COMMISSION STAFF WORKING DOCUMENT IMPACT ASSESSMENT REPORT Accompanying the document Proposal for a Regulation of the European Parliament and of the Council on applying a generalised scheme of tariff preferences and repealing Regulation (EU) No 978/2012 of the European Parliament and of the Council
Date: 2021-09-22
Institutions: Directorate-General for Trade and Economic Security, European Commission
Subjects: EU market, common commercial policy, developing countries, development aid, generalised preferences, market access, poverty, rule of law, sustainable development, tariff preference

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 22.9.2021  SWD(2021) 266 final  COMMISSION STAFF WORKING DOCUMENT  IMPACT ASSESSMENT REPORT  Accompanying the document Proposal for a Regulation of the European Parliament and of the Council on applying a generalised scheme of tariff preferences and repealing Regulation (EU) No 978/2012 of the European Parliament and of the Council        {COM(2021) 579 final} - {SEC(2021) 330 final} - {SWD(2021) 267 final}  
 
 
Table of contents 

1. 

INTRODUCTION: POLITICAL AND LEGAL CONTEXT ............................................................... 5 

1.1.  The EU Generalised Scheme of Preferences ..................................................... 5 
1.2.  What is the prevailing political/legal context as to why the initiative is 

being brought forward now? ............................................................................. 7 

1.3.  Are  there  European  Council  conclusions,  Council  conclusions,  EP 

resolutions or College decisions? ...................................................................... 8 

1.4.  Are related initiatives also under preparation? Which issues will each 

initiative tackle? ................................................................................................. 9 

2. 

PROBLEM DEFINITION .................................................................................................................... 9 

2.1. Problems identified ............................................................................................. 11 
2.2.  What are the problem drivers? ........................................................................ 16 
2.3. How will the problems evolve? .......................................................................... 23 

3.  WHY SHOULD THE EU ACT? ........................................................................................................ 23 

3.1. Legal basis .......................................................................................................... 23 
3.2. Subsidiarity: necessity of EU action .................................................................. 23 

4.  GENERAL AND SPECIFIC OBJECTIVES OF GSP: WHAT IS TO BE ACHIEVED? .................. 24 

4.1. General Objective No 1: To further contribute to poverty eradication in 

countries most in need ..................................................................................... 27 

4.2.  General  Objective  No  2:  To  further  contribute  to  sustainable 

development and good governance in beneficiary countries .......................... 29 

4.3. General Objective No 3: To ensure protection of EU economic interests 

in the functioning of the scheme ..................................................................... 30 

5.  WHAT ARE THE AVAILABLE POLICY OPTIONS? .................................................................... 31 

5.1.  What is the baseline from which options are assessed? .................................. 31 
5.2.  Description of the policy options .................................................................... 32 

6.  WHAT ARE THE IMPACTS OF THE POLICY OPTIONS? ........................................................... 42 

6.1. 

6.2. 

6.3. 
6.4. 
6.5. 

Impact  of  the  options  under  Cluster  1:  arrangements  and  beneficiary 
countries .......................................................................................................... 42 
Impact  of  the  options  under  Cluster  2:  products  coverage  and 
graduation mechanism ..................................................................................... 48 
Impacts of the options under Cluster 3: conditionality ................................... 49 
Impacts of the options under Cluster 4: transparency ..................................... 54 
Impacts of the options under Cluster 5: safeguards ......................................... 56 

7.  HOW DO THE OPTIONS COMPARE? ............................................................................................ 57 

7.1.  A comparison among the options proposed to address problems related 

to Cluster 1: arrangements and beneficiary countries ..................................... 58 

7.2.  Comparison among the options proposed to  address problems  related 

to Cluster 2: products coverage and graduation mechanism ........................... 59 

1 

 
 
7.3.  Comparison among the options proposed to  address problems  related 
international 

to  Cluster  3:  conditionality 
conventions, withdrawal procedure) ............................................................... 61 

(positive,  negative, 

7.4.  Comparison  among  the  options  proposed  to  address  the  problems 

related to the Cluster 4: transparency .............................................................. 66 

7.5.  Comparison  among  the  options  proposed  to  address  the  problem 

related to Cluster 5: safeguards ....................................................................... 67 

8. 

PREFERRED OPTIONS .................................................................................................................... 68 

8.1.  Preferred  option  related  to  Cluster  1:  arrangements  and  beneficiary 

countries .......................................................................................................... 68 

8.2.  Preferred  option  related 

to  Cluster  2:  products  coverage  and 

graduation mechanism ..................................................................................... 69 
8.3.  Preferred options related to Cluster 3: conditionality ...................................... 70 
8.4.  Preferred options regarding Cluster 4: transparency ....................................... 71 
8.5.  Preferred option regarding Cluster 5: safeguards ............................................ 72 

9.  HOW WILL ACTUAL IMPACTS BE MONITORED AND EVALUATED? .................................. 73 

9.1.  Measuring  performance  with  regard  to  GSP  overarching  objectives  (at 

the mid-term review and/or at the end of the Regulations’ application) ......... 74 

9.2.  Measuring  performance  with  regard  to  GSP  specific  objectives  (to  be 

measured in line with GSP monitoring cycle) ................................................. 75 

ANNEX 1: PROCEDURAL INFORMATION ............................................................................................ 78 

ANNEX 2: STAKEHOLDER CONSULTATION ....................................................................................... 80 

ANNEX 3: WHO IS AFFECTED AND HOW? .......................................................................................... 85 

ANNEX 4: ANALYTICAL METHODS ..................................................................................................... 90 

ANNEX 5: SUMMARY OF THE MID-TERM EVALUATION ................................................................ 94 

ANNEX  6:  EXECUTIVE  SUMMARY 

  AND  FULL  INTERIM  REPORT  OF  THE 

SUPPORTING STUDY ...................................................................................................................... 95 

ANNEX 7: DETAILED DESCRIPTION OF BASELINE SCENARIOS ................................................... 96 

ANNEX 8: THE CURRENT TEMPORARY WITHDRAWAL PROCEDURE ....................................... 102 

ANNEX 9: DETAILED DESCRIPTION OF INTERNATIONAL CONVENTIONS ANALYSED 

BY THE SUPPORTING STUDY ..................................................................................................... 104 

