdraw  tariff 
preferences.  EU  did  not  use  its  mandate,  even  in  those  cases  where  serious  and 
systematic labour and human rights violations were reported by relevant monitoring 
bodies.  It  is  recommended  that  whenever  severe  and  systematic  violation  is 
reported  by  relevant  monitoring  bodies,  the  Commission  takes  immediate  steps  to 
initiate  the  relevant  procedures  and  establish  the  relevant  files.  The  EU  could 
potentially have a greater leverage and bigger impact on adherence to fundamental 
rights and therewith improve the effectiveness and impact of the Regulation. 

9.2.  Recommendations after expiry of the GSP Regulation 

The  Mid-term  Evaluation  Project  Team  presents  the  following  recommendations  to 
be considered after  expiry  of  Regulation  978/2012,  to ensure predictability and 
legal certainty during the implementation of the current scheme. 

732 See Trade for All, Sections 3.1 and 3.2. pp. 18-19. 

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o  Update  the  list  of  conventions  on  core  human  and  labour  rights  as  well  as 
on  environment  and  governance  principles:  The list of  conventions that GSP+ 
countries  are  required  to  ratify  and  effectively  implement  has  been  found  to  be 
incomplete and outdated. It is recommended that a detailed review be undertaken 
towards  a  possible  update.  For  example,  the  feasibility  of  including  ratification  and 
effective implementation of the Paris Agreement on Climate Change735, adopted by 
UN Member States in recent years, needs to be examined. To ensure legal certainty, 
the list should be updated only after expiry of the present Regulation. 

o  Harmonize  the  Standard  GSP  and  the  GSP+  approaches:  Eligibility  for  the 
Standard GSP736 has been markedly reduced under the GSP Regulation. The Project 
Team  questions  the  continued  relevance  of  the  Standard  GSP  arrangement  beyond 
2023, as distinct and separate from the GSP+ arrangement.  The latter includes EU 
monitoring  of  ratification  and  effective  implementation  of  relevant  conventions  and 
provides  special  incentives  for  sustainable  development  and  good  governance.  This 
approach  is  recognized  to  enhance  the  effectiveness  of  the  GSP  Regulation.  It  is 
recommended that the Standard GSP and the GSP+ are harmonized after expiry of 
the GSP Regulation. In order to facilitate a smooth transition, a transition period of 
e.g. three years should be considered for present Standard  GSP countries, in order 
to enable them to meet the sustainable development criteria and for the Commission 
to  undertake  an  assessment  whether  or  not  they  fulfil  the  vulnerability  criteria.  If 
this  is  not  case  exemptions  may  be  granted.  Similar  transition  period  should  be 
applicable  for  EBA  countries  graduating  from  the  LDC  category  in  accordance  with 
UN  procedures  and  assessments.  It  is  not  recommended  that  the  GSP  would 
integrate into one  single arrangement. The EBA arrangement,  which does not have 
an  expiry  date,  should  remain  separate  as  is  presently  the  case.  To  initiate  EU 
monitoring for all EBA countries would have vast human resource implication for EU 
as  well  as  for  EBA  beneficiary  countries  and  is  considered  inefficient  and  unduly 
burdensome. 

o  Consider  inclusion  of  selected  trade  in  services:  In  view  of  the  rapid  rise  in 
trade in services within the EU and with the rest of the world,737 it is recommended 
that  the  European  Commission  reviews  the  scope  for  inclusion  of  selected  trade  in 
services categories within the framework of the successor to the current GSP. Such a 
review would seek to ensure that the GSP remains relevant in the rapidly changing 
landscape  of  global  trade  and  the  rapid  growth  of  trade  in  services.  It  is 
recommended that a stock taking of the WTO’s services waiver for LDCs should be 
undertaken. The feasibility of improving market access for selected trade in services 
categories for GSP eligible countries will need to be identified. 

o  Ensure  Coherence  between  GSP  and  the  FTA/PTA  regimes:  This  evaluation 
study,  in  particular  the  detailed  econometric  analyses  of  the  determinants  of 
bilateral  trade  flows  and  the  impact  of  changes  in  trade  regime  status,  finds  that 
countries leaving the GSP and MAR arrangements do not necessarily experience an 
increased  value  of  EU  imports,  even  if  they  enter  into  reciprocal  preferential  trade 
arrangements.  These  findings  must  be  regarded  as  preliminary  and  will  need  to  be 
re-examined, taking into account a longer time-frame. In general, there need to be 
sufficient  incentives  for  countries  to  graduate  from  the  EBA  to  the  GSP+  status  as 
well as from GSP+ to other FTA arrangements. It  is  recommended that the issue 

735 Paris Agreement under the United Nations Framework Convention on Climate Change (here referred to as 
“the Paris Agreement on Climate Change”) 
736The GSP Regulation (EU) No 978/2012, refers to this as the ‘general arrangement’ see Ch.1 Art 1. 2 (a).  
737See  Trade for All, sections 2.1.1 on promoting trade in services.  

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of  coherence  between  GSP  and  FTA/PTA  regimes  is  included  in  the  impact 
assessment  at  the  time  of  the  formulation  and  adoption  of  a  possible  successor 
Regulation upon expiry of the current GSP. 

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9  Annexes 

9.1  Annex I - Imports and utilisation rates by GSP beneficiary (in millions of euros) 

2011 

2012 

2013 

2014 

2015 

2016 

Afghanistan 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Angola 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Armenia 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Bangladesh 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Benin 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Bhutan 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

26.12 
4.25 
1.69 
39.68% 

6582.65 
133.56 
91.73 
68.68% 

302.27 
111.91 
108.06 
96.56% 

9005.31 
8891.68 
8410.78 
94.59% 

45.47 
9.67 
8.29 
85.72% 

3.84 
3.07 
2.96 
96.26% 

32.54 
9.46 
3.63 
38.37% 

7070.99 
123.14 
82.30 
66.84% 

255.25 
82.00 
78.34 
95.53% 

9809.80 
9744.74 
9319.44 
95.64% 

27.55 
13.96 
13.54 
96.96% 

5.09 
4.92 
4.77 
96.94% 

40.02 
7.46 
3.08 
41.34% 

9165.74 
71.23 
26.45 
37.14% 

190.65 
53.07 
45.70 
86.11% 

35.03 
16.94 
6.97 
41.11% 

9361.18 
50.12 
20.94 
41.78% 

192.87 
47.31 
42.40 
89.63% 

25.18 
6.16 
3.69 
59.88% 

7008.98 
39.95 
18.09 
45.28% 

269.77 
115.14 
103.51 
89.90% 

18.94 
5.35 
2.57 
48.12% 

4155.60 
67.52 
29.47 
43.65% 

293.98 
116.33 
107.67 
92.56% 

10822.70 
10764.54 
10301.77 
95.70% 

12309.54 
12247.76 
11765.55 
96.06% 

15072.56 
15004.41 
14629.56 
97.50% 

16245.37 
16182.22 
15592.19 
96.35% 

16.21 
3.25 
2.59 
79.75% 

10.26 
9.37 
9.28 
99.04% 

30.00 
12.25 
11.25 
91.82% 

14.93 
14.79 
14.42 
97.47% 

29.19 
5.54 
3.97 
71.68% 

48.50 
16.73 
16.10 
96.27% 

26.94 
5.12 
4.82 
94.03% 

2.60 
2.14 
1.88 
88.03% 

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Bolivia 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Burkina Faso 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Burundi 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Cambodia 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Cameroon 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Cape Verde 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Central African Republic 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Chad 

EUROPEAN COMMISSION 

2011 

2012 

2013 

2014 

2015 

2016 

353.68 
49.54 
45.67 
92.17% 

52.79 
6.50 
5.63 
86.67% 

45.31 
0.77 
0.17 
21.90% 

1490.54 
1488.42 
1344.57 
90.34% 

2156.68 
120.13 
0.26 
0.22% 

45.43 
44.07 
42.86 
97.27% 

53.61 
0.07 
0.01 
10.13% 

359.12 
57.64 
55.06 
95.52% 

60.89 
6.48 
5.79 
89.33% 

41.91 
0.43 
0.00 
0.94% 

2031.97 
2027.26 
1842.62 
90.89% 

2109.68 
98.14 
0.33 
0.34% 

54.48 
44.96 
43.29 
96.29% 

54.04 
0.16 
0.07 
45.09% 

469.93 
69.90 
68.08 
97.40% 

44.11 
8.04 
6.85 
85.30% 

31.55 
0.69 
0.00 
0.00% 

2498.15 
2489.66 
2300.32 
92.40% 

2359.99 
137.72 
0.77 
0.56% 

47.44 
45.38 
43.76 
96.42% 

25.89 
0.36 
0.29 
81.19% 

516.31 
107.09 
102.58 
95.78% 

111.55 
11.64 
9.85 
84.59% 

21.36 
0.41 
0.09 
20.70% 

3014.92 
3004.24 
2774.90 
92.37% 

2147.91 
32.56 
0.04 
0.12% 

96.85 
55.90 
54.72 
97.89% 

6.25 
0.18 
0.16 
86.95% 

588.81 
84.34 
80.75 
95.75% 

53.93 
11.20 
9.50 
84.76% 

38.06 
0.36 
0.32 
89.02% 

4055.23 
4000.36 
3767.44 
94.18% 

1780.64 
150.20 
26.07 
17.36% 

63.14 
53.15 
51.39 
96.69% 

12.04 
0.06 
0.00 
4.61% 

522.56 
58.29 
54.81 
94.03% 

105.82 
10.92 
9.90 
90.66% 

31.85 
0.29 
0.26 
89.02% 

4538.25 
4471.58 
4175.09 
93.37% 

1765.83 
120.51 
6.32 
5.25% 

70.80 
68.31 
65.76 
96.27% 

16.32 
0.44 
0.01 
1.48% 

268 

 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Comoros 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Congo 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Congo (Democratic Rep) 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Cook Islands 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Djibouti 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Equatorial Guinea 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Eritrea 
Total EU Imports 

EUROPEAN COMMISSION 

2012 
18.54 
0.37 
0.00 
0.00% 

58.82 
6.70 
0.07 
1.09% 

2431.29 
85.72 
68.37 
79.76% 

628.23 
24.09 
8.02 
33.29% 

12.02 
0.08 
0.02 
23.00% 

5.27 
1.43 
0.00 
0.27% 

5270.64 
311.55 
274.27 
88.03% 

2013 
49.05 
0.23 
0.05 
23.45% 

13.20 
8.69 
0.23 
2.60% 

1363.05 
67.57 
48.18 
71.31% 

1094.55 
14.52 
13.18 
90.75% 

1.54 
0.15 
0.00 
0.00% 

5.62 
2.32 
0.01 
0.39% 

4025.96 
374.95 
337.38 
89.98% 

2011 
213.25 
0.40 
0.00 
0.00% 

9.26 
6.14 
0.00 
0.00% 

1997.28 
96.28 
76.66 
79.62% 

601.04 
7.03 
6.26 
89.00% 

0.28 
0.16 
0.03 
18.57% 

5.17 
1.06 
0.52 
48.94% 

4052.70 
233.63 
113.32 
48.50% 

2014 
13.79 
0.32 
0.00 
0.00% 

10.64 
6.78 
1.54 
22.65% 

1523.99 
82.83 
67.27 
81.21% 

1002.41 
8.20 
6.24 
76.08% 

1.49 
0.10 
0.06 
62.76% 

8.11 
3.77 
0.06 
1.64% 

3643.05 
227.49 
210.57 
92.56% 

2015 
108.77 
0.62 
0.00 
0.00% 

10.95 
5.61 
5.49 
97.88% 

1764.66 
40.96 
31.13 
75.99% 

457.15 
10.08 
5.18 
51.42% 

1.91 
0.06 
0.00 
5.24% 

13.10 
2.63 
0.00 
0.00% 

1931.89 
45.31 
33.13 
73.12% 

2016 
114.70 
1.00 
0.00 
0.00% 

15.66 
7.51 
7.09 
94.42% 

1047.57 
34.08 
14.33 
42.05% 

716.25 
5.98 
3.56 
59.64% 

8.67 
0.25 
0.03 
12.69% 

23.71 
5.67 
0.21 
3.71% 

1240.15 
22.72 
18.94 
83.38% 

3.67 

3.68 

3.04 

8.22 

41.74 

13.11 

269 

 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Ethiopia 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Fiji 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Gambia 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Ghana 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Guinea 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Guinea Bissau 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Haiti 
Total EU Imports 
GSP Eligible Imports  

EUROPEAN COMMISSION 

2011 
2.11 
1.95 
92.59% 

664.28 
202.85 
197.04 
97.14% 

67.61 
2.23 
0.23 
10.49% 

19.97 
11.69 
11.61 
99.30% 

3417.91 
632.77 
10.65 
1.68% 

463.73 
5.56 
3.76 
67.69% 

4.17 
0.07 
0.04 
60.80% 

2012 
2.68 
1.97 
73.71% 

594.12 
217.19 
211.22 
97.25% 

44.94 
2.32 
0.06 
2.51% 

15.08 
8.95 
8.74 
97.63% 

3258.32 
494.65 
2.35 
0.47% 

521.41 
4.26 
0.71 
16.68% 

5.84 
0.13 
0.01 
11.08% 

18.59 
5.65 

22.75 
12.75 

2013 
2.38 
2.32 
97.41% 

501.76 
228.42 
223.90 
98.02% 

82.43 
3.49 
0.21 
6.10% 

8.41 
5.06 
5.00 
98.71% 

3296.91 
488.43 
3.59 
0.74% 

435.96 
2.27 
0.27 
11.73% 

1.44 
0.12 
0.01 
6.81% 

27.83 
15.95 

2014 
2.51 
2.38 
94.92% 

549.82 
252.20 
248.73 
98.62% 

97.69 
1.30 
0.00 
0.22% 

17.63 
9.28 
8.56 
92.29% 

2832.89 
150.58 
0.13 
0.08% 

454.34 
1.65 
0.66 
39.91% 

3.33 
0.01 
0.00 
0.00% 

31.32 
17.79 

2015 
2.50 
2.29 
91.86% 

675.37 
333.65 
256.38 
76.84% 

85.50 
5.53 
0.42 
7.62% 

16.90 
11.47 
11.26 
98.17% 

2592.88 
737.37 
0.80 
0.11% 

583.06 
1.57 
0.74 
47.26% 

1.99 
1.05 
0.00 
0.00% 

33.00 
14.01 

2016 
2.17 
2.03 
93.53% 

710.26 
399.08 
244.50 
61.26% 

60.07 
6.53 
0.14 
2.18% 

14.08 
10.54 
9.93 
94.25% 

2236.26 
671.70 
0.87 
0.13% 

575.46 
2.64 
0.81 
30.69% 

1.64 
0.40 
0.00 
0.00% 

38.88 
15.52 

270 

 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
GSP Preferential Imports  
Utilisation Rate  

India 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Indonesia 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Iraq 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Ivory Coast 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Kenya 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Kiribati 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Kyrgyz Republic 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  

EUROPEAN COMMISSION 

2011 
1.05 
18.57% 

37842.75 
21930.39 
18492.17 
84.32% 

15595.46 
7468.34 
5553.20 
74.36% 

8924.62 
10.73 
0.08 
0.70% 

3181.86 
882.65 
0.58 
0.07% 

1208.77 
753.88 
4.68 
0.62% 

1.83 
1.35 
0.04 
2.96% 

22.50 
3.82 
1.98 

2012 
1.02 
8.03% 

35381.42 
21072.87 
17411.66 
82.63% 

14876.10 
7627.57 
5732.68 
75.16% 

12435.27 
2.82 
0.08 
2.74% 

3259.29 
853.84 
0.88 
0.10% 

1175.51 
736.22 
7.95 
1.08% 

0.81 
0.47 
0.03 
5.90% 

30.82 
3.30 
0.70 

2013 
0.43 
2.71% 

35023.17 
21901.56 
18413.92 
84.08% 

13525.55 
6486.04 
4816.02 
74.25% 

10530.49 
3.61 
0.05 
1.33% 

3282.83 
994.18 
3.34 
0.34% 

1072.08 
726.07 
7.08 
0.98% 

0.05 
0.04 
0.01 
13.96% 

44.25 
4.10 
1.13 

2014 
3.32 
18.69% 

35481.06 
16966.27 
15015.55 
88.50% 

13824.55 
6273.16 
4508.23 
71.87% 

11487.71 
5.23 
0.15 
2.79% 

3234.62 
319.70 
0.37 
0.11% 

1140.65 
190.91 
138.11 
72.34% 

0.05 
0.03 
0.02 
76.82% 

68.76 
11.99 
8.24 

2015 
12.48 
89.12% 

37678.31 
18885.07 
16678.26 
88.31% 

14628.79 
7166.17 
5013.82 
69.97% 

11938.50 
7.91 
2.08 
26.29% 

4228.77 
1287.25 
3.26 
0.25% 

1302.24 
864.00 
19.93 
2.31% 

0.14 
0.06 
0.00 
0.00% 

48.75 
10.08 
6.57 

2016 
13.34 
85.97% 

37473.91 
18813.25 
16584.92 
88.16% 

13877.92 
7233.36 
5149.05 
71.18% 

10172.90 
3.84 
1.04 
27.12% 

4470.50 
1274.37 
2.07 
0.16% 

1264.47 
866.04 
16.28 
1.88% 

0.15 
0.09 
0.00 
0.00% 

72.18 
6.08 
3.24 

271 

 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
Utilisation Rate  

Laos 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Lesotho 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Liberia 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Madagascar 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Malawi 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Mali 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Marshall Islands 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