ANNEX  10:  PERFORMANCE  MEASUREMENT  FRAMEWORK  FOR  THE  GSP 

REGULATION ................................................................................................................................. 114 

2 

 
 
 
 
CGE 

COVID-19 

CSD 

CTEO 

EBA 

EEAS 

EP 

EPA 

EU 

FTA 

GATT 

GDP 

GHG 

GSP 

GSP+ 

HS 

ILO 

LDC 

LMIC 

MFN 

MTE 

OECD 

OPC 

RoO 

TPR 

Acronyms 

Acronym 

Definition 

Computable General Equilibrium   

Coronavirus disease 

Civil Society Dialogue 

Chief Trade Enforcement Officer 

Everything But Arms 

European External Action Service 

European Parliament 

Economic Partnership Agreement 

European Union 

Free Trade Agreement 

General Agreement on Tariffs and Trade 

Gross Domestic Product 

Green House Gas 

EU Generalised Scheme of Preferences 

Special Incentive Arrangement for Sustainable Development 
and good Governance 

Harmonised System 

International Labour Organisation 

Least Developed Country 

Low- and Middle- Income Countries 

Most Favoured Nation 

Mid-Term Evaluation of the EU GSP 

Organisation for Economic Cooperation and Development 

Open Public Consultation 

Rules of Origin 

Trade Policy Review 

3 

 
 
Glossary 

Term  

Meaning or definition 

Product coverage  The list of products included in the EU GSP arrangements 

Effective 
implementation 

The integral implementation of all obligations undertaken under the 
international conventions listed in Annex VIII to the EU GSP Regulation 

Export 
diversification 

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 

Product 
graduation 

Non-sensitive 
products 

Imports of particular group of products and originating in a given GSP 
beneficiary country lose GSP tariff preferences. It concerns imports that 
are competitive on the EU market and thus no longer need the GSP to 
boost their exports to the EU 

In the GSP scheme, non-sensitive products enjoy duty free access 

Preference erosion  The process by which the preference granted to a specific good loses its 
nominal or relative value (in particular in light of EU trade agreements 
which have recently been negotiated with other countries in the world 
which may grant these other countries access to the EU market which is 
similarly generous as the GSP preferences once granted only to GSP 
beneficiary countries) 

Sensitive products  In the GSP scheme, sensitive products benefit from tariff reductions 

compared to the standard most favoured nation tariff, but these reductions 
are somewhat less favourable than the duty-free access accorded to non-
sensitive products.  

Standard GSP 

The general arrangement provided for in Art. 1(2)(a) of the EU GSP 
Regulation 

Utilisation rate 

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

Everything But 
Arms or ‘EBA’ 

The special arrangement for least developed countries in Art.1(2)(c) of 
the EU GSP Regulation 

GSP+ 

A special incentive arrangement for sustainable development and good 
governance in Art.1(2)(b) of the EU GSP Regulation  

The GSP 
Arrangements 

Vulnerability 
criteria 

The Standard GSP, GSP+ and EBA arrangements 

A set of two economic criteria for GSP+, limiting access to the scheme to 
beneficiaries with less diversified exports and limited export 
competitiveness.   

4 

 
 
 
1. 

INTRODUCTION: POLITICAL AND LEGAL CONTEXT 

The  European  Commission  services  prepared  this  Impact  Assessment  Report  (IAR)  in 
support of a new regulation for the EU Generalised Scheme of Preferences (hereafter ‘the 
GSP’).   

The GSP is a multifaceted instrument covering a variety of economic and sustainability 
obligations, which all impact the drivers for improvement and the related policy options. 
To facilitate the analysis, the problems’ underlying drivers have been grouped in clusters 
according  to  the  main  aspect  they  are  related  to:  GSP  arrangements  and  beneficiary 
countries coverage, the products, conditionality, transparency, and safeguard mechanisms 
(see Table 5 in Section 5.2.).  

The GSP is a very mature part of the EU’s trade policy tool box. Its review is about fine-
tuning  the  way  the  GSP  works  and  improving  its  efficiency  and  effectiveness  –  hence, 
the  drivers  and  policy  options  defined  and  further  explored  in  the  External  Study  and 
IAR have a high level of granularity. A Midterm Evaluation (MTE) of the current GSP 
Regulation was completed in 20181. An External Study (hereafter the Study) undertaken 
by  BKP  Economic  Advisors  GmbH,  as  well  as  an  open  public  consultation2  (OPC) 
supported the preparation of the  IAR.  This  document builds upon the  Inception  Impact 
Assessment3 published in May 2019. 

1.1. 

 The EU Generalised Scheme of Preferences 

The  EU’s  GSP  is  a  well-established  EU  trade  policy  instrument  with  development 
objectives, which has been in place since 19714. The legal basis was made permanent by 
the  GATT’s  Enabling  Clause5,  which  grants  a  permanent  exemption  from  the  Most 
Favoured  Nation  (MFN6)  principle,  for  developed  countries  to  unilaterally  grant 
reductions in the tariffs paid on imports from developing countries. 

The current GSP scheme is based on Regulation (EU) No 978/2012 of 25 October 20127 
(hereafter ‘the Regulation’). The scheme offers easier access to the EU market for goods 
exported from developing countries by eliminating or reducing import tariffs unilaterally 
(i.e.,  on  a  non-reciprocal  basis).  Lower  tariffs  enable  these  countries  to  increase  their 
exports  to  the  EU  and  contribute  to  economic  growth  and  jobs  creation.  Preferential 
access to the EU market also helps developing countries to generate additional revenues, 

1  Commission  Staff  Working  Document  Midterm  Evaluation  of  the  Generalised  Scheme  of  Preferences 
(SWD(2018) 430 final) 
2  Preferential  tariff  scheme  between  the  EU  and  developing  countries  (update),  completed  on  15/7/2020. 
https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/2136-Towards-the-future-
Generalised-Scheme-of-Preferences-legal-framework-granting-trade-advantages-to-developing-
countries/public-consultation  
3 https://trade.ec.europa.eu/doclib/docs/2020/february/tradoc_158624.pdf  
4  In  1971,  the  Contracting  Parties  to  the  General  Agreement  on  Tariffs  and  Trade  (GATT)  approved  a 
waiver to Article I of the GATT that gave a legal basis for a 'Generalised System of Tariff Preferences' 
5 The  Enabling Clause is officially called the  “Decision on  Differential and More Favourable Treatment, 
Countries”. 
Reciprocity 
https://www.wto.org/english/docs_e/legal_e/enabling1979_e.htm 
6 https://www.wto.org/english/thewto_e/whatis_e/tif_e/fact2_e.htm#seebox  
7  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  
https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=uriserv%3AOJ.L_.2012.303.01.0001.01.ENG 

Participation 

Developing 

Fuller 

and 

of 

5 

 
                                                           
which  can  be  reinvested  to  diversify  their  economies.  Finally,  the  EU’s  GSP  scheme 
supports beneficiary countries’ sustainable development, because the promise of lower-
tariff  or  tariff-free  access  to  the  EU’s  large  market  is  an  incentive  for  developing 
countries  to  promote  respect  for  human  rights,  labour  rights,  environmental  protection, 
and good governance.  

The  current  Regulation  sets  up  three  distinct  arrangements,  adapted  to  the  needs  of 
different categories of developing countries:  

(1)  Standard  GSP8:  The  general  arrangement  for  low  and  lower-middle  income 
countries, which offers a partial or full removal of customs duties on two-thirds 
of the EU’s tariff lines. It is granted automatically to all developing countries in 
WTO context. At present, there are 15 beneficiary countries.  

(2)  GSP+9:  The  special  incentive  arrangement  for  sustainable  development  and 
good  governance.  To  qualify  for  GSP+,  the  countries  must  benefit  from 
Standard  GSP  and  be  considered  “vulnerable”  in  terms  of  low  level  of 
diversification  of  their  exports  to  the  EU,  and  insufficient  integration  in  the 
international trading system. It reduces import duties for the same tariff lines as 
Standard  GSP  to  0%  for  countries  that  have  ratified  and  implement  27  major 
international conventions. At present, there are 9 GSP+ beneficiary countries. 

(3)  EBA10  (Everything  But  Arms):  The  special  arrangement  for  least  developed 
countries (LDCs) is  one of the world’s most  generous and inclusive scheme11, 
providing  LDCs  with  duty-free,  quota-free  access  to  the  EU  market  for  all 
products  except  arms  and  ammunition.  At  present,  there  are  48  EBA 
beneficiary countries. 

The Standard GSP covers a wide range of products, split into non-sensitive and sensitive 
categories:  

-  Non-sensitive products enjoy duty-free access; 
-  Sensitive  products  (a  mixture  of  agricultural,  chemical,  textile,  clothing  and 
footwear items) benefit from a tariff reduction of 3.5 percentage points (20% in 
case  of  textiles  and  clothing)  on  ad  valorem  duties  or  a  reduction  of  30%  on 
specific duties compared to the MFN levels. 

8 GSP standard arrangement beneficiary countries (as of 1 August 2021): Congo, Cook Island, India, Indonesia, Kenya, 
Micronesia, Nauru, Nigeria, Syria, Niue, Samoa, Tajikistan, Tonga, and Vietnam.  
9 GSP+ beneficiary countries (as of 1 August 2021): Armenia, Bolivia, Cabo Verde, Kyrgyzstan, Mongolia, Pakistan, 
Philippines, Sri Lanka, and Uzbekistan. 
10 EBA beneficiary countries (as of 1 August 2021): Afghanistan, Angola, Bangladesh, Benin, Bhutan, Burkina Faso, 
Burundi, Cambodia (preferences were partially and temporarily withdrawn in August 2020), Central African Republic, 
Chad, Comoros, Congo (DRC), Djibouti, Equatorial Guinea, Eritrea, Ethiopia, Gambia, Guinea, Guinea Bissau, Haiti, 
Kiribati,  Lao  PDR,  Lesotho,  Liberia,  Madagascar,  Malawi,  Mali,  Mauritania  and  Mozambique,  Myanmar/Burma, 
Nepal, Niger, Rwanda, Sao Tome & Principe, Senegal, Vanuatu, Yemen and Zambia.  

11 EBA provides nearly 100% tariff-free quota-free goods coverage except for arms and ammunitions. “This makes the 
EU GSP one of the most generous in the world.” Japan GSP provides about 98% product coverage. The US GSP (plus 
other schemes) provide less than 97% as it excludes textile products (which are of main importance to developing 
countries). China’s and India’s GSP schemes cover around 97% and 94% respectively (source 
WT/COMTD/LDC/W/68) 

6 

 
                                                           
Under  the  GSP+  arrangement,  tariffs  for  most  of  the  sensitive  products  are  removed, 
making the GSP+ much more attractive in comparison to the Standard GSP. The EU is 
willing to open up its market for sensitive products for the EU industry, provided the aim 
is to support beneficiaries’ sustainable development. EBA countries get more than 99% 
duty-free quota-free coverage together with the EU MFN zero tariff lines. 

Additional major features to enjoy GSP preferences are: conditionality, graduation and 
safeguards.  

The  tariff  treatment  of  beneficiary  countries  is  conditional  on  the  respect  of  27 
international Conventions on human rights, labour rights, environmental protection, and 
good governance listed in Annex VIII to the GSP Regulation.  

The  GSP  Regulation  uses  two  different  ways  of  conditioning  preferences:  a  “negative” 
conditionality for Standard GSP and EBA beneficiaries, and  a “positive”  conditionality 
only  for  GSP+  beneficiaries.  Conditionality  remains  one  of  the  key  EU  instruments  to 
promote respect for human and labour rights, environment and good governance in GSP 
beneficiary countries: a country should not benefit from preferential trade arrangements 
if  it  is  acting  in  a  way  that  is  contrary  to  its  own  developmental  needs  or  contrary  to 
international standards and principles. 

Negative  conditionality  implies  that  beneficiaries  lose  GSP  preferences  for  non-
compliance with a series of obligations, including failure to respect the main principles of 
the  relevant  international  Conventions.  Such  a  procedure  is  referred  in  the  GSP 
Regulation  also  as  a  “withdrawal”  of  GSP  preferences.  The  withdrawal  of  preferences 
results  in  EU  customs  authorities  applying  the  standard  Most  Favoured  Nation  WTO 
tariffs with respect to the affected imported products. 