EUROPEAN COMMISSION 

2011 
51.93% 

2012 
21.33% 

2013 
27.47% 

2014 
68.72% 

2015 
65.20% 

2016 
53.22% 

208.53 
166.81 
160.07 
95.96% 

243.07 
3.19 
0.17 
5.30% 

225.48 
1.75 
0.06 
3.62% 

539.31 
438.44 
6.15 
1.40% 

221.48 
187.47 
183.77 
98.03% 

21.46 
1.69 
1.07 
63.03% 

59.08 
0.37 
0.02 
5.75% 

239.41 
199.88 
196.84 
98.48% 

220.84 
2.42 
0.41 
16.83% 

193.62 
1.73 
0.48 
27.93% 

564.34 
474.56 
18.63 
3.93% 

244.70 
221.56 
219.75 
99.19% 

31.04 
1.98 
1.01 
51.02% 

33.87 
0.46 
0.02 
5.25% 

251.84 
193.31 
190.02 
98.30% 

186.36 
1.40 
0.32 
22.97% 

278.61 
2.37 
0.66 
28.10% 

701.22 
522.70 
19.41 
3.71% 

210.84 
188.86 
184.99 
97.96% 

41.16 
3.87 
2.34 
60.58% 

13.05 
0.84 
0.00 
0.00% 

222.57 
195.08 
191.07 
97.95% 

247.36 
1.57 
0.48 
30.93% 

284.02 
3.40 
0.42 
12.44% 

826.02 
534.46 
21.33 
3.99% 

289.99 
266.63 
251.60 
94.36% 

34.49 
4.40 
3.63 
82.46% 

146.01 
0.42 
0.00 
0.00% 

235.06 
195.81 
189.92 
96.99% 

254.45 
1.99 
1.41 
70.81% 

186.04 
0.58 
0.00 
0.00% 

922.07 
573.70 
4.77 
0.83% 

320.56 
286.32 
270.03 
94.31% 

39.32 
5.50 
4.17 
75.76% 

116.79 
0.50 
0.00 
0.00% 

234.54 
177.17 
169.88 
95.89% 

207.53 
2.89 
2.05 
70.84% 

270.12 
4.37 
0.38 
8.67% 

926.92 
702.11 
9.85 
1.40% 

267.53 
214.86 
214.04 
99.62% 

33.79 
5.73 
4.76 
83.15% 

187.04 
20.90 
0.00 
0.00% 

272 

 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
Mauritania 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Micronesia 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Mongolia 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Mozambique 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Myanmar/Burma 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Nauru 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Nepal 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

EUROPEAN COMMISSION 

2011 

2012 

2013 

2014 

2015 

2016 

783.56 
123.62 
120.96 
97.85% 

0.17 
0.15 
0.13 
0.90 

69.64 
15.83 
15.29 
96.55% 

1315.64 
1212.83 
54.21 
4.47% 

155.43 
0.00 
0.00 

0.05 
0.05 
0.04 
84.92% 

91.42 
83.05 
77.04 
92.76% 

592.60 
126.15 
124.91 
99.02% 

0.25 
0.25 
0.22 
0.87 

62.95 
13.68 
12.50 
91.39% 

1238.57 
1102.45 
51.15 
4.64% 

151.53 
0.00 
0.00 

0.06 
0.02 
0.00 
0.00% 

86.47 
76.77 
71.29 
92.86% 

485.37 
113.28 
110.85 
97.85% 

0.23 
0.22 
0.20 
0.91 

66.07 
15.76 
14.17 
89.88% 

1307.21 
1116.03 
51.05 
4.57% 

192.49 
160.91 
80.83 
50.23% 

0.24 
0.15 
0.00 
0.00% 

83.72 
75.97 
70.92 
93.36% 

544.98 
172.68 
164.75 
95.41% 

0.35 
0.17 
0.13 
0.74 

71.15 
17.95 
15.10 
84.12% 

1346.24 
1143.59 
292.71 
25.60% 

354.33 
312.64 
297.07 
95.02% 

0.08 
0.03 
0.00 
0.00% 

86.25 
77.73 
72.07 
92.72% 

475.35 
221.07 
212.22 
96.00% 

0.54 
0.51 
0.22 
0.42 

80.09 
18.73 
16.28 
86.91% 

1422.13 
1170.22 
1137.84 
97.23% 

644.38 
561.92 
534.18 
95.06% 

0.63 
0.18 
0.00 
0.00% 

97.30 
86.88 
80.34 
92.48% 

427.05 
224.23 
217.85 
97.16% 

0.45 
0.44 
0.11 
0.25 

64.22 
18.20 
15.27 
83.91% 

1296.91 
969.31 
963.81 
99.43% 

963.64 
868.62 
826.44 
95.14% 

0.10 
0.05 
0.00 
0.00% 

94.10 
83.22 
76.88 
92.38% 

273 

 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
Niger 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Nigeria 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Niue 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Pakistan 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Paraguay 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Philippines 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Rwanda 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Samoa 

EUROPEAN COMMISSION 

2011 

2012 

2013 

2014 

2015 

2016 

5.43 
2.97 
1.80 
60.70% 

24180.93 
603.98 
488.85 
80.94% 

0.05 
0.02 
0.00 
0.00% 

4497.21 
3869.17 
3639.96 
94.08% 

1191.07 
39.75 
32.84 
82.62% 

6104.27 
1592.84 
1019.47 
64.00% 

44.59 
0.45 
0.00 
0.00% 

38.91 
3.90 
3.42 
87.59% 

32130.14 
600.14 
519.83 
86.62% 

0.07 
0.07 
0.00 
0.00% 

4019.48 
3501.19 
3252.89 
92.91% 

950.27 
27.09 
24.64 
90.97% 

4885.66 
1706.79 
1131.97 
66.32% 

41.37 
0.68 
0.03 
4.85% 

6.89 
3.14 
2.55 
81.12% 

28390.56 
492.66 
407.82 
82.78% 

0.01 
0.00 
0.00 
0.00% 

4432.15 
3845.43 
2633.08 
68.47% 

1158.10 
48.02 
43.96 
91.53% 

4616.14 
1543.91 
1061.66 
68.76% 

25.95 
0.40 
0.00 
0.00% 

118.52 
2.96 
1.93 
65.29% 

27669.66 
207.88 
135.41 
65.14% 

0.13 
0.11 
0.00 
0.79% 

5382.92 
4768.21 
4551.13 
95.45% 

1098.63 
72.82 
69.35 
95.23% 

5265.38 
1826.34 
1227.15 
67.19% 

30.02 
0.54 
0.11 
19.97% 

116.76 
3.31 
2.73 
82.43% 

18312.32 
129.28 
94.96 
73.45% 

0.23 
0.01 
0.00 
0.96% 

5945.29 
5441.71 
5227.89 
96.07% 

1056.98 
46.57 
42.27 
90.78% 

6717.10 
2319.85 
1584.24 
68.29% 

46.85 
0.94 
0.65 
69.03% 

116.15 
3.69 
3.03 
82.19% 

10820.87 
156.87 
101.97 
65.00% 

0.27 
0.18 
0.00 
0.00% 

6173.65 
5753.66 
5509.32 
95.75% 

1073.83 
41.84 
36.57 
87.40% 

6232.04 
2343.56 
1660.63 
70.86% 

48.31 
1.97 
0.93 
47.35% 

274 

 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Sao Tome and Principe 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Senegal 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Sierra Leone 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Solomon Islands 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Somalia 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

South Sudan 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Sri Lanka 
Total EU Imports 

EUROPEAN COMMISSION 

2011 
1.44 
0.76 
0.14 
18.23% 

5.13 
0.44 
0.27 
59.76% 

404.76 
300.47 
296.53 
98.69% 

170.92 
2.54 
1.34 
52.88% 

48.04 
47.53 
47.39 
99.70% 

1.97 
0.04 
0.00 
2.30% 

0.00 
0.00 
0.00 

2012 
0.63 
0.41 
0.20 
49.82% 

5.88 
0.43 
0.17 
39.14% 

328.05 
225.90 
220.99 
97.83% 

214.46 
3.77 
3.02 
80.00% 

56.26 
32.38 
32.33 
99.83% 

1.69 
0.04 
0.00 
0.00% 

0.00 
0.00 
0.00 

2013 
0.48 
0.42 
0.28 
65.68% 

4.31 
0.19 
0.11 
58.79% 

323.02 
219.04 
214.04 
97.72% 

167.48 
2.96 
2.22 
74.99% 

48.16 
47.42 
47.36 
99.86% 

1.78 
0.03 
0.00 
0.64% 

0.07 
0.01 
0.00 
0.00% 

2014 
1.08 
0.87 
0.31 
35.75% 

8.00 
0.18 
0.11 
64.03% 

391.55 
281.69 
276.86 
98.28% 

219.94 
0.48 
0.08 
16.60% 

62.99 
62.07 
61.95 
99.81% 

2.57 
0.12 
0.01 
4.71% 

0.12 
0.03 
0.00 
0.00% 

2015 
2.27 
1.75 
0.22 
12.80% 

8.41 
0.14 
0.10 
68.96% 

411.22 
293.89 
286.07 
97.34% 

237.93 
3.94 
3.28 
83.27% 

68.30 
67.71 
66.36 
98.00% 

8.59 
0.12 
0.00 
0.00% 

0.16 
0.05 
0.00 
0.00% 

2016 
1.81 
1.41 
0.23 
16.38% 

10.34 
0.18 
0.10 
53.53% 

415.27 
288.22 
274.61 
95.28% 

221.44 
1.81 
0.53 
29.48% 

53.49 
52.94 
52.85 
99.82% 

13.05 
0.57 
0.02 
2.72% 

0.22 
0.11 
0.07 
66.66% 

2239.28 

2250.08 

2038.16 

2161.00 

2335.76 

2387.51 

275 

 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Sudan 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Swaziland 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Syria 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

TadjikistanTajikistan 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Tanzania 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Timor-Leste 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Togo 
Total EU Imports 
GSP Eligible Imports  

EUROPEAN COMMISSION 

2011 
1775.15 
1176.56 
66.28% 

333.77 
26.70 
16.29 
61.02% 

167.20 
29.28 
1.23 
4.21% 

3201.62 
247.15 
14.68 
5.94% 

64.90 
15.87 
14.42 
90.90% 

497.47 
231.42 
67.58 
29.20% 

12.63 
0.08 
0.03 
32.37% 

319.85 
15.78 

2012 
1763.53 
1071.96 
60.78% 

145.82 
48.70 
47.08 
96.68% 

180.03 
24.85 
1.27 
5.13% 

252.52 
127.51 
12.46 
9.77% 

72.03 
12.68 
11.86 
93.57% 

458.87 
239.91 
75.09 
31.30% 

5.01 
0.04 
0.00 
0.00% 

188.94 
44.35 

2013 
1644.03 
979.95 
59.61% 

174.94 
68.60 
65.69 
95.76% 

224.39 
16.97 
0.85 
5.02% 

115.40 
45.95 
8.40 
18.28% 

48.76 
14.75 
11.71 
79.40% 

506.88 
237.24 
58.42 
24.62% 

6.89 
0.14 
0.00 
0.74% 

101.82 
15.18 

2014 
1797.48 
1073.68 
59.73% 

204.46 
107.84 
101.34 
93.98% 

150.57 
5.14 
0.05 
0.90% 

85.01 
25.21 
3.44 
13.66% 

52.35 
14.90 
10.57 
70.96% 

588.07 
281.70 
119.72 
42.50% 

11.96 
0.04 
0.00 
0.00% 

83.51 
20.25 

2015 
1965.34 
1078.25 
54.86% 

211.62 
83.32 
81.72 
98.08% 

133.56 
19.47 
0.11 
0.56% 

80.26 
25.36 
4.40 
17.37% 

46.36 
12.11 
11.29 
93.22% 

686.38 
356.27 
346.97 
97.39% 

5.98 
0.05 
0.00 
0.00% 

69.92 
21.85 

2016 
2015.32 
1105.87 
54.87% 

169.03 
23.47 
22.75 
96.95% 

121.53 
21.07 
0.06 
0.26% 

49.31 
20.09 
8.91 
44.37% 

81.88 
12.95 
11.82 
91.28% 

616.01 
323.66 
317.09 
97.97% 

5.37 
0.07 
0.00 
0.00% 

102.33 
33.25 

276 

 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
GSP Preferential Imports  
Utilisation Rate  

Tonga 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Tuvalu 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Uganda 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Ukraine 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Uzbekistan 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Vanuatu 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Vietnam 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  

EUROPEAN COMMISSION 

2011 
14.90 
94.43% 

0.05 
0.04 
0.00 
5.61% 

0.11 
0.09 
0.06 
67.40% 

437.80 
145.91 
4.03 
2.76% 

2012 
11.15 
25.15% 

0.36 
0.36 
0.04 
11.09% 

0.06 
0.02 
0.00 
0.00% 

407.43 
150.70 
3.70 
2.46% 

2013 
13.52 
89.07% 

0.16 
0.03 
0.01 
45.55% 

0.26 
0.21 
0.07 
34.76% 

420.34 
147.30 
3.03 
2.05% 

2014 
19.15 
94.57% 

0.91 
0.07 
0.05 
75.87% 

0.51 
0.48 
0.00 
0.00% 

447.59 
149.92 
31.57 
21.06% 

2015 
20.09 
91.94% 

0.38 
0.14 
0.10 
70.33% 

0.51 
0.45 
0.00 
0.00% 

488.88 
157.88 
154.43 
97.81% 

2016 
24.10 
72.46% 

0.84 
0.10 
0.04 
34.22% 

0.06 
0.03 
0.00 
0.00% 

444.11 
150.23 
147.98 
98.50% 

13165.40 
2533.86 
2238.34 
88.34% 

12906.66 
2512.26 
2246.73 
89.43% 

12065.12 
2181.91 
1934.45 
88.66% 

11973.70 
2480.51 
1467.62 
59.17% 

11279.84 
2671.73 
1183.75 
44.31% 

11493.54 
3327.96 
1396.14 
41.95% 

285.85 
143.43 
130.63 
91.08% 

3.87 
3.22 
3.11 
96.49% 

133.47 
77.77 
69.63 
89.54% 

2.32 
0.24 
0.09 
37.25% 

119.74 
86.45 
73.48 
85.00% 

0.55 
0.20 
0.17 
85.44% 

146.16 
75.96 
60.46 
79.60% 

1.84 
0.40 
0.33 
82.84% 

117.17 
69.70 
57.70 
82.78% 

11.75 
4.51 
0.41 
9.17% 

117.89 
86.97 
74.47 
85.63% 

3.33 
1.47 
0.37 
25.11% 

12626.75 
4877.97 
2634.21 

18185.95 
5061.67 
2804.80 

20819.42 
5166.18 
2926.07 

21684.98 
8933.59 
5203.28 

29404.63 
11237.21 
6649.36 

32510.44 
12186.22 
7113.07 

277 

 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
Utilisation Rate  

Yemen 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

Zambia 
Total EU Imports 
GSP Eligible Imports  
GSP Preferential Imports  
Utilisation Rate  

EUROPEAN COMMISSION 

2011 
54.00% 

2012 
55.41% 

2013 
56.64% 

2014 
58.24% 

2015 
59.17% 

2016 
58.37% 

414.04 
31.55 
20.90 
66.24% 

390.53 
114.64 
26.02 
22.69% 

104.15 
87.01 
86.59 
99.52% 

334.18 
103.20 
33.29 
32.26% 

118.34 
80.94 
80.22 
99.11% 

372.52 
101.34 
24.33 
24.01% 

83.93 
10.57 
8.27 
78.19% 

305.01 
76.31 
38.77 
50.80% 

17.46 
7.08 
3.02 
42.61% 

421.76 
94.55 
67.48 
71.37% 

18.73 
6.28 
4.57 
72.78% 

425.25 
77.42 
71.81 
92.75% 

278 

 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
EUROPEAN COMMISSION 

9.2  Annex II - List of tariff regimes applicable to EU import partners (2011-2016)  

List of tariff regimes applicable to EU trading partners (2011- 2016)   

Country 

2011 

2012 

2013 

2014 

2015 

2016 

Afghanistan 

EBA  

EBA  

EBA  

EBA  

EBA  

EBA  

Albania 

Algeria 

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

American Samoa 

Standard GSP  

Standard GSP  

Standard GSP  

No Agreement  

No Agreement  

No Agreement  

Andorra 

Angola 

Anguilla 

Antarctica 

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

EBA  

EBA  

EBA  

EBA  

EBA  

EBA  

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

Antigua and Barbuda 

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

Argentina 

Armenia 

Aruba 

Australia 

Azerbaijan 

B.I.O.T. 

Bahamas 

Bahrain 

Bangladesh 

Barbados 

Belarus 

Belize 

Benin 

Bermuda 

Bhutan 

Standard GSP  

Standard GSP  

Standard GSP  

No Agreement  

No Agreement  

No Agreement  

GSP+ 

GSP+ 

GSP+ 

GSP+ 

GSP+ 

GSP+ 

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

No Agreement  

No Agreement  

No Agreement  

No Agreement  

No Agreement  

No Agreement  

Standard GSP  

Standard GSP  

Standard GSP  

No Agreement  

No Agreement  

No Agreement  

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

Standard GSP  

Standard GSP  

Standard GSP  

No Agreement  

No Agreement  

No Agreement  

EBA  

EBA  

EBA  

EBA  

EBA  

EBA  

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

No Agreement  

No Agreement  

No Agreement  

No Agreement  

No Agreement  

No Agreement  

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

EBA  

EBA  

EBA  

EBA  

EBA  

EBA  

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

EBA  

EBA  

EBA  

EBA  

EBA  

EBA  

279 

 
 
 
EUROPEAN COMMISSION 

Country 

2011 

2012 

2013 

2014 

2015 

2016 

List of tariff regimes applicable to EU trading partners (2011- 2016)   

Bolivia 
Bonaire and St Eustatius and 
Saba 

GSP+ 

GSP+ 

GSP+ 

GSP+ 

GSP+ 

GSP+ 

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

Bosnia and Herzegovina 

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

Botswana 

Bouvet Island 

Brazil 

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

Standard GSP  

Standard GSP  

Standard GSP  

No Agreement  

No Agreement  

No Agreement  

British Virgin Islands 

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

Brunei 

Burkina Faso 

Burundi 

Cambodia 

Cameroon 

Canada 

Cape Verde 

Cayman Isles 

Standard GSP  

Standard GSP  

Standard GSP  

No Agreement  

No Agreement  

No Agreement  

EBA  

EBA  

EBA  

EBA  

EBA  

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   EBA  

EBA  

EBA  

EBA  

EBA  

EBA  

EBA  

EBA  

EBA  

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

No Agreement  

No Agreement  

No Agreement  

No Agreement  

No Agreement  

No Agreement  

EBA  

GSP+ 

GSP+ 

GSP+ 

GSP+ 

GSP+ 

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

Central African Republic 

EBA  

EBA  

EBA  

EBA  

EBA  

EBA  

Ceuta 

Chad 

Chile 

China 

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

EBA  

EBA  

EBA  

EBA  

EBA  

EBA  

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

Standard GSP 

Standard GSP 

Standard GSP 

Standard GSP 

No Agreement  

No Agreement  

Christmas Island 

Standard GSP 

Standard GSP 

Standard GSP 

No Agreement  

No Agreement  

No Agreement  

Cocos Islands 

Standard GSP 

Standard GSP 

Standard GSP 

No Agreement  

No Agreement  

No Agreement  

Colombia 

Comoros 

Congo 

GSP+ 

GSP+ 

GSP+ 

Trade Agreement   Trade Agreement  

Trade Agreement  

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   EBA  

EBA  

Standard GSP  

Standard GSP  

Standard GSP  

Standard GSP  

Standard GSP  

Standard GSP  

Congo (Democratic Rep) 