Positive  conditionality,  applicable  only  to  GSP+  countries,  implies  that  beneficiaries 
must take certain actions to become eligible and maintain the GSP+ preferences, namely 
to ratify the conventions and effectively implement them.  

In  addition  to  the  withdrawal  procedure,  there  is  also  the  “graduation”  procedure  that 
can lead to a GSP country losing wholly or partially is preferential treatment, for which 
we need to distinguish between “product graduation” and “countries graduation”. 

Product  graduation  (according  to  Article  8  of  the  GSP  Regulation)  takes  place  when 
imports  of  a  particular  group  of  products  originating  in  a  GSP  beneficiary  country 
exceeds  a  given  threshold.  In  that  case,  imports  of  that  group  of  products  from  that 
country  are  considered  too  competitive  on  the  EU  market  and  thus  no  longer  need  the 
GSP  to  boost  their  exports  to  the  EU.  This  mechanism  currently  applies  only  to  the 
Standard  GSP,  but  not  to  the  GSP+  or  EBA  arrangements.  At  present,  the  list  of 
graduated products is revised every three years.  

Countries’ graduation apply to all GSP beneficiaries’.  

-  Graduation  out  of  EBA    takes  place  when  a  country  loses  the  “Less  Developed 
Country”  status  granted  by  the  UN  Committee  for  Development  Policy  (CDP). 
Following graduation from the EBA arrangement, these countries could move to 
Standard GSP or, pending their application (and meeting the eligibility criteria) to 
GSP+.  

7 

 
-  Graduation  out  of  standard  GSP  and  GSP+    takes  place  if  that  country  (i)  has 
another  type  of  special  trade  arrangement  with  the  EU,  granting  the  same  tariff 
preferences  (e.g.  an  FTA),  or  (ii)  it  has  achieved  high  or  upper-middle  income 
status  during  three  consecutive  years  on  the  basis  of  the  World  Bank’s 
classification.  

Free Trade Agreements by their nature, offer substantially more benefits to parties (e.g., 
legal  certainty,  chapters  on  services,  SPS/TBT  issues,  IPR,  cooperation,  etc.)  beyond 
market  access  for  goods  and,  thus,  are  significantly  more  advantageous  in  commercial 
terms  than  unilateral  preferences  which  are  limited  to  goods.  In  terms  of  goods, 
Economic Partnership Agreements with ACP countries provide the same 100% tariff-free 
quota-free  benefits  as  the  EBA.  Other  bilateral  FTAs  provide  better  benefits  than 
Standard  GSP  or  GSP+,  which  cover  around  66%  of  tariff  lines;  the  average  product 
coverage of an EU FTA is above 90%. 

Finally,  beneficiary  countries  can  lose  preferential  tariff  treatment  as  a  result  of  the 
application of safeguards, which can be “general” or “automatic”.   

The general safeguard mechanism applies to all GSP beneficiaries and products, where 
products are imported in volumes and/or at prices that cause, or threaten to cause, serious 
difficulties  to  Union  producers  of  like  or  directly  competing  products.  The  first 
investigation under the general  safeguards was concluded in 2019 on rice imports from 
Cambodia and Myanmar.  

The automatic safeguard mechanism applies only to specific product groups which are 
indicated to be sensitive in the GSP Regulation, primarily textiles and garments as well 
as a few selected other products. The automatic safeguard measures do not apply to EBA 
beneficiary countries; and, among the Standard GSP and GSP+ countries, only to those 
that  meet  certain  minimum  thresholds  in  EU  imports.  The  Commission  has  never 
activated the automatic safeguard mechanism because the conditions provided in the GSP 
Regulation  have  not  been  met.  This  reflects  the  exceptional  nature  of  the  automatic 
safeguard mechanism.  

8 

 
Figure 1: World map – GSP beneficiary countries by arrangement12 

 EBA 

 GSP+     

 Standard GSP 

1.2. 

 What is the prevailing political/legal context as to why the initiative is being 
brought forward now? 

The current GSP Regulation will expire on 31 December 2023. Unless a new regulation 
is  adopted,  the  Standard  GSP  and  the  GSP+  arrangements  will  cease  to  apply.  Imports 
from  developing  countries  under  Standard  GSP  and  GSP+  would  thus  be  charged  with 
higher duties as from 1 January 2024. However, imports from least developed countries 
(LDCs)  would  still  be  covered  by  the  EBA  arrangement  which  does  not  have  a  fixed 
expiry date.  

The  GSP  pursues  three  main  objectives,  namely,  to  assist  developing  countries  in  their 
efforts  to  reduce  poverty,  to  promote  good  governance  and  sustainable  development, 
while taking into account the situation of the sectors manufacturing the same products in 
the  EU.  This  is  in  line  with  EU’s  Policy  Coherence  for  Development  (PCD)  which 
constitutes  a  key  pillar  of  EU  efforts  to  enhance  the  positive  impact  and  increase 
effectiveness of development cooperation13.  

The supporting Study for this Impact Assessment showed that the highest positive impact 
of GSP was the support  given to  growth and trade diversification through EBA, which 
benefits LDCs. 

Building  on  what  the  GSP  has  achieved,  because  of  the  continued  relevance  and 
coherence of its general  objectives, and even more so in view of the recovery from the 
Covid-19  pandemic,  this  GSP  review  aims  to  maintain  the  scheme  as  such,  while 

12  Countries  whose  assumed  status  in  the  baseline  of  the  Computable  General  Equilibrium  (CGE) 
modelling differs from the current legal status are striped, e.g. 
 indicates a current EBA country that is 
treated as a Standard GSP country in the baseline scenario for modelling purposes (see Section 2.2.1). 
13 Article 208 of the Treaty on the Functioning of the EU concerning PCD reads: “The Union shall take 
account of the objectives of development cooperation in the policies that it implements which are likely to 
affect developing countries”. 

9 

 
 
                                                           
improving its  efficiency and effectiveness.  The EU’s overarching objectives in revising 
the GSP Regulation are to maintain the essential features of the present Regulation, and 
specifically  the  focus  of  the  2012  reform  on  the  three  goals  of  poverty  eradication, 
support  for  sustainable  development  and  good  governance,  while  also  better  defending 
EU industries that may face serious difficulties as a result of increased imports from GSP 
beneficiary countries. 

The continuation of GSP is part of the EU’s political commitment to support sustainable 
development  globally,  as  reflected  in  the  implementation  of  the  UN  Agenda  2030  for 
Sustainable  Development  and  Sustainable  Development  Goals  (SDGs),  to  which  all 
WTO Members have committed.  

The  Midterm  Evaluation14  (MTE)  of  the  implementation  of  the  GSP  Regulation 
concluded that overall the GSP was delivering on its objectives15 and there was no need 
to  amend  the  Regulation  before  its  expiry  on  31  December  2023.  However,  the  MTE 
made  several  recommendations  to  improve  the  effectiveness  and  efficiency  of  the 
scheme. These recommendations underpinned the identification of the problems defined 
in detail in Section 2. 

1.3.  Are there European Council conclusions, Council conclusions, EP resolutions 

or College decisions? 

On 14 March 2019, the European Parliament (EP) adopted a non-legislative resolution on 
the implementation of the GSP Regulation16 (hereafter ‘the Resolution’). The Resolution 
acknowledged  the  overall  positive  impact  of  GSP  on  developing  countries,  but  made  a 
number  of  recommendations  for  improving  the  scheme,  including:  further  encouraging 
export  diversification  of  beneficiary  countries;  placing  more  emphasis  on  improving 
environmental standards, reinforcing stakeholders’ involvement in order to ensure better 
monitoring of the scheme’s implementation; and introducing additional tariff preferences 
for products that have demonstrably been produced sustainably. 

European  Commission  President  Ursula  von  der  Leyen  promised  that  under  her 
leadership the Commission would further strengthen the use of trade tools in support of 
non-trade policy objectives. In her Agenda for Europe 2019-2024, she stressed, “Trade is 
not an end in itself. It is a means to deliver prosperity at home and to export our values 
across the world” including “the highest standards of climate, environmental and labour 
protection, with a zero-tolerance policy on child labour”17. 

The  Commission  Communication  Trade  Policy  Review  –  An  Open,  Sustainable  and 
Assertive  Trade  Policy,  reflecting  the  above  objectives,  was  adopted  on  18  February 

14 http://trade.ec.europa.eu/doclib/docs/2017/september/tradoc_156085.pdf  
15  For  instance,  since  2011,  EBA-beneficiary  Bangladesh  has  almost  doubled  its  exports  to  the  EU  from 
EUR  9  billion  to  approximately  EUR  18  billion  in  2018.  Exports  from  GSP  countries,  in  particular  the 
LDCs expanded significantly  over the last  few  years. Economic operators used the scheme’s  safeguards. 
Through promotion of socio-economic development while respecting the core values the GSP contributed 
positively to promoting and protecting human and labour rights. The MTE noted, however, that impact of 
GSP on environment protection was less clear. 
16 https://www.europarl.europa.eu/doceo/document/TA-8-2019-0207_EN.html  
17 https://ec.europa.eu/info/sites/info/files/political-guidelines-next-commission_en_0.pdf   

10 

 
                                                           
202118. It sets the medium-term direction of trade policy in response to a variety of new 
global  challenges,  including  the  post-Covid-19  economic  recovery.  The  Trade  Policy 
Review  (TPR)  confirms  that  “One  of  the  key  objectives  of  the  upcoming  review  of  the 
Generalised  System  of  Preferences  (GSP)  will  be  to  further  increase  trading 
opportunities  for  developing  countries  to  reduce  poverty  and  to  create  jobs  based  on 
international values and principles, such as labour and human rights”19.  

The  TPR  also  notes  that  the  EU  has  a  “strategic  interest  to  support  the  enhanced 
integration  into  the  world  economy  of  vulnerable  developing  countries”  […]  “The  EU 
must fully use the strength provided by  its openness and the attractiveness of its Single 
Market  […]”  to  support  multilateralism  and  to  ensure  adherence  to  universal  values, 
adding a focus on climate and environmental challenges, while also remaining ready to 
act  assertively  in  defending  its  interests.  For  GSP  specifically,  the  TPR  notes  its 
important role to promote “respect for core human and labour rights”. 

1.4.  Are  related  initiatives  also  under  preparation?  Which  issues  will  each 

initiative tackle? 

The Action on GSP Trade Preferences (GSP Hub) 

The  2018  Mid-Term  Evaluation  of  GSP  called  inter  alia  for  more  transparency  and 
inclusiveness of stakeholders in the scheme. Along the lines of the Resolution adopted by 
the EP, the MTE also asked the Commission to raise the utilisation and impact of GSP 
through increased awareness and engagement with stakeholders, including industry.  

In 2020 – in order to address some of the concerns highlighted by the MTE and the EP 
Resolution – the Commission launched a dedicated two-year project: the Action on GSP 
Trade  Preferences  (GSP  Hub)20.  Its  overall  aim  is  to  increase  the  effectiveness, 
inclusiveness, and transparency of the GSP (including the GSP+ monitoring process) via 
a  dedicated  GSP  platform/website  along  with  other  activities  and  engagements  with 
stakeholders.21 

2.  PROBLEM DEFINITION 

The  identified  problems  and  their  underlying  drivers  are  set  out  in  a  problem  tree  in 
Figure 2 below. This builds on the results and recommendations of the 2018 Mid-Term 
Evaluation (MTE) and the 2020 External Study on GSP22. Both studies confirmed that a 

18 COM(2021) 66 final, 18.2.2021. https://eur-lex.europa.eu/resource.html?uri=cellar:5bf4e9d0-71d2-11eb-
9ac9-01aa75ed71a1.0001.02/DOC_1&format=PDF  
19 See Trade Policy Review Communication, page 13. 
20 https://gsp-hub.eu/  
21  See  for  instance  the  third  biennial  GSP  Report  to  the  Council  and  the  European  Parliament  of  10 
February 2020, JOIN(2020) 3 final. 
22 Study in support of an impact assessment to prepare the review of GSP Regulation No 978/2012, Final 
Report, 2021: https://op.europa.eu/en/publication-detail/-/publication/706f539c-f0db-11eb-a71c-
01aa75ed71a1/language-en/format-PDF/source-221478841 . Annexes: https://op.europa.eu/en/publication-
detail/-/publication/be174994-f337-11eb-aeb9-01aa75ed71a1/language-en. Executive Summary : 
https://op.europa.eu/en/publication-detail/-/publication/f7031da3-f0dc-11eb-a71c-01aa75ed71a1/language-
en 

11 

 
                                                           
 
major  overhaul  of  the  existing  legal  framework  would  not  be  justified  and  identified 
ways to improve the efficiency and effectiveness of the GSP instrument.  