EBA  

EBA  

EBA  

EBA  

EBA  

EBA  

280 

 
 
EUROPEAN COMMISSION 

Country 

2011 

2012 

2013 

2014 

2015 

2016 

List of tariff regimes applicable to EU trading partners (2011- 2016)   

Cook Islands 

Costa Rica 

Croatia 

Cuba 

Curacao 

Djibouti 

Dominica 

Standard GSP  

Standard GSP  

Standard GSP  

Standard GSP  

Standard GSP  

Standard GSP  

GSP+  

GSP+  

GSP+  

Trade Agreement   Trade Agreement  

Trade Agreement  

Trade Agreement   Trade Agreement   Trade Agreement   n/a  

n/a 

n/a  

Standard GSP  

Standard GSP  

Standard GSP  

No Agreement  

No Agreement  

No Agreement  

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

EBA  

EBA  

EBA  

EBA  

EBA  

EBA  

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

Dominican Republic 

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

Ecuador 

Egypt 

El Salvador 

Equatorial Guinea 

Eritrea 

Ethiopia 

GSP+ 

GSP+ 

GSP+ 

GSP+ 

GSP+ 

GSP+ 

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

GSP+ 

EBA  

EBA  

EBA  

GSP+  

EBA  

EBA  

EBA  

GSP+ 

EBA  

EBA  

EBA  

Trade Agreement   Trade Agreement  

Trade Agreement  

EBA  

EBA  

EBA  

EBA  

EBA  

EBA  

EBA  

EBA  

EBA  

Falkland Islands 

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

Faroe Isles 

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

Fiji 
Former Yugoslav Republic of 
Macedonia 

Standard GSP 

Standard GSP 

Standard GSP 

Standard GSP 

Trade Agreement  

Trade Agreement  

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

French Polynesia 

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

French Southern Territories 

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

Gabon 

Gambia 

Georgia 

Ghana 

Gibraltar 

Greenland 

Standard GSP 

Standard GSP 

Standard GSP 

No Agreement  

No Agreement  

No Agreement  

EBA  

GSP+  

EBA  

GSP+  

EBA  

GSP+  

EBA  

GSP+  

EBA  

EBA  

Trade Agreement  

Trade Agreement  

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

281 

 
 
EUROPEAN COMMISSION 

Country 

2011 

2012 

2013 

2014 

2015 

2016 

List of tariff regimes applicable to EU trading partners (2011- 2016)   

Grenada 

Guam 

Guatemala 

Guinea 

Guinea Bissau 

Guyana 

Haiti 

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

Standard GSP  

Standard GSP  

Standard GSP  

No Agreement  

No Agreement  

No Agreement  

GSP+  

EBA  

EBA  

GSP+  

EBA  

EBA  

GSP+  

EBA  

EBA  

Trade Agreement   Trade Agreement  

Trade Agreement  

EBA  

EBA  

EBA  

EBA  

EBA  

EBA  

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   EBA  

EBA  

Heard and McDonald Islands 

Standard GSP 

Standard GSP 

Standard GSP 

No Agreement  

No Agreement  

No Agreement  

High seas 

Holy See 

Honduras 

Hong Kong 

Iceland 

India 

Indonesia 

Iran 

Iraq 

Israel 

No Agreement  

No Agreement  

No Agreement  

No Agreement  

No Agreement  

No Agreement  

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

GSP+ 

GSP+ 

GSP+ 

Trade Agreement   Trade Agreement  

Trade Agreement  

No Agreement  

No Agreement  

No Agreement  

No Agreement  

No Agreement  

No Agreement  

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

Standard GSP  

Standard GSP  

Standard GSP  

Standard GSP  

Standard GSP  

Standard GSP  

Standard GSP  

Standard GSP  

Standard GSP  

Standard GSP  

Standard GSP  

Standard GSP  

Standard GSP  

Standard GSP  

Standard GSP  

No Agreement  

No Agreement  

No Agreement  

Standard GSP  

Standard GSP  

Standard GSP  

Standard GSP  

Standard GSP  

Standard GSP  

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

Ivory Coast 

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

Jamaica 

Japan 

Jordan 

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

No Agreement  

No Agreement  

No Agreement  

No Agreement  

No Agreement  

No Agreement  

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

Kazakhstan 

Standard GSP  

Standard GSP  

Standard GSP  

No Agreement  

No Agreement  

No Agreement  

Kenya 

Kiribati 

Kosovo* 

Trade Agreement  Trade Agreement 

Trade Agreement 

Trade Agreement 

Trade Agreement 

Trade Agreement 

EBA  

EBA  

EBA  

EBA  

EBA  

EBA  

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

* This designation is without prejudice to positions on status, and is in line with UNSCR 1244/1999 and the ICJ Opinion on the Kosovo declaration of independence. 

282 

 
 
EUROPEAN COMMISSION 

Country 

2011 

2012 

2013 

2014 

2015 

2016 

List of tariff regimes applicable to EU trading partners (2011- 2016)   

Kuwait 

Standard GSP  

Standard GSP  

Standard GSP  

 No Agreement  

No Agreement  

 No Agreement  

Kyrgyz Republic 

Standard GSP  

Standard GSP  

Standard GSP  

Standard GSP  

Standard GSP  

GSP+ 

Laos 

Lebanon 

Lesotho 

Liberia 

Libya 

Liechtenstein 

Macao 

Madagascar 

Malawi 

Malaysia 

Maldives 

Mali 

EBA  

EBA  

EBA  

EBA  

EBA  

EBA  

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   EBA  

EBA  

EBA  

EBA  

EBA  

EBA  

EBA  

EBA  

Standard GSP  

Standard GSP  

Standard GSP  

No Agreement  

No Agreement  

No Agreement  

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

Standard GSP  

Standard GSP  

Standard GSP  

No Agreement  

No Agreement  

No Agreement  

EBA  

EBA  

Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

EBA  

EBA  

EBA  

EBA  

EBA  

Standard GSP 

Standard GSP 

Standard GSP 

No Agreement  

No Agreement  

No Agreement  

EBA  

EBA  

EBA  

EBA  

EBA  

EBA  

Standard GSP  

No Agreement  

No Agreement  

EBA  

EBA  

EBA  

Marshall Islands 

Standard GSP  

Standard GSP  

Standard GSP  

Standard GSP  

Standard GSP  

Standard GSP  

Mauritania 

Mauritius 

Mayotte 

Melilla 

Mexico 

Micronesia 

Moldova 

Mongolia 

Montenegro 

Montserrat 

Morocco 

Mozambique 

EBA  

EBA  

EBA  

EBA  

EBA  

EBA  

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

Standard GSP  

Standard GSP  

Standard GSP  

Standard GSP  

Standard GSP  

Standard GSP  

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

GSP+  

GSP+  

GSP+  

GSP+  

GSP+  

GSP+  

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   EBA  

EBA  

283 

 
 
EUROPEAN COMMISSION 

Country 

2011 

2012 

2013 

2014 

2015 

2016 

List of tariff regimes applicable to EU trading partners (2011- 2016)   

Myanmar/Burma 

No Agreement  

EBA  

EBA  

EBA  

EBA  

EBA  

Namibia 

Nauru 

Nepal 

Trade Agreement  Trade Agreement 

Trade Agreement 

Trade Agreement 

Trade Agreement 

Trade Agreement 

Standard GSP  

Standard GSP  

Standard GSP  

Standard GSP  

Standard GSP  

Standard GSP  

Netherlands Antilles 

Trade Agreement   Trade Agreement   n/a 

EBA  

EBA  

EBA  

EBA  

n/a 

EBA  

n/a 

EBA  

n/a  

New Caledonia 

New Zealand 

Nicaragua 

Niger 

Nigeria 

Niue 
Norfolk Island 

North Korea 

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

No Agreement  

No Agreement  

No Agreement  

No Agreement  

No Agreement  

No Agreement  

GSP+ 

EBA  

GSP+ 

EBA  

GSP+  

EBA  

Trade Agreement   Trade Agreement  

Trade Agreement  

EBA  

EBA  

EBA  

Standard GSP  

Standard GSP  

Standard GSP  

Standard GSP  

Standard GSP  

Standard GSP  

Standard GSP  
Standard GSP  

Standard GSP  
Standard GSP  

Standard GSP  
Standard GSP  

Standard GSP  
No Agreement  

Standard GSP  
No Agreement  

Standard GSP  
No Agreement  

No Agreement  

No Agreement  

No Agreement  

No Agreement  

No Agreement  

No Agreement  

Northern Mariana Islands 

Standard GSP  

Standard GSP  

Standard GSP  

No Agreement  

No Agreement  

No Agreement  

Norway 

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

Occupied Palestinian Territory 

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

Oman 

Pakistan 

Palau 

Panama 

Standard GSP  

Standard GSP  

Standard GSP  

No Agreement  

No Agreement  

No Agreement  

Standard GSP  

Standard GSP  

Standard GSP  

GSP+  

GSP+  

GSP+  

Standard GSP  

Standard GSP  

Standard GSP  

No Agreement  

No Agreement  

No Agreement  

GSP+  

GSP+  

GSP+  

Trade Agreement   Trade Agreement  

Trade Agreement  

Papua New Guinea 

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

Paraguay 

Peru 

Philippines 

Pitcairn 

Qatar 

Russia 

GSP+  

GSP+  

GSP+  

GSP+  

GSP+  

GSP+  

GSP+  

GSP+  

GSP+  

Trade Agreement   Trade Agreement  

Trade Agreement  

Standard GSP 

Standard GSP 

Standard GSP 

Standard GSP 

GSP+ 

GSP+ 

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

Standard GSP  

Standard GSP  

Standard GSP  

No Agreement  

No Agreement  

No Agreement  

Standard GSP  

Standard GSP  

Standard GSP  

No Agreement  

No Agreement  

No Agreement  

284 

 
 
EUROPEAN COMMISSION 

Country 

2011 

2012 

2013 

2014 

2015 

2016 

List of tariff regimes applicable to EU trading partners (2011- 2016)   

Rwanda 

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   EBA  

EBA  

S. Georgia & S. Sandwich Is. 

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

Samoa 

San Marino 

EBA  

EBA  

EBA  

EBA  

EBA  

EBA  

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

Sao Tome and Principe 

EBA  

EBA  

EBA  

EBA  

EBA  

EBA  

Saudi Arabia 

Standard GSP  

Standard GSP  

Standard GSP  

No Agreement  

No Agreement  

No Agreement  

Senegal 

Serbia 

Seychelles 

Sierra Leone 

Singapore 

Solomon Islands 

Somalia 

South Africa 

South Korea 

South Sudan 

Sri Lanka 

St Barthelemy 

St Helena 

EBA  

EBA  

EBA  

EBA  

EBA  

EBA  

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

EBA  

EBA  

EBA  

EBA  

EBA  

EBA  

No Agreement  

No Agreement  

No Agreement  

No Agreement  

No Agreement  

No Agreement  

EBA  

EBA  

EBA  

EBA  

EBA  

EBA  

EBA  

EBA  

EBA  

EBA  

EBA  

EBA  

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

n/a 

n/a 

EBA  

EBA  

EBA  

EBA  

Standard GSP  

Standard GSP  

Standard GSP  

Standard GSP  

Standard GSP  

Standard GSP  

n/a  

n/a  

Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

St Kitts and Nevis 

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

St Lucia 

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

St Maarten (Dutch part) 

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

St Pierre and Miquelon 

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

St Vincent 

Sudan 

Surinam 

Swaziland 

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

EBA  

EBA  

EBA  

EBA  

EBA  

EBA  

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

Trade Agreement  Trade Agreement 

Trade Agreement 

Trade Agreement 

Trade Agreement 

Trade Agreement 

285 

 
 
EUROPEAN COMMISSION 

Country 

2011 

2012 

2013 

2014 

2015 

2016 

List of tariff regimes applicable to EU trading partners (2011- 2016)   

Switzerland 

Syria 

Tadjikistan 

Taiwan 

Tanzania 

Thailand 

Timor-Leste 

Togo 

Tokelau 

Tonga 

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

Standard GSP  

Standard GSP  

Standard GSP  

Standard GSP  

Standard GSP  

Standard GSP  

Standard GSP  

Standard GSP  

Standard GSP  

Standard GSP  

Standard GSP  

Standard GSP  

No Agreement  

No Agreement  

No Agreement  

No Agreement  

No Agreement  

No Agreement  

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   EBA  

EBA  

Standard GSP  

Standard GSP  

Standard GSP  

Standard GSP  

No Agreement  

No Agreement  

EBA  

EBA  

EBA  

EBA  

EBA  

EBA  

EBA  

EBA  

EBA  

EBA  

EBA  

EBA  

Standard GSP  

Standard GSP  

Standard GSP  

No Agreement  

No Agreement  

No Agreement  

Standard GSP 

Standard GSP 

Standard GSP 

Standard GSP 

Standard GSP 

Standard GSP 

Trinidad and Tobago 

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

Tunisia 

Turkey 

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

Turkmenistan 

Standard GSP  

Standard GSP  

Standard GSP  

Standard GSP  

Standard GSP  

No Agreement  

Turks and Caicos Isles 

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

Tuvalu 

EBA  

EBA  

EBA  

EBA  

EBA  

EBA  

US Minor outlying Islands 

Standard GSP  

Standard GSP  

Standard GSP  

No Agreement  

No Agreement  

No Agreement  

USA 

Uganda 

Ukraine 

No Agreement  

No Agreement  

No Agreement  

No Agreement  

No Agreement  

No Agreement  

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   EBA  

EBA  

Standard GSP 

Standard GSP 

Standard GSP 

Standard GSP 

Standard GSP  

Trade Agreement  

United Arab Emirates 

Standard GSP  

Standard GSP  

Standard GSP  

No Agreement  

No Agreement  

No Agreement  

Uruguay 

Uzbekistan 

Vanuatu 

Venezuela 

Vietnam 

Virgin Isles 

Standard GSP  

Standard GSP  

Standard GSP  

No Agreement  

No Agreement  

No Agreement  

Standard GSP 

Standard GSP 

Standard GSP 

Standard GSP 

Standard GSP 

Standard GSP 

EBA  

EBA  

EBA  

EBA  

EBA  

EBA  

Standard GSP  

Standard GSP  

Standard GSP  

No Agreement  

No Agreement  

No Agreement  

Standard GSP 

Standard GSP 

Standard GSP 

Standard GSP 

Standard GSP 

Standard GSP 

Standard GSP  

Standard GSP  

Standard GSP  

No Agreement  

No Agreement  

No Agreement  

286 

 
 
EUROPEAN COMMISSION 

Country 

2011 

2012 

2013 

2014 

2015 

2016 

List of tariff regimes applicable to EU trading partners (2011- 2016)   

Wallis and Futuna 

Trade Agreement    Trade Agreement    Trade Agreement    Trade Agreement   Trade Agreement  

Trade Agreement  

Western Sahara 

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

Yemen 

Zambia 

Zimbabwe 

EBA  

EBA  

EBA  

EBA  

EBA  

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   EBA  

EBA  

EBA  

Trade Agreement   Trade Agreement   Trade Agreement  

Trade Agreement   Trade Agreement  

Trade Agreement  

287 

 
 
EUROPEAN COMMISSION 

9.3  Annex III- Dummy variables used in econometric models  

LIST OF CHANGES IN EBA REGIME   

EBA_Always  

STATUS: ALWAYS  

2011 - 2016 

1.  Afghanistan 
2.  Angola 
3.  Bangladesh 
4.  Benin 
5.  Bhutan 
6.  Burkina Faso 
7.  Cambodia 
8.  Central African Republic 
9.  Chad 
10.  Congo (Democratic Rep) 
11.  Djibouti 
12.  Equatorial Guinea 
13.  Eritrea 
14.  Ethiopia 
15.  Gambia 
16.  Guinea 
17.  Guinea Bissau 
18.  Kiribati 
19.  Laos 
20.  Liberia 
21.  Malawi 
22.  Mali 
23.  Mauritania 
24.  Nepal 
25.  Niger 
26.  Samoa 
27.  Sao Tome and Principe 
28.  Senegal 
29.  Sierra Leone 
30.  Solomon Islands 
31.  Somalia 
32.  Sudan 
33.  Timor-Leste 
34.  Togo 
35.  Tuvalu 
36.  Vanuatu 
37.  Yemen 

LIST OF CHANGES IN GSP+ REGIME 

STATUS: ALWAYS 

2011-2016 

GSPplus_Always 

1.  Armenia 
2.  Bolivia 
3.  Ecuador 
4.  Mongolia 
5.  Paraguay 

GSPplus_Out_TradeAgr  

STATUS: OUT 

2014-2016 

1.  Colombia 
2.  Costa Rica 
3.  El Salvador 
4.  Guatemala 
5.  Honduras 
6.  Nicaragua 
7.  Panama 
8.  Peru 
9.  Georgia 

288 

 
 
 
 
 
EUROPEAN COMMISSION 

LIST OF CHANGES IN STANDARD GSP REGIME  

STATUS: ALWAYS 

2011-2016 

2014-2016 

India 
Indonesia 
Iraq 

StdrGSP_Always  
1.  Congo 
2.  Cook Islands 
3. 
4. 
5. 
6.  Marshall Islands 
7.  Micronesia 
8.  Nauru 
9.  Nigeria 
10.  Niue 
11.  Sri Lanka 
12.  Syria 
13.  Tajikistan 
14.  Tonga 
15.  Uzbekistan 
16.  Vietnam 

STATUS: OUT  

StdrGSP_Out_NoAgr 
1.  Argentina 
2.  Azerbaijan 
3.  Bahrain 
4.  Brazil 
5.  Brunei 
6.  Christmas Island 
7.  Cocos Islands 
8.  Cuba 
9.  Gabon 
10.  Guam 
11.  Heard and McDonald Islands 
12.  Iran 
13.  Kazakhstan 
14.  Kuwait 
15.  Libya 
16.  Macao 
17.  Malaysia 
18.  Oman 
19.  Palau 
20.  Qatar 
21.  Russia 
22.  Saudi Arabia 
23.  United Arab Emirates 
24.  Uruguay 
25.  Venezuela 
26.  American Samoa 
27.  Norfolk Island 
28.  Northern Mariana Islands 
29.  Tokelau 
30.  US Minor outlying Islands 
31.  Virgin Isles 

2015-2016 

2016 

2014-2016 
2015-2016  
2016 

2015-2016 

2016  

1.  China 
2.  Thailand 
3.  Turkmenistan 
StdrGSP_Out_GSPplus 

1.  Pakistan 
2.  Philippines 
3.  Kyrgyz Republic 

StdrGSP_Out_TradeAgr 

1.  Fiji 
2.  Ukraine 

289 

 
 
 
 
 
 
 
 
EUROPEAN COMMISSION 

LIST OF CHANGES IN TRADE AGREEMENTS  

TradeAgr_Always 

STATUS: ALWAYS 

1. 
2. 
3. 
4. 
5. 
6. 
7. 
8. 
9. 
10. 
11. 
12. 
13. 
14. 
15. 
16. 
17. 
18. 
19. 
20. 
21. 
22. 
23. 
24. 
25. 
26. 
27. 
28. 
29. 
30. 
31. 
32. 
33. 
34. 
35. 
36. 
37. 
38. 
39. 
40. 
41. 
42. 
43. 
44. 
45. 
46. 
47. 
48. 
49. 
50. 
51. 
52. 
53. 
54. 
55. 
56. 
57. 
58. 
59. 
60. 
61. 
62. 
63. 

Albania 
Algeria 
Andorra 
Anguilla 
Antarctica 
Antigua and Barbuda 
Aruba 
B.I.O.T. 
Bahamas 
Barbados 
Belize 
Bermuda 
Bonaire and St Eustatius and Saba 
Bosnia and Herzegovina 
Bouvet Island 
British Virgin Islands 
Cayman Isles 
Ceuta 
Chile 
Curacao 
Dominica 
Dominican Republic 
Egypt 
Falkland Islands 
Faroe Isles 
Former Yugoslav Republic of Macedonia 
French Polynesia 
French Southern Territories 
Gibraltar 
Greenland 
Grenada 
Guyana 
Holy See 
Iceland 
Israel 
Jamaica 
Jordan 
Kosovo 
Lebanon 
Liechtenstein 
Mayotte 
Melilla 
Mexico 
Moldova 
Montenegro 
Montserrat 
Morocco 
New Caledonia 
Norway 
Occupied Palestinian Territory 
Papua New Guinea 
Pitcairn 
S. Georgia & S. Sandwich Is. 
San Marino 
Serbia 
Seychelles 
South Africa 
South Korea 
St Helena 
St Kitts and Nevis 
St Lucia 
St Maarten (Dutch part) 
St Pierre and Miquelon 

2011-2016 

290 

 
 
EUROPEAN COMMISSION 

64. 
65. 
66. 
67. 
68. 
69. 
70. 
71. 
72. 

St Vincent 
Surinam 
Switzerland 
Trinidad and Tobago 
Tunisia 
Turkey 
Turks and Caicos Isles 
Wallis and Futuna 
Western Sahara 

LIST OF CHANGES IN EU’S MARKET ACCESS REGULATION FOR AFRICAN COUNTRIES 
STATUS: ALWAYS 

2011-2016  

2015-2016 

 MAR_Always  

1.  Botswana  

2.  Kenya 

3.  Namibia 

4.  Swaziland  

5.  Ghana 

6. 

Ivory Coast 

MAR_Out_EBA 

STATUS: OUT 

1. 
2. 
3. 
4. 
5. 
6. 
7. 
8. 
9. 

Burundi 
Comoros 
Haiti 
Lesotho 
Mozambique 
Rwanda 
Tanzania 
Uganda 
Zambia 

2012-2016 

2015 -2016 

MAR_ Out_TradeAgr  
1.  Mauritius 
2.  Zimbabwe 
 Cameroon 
3. 

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9.4   Annex IV – Analytical Framework for Mid-Term Evaluation of the EU’s GSP  

Evaluation questions 

Judgement criteria 

Required evidence and 
analysis/ possible indicators 

Sources of evidence/ 
methodological tools 

Coverage in Final Report   

1. 

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

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

i. 

ii. 

iii. 

iv. 

v. 

vi. 

Have preferences been 
better focused on countries 
most in need?  
Have disincentives for 
diversification been 
removed for countries most 
in need?  
Has there been enhanced 
consistency with overall 
trade objectives, whether 
bilateral or multilateral?  
Has support been 
strengthened for 
sustainable development 
and good governance? 
Has the efficiency of 
safeguard mechanisms 
been improved to ensure 
that the EU’s financial and 
economic interests are 
protected? 
Has the legal certainty, 
stability and predictability 
of the scheme been 
enhanced?  

The Project Team will analyse:  

i. 

ii. 

iii. 

iv. 

v. 

vi. 

vii. 

viii. 

Revised eligibility criteria 
and  
Reduced number of 
beneficiaries;  
Reformed graduation and 
increased thresholds; 
Simplified GSP+ entry 
mechanism;  
A more effective and 
transparent mechanism 
for monitoring and 
evaluating the GSP+ 
countries’ commitment 
and progress in the 
implementation of GSP+ 
conventions;  
 Clarified temporary 
withdrawal provisions and 
procedures;  
Simplified and clarified 
safeguard mechanisms; 
and 
Redefined product 
sections and increased 
product coverage.  

i. 
ii. 

iii. 

iv. 

v. 

vi. 

vii. 

Desk research 
Online Public 
Consultation  
Stakeholder 
interviews 
Stakeholder outreach 
workshops in 
Bangladesh, Ethiopia, 
Bolivia and Pakistan 
Case studies for 
selected countries 
and sectors 
Analysis of tariff and 
trade data 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.  

i. 

ii. 

iii. 

iv. 

v. 

vi. 

vii. 

Chapter 2 – Economic 
Impact Analysis 
Chapter 3 – Social Impact 
Analysis  
Chapter 4 – Environmental 
Impact Analysis  
Chapter 5 - Case Studies 
on Textiles and Machinery 
Chapter 6 – Case Studies 
on EBA  countries  
Chapter 7 – Case Studies 
on GSP+ countries  
Chapter 8 – Conclusions 
and Recommendations 

(ii) What has 
been the 
impact of the 

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

In order to determine the 
economic impact, the Project Team 

i. 
ii. 

Desk research 
Online Public 
Consultation  

i. 

ii. 

Chapter 2 – Economic 
Impact Analysis  
Chapter 5 – Case Studies 

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Required evidence and 
analysis/ possible indicators 

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methodological tools 

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present 
scheme on 
developing 
countries and 
LDCs?  

i.  What has been the 

economic impact of the 
present scheme on 
developing countries and 
LDCs?  

will:  

i. 

ii. 

iii. 

iv. 

v. 

iii. 

iv. 

v. 

on Textiles and Machinery  
Chapters 6.1.1 & 6.2.1 – 
Case Studies on EBA  
countries  
Chapter 7.1.1 & 7.2.1  – 
Case Studies on GSP+ 
countries  
Chapter 8 – Conclusions 
and Recommendations 

iii. 

iv. 

v. 

vi. 

vii. 

Stakeholder 
interviews 
Stakeholder outreach 
workshops in 
Bangladesh, Ethiopia, 
Bolivia and Pakistan 
Case studies for 
selected countries 
and sectors 
Analysis of tariff and 
trade data 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.  

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);  
Analyse the importance of 
the EU market to GSP 
beneficiary countries; 
Analyse, as precisely as 
possible, the role of the 
GSP itself on economic 
growth and development 
in beneficiary countries; 
Analyse the impact of the 
GSP on specific sectors in 
beneficiary countries 
(descriptive statistical 
analysis of sectoral trends 
and developments, 
including export 
diversification); and 
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 
developing countries and 

In order to determine the social 
and human rights impact, the 
Project Team will analyse the 
impact of the current GSP on the 

i. 
ii. 

iii. 

Desk research 
Online Public 
Consultation  
Stakeholder 

i. 

ii. 

Chapter 3– Social Impact 
Analysis  
Chapter 5 – Case Studies 
on Textiles and Machinery 

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Judgement criteria 

Required evidence and 
analysis/ possible indicators 

Sources of evidence/ 
methodological tools 

Coverage in Final Report   

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LDCs?  

following:  

i. 
ii. 
iii. 
iv.  Wage rate;  
v. 
vi. 
vii. 
viii. 
ix. 
x. 

Employment rate; 
Female employment rate;  
Youth employment rate;  

Social protection rate;  
Social inclusion rate;  
Poverty rate;  
Civil liberties index;  
Gender equality rate;  
Voice and accountability 
Index;  
Political stability index;  
Government effectiveness 
index;  
Regulatory quality index;  
Rule of law index;  
Corruption perceptions 
index (CPI); and  
Control of corruption 
index.  

xi. 
xii. 

xiii. 
xiv. 
xv. 

xvi. 

iii.  What has been the 

environmental impact of the 
present scheme on 
developing countries and 
LDCs?  

In order to determine the 
environmental impact, the Project 
Team will analyse the impact of 
the current GSP on the following: 

iii. 
iv. 
v. 

i.  Waste generation;  
Environmental 
ii. 
sustainability rate;  
Forest area coverage; 
Land use and competition;  
Land tenure and 
ownership rights; 
Terrestrial and freshwater 
biodiversity;  
Proportion of fish stocks;  
Biodiversity;  

vi. 

vii. 
viii. 

iv. 

v. 

vi. 

i. 
ii. 

iii. 

iv. 

v. 

vi. 

interviews 
Stakeholder outreach 
workshops in 
Bangladesh, Ethiopia, 
Bolivia and Pakistan 
Case studies for 
selected countries 
and sectors 
Analysis of social and 
human rights 
indicators using data 
from national 
statistical agencies, 
the ILO, World Bank, 
Freedom House, 
Transparency 
International, among 
others  

Desk research 
Online Public 
Consultation  
Stakeholder 
interviews 
Stakeholder outreach 
workshops in 
Bangladesh, Ethiopia, 
Bolivia and Pakistan 
Case studies for 
selected countries 
and sectors 
Analysis of 
environmental 
indicators using data 

iii. 

iv. 

v. 

Chapters 6.1.2 & 6.2.2 – 
Case Studies on EBA  
countries  
Chapter 7.1.2 & 7.2.2  – 
Case Studies on GSP+ 
countries  
Chapter 8 – Conclusions 
and Recommendations 

i. 

ii. 

iii. 

iv. 

v. 

Chapter 4– Environmental 
Impact Analysis  
Chapter 5 –Case Studies 
on Textiles and Machinery 
Chapters 6.1.3 & 6.2.3 – 
Case Studies on EBA  
countries  
Chapter 7.1.3 & 7.2.3  – 
Case Studies on GSP+ 
countries  
Chapter 8 – Conclusions 
and Recommendations 

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Judgement criteria 

Required evidence and 
analysis/ possible indicators 

Sources of evidence/ 
methodological tools 

Coverage in Final Report   

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ix. 
x. 
xi. 
xii. 

Climate change;  
CO2 emissions;  
Biofuels; and  
Renewable energy. 

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

i.  What positive factors have 

i. 

contributed to the 
economic, social, human 
rights and/or environmental 
impact of the present 
scheme on developing 
countries on developing 
countries and LDCs?  

ii.  What negative factors have 

ii. 

contributed to the 
economic, social, human 
rights and/or environmental 
impact of the present 
scheme on developing 
countries on developing 
countries and LDCs?  

3.  What 

i.  What economic, social, 

i. 

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

human rights and/or 
environmental impacts have 
resulted from the design of 
the current GSP? 

- 

- 

Have there been any 
positive unintended 
effects?  
Have there been any 
negative unintended 

ii. 

Identification of the 
factors that have 
positively contributed to 
the impact deduced 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 affected by the 
reform in an unintended 
manner; and 

i. 
ii. 

iii. 

iv. 

v. 

vi. 

i. 
ii. 

iii. 

iv. 

v. 

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

Desk research 
Online Public 
Consultation  
Stakeholder 
interviews 
Stakeholder outreach 
workshops in 
Bangladesh, Ethiopia, 
Bolivia and Pakistan 
Case studies for 
selected countries 
and sectors 
Economic, social, 
human rights and 
environmental 
analyses undertaken 
in fulfilment of 
Evaluation Question 
(1) above 

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

i. 

ii. 

iii. 

iv. 

v. 

vi. 

vii. 

i. 

ii. 

iii. 

iv. 

v. 

Chapter 2 – Economic 
Impact Analysis 
Chapter 3 – Social Impact 
Analysis  
Chapter 4 – Environmental 
Impact Analysis  
Chapter 5 - Case Studies 
on Textiles and Machinery 
Chapter 6 – Case Studies 
on EBA  countries  
Chapter 7 – Case Studies 
on GSP+ countries  
Chapter 8 – Conclusions 
and Recommendations 

Chapter 2 – Economic 
Impact Analysis 
Chapter 3 – Social Impact 
Analysis  
Chapter 4 – Environmental 
Impact Analysis  
Chapter 5 - Case Studies 
on Textiles and Machinery 
Chapter 6 – Case Studies 
on EBA  countries  

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Required evidence and 
analysis/ possible indicators 

Sources of evidence/ 
methodological tools 

Coverage in Final Report   

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Identification of 
positive/negative side 
effects of the reform in 
the beneficiary countries 
and the EU. 

vi. 

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

vi. 

vii. 

Chapter 7 – Case Studies 
on GSP+ countries  
Chapter 8 – Conclusions 
and Recommendations 

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 unintended 
effects? 
Have there been any 
negative unintended 
effects? 

4.  To what extent 

i. 

is the current 
GSP efficient? 

How does the current GSP 
compare with the previous 
GSP? 

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 Mid-Term 
Evaluation of the EU’s 
GSP in 2010); and 
Identification of the ratio 

i. 
ii. 

iii. 

iv. 

v. 

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

i. 

ii. 

iii. 

iv. 

v. 

Chapter 2 – Economic 
Impact Analysis 
Chapter 3 – Social Impact 
Analysis  
Chapter 4 – Environmental 
Impact Analysis  
Chapter 5 - Case Studies 
on Textiles and Machinery 
Chapter 6 – Case Studies 
on EBA  countries  

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Required evidence and 
analysis/ possible indicators 

Sources of evidence/ 
methodological tools 

Coverage in Final Report   

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5.  To what extent 

i.  What synergies or 

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

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

ii.  What synergies or 

inconsistencies exist 
between the current GSP  
and EU development 
policies? 

iii.  What synergies or 

inconsistencies exist 
between the current GSP  
and the EU foreign policy? 

iv.  What synergies or 

inconsistencies exist 
between the current GSP 
and other EU policies? 

How does the current GSP 
contribute to sustainable 
development and poverty 
eradication objectives? 

6.  To what extent 

i. 

is the current 
GSP relevant to 
the 
development 
needs which it 
is intended to 
address? 

between the inputs and 
outputs of the current 
GSP reform (evidenced by 
the results of the Mid-
Term Evaluation of the 
EU’s GSP in 2010) 

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

vi. 

i. 

ii. 

iii. 

iv. 

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

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

vi. 

vii. 

Chapter 7 – Case Studies 
on GSP+ countries  
Chapter 8 – Conclusions 
and Recommendations 

i. 

ii. 

iii. 

iv. 

v. 

vi. 

vii. 

Chapter 2 – Economic 
Impact Analysis 
Chapter 3 – Social Impact 
Analysis  
Chapter 4 – Environmental 
Impact Analysis  
Chapter 5 - Case Studies 
on Textiles and Machinery 
Chapter 6 – Case Studies 
on EBA  countries  
Chapter 7 – Case Studies 
on GSP+ countries  
Chapter 8 – Conclusions 
and Recommendations 

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. 

iv. 

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

i. 

ii. 

iii. 

iv. 

Chapter 2 – 
Economic Impact 
Analysis 
Chapter 3 – Social 
Impact Analysis  
Chapter 4 – 
Environmental 
Impact Analysis  
Chapter 5 - Case 
Studies on 

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Required evidence and 
analysis/ possible indicators 

Sources of evidence/ 
methodological tools 

Coverage in Final Report   

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v. 

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

v. 

vi. 

vii. 

Textiles and 
Machinery 
Chapter 6 – Case 
Studies on EBA  
countries  
Chapter 7 – Case 
Studies on GSP+ 
countries  
Chapter 8 – 
Conclusions and 
Recommendations 

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9.5  Annex V - Summary of stakeholder consultations 

9.5.1  Stakeholder consultation strategy 
A  continuous  and  wide-ranging  consultation  process  was  conducted  over  the  course  of 
the project. An inclusive stakeholder consultation process is a key characteristic of all EU 
impact  assessments  and  evaluations  and  adheres  to  the  common  methodological 
in  the  Better  Regulation  Toolkit 738  and  Better  Regulation 
framework  outlined 
Guidelines.739 The Project Team adopted a dynamic and robust methodological approach 
that  followed  the  minimum  standards  for  stakeholder  consultation740 to  ensure  that  the 
process was: 

  Comprehensive: giving all stakeholders the opportunity to express their views; 
  Balanced: ensuring that the consultation was representative; 
  Timely: allowing sufficient time for stakeholder inputs and contributions; 
  Tailored: ensuring that the needs of specific target audiences were met; and 
  Incorporated: taking into account all feedback and input in the study. 

The  objective  of  the  stakeholder  consultation  process  was  two-fold:  (i)  to  collect 
invaluable 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 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. 

The Project Team employed a wide range of consultation activities and tools 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).  

738European Commission.(2015). Better Regulation Toolbox. Available at: http://ec.europa.eu/smart-
regulation/guidelines/toc_tool_en.htm 
739European Commission.(2015). Better Regulation Guidelines (SWD (2015) 111 final). Available at: 
http://ec.europa.eu/smart-regulation/guidelines/docs/swd_br_guidelines_en.pdf 
740European Commission.(2016). Handbook for trade sustainability impact assessments 2nd edition. Available at: 
http://trade.ec.europa.eu/doclib/docs/2016/april/tradoc_154464.PDF 

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 Figure 67: Overview of the stakeholder consultation activities and tools 

9.5.2  Stakeholder outreach and engagement tools 
Website:  The Project Team designed and launched a dedicated GSP Evaluation website 
at  www.GSPevaluation.com  to  serve  as  the  main  platform  for  conducting  online 
consultation as well as for regularly and pro-actively informing stakeholders on the Mid-
Term 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  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 Project Team 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  Project  Team 
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  Project  Team  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 Project Team 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 

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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 

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

dedicated 

address: 

Through 

email 

the 

Results of the Electronic Stakeholder Outreach and Engagement 
In order to assess the success of the electronic stakeholder outreach, we analysed visits 
to the dedicate GSP website (www.gspevaluation.com) over the course of the project.741 

Figure  2  below  illustrates  the  geographical  spread  of  the  website  visitors  based  on  the 
number  of  pages  accessed.  It  can  be  observed  that  65  per  cent  of  website  views  came 
from EU countries (5580) while 35 per cent came from non-EU countries (3001).  