The MTE pointed out to areas for improvement that – if addressed by appropriate policy 
options – could enhance the efficiency and effectiveness of the GSP.  

The 2020 External Study focused on several policy options that could improve achieving 
the overall objectives of the GSP instrument. 

In  open  public  consultations,  the  vast  majority  of  respondents  supported  maintaining 
GSP preferences  with  its  three arrangements, on  the grounds that it helped to  eradicate 
poverty,  create  jobs  (notably  for  women),  and  support  economic  growth  (including 
economic  recovery  of  beneficiary  countries  severely  impacted  by  the  COVID-19 
pandemic), while contributing to sustainability of development and possibly serving as a 
stepping stone to reciprocal trade agreements as countries graduate from the GSP. 

In Figure 2 below, some of the underlying drivers are shown in red, others in grey. As 
will  be  seen  in  sections  5  (policy  options)  and  6  (impact  of  the  policy  options)  of  this 
impact  assessment  report,  options  to  address  each  of  the  specific  problems  and  their 
underlying drivers have been considered and analysed. In some cases that analysis led to 
the conclusion that the options for specific new policy measures would be ineffective or 
inefficient. In those cases, the underlying drivers are shown in grey. 

12 

 
Figure 2: Problem definition tree 

13 

SP1Limited exports under GSP preferences from some beneficiary countries, particularly those most in needSP2Limited export diversification of beneficiary countriesSP3Insufficient impact of GSP on sustainable development, good governance and human and labour rightsSP5Safeguard mechanisms in GSP regulation are not perceived by economic operators as fully exploitedSP4Insufficient availability of information on the GSP+ monitoring processMP1 GSP potential for contributing to poverty eradication –through expansion and diversification of exports from beneficiary countries –is not fully exploitedMP2GSP potential for contributing to sustainable development and good governance in beneficiary countries is not fully exploitedMP3The protection mechanisms in GSP in favour of EU economic interests are not fully exploitedD4Product graduation mechanism is not targeted enough on competitive products and covers only Standard GSPD3Large and unprecedented number of EBA beneficiary countries expected to graduate from LDC statusD7Positive conditionality (Art.15) only applies to GSP+; Standard GSP and EBA beneficiaries not required to ratify conventions in Annex VIIID8List of conventions in Annex VIII is not up-to-dateD6Negative conditionality (Art.19) applies to all GSP arrangements BUT is restricted to core human and labour rights conventions (Annex VIII Part A)D9Inefficient and insufficient response –through the GSP withdrawal mechanism –to toserious and systematic violationsD11Safeguard mechanisms not responsive enough, in particular on sensitive productsD1Diminishing number of Standard GSP beneficiary countriesD10Insufficient information and transparency and lack of indicators for monitoring and evaluation of GSP impactD2Large and industrialized beneficiary countries with diversified export structure also benefit from GSPD5GSP product coverage does not adequately reflect export potential of beneficiary countriesProblemsDrivers 
 
 
2.1. Problems identified 

The  three  main  (overarching)  problems  identified  correspond  to  weaker  than  intended 
performance for each of the three main objectives of the GSP23. To address these issues, 
the  analysis  has  identified  five  specific  implementation  problems  to  look  at.  They  are 
briefly summarised in Table 1. 

Table 1: Main problems identified 

Main Problems (MP) 

Specific problems (SP) 

Main Problem #1 (MP1) 

The GSP potential for contributing to poverty 
eradication – through expansion and 
diversification of exports of beneficiary countries, 
especially those most in need – is not fully 
exploited  

SP1: Limited exports under GSP from 
some beneficiary countries, particularly 
those most in need 

SP2: Limited export diversification of 
beneficiary countries 

Main Problem #2 (MP2) 
The GSP potential for contributing to sustainable 
development  and  good  governance  in  beneficiary 
countries is not fully exploited 

SP3: Insufficient impact of GSP on 
sustainable development, good 
governance, and human and labour rights 

SP4: Insufficient availability of 
information on the GSP+ monitoring 
process  

Main Problem #3 (MP3)  

The  protection  mechanisms  in  GSP  in  favour  of 
EU economic interests are not fully exploited  

SP5:  Safeguard  mechanisms  in  the  GSP 
Regulation are not perceived by economic 
operators as fully exploited 

2.1.1. Main  Problem  #1:  The  GSP  potential  for  contributing  to  poverty  eradication  – 
through  expansion  and  diversification  of  exports  of  beneficiary  countries, 
especially the most in need – is not fully exploited 

By  providing  preferential  access  to  the  EU  market,  the  GSP  instrument  can  assist 
developing countries in their efforts to reduce poverty.  

As the causal  link between the GSP and poverty reduction is  difficult  to ascertain  with 
precision24, GSP effectiveness  is  primarily measured through its  impact on exports and 
its diversification.  

Trade  statistics  prove  GSP  has  positive  impact  on  improving  trade  flows  from  GSP 
beneficiaries  to  EU.  Between  2014  and  2019,  EU27  imports  from  current  GSP 
beneficiaries  utilising  any  of  the  existing  arrangements  increased  by  25%25,  whereas 
overall  imports  from  third  countries  increased  by  16%  over  the  same  period.  Imports 
under EBA even outperformed this increase with 47% (from 17.1 billion EUR in 2014 to 

23 See Section 1.2. 
24 Also noted in the MTE. 
25 COMTEXT – TARIC 

14 

 
 
 
 
 
 
                                                           
25.2 billion EUR in 2019). Imports from LDCs accounted for 2% of total EU imports in 
2019; 67% of these imports from LDCs benefitted from EBA preferences.  

During  the  same  time,  the  share  of  imports  under  EBA  in  total  imports  from  LDC 
increased from less than half to over two thirds, suggesting a diversification away from 
fuels and other items not receiving EBA preferences. For GSP beneficiaries as a whole, 
this increase was from 32% to 39%. 