As illustrated in Figure 3, the majority of pages (46 per cent) were accessed through the 
Google  Chrome  browser.  Roughly  20  per  cent  of  the  viewers  used  Firefox;  10  per  cent 
used  MS  Internet  Explorer;  8  per  cent  used  Safari;  while  the  other  16  per  cent  used 
unknown browsers. A safe conclusion to be made for the future is that the website should 
be  heavily  tested  on  Google  Chrome  and  Firefox  as  these  are  the  main  browsers  that 
users will be accessing the website through. 

4.500

4.000

3.500

3.000

2.500

2.000

1.500

1.000

500

0

50%

45%

40%

35%

30%

25%

20%

15%

10%

5%

0%

Google
Chrome

Firefox

Unknown MS Internet

Safari

Mozilla

Explorer

Pages

Percent

Figure 68: Number and percentage of pages viewed by browser 

The amount of time spent on views is illustrated in Figure 5 below. It can be seen that 79 
per cent of the visitors spent between 0 to 30 seconds on a page per visit. The times of 
the remaining visitors ranged from 30 seconds to 1 hour.  

741This analysis was carried out at the time of writing, November 16, 2017. 

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1.200

1.000

800

600

400

200

0

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80%
70%
60%
50%
40%
30%
20%
10%
0%

Number of visits

Percent

Figure 69: Time spent on visits 

Figure 70: Monthly downloads for all files 

Lastly, the monthly downloads could potentially highlight why most visits were within the 
0 to 30 second range. Visitors were primarily downloading files; thus, they did not need 
to  spend  a  long  time  on  the  website.  In  February  2017,  the  number  of  downloads 
reached 176, reaching a peak in Sept 2017 with over 1248 downloads. Overall, there was 
a steep increase of downloads from January to October.  

9.5.3  Online Public Consultation 
The  Online  Public  Consultation  was  launched  on  17  March  2017  on  the  EU  Survey 
platform  and  ran  for  12  weeks,  until  9  June  2017.  The  Online  Public  Consultation  was 
available  in  English,  French,  Spanish,  Portuguese  and  Russian.  It  was  featured  on  the 
project’s website, the Your Voice in Europe 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  LDCs;  and  the  coherence  of  the  scheme  in  relation  to  other  EU  trade  and 
development policies.  

Through a set of tailored questions, the Project Team aimed to receive useful input from 
stakeholders  with  key  knowledge  of  the  scheme.  Contributions  were  particularly  sought 
from  stakeholders  from  the  public  sector,  private  sector,  and  social  organizations, 
including  trade  unions  and  international  organizations  in  the  EU,  Bangladesh,  Ethiopia, 
Bolivia and Pakistan. 

The  Online  Public  Consultation  allowed  the  Project  Team  to  gather  large  volumes  of 
standardised information with a relatively efficient use of financial and human resources. 
In  addition,  stakeholders  were  given  appropriate  time  to  prepare  responses,  allowing 
them  to  gather  and  utilise  information  that  may  not  be  readily  available  during  an 
interview. 

The Project Team identified two major drawbacks of using the Online Public Consultation, 
namely  the  low  response  rate  and  some  inherent  rigidity  in  this  form  of  feedback. 
Inevitably, in some cases the questions asked  may not have been  entirely applicable to 
the stakeholder. In order to minimise the risks and aim for a high rate of responses, the 
Project  Team  followed  up  on  stakeholders  with  reminder  emails,  telephone  calls  and 
promoted the Online Public Consultation through the project’s social media channels and 
at the local workshops and Civil Society Dialogues. Furthermore, the Project Team invited 

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key  stakeholders  for  interviews  and  meetings  to  allow  them  to  provide  more  in-depth 
input and insights. 

Overall,  there  was  a  high  response  rate  to  the  Online  Public  Consultation.  In  total,  the 
Project  Team  received  961  responses,  with  the  vast  majority  of  respondents  emanating 
from Europe. There was a high sectoral and geographical concentration in the responses 
to  the  Online  Public  Consultation.  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  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. 

it  enhances 
Business  stakeholders  highlighted  the  importance  of  the  GSP  as 
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. 

9.5.4  Interviews and meetings 
Interviews  and  meetings  constituted  the  most  direct  form  of  stakeholder  engagement 
under  the  Mid-Term  Evaluation.  Through  interviews  and  meetings,  the  Project  Team 
aimed  to  collect  in-depth  qualitative  data  and  insights  into  a  range  of  different 
perspectives from relevant stakeholders.  The  main objective of this consultation activity 
was  to  facilitate  detailed  discussions  with  stakeholders  on  the  various  impacts  of  the 
GSP. The interviews were structured to allow comparability of the information gathered, 

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while  also  allowing  a  degree  of  flexibility  to  the  interviewer  to  interact  with  the 
interviewee. 

The  Project  Team  invited  over  450  key  stakeholders  for  interviews  to  share  their  views 
and  opinions  on  the  impact  and  application  of  the  GSP  Regulation.  Overall,  the  Project 
Team conducted 26 interviews and 7 meetings with stakeholders in the EU as well as in 
the  case  study  countries.  These  took  the  form  of  face-to-face  meetings  and  telephone 
interviews.  

The  Project  Team  has  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.  

The Project Team 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 Project Team met with trade unions 
and business organisations. 

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  rights  and  development  association  (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.742 

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. 

Interviews  and  meetings  with  stakeholders  regarding  the  country-specific  and  sector-
specific case studies provided further insight on the impact of the GSP Regulation. 

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 

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

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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  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. 

9.5.5  Civil Society Dialogue 
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 Project Team. Firstly, the Commission expressed its appreciation 
of the exchange with civil society and laid out the objective and context of the Mid-Term 
Evaluation to assess the functioning of the current GSP Regulation and its impact in the 
beneficiary countries and the  EU. Secondly, the  Project Team presented its approach to 
the  Mid-Term  Evaluation,  including  the  methodological  approach  to  the  impact 
assessment  and  the  case  studies  and  the  stakeholder  consultation  activities.  EU 
stakeholders were then given the opportunity to refer their questions regarding the Mid-
Term Evaluation towards the Commission and the Project Team and to provide feedback 
on  the  Draft  Inception  Report.  Through  the  CSD,  the  first  contact  between  the  Project 

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Team  and  stakeholders  was  established,  providing  a  basis  for  the  ongoing  stakeholder 
engagement and consultation.743 

Figure 7 Twitter update from the first Civil Society Dialogue 

The  2nd  CSD  in  Brussels  was  organised  on  25  September  2017.  The  CSD  had  invited 
participants  from  registered  civil  society  organisations  and  representatives  from  the 
European Commission and the Project Team. 

Firstly, the lead speakers expressed their appreciation of the exchange with civil society 
and shortly reviewed the objective of the Mid-Term Evaluation to assess the functioning 
of  the  current  GSP  Regulation  and  its  impact  in  the  beneficiary  countries  and  the  EU. 
Secondly,  the  Project  Team  presented  its  progress  and  preliminary  findings  from  the 
Final Interim Report and reviewed the project timeline. EU stakeholders were then given 
the  opportunity  to  refer  their  questions  regarding  the  Mid-Term  Evaluation  towards  the 
Commission and the Project  Team and to provide feedback on the Final Interim Report. 
The  second  CSD  was  the  final  contact  between  the  Project  Team  and  the  stakeholders, 
thus  providing  them  a  last  chance  to  participate  in  the  stakeholder  engagement  and 
consultation.744 

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. 

743 The minutes of the Civil Society Dialogue are available here: http://www.gspevaluation.com/wp-
content/uploads/2016/12/Minutes-Mid-Term-Evaluation-GSP-Civil-Society-Dialogue-19-01-2017.pdf 
744 The minutes of the Civil Society Dialogue are available here: 
http://trade.ec.europa.eu/doclib/docs/2017/october/tradoc_156185.pdf 

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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 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. 

9.5.6  Local workshops in Bangladesh, Ethiopia, Bolivia and Pakistan 
The  Project  Team  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.  The  full-day  workshops  were  held  in 
Bangladesh, Ethiopia, Bolivia and Pakistan. The workshops have been publicly announced 
via the project dedicated website and social media channels.  

Throughout  the  workshops,  participants  were  provided  with  the  opportunity  to  learn 
more  about  the  EU’s  GSP,  to  comment  on  the  preliminary  findings  of  the  Mid-Term 
Evaluation  pertaining  to  their  respective  countries  and  most-affected  sectors,  and  to 
share  their  views  on  the  impact  and  application  of  the  GSP.  Local  experts  and 
government representatives were invited to comment specifically on the trade, economic, 
social, human rights, and environmental impacts of the  EU’s  GSP. Representatives from 
the  Commission  and  the  Project  Team  shared  background  information  on  the  GSP,  the 
objectives  of  the  Mid-Term  Evaluation,  and  the  preliminary  findings  of  the  Mid-Term 
Evaluation with participants. 

As  a  follow-up  to  each  workshop,  the  Project  Team  published  workshop  reports  on  the 
dedicated  project  website.  The  reports  included  summaries  of  the  presentations,  an 
overview  of  the  stakeholder  contributions  to  the  discussions  and  questions.  The 
PowerPoint  presentations  prepared  by  the  speakers  were  also  uploaded  on  to  the 
dedicated website. The workshop materials were promoted via the social media channels 
and featured in the electronic newsletter. 

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  are  were  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 

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side  constraints  such  as  increasing  production  costs  due  to  increased  labour  costs, 
infrastructure and banking costs. 

The workshop report is available on the website: here 

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 
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. 

The workshop report is available on the website: here 

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. 

The workshop report is available on the website: here 

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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, 
focusing 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. 

The workshop report is available on the website: here 

9.5.7  Meetings with the European Commission and ISSG 
The Project Team has attended two meetings with the Commission and the Inter-Service 
Steering  Group  (ISSG):  a  kick-off  meeting  on  17  November  2016  a  second  meeting  on 
19 January 2017 and a third ISSG meeting on 13 June 2017. These meetings served to 
provide  an  update  on  the  progress  on  the  Mid-Term  Evaluation  and  to  consult  with  the 
Commission  to  confirm  that  their  priorities  are  addressed  in  the  study.  These  meetings 
have  helped  to  steer  the  work  on  the  Mid-Term  Evaluation  to  ensure  that  it  remains 
highly relevant to the work of the Commission. 

The following EU departments are represented in the ISSG:  

  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 Employment, Social Affairs & Inclusion (DG EMPL); 
  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; and  
  The European External Action Service (EEAS). 

Initial engagement of the Project Team with the ISSG took place during the project kick-
off meeting on 17 November 2016. The meeting focused on the context and the scope of 
the Mid-Term Evaluation, as well as more specifically on the methodology and data to be 

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employed. Among the points discussed were the purpose and objective of the Mid-Term 
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  between  the  Project  Team  and  the  ISSG  took  place  on  19  January 
2017. During the meeting, the Team Leader, where necessary supported by key experts 
and  the  project  management  team,  provided  a  detailed  update  on  the  GSP  Mid-Term 
Evaluation  progress  to  date.  The  ISSG  and  the  Project  Team  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 between the Project Team and the ISSG took place on 13 June 2017. 
During  the  meeting,  the  Team  Leader  supported  by  the  project  management  team 
provided the preliminary findings of the Draft Interim Report and identified the steps to 
be taken towards its finalisation. A detailed update was also provided on the consultation 
and  research  activities  undertaken  to  date.  The  ISSG  provided  comments  and 
suggestions  on  the  Draft  Interim  Report,  which  were  incorporated  in  the  Final  Interim 
Report that was completed by the end of August 2017. 

9.5.8  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.  To  solve  this,  the  Project  Team 
initiated  bilateral  meetings  with  civil  society  and  business  associations  in  workshop 
countries. 

Another challenge was the inherent rigidity of the format and the low initial response rate 
to  the  Online  Public  Consultation.  However,  through  active  promotion  through  online 
outreach,  workshops,  emails  and  calls,  the  Project  Team  managed  to  engage  with 
important  stakeholders  and  receive  their  inputs.  Finally,  as  stakeholder  contributions 
were such an important part of giving a nuanced picture of the  impacts of the EU’s GSP 
on its beneficiary countries, the Project Team engaged in a large number of stakeholder 
activities. 

Over  450  invitations  were  sent  to  stakeholders  from  Europe,  Bangladesh,  Bolivia, 
Pakistan,  Ethiopia,  and  other  beneficiary  countries  to  participate  in  meetings  and 
interviews.  In  total,  33  meetings  and  interviews  were  conducted  and  21  written 
stakeholder contributions were made. 

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9.6  Annex VI - Summary of research methods and analytical 

methods   

This  section  provides  a  brief  overview  of  the  methodology  applied  by  the  Project  Team 
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.  

9.6.1  Economic impact analysis 
The  Project  Team  has  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 utilisation. 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 Project Team has conducted 
an  in-depth  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.  

The empirical quantitative economic analysis consists of two main parts: (i) a diagnostic 
and  descriptive  analysis  of  data  at  the  CN  8-digit  level  from  trade  databases  such  as 
Eurostat, TARIC, UN ComTrade, and WB World Integrated Trade Solution (WITS); and an 
econometric analysis of trade data from 2011 to 2016, provided by the EC at a CN 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  RoO,  as  applicable  during  the  period  under 

review. 

the 

(ii)  Descriptive/diagnostic  analysis:  Descriptive  and  diagnostic  analyses  have 
been  conducted  which  examine  the  degree  of  coverage  and  preferential  access 
under 
three  GSP  arrangements  (Standard  GSP,  GSP+,  and  EBA 
arrangements), 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  utilise  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  (MFN)  tariff-zero  trade.  Additionally,  there  have  been  detailed 
analyses of differences  in tariffs across  regime types and the preference margins 

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

  Share  of  trade  by  tariff  category  (MFN,  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. 

The  Project  Team  has  undertaken  further  analysis  of  the  impact  of  the  GSP  on 
export  diversification,  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:  The  Project  Team  has  undertaken  extensive  regression 
analysis  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)  toassess 
whether  there  have  been  associated  impacts  on  the  exports  of  those  countries  that  are 
no longer eligible for the GSP. The Project Team has 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 CN-8 digit level in order to  allow the Project 
Team to analyse the impact of the GSP reform as precisely as possible. The Project Team 
analysed the trade data from three years before to three years after the scheme’s reform 
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, the Project Team made use of EU import data 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: 

Table 38: Data sources used for MTE economic impact analysis  

Institution 

European 
Commission  

 Database 

Eurostat 

Title 

Trade data at HS-6 level, including 
utilisation rate, for 2011-2016 (Data for 
2016 will be made available from March 
2017).  

Year 

2011-
2016  

TARIC 

The integrated tariff of the European 
Communities is a database which 

2011-
2016 

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Institution 

 Database 

Title 

United Nations 

UN Comtrade 

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 

(updated 
to 
December 
2016) 

2011-
2015 

9.6.2  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  Project 
Team  sought  to  gain  a  picture  of  the  social  impact  associated  with  participation  in  the 
GSP.  The  Project  Team  has  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. 

The Project Team makes use of a wide range of social and human rights indicators as set 
out in the table below: 

Table 39: Social and human rights indicators used in MTE  

Indicator 

Description 

Unemployment 

Female 
employment 

Employment-to-population ratio to measure the 
proportion of the country’s working age population that 
is employed. 

Share of women in wage employment 

Youth 
unemployment 

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

Wages 

Average real wages; and average real wage growth. 

Social Protection 
Rating 

Social Inclusion 
Rating 

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 

Source 

World Bank; 
National 
statistics 

World Bank; 
National 
statistics 

World Bank; 
National 
statistics 

National 
statistics 

Country Policy 
and Institutional 
Assessment 
(CPIA) World 
Bank 

CPIA World Bank 

Poverty rate 

Proportion of the population below the international 
poverty line of $ 1.90 per day 

World Bank 

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Indicator 

Description 

Civil Liberties 
Index 

Political Rights 
Index 

Gender Equality 
Rating 

Voice and 
Accountability 
Index 

Political Stability 
Index 

Government 
Effectiveness 
Index 

Regulatory Quality 
Index 

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. 

Source 

Freedom House 

Freedom House 

CPIA World 
Bank; available 
up until 2015 

World Bank 

World Bank 

World Bank; 
available up until 
2015 

World Bank 

Rule of Law Index  Assessment of agents’ confidence in and abide by the 

World Bank 

Corruption 
Perceptions Index 
(CPI) 

Control of 
Corruption Index 

rules of society and likelihood of crime and 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  the  Project 
Team  has  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 

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reports,  and  monitoring  reports  by  international  monitoring  bodies,  such  as  the  ILO. 
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.  

9.6.3  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  Project  Team  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 Project Team 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. 

The Project  Team makes use of a wide  range  of  environmental indicators set out in the 
table below. 

Table 40: Environmental indicators used in MTE 

Indicator 

Description 

Waste generation  Municipal waste per capita, municipal waste recovery 

rates 

Source 

IEA Country 
Profiles 

Assessment of the extent to which environmental policies 
foster the protection and sustainable use of natural 
resources and management of pollution 

CPIA World 
Bank; available 
up until 2015 

Environmental 
Sustainability 
Rating 

Forest Area 
Coverage 

Land use and 
competition 

Forest area as a percentage of land area, tree cover 
loss/gain, tree cover %, deforestation/reforestation rates, 
LULUCF-related CO2 emissions, carbon stocks 

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) 

Land tenure and 
ownership rights 

Private ownership of land and further investments in land 
improvements (i.e. increased economic returns per unit 
of land) 

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 

Terrestrial and 

UN SDG indicator on the proportion of important sites for  UN; FAOSTAT: 

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Indicator 

freshwater 
biodiversity 

Description 

terrestrial and freshwater biodiversity that are covered by 
protected areas 

Source 

available up 
until 
2014/2015; 
AQUASTAT 

Proportion of fish 
stocks 

UN SDG indicator on the proportion of fish stocks within 
biologically sustainable levels 

UN 

Biodiversity 

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. 

CBD, GBIF and 
InforMEA 
Country Profiles 

UNDP Climate 
Change country 
profiles; WHO 
Climate Change 
and Human 
Health Country 
Profiles 

CO2 emissions 

UN MDG indicator on total CO2 emissions and per capita 
emissions 

UN; IEA 
Country Profiles 

Biofuels  

Use of biofuels 

IEA Country 
Profiles 

Renewable 
energy 

ND-GAIN index 

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

UN; IEA 
Country Profiles 

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 

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.  

9.6.4  Case studies 
The Mid-Term Evaluation includes six case studies to conduct a systematic analysis of the 
economic, social, environmental, and human rights impacts 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 

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sector  has  been  selected  due  to  concerns  about  intensifying  competition  for  EU 
industry in this sector as a result of the trade preferences. 

(ii)  Case  studies  on  the  GSP+  arrangement  in  Pakistan  and  Bolivia  -  The 
Project  Team    has  conducted  two  case  studies  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  -  The 
Project  Team  has  conducted  two  case  studies  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. 

Table 41: Analytical questions used in MTE case studies 

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 

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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? 

-  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? 

Impact of the 
GSP+ in Pakistan 
and Bolivia 

Impact of the 
EBA in Ethiopia 
and Bangladesh 

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9.7  Annex VII - GSP’s Impact on EU Imports of Biofuels 

The  GSP  Regulation  provides  that  the  Commission’s  report  on  the  application  of  the 
Regulation  should  include  an  analysis  of  the  effects  of  the  scheme  on  the  imports  of 
biofuels and sustainability aspects. This section supports this analysis.  It first provides a 
brief overview of the use of biofuels in the EU, and identifies relevant and feedstocks that 
the  EU  imports.  Subsequent  sections  detail  the  level  of  imports  of  biofuels  and  key 
feedstocks  under  the  GSP,  and  then  provide  insight  into  the  environmental  implications 
of biofuels production in relevant countries of origin. The sustainability criteria set out in 
EU legislation are then reviewed. A last section puts forward concluding remarks. 

Biofuels and the GSP 

According to the  European Commission’s latest progress  report  on  renewable energy745, 
79% of biofuel used in the EU is biodiesel (10.9 Mtoe) and about 20% is bioethanol (2.6 
Mtoe). Most of this biofuel is produced from EU feedstocks (biodiesel: >60%, bioethanol: 
>90%).  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).746 Of  these 
countries, two of the biofuel exporters are included under the GSP arrangements in place 
since  January  2014:  Bolivia  and  Pakistan,  both  of  which  are  under  GSP+.  The  next 
sections provides data on overall biofuel imports under GSP and on biofuel imports from 
these two countries, as well as insight into the direct747 environmental impacts of the EU 
GSP due to the production and trade of biofuels.  

The  EU  also  imports  feedstocks  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). 748 Among  the  feedstocks,  it  should  be  noted  that  biofuels  consumed  an 
estimated half of EU palm oil imports in 2014, up from about  one-quarter  earlier in the 
decade.749 Information is not available on the share of cereal imports used for biofuels in 
the EU, but it is believed to be quite small.  

With regard to the main countries that are sources the EU’s feedstock imports, it can be 
noted  that  Malaysia,  a  large  exporter  of  palm  oil,  was  under  GSP  only  up  to  2013.  The 
other major palm oil exporter,  Indonesia, has remained in GSP but has been graduated 
for product section 3 (which includes palm oil) with the entry into force of the new GSP 
Regulation in January 2014. Neither Malaysia nor Indonesia, however, exported palm oil 
to  the  EU  under  GSP  in  the  years  2011  to  2013.  Among  the  exporters  of  cereal 
feedstocks, Ukraine is part of GSP, but its cereal exports are not covered.  

EU imports of palm oil under GSP are detailed below. As noted above, only a small share 
of EU imports of cereals are believed to be used for biofuels; this annex does not further 
review these imports.  

Imports of biodiesel and ethanol 

745 European Commission, Renewable Energy Progress Report, COM(2017) 57 final. 
746 Guatemala and Peru exited the GSP+ plus arrangement in 2013, making a transition to a free trade 
agreement with the EU. Malaysia exited Standard GSP in 2013 without entering a new agreement.  Therefore, 
these countries are not considered further in this section. 
747 Indirect land-use change is not discussed in detail in this section because its relationship with the GSP is 
considered too slight to allow a meaningful analysis. 
748 European Commission, Renewable Energy Progress Report, COM(2017) 57 final. 
749 Transport and Environment, Cars and trucks burn almost half of palm oil used in Europe, 2016  (based on 
data from FEDIOL) 

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Total  EU  imports  of  biodiesel  declined  drastically  between  2012  and  2016,  from  about 
EUR  2.6  billion  to  just  over  EUR  450  million.  EU  imports  of  biodiesel  under  GSP  also 
declined,  from  about  EUR  860  million in  2012  and  2013  to  below  EUR  10  million in  the 
period from 2014 to 2016 (see the figure below). For 2012 and 2013 combined, 49% of 
EU imports of biodiesel were under GSP, while for 2014 to 2016, the share was close to 
zero.  

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2500

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500

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2016

Total

Under GSP

Figure 71: EU imports of biodiesel: total and under GSP (2012 to 2016) 

The  decline  in  biodiesel  imports  under  GSP  is  linked  in  particular  to  the  reform  of  the 
GSP,  which  significantly  reduced  the  number  of  beneficiary  countries  (from  177  to  90): 
some of the larger biodiesel exporters under GSP in 2013, such as Malaysia and Mexico, 
did not remain under GSP. (An even sharper trend is seen compared to 2010 and 2011, 
when biodiesel imports from Argentina under GSP reached approximately EUR 1 billion.) 

After increasing from 2011 to 2013, total EU imports of ethanol750 declined from 2013 to 
2016, from about EUR 460 million to about EUR 260 million. EU imports under GSP also 
declined (see the figure below).  

s
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500

450

400

350

300

250

200

150

100

50

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2012

2013

2014

2015

2016

Total

Under GSP

Figure 72: EU imports of ethanol: total and under GSP (2011 to 2016) 

For ethanol, the share of GSP imports was larger in the period 2014 to 2016, 39% of the 
total, compared to 2011 to 2013, when GSP imports made up only 21% of the total. Both 

750 Trade statistics do not distinguish between end-uses. Imports of products classified as ‘ethanol’ may be used 
as biofuels, as well as in non-energy applications. Actual values for bioethanol are therefore expected to be 
lower than shown here. 

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periods saw significant shifts in import levels, however.   

Imports of ethanol from Bolivia and Pakistan and their sustainability impacts 

As noted above, two case study countries, Bolivia and Pakistan, are important exporters 
of ethanol to the EU. The table below shows total EU ethanol imports under the GSP, as 
well  as  imports  from  Bolivia  and  Pakistan,  over  the  period  2012-2016  (data  for  2011 
were not available in the source).751 

Table 42: EU imports of ethanol under the GSP  

Total GSP  
(EUR mln) 

Bolivia  
(EUR mln) 

2011 

2012 

2013 

2014 

2015 

2016 

38 

4 

28 

3 

175 

158 

102 

25 

47 

29 

63 

13 

% Bolivia 

12% 

12% 

14% 

30% 

28% 

20% 

Pakistan  
(EUR mln) 

% Pakistan 

%Bolivia + 
%Pakistan 

The table shows that: 

0 

0 

0 

42 

14 

26% 

14% 

56% 

42% 

42 

67% 

87% 

o  The average of the EU’s total ethanol imports under GSP in the years 2011-2013 

(EUR 242m) was lower than the average from 2014 to 2016 (EUR 323m) 

o  Over  the  period  from  2014  to  2016,  EU  imports  under  GSP  fell  by  60%,  with 

imports from Bolivia falling by 73%; 

o  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. 

The sustainability aspects related to EU imports of ethanol are seen in particular in terms 
of impacts in the exporting countries.  

Comprehensive  data  on  Bolivia’s  overall  bioethanol  production  or  exports  to  markets 
other than the EU were not available.752 However, industry sources suggest that the EU is 
an important export market for Bolivia’s bioethanol.753 

Pakistan  has  historically  been  the  largest  exporter  of  ethanol  to  the  EU.754 After  textiles 
and  clothing,  ethanol  is  an  important  export  product  for  Pakistan.  Available  literature 

751 Based on trade data supplied by the European Commission  
752 US data indicate  no imports of bioethanol from Bolivia. See US Energy Information Administration, 
Petroleum & other liquids: U.S. net imports by country: Bolivia, 2017, available at: 
https://www.eia.gov/dnav/pet/pet_move_neti_dc_NUS-NBL_mbblpd_a.htm 
753Recent news reports indicate for example that a Bolivian mill is planning to sell all of its alcohol production to 
Italy. See World Ethanol & Biofuels Report, Bolivia - San Buenaventura mill to export ethanol to Italy, 2017, 
available at https://www.agra-net.com/agra/world-ethanol-and-biofuels-report/analysis/company/bolivia---san-
buenaventura-mill-to-export-ethanol-to-italy--1.htm An older news item suggests that part of the production of 
that company will be exported to Peru. See Sugaronline, Bolivia: San Buenaventura mill will export ethanol to 
Peru and Italy, 2016, available at http://www.sugaronline.com/website_contents/view/1248505 
754 Worldwatch Institute, Biofuels for transport: Global potential and implications for sustainable energy and 
agriculture, 2007. 

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suggests  that  the  EU  GSP  (together  with  the  2004  Cooperation  Agreement755)  is  a  key 
factor behind the high level of Pakistan’s exports to the EU.756 

More  information  is  available  about  the  environmental  impacts  of  bioethanol  in  Bolivia 
than in Pakistan. In both countries bioethanol is mainly produced from sugarcane,757 so it 
may be expected that the environmental implications will be broadly similar758. In Bolivia, 
key impacts consist of: 

o  Deforestation: Nearly a third of deforestation (540,000 ha  or 29.7%) in Bolivia 
in  the  period  2000-2010  is  attributed  to  mechanised  agriculture  --  the  second 
main  driver  of  deforestation  in  the  country  after  cattle  ranching  (940,000  ha  or 
51.9%).  Mining  plays  a  less  important  role.  Sugarcane  is  the  second  most 
important  product  (after  soybean),  with  production  concentrated  in  the  Santa 
Cruz region. Increasing international demand for agricultural products (especially 
soybean)  is  among  the  main  factors  behind  the  expansion  of  mechanised 
agriculture  in  Bolivia. 759 In  Pakistan,  sugarcane  has  significantly  contributed  to 
water  consumption  and  changing  water  flows.  This  has  for  example  affected  the 
Indus Delta, which supports the world’s largest expanse  of arid land mangroves. 
Only  65%  of  the  260,000  hectares  of  mangrove  forest  still  remains,  and  is 
dominated by only one salt-tolerant species (on soil salinity, see below).760 

o  Effluents  and  air  emissions:    The  discharge  of  effluents  is  among  the  most 
significant  environmental  impacts  from  sugarcane  processing,  which  makes  the 
sugarcane  industry  one  of  the  main  water  polluters  in  Bolivia.761 They  arise  from 
e.g.  the  annual  cleaning  of  mills  and  can  include  heavy  metals,  oil,  grease  and 
cleaning  agents.  Unless  properly  managed,  they  can  have  negative  impacts  on 
water bodies. For example, in 1995 the cleaning of sugar mills is alleged to have 
caused millions of fish in local rivers to die.762 Aerial particulate matter can cause 
fall-outs  in  the  vicinity. 763  In  Pakistan  as  well,  sugarcane  cultivation  has  been 
associated  environmental  impacts,  including  pesticide  contamination  of  surface 

755 Council decision 2004/870/EC of 29 April 2004 concerning the conclusion of the Cooperation Agreement 
between the European Community and the Islamic Republic of Pakistan. 
756Govaere I. and Poli S., EU management of global emergencies: Legal framework for combating threats and 
crises, 2014. 
757 Peperkamp M., Fact-finding agro-food Bolivia with a special focus on Santa Cruz region, 2016-17, available 
at https://www.rvo.nl/sites/default/files/2017/06/FACTFINDING%20BOLIVIA%20-%20final%20version.pdf 
Arshad M. et al., Enhanced ethanol production at commercial scale from molasses using high gravity technology 
by mutant S. cerevisiae, 2017, available at 
http://www.sciencedirect.com/science/article/pii/S1517838217301193 
758 Although deforestation is an important environmental concern in Pakistan (see section 7.2.3 of this report), 
links between deforestation and sugarcane production in Pakistan were not found in the literature reviewed.  
759 Müller R. et al. (CIFOR), The context of deforestation and forest degradation in Bolivia: Drivers, agents and 
institutions, 2014, available at https://www.cifor.org/library/4600/the-context-of-deforestation-and-forest-
degradation-in-bolivia-drivers-agents-and-institutions/ On sugarcane-driven deforestation in Bolivia also see 
Berton E. F., Exclusive: Rainforest rapidly cleared for sugarcane in Bolivia, 2016, available at 
https://news.mongabay.com/2016/10/exclusive-rainforest-rapidly-cleared-for-sugarcane-in-bolivia/ 
760 WWF, Sugar and the environment: Encouraging better management practices in sugar production and 
processing, 2005, available at http://wwf.panda.org/?22255/Sugar-and-the-Environment-Encouraging-Better-
Management-Practices-in-Sugar-Production-and-Processing 
761 Müller R. et al. (CIFOR), The context of deforestation and forest degradation in Bolivia: Drivers, agents and 
institutions, 2014, available at https://www.cifor.org/library/4600/the-context-of-deforestation-and-forest-
degradation-in-bolivia-drivers-agents-and-institutions/ On sugarcane-driven deforestation in Bolivia also see 
Berton E. F., Exclusive: Rainforest rapidly cleared for sugarcane in Bolivia, 2016, available at 
https://news.mongabay.com/2016/10/exclusive-rainforest-rapidly-cleared-for-sugarcane-in-bolivia/ 
762 WWF, Sugar and the environment:Encouraging better management practices in sugar production and 
processing, 2005, available at http://wwf.panda.org/?22255/Sugar-and-the-Environment-Encouraging-Better-
Management-Practices-in-Sugar-Production-and-Processing 
763 Rein P. et al. (IFC), Good management practices manual for the cane sugar industry, 2011, available at 
http://www.ifc.org/wps/wcm/connect/486cf5004953685e8586b519583b6d16/IFC_GMP_ManualCaneSugarIndu
stry.pdf?MOD=AJPERES 

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and groundwater, and sugar processing is a further source of water pollution.764 
o  Soil  quality:  Sugarcane  production,  together  with  other  factors  (e.g.  weather, 
topography)  contribute  to  soil  erosion,  which  affects  the  environmental  status  of 
water  bodies  as  polluted  sediments  wash  into  rivers  and  marine  ecosystems. 765 
Negative  impacts  on  soil  quality  also  arise  from  pre-harvest  burning  (see  next 
bullet  point).766 It  is  estimated  that  40%  of  sugarcane  growing  areas  in  Pakistan 
have  soil  salinity  problems.  Together  with  water-logging,  soil  salinity  can  reduce 
yields by up to 50%.767 

o  Greenhouse  gas  emissions: The manufacture of herbicides and fertilisers used 
in  sugarcane  plantations  requires  significant  energy  inputs  and  therefore 
contributes  to  greenhouse  gas  emissions. 768 Greenhouse  gas  emissions  and  air 
pollution also result from the practice, is intended to facilitate cutting, of burning 
cane fields before harvesting.769 

EU imports of palm oil 

Total EU imports of palm oil rose from approximately EUR 3 billion in 2011 to an average 
just  over  EUR  4  billion  in  the  period  from  2012  to  2016.  Imports  under  GSP,  however, 
made up a small share of total imports (see the figure below).  

764 Azizullah A. et al, Water pollution in Pakistan and its impact on public health — A review, Environment 
International, Vol. 37, pp. 479-297, doi:10.1016/j.envint.2010.10.007  
765 WWF, Sugar and the environment: Encouraging better management practices in sugar production and 
processing, 2005, available at http://wwf.panda.org/?22255/Sugar-and-the-Environment-Encouraging-Better-
Management-Practices-in-Sugar-Production-and-Processing 
766 Peperkamp M., Fact-finding agro-food Bolivia with a special focus on Santa Cruz region, 2016-17, available 
at https://www.rvo.nl/sites/default/files/2017/06/FACTFINDING%20BOLIVIA%20-%20final%20version.pdf 
767WWF, Sugar and the environment: Encouraging better management practices in sugar production and 
processing, 2005, available at http://wwf.panda.org/?22255/Sugar-and-the-Environment-Encouraging-Better-
Management-Practices-in-Sugar-Production-and-Processing 
768A possible approach to reduce the use of herbicides is leaving trash in-field after cane chopper harvesting. 
Similarly, fertiliser needs may be reduced by re-using vinasse (a by-product). See Rein P. et al. (IFC), Good 
management practices manual for the cane sugar industry, 2011, available at 
http://www.ifc.org/wps/wcm/connect/486cf5004953685e8586b519583b6d16/IFC_GMP_ManualCaneSugarIndu
stry.pdf?MOD=AJPERES 
769 WWF, Sugar and the environment: Encouraging better management practices in sugar production and 
processing, 2005, available at http://wwf.panda.org/?22255/Sugar-and-the-Environment-Encouraging-Better-
Management-Practices-in-Sugar-Production-and-Processing Replacing this practice with ‘green cane’ harvesting 
practices (without burning) is considered an environmental good practice which, however, reduces labour 
requirements and can result in the layoff of workers. See Rein P. et al. (IFC), Good management practices 
manual for the cane sugar industry, 2011, available at 
http://www.ifc.org/wps/wcm/connect/486cf5004953685e8586b519583b6d16/IFC_GMP_ManualCaneSugarIndu
stry.pdf 

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4500

4000

3500

3000

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1500

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0
2011

2012

2013

2014

2015

2016

Total

Under GSP

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Figure 73: EU imports of palm oil: total and under GSP (2011 to 2016) 

From 2011 to 2013, EU imports of palm oil under GSP represented about 10% of total EU 
imports. Imports of palm oil under GSP fell to 4% of the total in 2014 and 1% in the next 
two years.  

The  decline  in  palm  oil  imports  under  GSP  is  linked  to  the  reform  of  the  GSP,  which 
significantly  reduced  the  number  of  beneficiary  countries:  some  of  the  larger  palm  oil 
exporters under GSP in 2013 – such as Brazil, Colombia, Ecuador, Honduras and Thailand 
– were no longer part of GSP.  

The two largest palm oil exporters to the EU – Indonesia and Malaysia – were both part 
of GSP in the period from 2011 to 2013, but neither exported palm oil under GSP. From 
2014,  as  noted  above,  Malaysia  is  no  longer  under  GSP  and  Indonesia  has  been 
graduated for product section 3 (which includes palm oil).  

By 2016, EU imports of palm oil under GSP had fallen to EUR 21 million,  of  which 90% 
came from one exporting country, the Solomon Islands.  

The main environmental impacts associated with the production and processing of palm 
oil vary by producer. They can include770, 771: 

o  Deforestation and peatland conversion 
o  Biodiversity loss 
o  Fertilisers and pesticides runoff 
o  Waste and by-products from processing 
o  Water and energy use 
o  Effluents and air emissions 

EU  imports  under  GSP,  however,  represent  a  small  and  declining  share  of  total  EU 
imports  and  thus  a  minor  contribution  to  these  impacts  in  nearly  all  palm  oil  exporting 
countries772.  