Ensuring the continuing relevance of the scheme requires in the first place focusing the 
GSP  preferences  on  the  developing  countries  most  in  need,  to  help  them to  boost  their 
exports.26 At the same time, the contribution of GSP to export diversification is modest 
and  depends  more  on  how  well  export  opportunities  under  GSP  are  integrated  into  the 
broader  domestic  policy  mix  in  the  beneficiary  country27.  Moreover,  extending  to  GSP 
beneficiaries  certain  advantages  related  to  GSP  status  (in  compliance  with  the  rules  of 
origin  in  the  EU  Custom  legislation)  should  respond  to  the  country’s  development, 
financing  and  trade  needs  as  well  as  future  perspectives  with  regards  to  the  product 
benefitting from preferential tariffs.  

This  Main  Problem  #1  (i.e.,  not  fully  exploiting  GSP’s  potential  for  contributing  to 
poverty reduction) results in part from the concentration of GSP preferences in a limited 
number of countries. Bangladesh (EBA, 25% of total GSP), India (Standard GSP, 23% of 
total GSP), Indonesia (Standard GSP, 10% of total GSP), Vietnam (Standard GSP, 14% 
of  total  GSP)  and  Pakistan  (GSP+,  8%  of  total  GSP)  are  the  five  biggest  users 
responsible for 80% of total GSP imports to the EU in 2019.  

Around  99%  of  imports  from  countries  covered  by  Standard  GSP  are  from  three 
beneficiaries:  India, Indonesia, and Vietnam. Vietnam will leave GSP in 2023 (because 
since August 2020 it has preferential access to the EU market under a bilateral free trade 
agreement) and Indonesia reached upper middle-income status in 2020 and may be out of 
the  Standard  GSP  by  2024  (though  Covid-19  may  have  an  impact).  This  development 
will concentrate the preferences even more in two countries, India, and Bangladesh, with 
Pakistan coming third, raising doubts about the accuracy of the targeting.  

Another risk relating to Main Problem #1 is that several EBA beneficiaries will soon lose 
their status as LDCs, and will consequently move into another GSP arrangement (under 
Standard GSP they will enjoy a less preferential access). This would be of some concern 
because of their poorer performance and because of their vulnerability to trade shocks on 
the current account. 

26 While most academic research on the economic effects of GSP focuses on the impact of trade preference 
on exports, the scheme aims at both expanding and diversifying exports of the beneficiary countries. But 
over time the focus shifted to the quantitative objective while neglecting diversification. See also: Persson 
M. and Wilhelmsson F., 2016 EU Trade preferences and Export Diversification, The World Economy 39 
(1):  16-53,  and  a  2015  Study  ‘Assessment  of  economic  benefits  generated  by  the  EU  Trade  Regimes 
towards developing countries’ found that GSP preferences had a positive and causal impact on the growth 
and 
EU. 
https://trade.ec.europa.eu/doclib/docs/2015/july/tradoc_153595.pdf 

diversification 

developing 

countries 

exports 

from 

the 

of 

to 

27 The Generalised Scheme of Preferences Regulation (No 978/2012) - European Implementation 
Assessment, EPRS (European Parliamentary Research Service), 2018. 
https://www.europarl.europa.eu/RegData/etudes/STUD/2018/627134/EPRS_STU(2018)627134_EN.pdf 

15 

 
                                                           
 
 
Finally  in  connection  with  Main  Problem  #1,  the  MTE  identified  modest  overall 
improvements in export diversification but could not establish a clear link with the GSP 
Regulation.  Any positive impact largely depended on whether the beneficiary countries 
had  policies  and  administrative  capacity  in  place  to  effectively  channel  the  extra 
resources 
to  social28  and  distribution-improving  policies.  These  findings  were 
corroborated by the 2020 External  Study.  In the public consultation,  some stakeholders 
noted  that  the  GSP  had  not  contributed  to  economic  diversification  in  beneficiary 
countries in the way that had been expected. 

Figure 3: The causal link between Main Problem #1 and its underlying drivers 

Drivers

•D1 - Relevance of 
Standard GSP 

•D2 - Large diversified 
countries still included

•D3 - EBA graduation
•D4 - Product graduation
•D5 - Limited product 

coverage

Specific 
Problem 
#1 and 
#2

Limited 
exports and 
low 
diversification 
in countries 
most in need 

MP #1

Conse-
quences

GSP's 
potential for 
poverty 
eradication:  
not fully 
exploited

2.1.2. Main  Problem  #2:  The  GSP  potential  for  contributing 

to  sustainable 

development and good governance in beneficiary countries is not fully exploited 

The present GSP instrument has contributed to the promotion of sustainable development 
and good governance, in particular through the EU’s monitoring of the implementation of 
the international conventions relevant to GSP+. 

The  MTE  recognised  that  overall,  the  GSP  has  created  incentives  for  ratifying 
international  conventions  and  has,  therefore,  contributed  to  a  better  framework  for 
progress. However, one aspect highlighted by the MTE that contributes to Main Problem 
#2 is the need to put further measures in place in order to ensure that the GSP supports 
positive  environmental  development.  In  particular,  it  recommended  that  the  Paris 
Agreement on Climate Change should be added to the list of 27 international conventions 
that GSP+ beneficiary countries must comply with. 

The  2020  External  Study  confirmed  that  GSP  has  fostered  the  potential  for  sustainable 
development and brought benefits in terms of respect for human rights, labour standards 
promoted  by 
the  International  Labour  Organization  (ILO),  environmental  and 
governance conventions in the beneficiary countries. Aspects proposed for improvement 
include:  extending  negative  conditionality  to  the  environmental  and  good  governance 
conventions;  improving  transparency towards  and inclusiveness  of civil  society;  raising 
awareness of the scheme in the GSP beneficiary countries. 

16 

 
 
 
 
 
                                                           
 
Overall,  across  stakeholder  groups,  stakeholders  consulted  for  the  External  Study  consider  that 
the GSP has positive impacts across all areas, with the exception of combating corruption, where 
it is seen as substantially less successful. 

Another aspect identified by the MTE which contributes to Main Problem #2 is that the 
scheme might not sufficiently incentivise beneficiary countries to improve the respect for 
human rights and other core rights and obligations related to sustainable development.  