770 Sheil D. et al., The impacts and opportunities of oil palm in Southeast Asia: What do we know and what do 
we need to know?, 2009, available at https://www.cifor.org/library/2792/the-impacts-and-opportunities-of-oil-
palm-in-southeast-asia-what-do-we-know-and-what-do-we-need-to-know/ 
771 International Finance Corporation (IFC), Environmental, Health, and Safety Guidelines for Vegetable Oil 
Production and Processing, 2015, available at: 
http://www.ifc.org/wps/wcm/connect/1e6d9780474b37b89a2bfe57143498e5/FINAL_Feb+2015_Vegetable+Oil
+Processing+EHS+Guideline.pdf 
772 Moreover, it can be noted that for the largest exporter of palm oil in the world, Indonessia, less than 20% of 
its total exports go to Europe. 

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Sustainability criteria in the Renewable Energy Directive and Fuel Quality 
Directive 

The EU promotes renewable energy in transport, including from biofuels. The Renewable 
Energy Directive773 and the Fuel Quality Directive774 make such promotion conditional on 
biofuels complying with sustainability criteria including: 

o  Greenhouse  gas  emissions:  Biofuels  have  to  achieve  minimum  levels  of 
greenhouse  gas  savings,  depending  on  whether  they  are  produced  in  new  or  old 
installations  (new  installations:  60%;  old  installations:  35%  until  end-2017, 
raising to 50% from 2018). The greenhouse gas savings are calculated on a life-
cycle basis. 

o  Biodiversity: Biofuels cannot be produced from raw material obtained from land 
with  high  biodiversity  value,  including  primary  forests  and  other  wooded  lands, 
designated areas and highly biodiverse grasslands. 

o  Carbon  stocks:  Biofuels  cannot  be  made  from  raw  material  obtained  from  the 
conversion of land with high carbon stock, such as wetlands and certain forested 
areas. 

o  Peatland:  Biofuels  cannot  be  made  from  raw  material  obtained  from  peatland, 
unless there is evidence that no drainage of previously undrained soil occurred. 

Compliance  with  sustainability  criteria  can  be  attested  in  several  ways,  the  main  one 
being  certification  under  one  of  the  schemes  officially  recognised  by  the  European 
Commission.775 

Since 2015, a maximum of 7% of biofuels receiving public support can come from crops 
grown on agricultural land. This is in response to concerns related to (indirect) land-use 
change. 776 This  is  higher  than  current  EU  biofuels  consumption.  Therefore,  the  cap  is 
mainly expected to limit additional environmental pressure. 

The reliability of the certification system has been called into question.777 Even assuming 
full  compliance,  the  fact  remains  that  sustainability  criteria  do  not  target  all  relevant 
environmental  impacts  described  in  the  previous  sections  (water  consumption  and 
pollution,  effluent  and  air  emissions  other  than  greenhouse  gas  emissions,  soil  quality 
and  waste).  Therefore,  while  sustainability  criteria  can  help  protect  against  the  impacts 
they target, they are not comprehensive enough to cover all impacts. 

Concluding remarks 

o  Under  the  GSP,  the  EU  imports  biofuels  and  their  feedstocks,  with  the  largest 

o 

imports in 2014 to 2016 being bioethanol from Bolivia and Pakistan.  
In the period 2014 to 2016, EU imports of ethanol under GSP represented 39% of 
total EU imports. Both total EU imports of ethanol and those under  GSP declined 
in  this  period.  The  lion’s  share  of  imports  under  GSP  came  from  Bolivia  and 
Pakistan. 

773Directive 2009/28/EC of the European Parliament and of the Council of 23 April 2009 on the promotion of the 
use of energy from renewable sources and amending and subsequently repealing Directives 2001/77/EC and 
2003/30/EC. 
774Directive 98/70/EC of the European Parliament and of the Council of 13 October 1998 relating to the quality 
of petrol and diesel fuels and amending Council Directive 93/12/EEC. 
775https://ec.europa.eu/energy/node/74 
776https://ec.europa.eu/energy/node/75 
777European Court of Auditors, The EU system for the certification of sustainable biofuels, 2016, available at 
http://www.eca.europa.eu/en/Pages/DocItem.aspx?did=37264 

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o 

In  both  countries,  bioethanol  is  mainly  produced  from  sugarcane,  the  cultivation 
of  which  is  associated  with  negative  impacts  on  forests,  air,  water,  soil  and 
greenhouse gas emissions.  

o  The  EU’s  total  imports  of  biodiesel  have  fallen  since  2012;  imports  of  biodiesel 

under GSP have also fallen and were negligible in 2015 and 2016.  

o  Consequently, sustainability impacts associated with GSP imports will have  fallen 

to low levels.  

o  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%. 

o  Consequently,  sustainability  impacts  associated  with  palm  oil  imports  under  GSP 

have a small and declining share of impacts related to total EU imports.  

o  Sustainability  criteria  in  the  Renewable  Energy  Directive  and  Fuel  Quality 
Directive,  if  appropriately  implemented,  can  avoid  deforestation,  peatland 
conversion and significant biodiversity loss. They do not however address the full 
array of environmental impacts.  

o  While  this  review  has  identified  the  types  of  sustainability  impacts  from  biofuels 
and  a  key  feedstock,  palm  oil,  generally  speaking it is  difficult  to  isolate  impacts 
from  the  GSP  imports  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. 

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9.8  Annex VIII - Application of GSP Regulation and EU’s Sanitary 

and Phytosanitary Legislation  

The  GSP  Regulation  provides  that  the  Commission  report  on  the  application  of  the 
Regulation  should,  where  applicable,  assess  compliance  with  Union  sanitary  and 
phytosanitary  (SPS)  legislation. 778  This  section  develops  this  assessment.  After  an 
introduction  to  SPS  measures,  we  offer  examples  of  recent  cases  in  which  GSP 
beneficiaries have  raised concerns about EU SPS measures, and in a last subsection we 
highlight  the  main  implications  of  such  requirements  for  countries  benefiting  from  GSP 
arrangements. 

Introduction 

The  GSP  has  among  its  objectives  to  expand  exports  from  developing  countries  and 
promote  sustainable  development.  At  the  same  time,  international  trade  can  pose  risks 
to  human  and  animal  health,  which  are  managed  by  requiring  imported  goods  to  meet 
EU sanitary and phytosanitary requirements. SPS measures are an example of non-tariff 
barriers to international trade. The table below lists notable SPS measures and provides 
examples of relevant requirements.779 

Table 43: Notable EU SPS measures 

Type of SPS measure 

Examples of relevant requirements 

Tolerance limits for residues and 
restricted use of substances 

Maximum residue levels (MRLs) for insecticides, 
pesticides and heavy metals 

Hygienic requirements 

Treatment for elimination of 
plant and animal pests and 
disease-causing organisms in 
the final product 

Restrictions on additives used for colouring, 
preservation and sweeteners 

Pasteurisation of eggs to avoid Salmonella 
microorganisms 

Daily cleaning of milking equipment on farms 

Cold treatment to eliminate fruit flies from citrus 
fruits 

Post-harvest fumigation of peaches, nectarines, 
apricots and cherries to destroy fungal spores 

Other requirements on 
production or post-production 
processes 

Prohibition to feed cattle with feeds containing offal 
of cows suspected of bovine spongiform 
encephalopathy (BSE) 

Requirements to store certain foodstuff in a dry 
place, or below a certain temperature 

Conformity assessment related 
to SPS 

Registration requirements for pesticides and 
compounds 

Tests on samples of orange imports to check 
against MRLs of pesticides 

Inspection of animals or part plants before entry 

Traceability requirements 

The  need  to  protect  health  in  the  context  of  international  trade  is  recognised  at 

778 Recital 34 and Article 40, second subparagraph, GSP Regulation. 
779 UNCTAD, International classification of non-tariff measures: 2012 version, 2015, available at 
http://unctad.org/en/PublicationsLibrary/ditctab20122_en.pdf   

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international  level.  Under  the  World  Trade  Organization  (WTO),  the  Agreement  on  the 
Application  of  Sanitary  and  Phytosanitary  Measures  (SPS  Agreement)  seeks  to  strike  a 
balance  between  countries’  right  to  implement  legitimate  food  safety  and  health 
protection policies and the promotion of cross-border trade. Among other things, the SPS 
Agreement  requires  WTO  members  to  notify  the  WTO  Secretariat  of  requirements  that 
may affect international trade. Other countries may submit comments. 

At the time of writing, the European Union has 118 sanitary and phytosanitary measures 
in  force,  and  these  affect  imports  from  GSP  countries:  of  the  118  measures,  108  affect 
the  case-study  countries  Bangladesh,  Bolivia,  Ethiopia780 and  Pakistan.781 These  figures 
are likely to underestimate the actual number of SPS measures in force in the EU.782 

The  overarching  regulatory  framework  for  EU  SPS  requirements  is  established  by  the 
General  Principles  of  Food  Law. 783  This  legislative  act  sets  out  the  principles  and 
obligations  applicable  at  various  stages  of  food  production  and  distribution,  which  apply 
to  food  products  regardless  of  whether  they  are  produced  in  the  EU  or  in  third 
countries.784 

Generally speaking, EU regulations in this field are more comprehensive and stricter than 
in  other  countries,  both  as  a  result  of  the  precautionary  principle  (which  leads  to 
managing uncertainty and risk even when harm is not proven) and the pre-existing legal 
traditions of the Member States.785 

In recent years, the most notable examples of EU SPS measures which created concerns 
at international level include initiatives on novel food, pesticides and endocrine disrupting 
chemicals  (EDCs).  These  will  be  discussed  in  turn  to  illustrate  the  concerns  that  SPS 
measures  raise  for  international  trade.  A  last  section  estimates  the  impact  of  EU  SPS 
measures on exports from GSP beneficiary countries. 

Novel food 

Novel  food  is  food  that  has  not  been  used  for  human  consumption  in  the  EU  to  a 
significant degree before 1997 and which falls under certain defined categories (e.g. food 
consisting  of  or  isolated  from  micro-organisms,  fungi  or  algae).  Examples  of  novel  food 
include chia seeds (an agricultural product mainly produced in Latin America), synthetic 
zeaxanthin  (a  newly  produced  nutritional  supplement)  and  rapeseed  protein  (extracted 
from existing food).786 

The  EU  first  regulated  novel  foods  and  food  ingredients  with  the  adoption  of  Regulation 

780 Note that Ethiopia is not a member of the WTO. 
781 Based on information reported in the WTO Integrated Trade Intelligence Portal (I-TIP Goods), available at 
http://i-tip.wto.org/goods/default.aspx?language=en. The search criteria covered European Union’s regular 
sanitary and phytosanitary measures (thus excluding emergency measures) in force on 14 September 2017. 
782 Notifications to the WTO usually cover broad measures rather than distinct measures. Moreover, WTO 
members have only been obliged new SPS measures proposed since 1995. See Josling T. and Roberts D., 
Measuring the impact of SPS standards on market access, no date, available at 
http://www.oecd.org/tad/ntm/48632882.pdf   
783 Regulation (EC) No 178/2002 of the European Parliament and of the Council of 28 January 2002 laying down 
the general principles and requirements of food law, establishing the European Food Safety Authority and laying 
down procedures in matters of food safety. 
784 Murina M. and Nicita A. (UNCTAD), Trading with conditions: The effect of sanitary and phytosanitary 
measures on lower income countries’ agricultural exports, 2014, available at 
http://unctad.org/en/PublicationsLibrary/itcdtab70_en.pdf  
785 Murina M. and Nicita A. (UNCTAD), Trading with conditions: The effect of sanitary and phytosanitary 
measures on lower income countries’ agricultural exports, 2014, available at 
http://unctad.org/en/PublicationsLibrary/itcdtab70_en.pdf  
786 https://ec.europa.eu/food/safety/novel_food_en  

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(EC)  No  258/97  (the  1997  Regulation).787 This  regulation  expired  at  the  end  of  2017, 
when  it  was  replaced  by  the  new  Regulation  (EU)  2015/2283  (the  2015  Regulation).788 
The regulations aim to ensure safety for consumers and, to this end, set out labelling and 
authorisation requirements. 

Criticism  of  EU  novel  food  policy  was  spearheaded  by  Peru  (not  a  GSP  beneficiary). 
Bolivia,  Paraguay,  the  Philippines  (GSP+  beneficiaries),  Indonesia  and  India  (Standard 
GSP  beneficiaries)  and  several  other  trading  partners  not  benefiting  from  GSP 
arrangements also expressed concerns. In statements to the WTO, these countries stated 
that:789 

o  Food is considered ‘novel’ and regulated not when it is novel in general (i.e. it has 
not  been  consumed  anywhere  before),  but  when  it  is  novel  to  the  EU.  The  fact 
that a food was or was not consumed in the EU before 1997 bears no relationship 
to  scientific  evidence  of  its  safety.  Most  traditional  and  exotic  products  from 
developing  countries  would  be  considered  ‘novel’  under  the  EU  definition  even  if 
they  have  been  consumed  for  thousands  of  years  and  may  have  substantial 
presence in other developed countries’ food markets. 

o  The  burden  of  proof  about  food  safety  is  placed  on  exporting  countries,  many  of 
which are developing countries. The  cost and time needed to  obtain approval for 
novel  foods  constitute  an  unnecessary  and  unjustified  barrier  to  trade, 
disproportionate to health risks. 

o  Export of these products plays an important role in tackling extreme poverty and 
promoting sustainable development. Bolivia for example pointed out that some of 
the  products  regulated  under  the  novel  food  legislation  are  at  the  same  time 
promoted through EU or Member State funding as part of programmes to diversity 
agricultural production and experts of developing countries, providing alternatives 
to e.g. narcotic crops.  

o  Reducing  the  export  potential  of  traditional  and  exotic  products  runs  counter  to 
the  objective  of  preserving  and  promoting  the  sustainable  use  of  biodiversity 
under the Convention on Biological Diversity. 

The recent reform of the 1997 Regulation was analysed by the United Nations Conference 
on  Trade  and  Development  (UNCTAD).  The  conclusion  was  that,  even  though  concerns 
remain,  the  reform  brought  about  significant  improvements,  particularly  as  regards  the 
authorisation  procedure  (faster  for  traditional  foods),  the  consideration  of  the  history  of 
safe use in the country of origin, and the scientific character of the procedure.790 Bolivia, 
Paraguay  and  several  other  countries  confirmed  in  their  submissions  to  the  WTO  that 
these changes could facilitate trade.791 

Pesticides 

787 Regulation (EC) No 258/97 of the European Parliament and of the Council of 27 January 1997 concerning 
novel foods and novel food ingredients. 
788 Regulation (EU) 2015/2283 of the European Parliament and of the Council of 25 November 2015 on novel 
foods, amending Regulation (EU) No 1169/2011 of the European Parliament and of the Council and repealing 
Regulation (EC) No 258/97 of the European Parliament and of the Council and Commission Regulation (EC) No 
1852/2001. 
789 The list summarises key information from the summaries of the meetings of the Committee on Sanitary and 
Phytosanitary Measures of the WTO. The can be accessed on the WTO Integrated Trade Intelligence Portal (I-
TIP Goods), available at http://i-tip.wto.org/goods/default.aspx?language=en.  
790 UNCTAD, New European Union Commission’s proposal on Novel Foods Regulation (2013): A preliminary 
overview from the perspective of biodiversity-based and traditional foods, 2014, available at 
http://unctad.org/en/PublicationsLibrary/ditcted2014d2_en.pdf  
791 WTO Committee on Sanitary and Phytosanitary Measures, Summary of the meeting of 2-3 April 2008, 
G/SPS/R/49, 18 June 2008, paragraph 48. 

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Pesticides are used to prevent, destroy or control harmful organisms (pests) or diseases. 
The  most  common  pesticides  are  plant  protection  products  (PPPs) 792  used  to  protect 
crops  or  other  useful  or  desirable  plants.793 Examples  of  PPPs  are  herbicides,  fungicides 
and insecticides.794 

PPPs  leave  traces  on  treated  products  that  are  called  ‘residues’.  Regulation  (EC)  No 
396/2005 795  sets  maximum  residue  levels  (MRLs)  on  plants  and  crops  to  protect 
consumers.  It  covers  around  1,100  PPPs  and  applies  to  about  315  products.  The  key 
principle  is  that  the  amounts  of  residues  must  be  safe  for  consumers  and  as  low  as 
possible.796 

The  general  default  MRL  is  0.01  mg/kg.  Different  MRLs  are  set  by  the  Commission 
through a procedure that starts from an application by the interested party and includes 
an  opinion  by  the  European  Food  Safety  Authority  (EFSA).  The  applicant  has  to  submit 
scientific  information  about  the  minimum  amount  of  PPP  and  the  residue  remaining  on 
the  crop  after  treatment.  EFSA  verifies  whether  or  not  this  level  is  safe  for  consumers. 
Where the amount of PPP needed to protect a crop is lower than the safe level, the MRL 
is  set  at  the  lower  level.  The  final  decision  setting  the  MRL  is  adopted  by  the 
Commission.797 

Criticism  of  EU  PPP  policy  was  spearheaded  by  India  (Standard  GSP  beneficiary). 
Pakistan  (GSP+  beneficiary)  and  other  trading  partners  not  benefiting  from  GSP 
arrangements also expressed concerns. They stated that:798 

o  The default MRL is essentially set at the  ‘limit of detection’ (LOD)  reachable with 
sophisticated  analytical  methods  and  testing  procedures  available  in  Europe,  but 
lacking in developing countries. 

o  The  default  MRL  is  not  based  on  a  risk  assessment  and  represents  a  zero 
tolerance  approach  that  adversely  affects  imported  foods  containing  small  traces 
of  PPP  (different  climatic  conditions  in  developing  countries  may  require  higher 
use of pesticides). 

o  While  exporting  countries  can  apply  for  higher  MRLs,  they  bear  the  onus  of 
supporting  their  application  with  scientific  evidence.  Moreover,  the  procedure  is 
lengthy, costly and burdensome. 

o  The  application  of  the  precautionary  principle  to  chemicals  that  have  been  used 
for decades without negative effects constitutes an unjustified barrier to trade.  
o  For some substances, MRLs are set in an unscientific, discriminatory manner. For 
example,  MRLs  for  EU  cereals  are  higher  than  the  approved  level  of  the  same 
substance in rice.  

792 Other types of pesticides, called biocides, are not intended for crop or plant protection, but to control 
organisms that can harm human or animal health, or damage human activities. Examples of biocides are 
insecticides not intended for plant protection and disinfectants. See 
https://ec.europa.eu/health/biocides/policy_en. International trade concerns over EU actions have focused on 
plant protection products, and therefore the rest of this section will focus on these products only. 
793 https://ec.europa.eu/food/plant/pesticides_en  
794 http://www.efsa.europa.eu/en/topics/topic/pesticides  
795 Regulation (EC) No 396/2005 of the European Parliament and of the Council of 23 February 2005 on 
maximum residue levels of pesticides in or on food and feed of plant and animal origin and amending Council 
Directive 91/414/EEC. 
796 https://ec.europa.eu/food/plant/pesticides/max_residue_levels_en; 
https://ec.europa.eu/food/plant/pesticides/max_residue_levels_en  
797 European Commission, Factsheet: New rules on pesticide and food residues in food, September 2008, 
available at https://ec.europa.eu/food/sites/food/files/plant/docs/pesticides_mrl_legis_factsheet_en.pdf  
798 The list summarises key information from the summaries of the meetings of the Committee on Sanitary and 
Phytosanitary Measures of the WTO. The can be accessed on the WTO Integrated Trade Intelligence Portal (I-
TIP Goods), available at http://i-tip.wto.org/goods/default.aspx?language=en.  

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In  its  responses,  the  European  Union  essentially  reiterated  that  its  policy  pursues  the 
objective  of  ensuring  a  maximum  level  of  protection  for  EU  consumers,  resulting  in  the 
practice  of  setting  the  MRL  level  at  the  LOD,  while  remaining  open  to  establishing 
different MRLs based on scientific evidence to be provided by interested parties.799 

The  EU  legislation  on  the  topic  is  currently  undergoing  a  REFIT  evaluation,  which  will 
examine inter alia the extent to which the legal framework is coherent with international 
trade  rules  and  agreements.  The  study  began  in  July  2017.800 Findings  are  not  publicly 
available online at the time of writing. 

Endocrine disrupting chemicals 

The  World  Health  Organisation  (WHO)  defines  an  endocrine  disruptor  as  ‘an  exogenous 
substance  or  mixture  that  alters  function(s)  of  the  endocrine  system  and  consequently 
causes  adverse  health  effects  in  an  intact  organism,  or  its  progeny,  or  (sub) 
populations’. 801  Endocrine  disrupting  chemicals  (EDCs),  are  chemical  substances  with 
such properties. They can interfere with the development and functioning of tissues and 
organs,  thus  altering  the  susceptibility  to  diseases.  Several  scientists  consider  that  the 
impact of EDCs on human health and the environment is underestimated and that EDCs 
are ‘a global threat that needs to be resolved’.802 

Existing EU legislation considers the endocrine disrupting properties of chemicals, notably 
under  the  Regulation  on  the  Registration,  Evaluation,  Authorisation  and  Restriction  of 
Chemicals  (REACH), 803  the  Plant  Protection  Products  Regulation 804  and  the  Biocidal 
Products  Regulation. 805  This  legal  framework  already  affords  some  protection  to 
consumers.  For  example,  the  use  of  certain  endocrine  disrupting  substances  has  been 
restricted  under  REACH  (e.g.  bisphenol  A  in  baby  bottles). 806  In  relation  to  plant 
protection products, relevant active substances can only be approved for a limited period 
of  time  (subject  to  review  and  renewal).  EDCs  cannot  be  approved  unless  there  is 
negligible  exposure  (in  this  case,  they  may  only  be  approved  under  restricted 
conditions). 807 However,  there  are  currently  no  defined  criteria  at  international  or  EU 
level to identify EDCs. The Plant Protection Products Regulation and the Biocidal Products 
Regulation require the Commission to draft scientific criteria for the determination of the 
endocrine disrupting properties of a substance. 

Third countries have raised concerns about current EU framework and the EU initiative to 
draft  EDC  criteria.  The  criticism  was  spearheaded  by  the  United  States  (not  a  GSP 

799 WTO Committee on Sanitary and Phytosanitary Measures, Summary of the meeting of 27-28 June 2013, 
G/SPS/R/71, 28 August 2013, paragraph 4.26; WTO Committee on Sanitary and Phytosanitary Measures, 
Summary of the meeting of 16-17 October 2013, G/SPS/R/73, 15 January 2014, paragraph 3.25. 
800 https://ec.europa.eu/food/plant/pesticides/refit_en; http://ec.europa.eu/smart-
regulation/roadmaps/docs/2016_sante_197_ealuation_plant_protection_products_en.pdf  
801 Bergman A. et al. (eds.) (WHO, UNEP), State of the Science of Endocrine Disrupting Chemicals - 2012, 
2013, available at: http://www.who.int/ceh/publications/endocrine/en/  
802 Bergman A. et al. (eds.) (WHO, UNEP), State of the Science of Endocrine Disrupting Chemicals - 2012, 
2013, available at: http://www.who.int/ceh/publications/endocrine/en/  
803 Regulation (EC) No 1907/2006 of the European Parliament and of the Council of 18 December 2006 
concerning the Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH), establishing a 
European Chemicals Agency, amending Directive 1999/45/EC and repealing Council Regulation (EEC) No 
793/93 and Commission Regulation (EC) No 1488/94 as well as Council Directive 76/769/EEC and Commission 
Directives 91/155/EEC, 93/67/EEC, 93/105/EC and 2000/21/EC. 
804 Regulation (EC) No 1107/2009 of the European Parliament and of the Council of 21 October 2009 concerning 
the placing of plant protection products on the market and repealing Council Directives 79/117/EEC and 
91/414/EEC. 
805 Regulation (EU) No 528/2012 of the European Parliament and of the Council of 22 May 2012 concerning the 
making available on the market and use of biocidal products. 
806 https://ec.europa.eu/health/endocrine_disruptors/legislation_en  
807 http://europa.eu/rapid/press-release_MEMO-17-1907_en.htm  

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beneficiary). The Philippines, Pakistan and Paraguay (GSP+ beneficiaries), Kenya, India, 
Nigeria  and  Vietnam  (Standard  GSP  beneficiaries),  as  well  as  Burkina  Faso,  Burundi, 
Central  African  Republic,  Madagascar,  Senegal,  Sierra  Leone,  Togo  and  Zambia  (EBA 
beneficiaries)  and  several  other  trading  partners  not  benefiting  from  GSP  arrangements 
also expressed concerns. Their remarks focused on:808 

o  The implementation of a hazard-based cut-off option, instead of a policy based on 
an assessment of the risks arising from actual exposure. Trading partners argued 
that  such  option  would  impede  the  use  of  safe  PPPs,  restricting  trade  without 
increasing  safety.  They  urged  the  adoption  of  a  risk-based  approach  and 
requested  that  the  European  Union  should  recognise  risk-based  endocrine 
programmes employed in other countries. 

o  Negative effects on international trade in agricultural products, leading to adverse 
socio-economic  impacts  in  commodity-producing  countries,  especially  developing 
countries.  

On  15  June  2016  the  Commission  put  forward  two  draft  legal  acts  setting  criteria  to 
identify  endocrine  disruptors,  thus  responding  to  the  mandate  in  the  Plant  Protection 
Products Regulation and the Biocidal Products Regulation. The criteria were endorsed by 
EU  Member  State  representatives  on  4  July  2017,  but  have  not  yet  been  officially 
published. 809  The  criteria,  explained  in  detail  in  the  box  below,  reflect  a  risk-based 
approach,  which  should  allay  the  main  concern  put  forward  by  trading  partners.  At  any 
rate,  rules  on  EDCs  have  not  yet  been  published  or  entered  into  force.  Therefore,  their 
impact on the GSP will only materialise, if at all, in the future and fall outside the scope 
of this evaluation. 

The draft developed under the Plant Protection Products Regulation provides that, insofar 
as humans are concerned,810 a substance will be considered as having endocrine 
disrupting properties if:811 

 

 

 

It shows adverse effect in an intact organism or its progeny (change in morphology, 
physiology, growth, development, reproduction, life span, system or 
(sub)population) that results in an impairment of functional capacity, capacity to 
compensate for additional stress, or increase in susceptibility to other influences; 
It has an endocrine mode of action, i.e. it alters the function of the endocrine 
system; 
The adverse effect is a consequence of the endocrine mode of action. 

A substance exhibiting these properties will not however be considered as an endocrine 
disruptor if evidence shows that the adverse effects are not relevant to humans. This 
condition entails that the EU has ultimately opted for a risk-based (as opposed to a 
hazard-based) approach. 

The following sources of evidence are going to be used to establish whether a substance 

808 The list summarises key information from the summaries of the meetings of the Committee on Sanitary and 
Phytosanitary Measures of the WTO. The can be accessed on the WTO Integrated Trade Intelligence Portal (I-
TIP Goods), available at http://i-tip.wto.org/goods/default.aspx?language=en.  
809 https://ec.europa.eu/health/endocrine_disruptors/policy_en  
810 The draft act distinguishes between adverse effects on humans and on non-target organisms. The criteria for 
establishing endocrine disrupting properties are equivalent. The sources of evidence and their analysis is 
slightly different. For details, see 
https://ec.europa.eu/health/sites/health/files/endocrine_disruptors/docs/20170530_ppp_draft_en.pdf  
811 https://ec.europa.eu/health/sites/health/files/endocrine_disruptors/docs/20170530_ppp_draft_en.pdf  

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shows the above-described properties:812 

  All available relevant scientific data; 
  An assessment of said data based on a weight of evidence approach (taking into 

account both positive and negative results, study designs, quality and consistency of 
data, the route of exposure, limit and recommended doses); 

  Biological plausibility of the link between adverse effects and the endocrine mode of 

action; 

  Adverse effects that are non-specific secondary consequences of other toxic effects 

will not be considered. 

Implications for GSP beneficiaries 

SPS  measures,  including  the  notable  examples  described  in  the  previous  sections,  are 
liable  to  affect  international  agri-food  trade.  In  parallel  to  trade  liberalisation  and 
promotion, in recent years market access for agricultural products has been restricted by 
regulatory  measures  driven  by  non-trade  policy  objectives  such  as  quality  and  safety. 
These restrictions can be particularly detrimental for developing countries, especially the 
least developed ones, for two main reasons: 

o  Developing countries’ economies tend to be heavily dependent on the agricultural 
sector, as agricultural exports represent an important share of export earnings. 

o  Developing  countries  are  placed  at  competitive  disadvantage  compared  to  richer 
countries,  as  they  are  less  able  to  meet  the  costs  of  complying  with  SPS 
requirements  (due 
facilities,  or 
infrastructure). 

lack  of  know-how,  production 

to  e.g. 

The  adverse  trade  effects  of  SPS  measures  thus  fall  disproportionately  on  developing 
countries.813 Moreover, SPS measures can affect the composition of developing countries’ 
exports,  as  exporting  firms  show  a  tendency  to  specialise  away  from  highly  regulated 
export markets.814 SPS measures can therefore counteract some of the potential benefits 
of the EU GSP for beneficiary countries. EU SPS measures are particularly important for 
international  trade,  as  the  EU  is  by  far  the  largest  importer  of  agricultural  products 
worldwide,  and  thus  its  regulations  have  profound  impacts  on  developing  countries’ 
exports.815 

A  comprehensive  UNCTAD  study  carried  out  in  2014  produced  an  index  of  regulatory 
intensity for different product  categories. Regulatory intensity refers to the approximate 
number  of  SPS  measures  applied  to  each  product  category.  Taking  into  account  that 
products  that  are  more  intensively  traded  tend  to  be  more  regulated,  the  figure  below 
plots the regulatory intensity per product group against import volumes. 

812 https://ec.europa.eu/health/sites/health/files/endocrine_disruptors/docs/20170530_ppp_draft_en.pdf  
813 Murina M. and Nicita A. (UNCTAD), Trading with conditions: The effect of sanitary and phytosanitary 
measures on lower income countries’ agricultural exports, 2014, available at 
http://unctad.org/en/PublicationsLibrary/itcdtab70_en.pdf Also see Kang J. W. and Ramizo D. M., Impact of 
sanitary and phytosanitary measures and technical barriers on international trade, 2017, available at 
http://www.kluwerlawonline.com/document.php?id=TRAD2017022 and WTO, World Trade Report 2012, 2012, 
available at https://www.wto.org/english/res_e/publications_e/wtr12_e.htm  
814 See e.g. Essaji A., Technical regulations and specialization in international trade, 2008, available at 
https://www.researchgate.net/publication/230839260_Technical_Regulations_and_Specialization_in_Internatio
nal_Trade and Maskus K. E. et al., The costs of complying with foreign product standards for firms in 
developing countries: An econometric study, 2005, available at https://doi.org/10.1596/1813-9450-3590  
815 Murina M. and Nicita A. (UNCTAD), Trading with conditions: The effect of sanitary and phytosanitary 
measures on lower income countries’ agricultural exports, 2014, available at 
http://unctad.org/en/PublicationsLibrary/itcdtab70_en.pdf  

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Figure 74：Regulatory intensity and total imports816 

The  study  estimates  that  EU  SPS  measures  reduce  agricultural  exports  from  lower 
income countries by about 3bn USD, or about 14% of overall agricultural trade of those 
countries  to  the  EU. 817  The  study  does  not  explicitly  distinguish  between  GSP 
beneficiaries  and  non-GSP  beneficiaries.  However,  it  defines  lower  income  countries  as 
those  countries  with  a  GDP  per  capita  of  less  than  4,085  USD.  As  the  GSP  generally 
targets  countries  classified  by  the  World  Bank  as  lower  or  lower-middle  income 
economies, i.e. countries with a GDP of up to 3,955 USD,818 the findings should represent 
a  good  estimate  of  the  economic  impact  of  the  EU  SPS  measures  on  GSP  beneficiaries’ 
agricultural exports. 

It can be expected that the impact of EU SPS measures on individual countries should be 
positively correlated to (a) the EU being a major export destination and (b) highly 
regulated products constituting a high share of exports. Based on these indicators, the 
table below provides insight into the possible impact of EU SPS measures on the four 

816 Murina M. and Nicita A. (UNCTAD), Trading with conditions: The effect of sanitary and phytosanitary 
measures on lower income countries’ agricultural exports, 2014, available at 
http://unctad.org/en/PublicationsLibrary/itcdtab70_en.pdf  
817 In contrast, the impact on trade from higher income countries was negligible, as these exporters had the 
means to comply with EU SPS requirements. The study also indicated that deep trade agreements and well-
targeted technical assistance could help lower income countries meet SPS requirements and thus increase their 
exports to the EU. See Murina M. and Nicita A. (UNCTAD), Trading with conditions: The effect of sanitary and 
phytosanitary measures on lower income countries’ agricultural exports, 2014, available at 
http://unctad.org/en/PublicationsLibrary/itcdtab70_en.pdf  
818 The World Bank, World Bank Country and Lending Groups, no date, available at 
https://datahelpdesk.worldbank.org/knowledgebase/articles/906519-world-bank-country-and-lending-groups  

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EUROPEAN COMMISSION 

case study countries.819  

Table 44: Impact of EU SPS on case study countries 

Country 

% of 
total 
national 
exports 
to EU 

% 
agricultural 
products in 
total 
national 
exports 

Main 
agricultural 
exports 
under GSP 
(2015) 

Remarks 

Bangladesh 

54.5 

5.6 

Bolivia 

8.4 

17.7 

Ethiopia 

23.1 

83.1 

Pakistan 

33.7 

21.0 

Vegetables 
and edible 
roots, 
preparation 
of cereals, 
vegetable 
textile fibres  

Bangladesh  mainly  exports  manufactured  goods 
(~93%  of  total)  and  relatively  small  share  of 
exports  is  agricultural  products.  Therefore,  the 
impact  of  EU  SPS  measures  is  expected  to  be 
limited overall. 

Vegetable and cereals are highly regulated products in 
the  EU  based on  the  regulatory  intensity  indicator 
presented  above.  The  sector-specific  impact of  EU 
SPS measures is therefore likely to be significant. 

Beverages, 
spirits and 
vinegar, 
cereals, 
preparations 
of 
vegetables, 
fruits and 
nuts  

Vegetables 
and edible 
roots, 
preparation 
of cereals, 
coffee, tea, 
mate and 
spices 

Fruit and 
nuts, 
beverages, 
spirits and 
vinegar, 
preparations 
of 
vegetables, 
fruits and 
nuts 

The  main  export  markets  for  Bolivia  are  Brazil  (28%), 
Argentina  (~17%)  and  the  US  (~12%).  Bolivia’s 
main  export  products  are 
fuels  and  mining 
products  (~74%).  Taken  together,  these  data 
suggest  that  the  impact  of  EU  SPS  measures  on 
Bolivia’s exports should be limited overall. 

All  of  Bolivia’s  main  exports  are  highly  regulated 
products  in  the  EU  based  on  the  regulatory 
intensity  indicator  presented  above.  The  sector-
specific  impact  of  EU  SPS  measures  is  therefore 
likely to be significant. 

The great majority of Ethiopia’s exports are agricultural 
products and the EU is the main destination for the 
country’s  exports,  far  ahead  of  the  US  and  Saudi 
Arabia  (both  at  ~10%).  Therefore,  EU  SPS 
measures  can  have  a  sizeable  impact  on  this 
country’s exports. 

Vegetables,  cereals,  coffee  and  tea  are  among  the 
highest regulated products in the EU based on the 
regulatory intensity indicator presented above. The 
sector-specific  impact  of  EU  SPS  measures  is 
therefore likely to be significant. 

Pakistan’s  main  exports  are  manufactured  goods 
(~76%).  Agricultural  products  however  constitute 
a  sizeable  share  of  exports.  The  EU  is  the  top 
export market, far ahead of the US (~17%). 

Fruits and vegetables are among the highest regulated 
products  in  the  EU  based  on  the  regulatory 
intensity  indicator  presented  above.  The  sector-
specific  impact  of  EU  SPS  measures  is  therefore 
likely to be significant. 

819 Data in the table is from WTO, Trade profiles, no date, 
http://stat.wto.org/CountryProfile/WSDBCountryPFHome.aspx?Language=E. The product categories listed in 
the fourth column are: Fruit juices and vegetable juices (HS2009); Vegetables provisionally preserved 
(HS0711); Unmanufactured tobacco (HS2401); Bread, pastry, other bakers' wares (HS1905); Malt extract 
(HS1901); 
Coconuts, Brazil nuts, cashew nuts (HS0801); Buckwheat, millet and canary seed (HS1008); Alcohol of 80% or 
more volume (HS2207); Coffee (HS0901); Dried leguminous vegetables (HS0713); Meat of sheep or goats, 
fresh (HS0204); Pepper of the genus Piper (HS0904); Dried vegetables, whole, cut (HS0712); Rice (HS1006); 
Wheat or meslin flour (HS1101); Citrus fruit, fresh or dried (HS0805); Dates, figs, pineapples, avocados 
(HS0804). The last column sets out the author’s remarks. 

 Solid residues from soya-bean oil (HS2304) and Soya-bean oil and its fractions (HS1507); 

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doi:10.2781/82578