Two  aspects  seem  to  be  relevant.  Firstly,  negative29  conditionality  (which  means  that 
eligibility for any of the three GSP arrangements can be withdrawn in case of serious and 
systematic violation of the principles laid down in the 15 core human rights and labour 
rights  conventions  of  Annex  VIII  of  the  GSP  Regulation)  currently  does  not  extend  to 
environmental and  governance issues.  Secondly,  positive30  conditionality (which makes 
eligibility  for  enhanced  GSP  benefits  conditional  upon  ratification  and  effective 
implementation of international conventions) only applies to GSP+ countries; it does not 
apply to the beneficiaries of the Standard GSP and EBA. 

As  noted  by  the  MTE  and  by  stakeholders  in  the  open  public  consultation,  the  list  of 
international  conventions  in  Annex  VIII  to  the  GSP  Regulation  needs  to  be  updated. 
Some  additional  conventions  would  be  of  particular  relevance  to  the  GSP  objective  of 
promoting sustainable development and good governance, including making the respect 
of certain international standards (e.g. on migration) a ground for possible withdrawal of 
preferences. 

Civil  society  stakeholders  across  beneficiary  countries  consulted  during  the  MTE  called  for 
more information and transparency in the GSP+ monitoring process, and criticised in particular 
the  lack  of  transparency  of  the  written  communication  between  the  Commission  and  the 
beneficiary countries. They argued that greater transparency, accountability and standartisation of 
the  monitoring  mechanism  could  lead  to  improved  effectiveness  of  the  monitoring  process. 
Indeed,  based  on  input  from  the  stakeholder  consultations,  the  2020  External  Study 
recommended that transparency in the GSP+ monitoring process could be improved. 

Another aspect of GSP which can contribute to Main Problem #2 is the lack of flexibility 
in the withdrawal mechanism. This lack of flexibility makes it difficult to react promptly 
to  seriously  adverse  developments  in  beneficiary  countries.  Some  stakeholders  contend 
that  the  lack  of  flexibility  makes  GSP  leverage  for  improving  the  respect  for  human 
rights and sustainable development weaker than intended.  

Figure 4: The causal link between Main Problem #2 and its underlying drivers 

29 Negative conditionality requires all GSP beneficiary countries to respect the principles enshrined in the 
human  and  labour  rights  international  core  conventions  listed  in  Part  A  of  Annex  VIII  to  the  GSP 
Regulation. 
30  Positive  conditionality  requires  GSP+  beneficiary  country  to  ratify  and  effectively  implement  all  27 
conventions  on  human  and  labour  rights,  environmental  protection  and  governance  listed  in  Part  A  and 
Part B of Annex VIII to the GSP Regulation. 

17 

 
 
                                                           
Drivers

• D6 - Negative 
conditionality
• D7 - Positive 
conditionality

• D8 - List of 

international 
conventions

•D9 - Withdrawal 

mechanism

•D10 -

Transparency of 
GSP+ monitoring 
process

Specific 
Problem 
#3 and 
#4

Limited impact on 
sustainable 
development, good 
governance and 
fundamental rights; 
insufficient 
information on 
GSP+ monitoring 
process

MP #2

Conse-
quences

GSP's 
potential for 
sustainable 
development:  
not fully 
exploited

2.1.3. Main  problem  #3:  The  protection  mechanisms  in  favour  of  EU  economic 

interests are not fully exploited 

There are two safeguard mechanisms built into the GSP. Their aim is to prevent serious 
difficulties  for  EU  producers  arising  as  a  result  of  growing  imports  under  GSP,  by 
allowing for the re-introduction of normal Common Customs Tariff duties.  

In  the  context  of  GSP,  there  is  a  set  of  ‘offensive’  EU  interests  to  promote  values, 
international  standards,  and  sustainable  development  through  generous  tariff  reductions 
or the full removal of tariffs. We also have a set of ‘defensive’ EU interests focused on 
protecting  EU  producers  in  cases  of  serious  market  difficulties.  Here,  the  views  of 
industry  are  more  nuanced,  reflecting  differences  between  the  interests  of  domestic 
producers/competitors, of producers/users of imported inputs, and of export/importers. 

In terms of product sections, the majority of GSP imports remains in apparel and clothing 
(48%),  followed  by  footwear  (11%),  mechanical  appliances  (7%),  fish  products  (4%), 
leather (3.7%) and plastics (2.7%) – and this is where the pressure on EU industry can be 
felt. 

While  the  reduction  in  the  number  of  beneficiaries  has  generally  weakened  the 
competitive pressure on EU industry, this is not the case in specific industry sectors such 
textiles, clothing, agricultural products, and tyres. That is why ensuring better safeguards 
for the EU’s economic interest remains among the Commission’s objectives. 

The MTE found that the present GSP scheme has improved the provisions for protecting 
the EU’s economic interests. Products that represent a high level of competitive threat to 
domestic EU producers are regularly removed from the scheme, and there are safeguard 
measures  in  force  until  2022  for  rice  imports.  However,  the  MTE  study  recommended 
that  the  Commission  should  more  effectively  use  the  safeguard  mechanisms  in  the 
application of the current GSP. 

The general safeguard mechanism (Articles 20-28 of the GSP Regulation) applies to all 
beneficiaries  and  products  covered  by  any  of  the  GSP  arrangements.  The  safeguard 

18 

 
 
 
investigations  on  imports  of  rice  from  Cambodia  and  Myanmar/Burma  have  been  the 
first test of the new safeguard provisions31.  

An  automatic  safeguard  mechanism  (Article  29  of  the  Regulation)  applies  only  to 
specific  product  groups  and  does  not  cover  EBA  beneficiaries.  The  Commission  has 
never applied this specific safeguard mechanism since the conditions have not been met.  

The  2020  External  Study’s  recommendations  called  for  the  automatic  safeguard  to  be 
better connected to its purpose – averting harm to EU industry. 

The  public  consultations  carried  out  for  the  MTE  and  for  the  2020  External  Study  provided 
opportunities for the EU private sector to point to cases of alleged suboptimal protection of EU 
economic interests due to insufficient use of the safeguards mechanism inbuilt in the scheme. A 
system  of  preferential  tariffs  in  favour  of  developing  countries  is  acceptable  for  European 
stakeholders  only  insofar  it  is  perceived  to  offer  sufficient  protection  against  economic 
difficulties resulting from competition by developing countries. 

Figure 5: The causal link between Main Problem #3 and its underlying drivers 

Drivers

• D11 -

Safeguard 
mechanism
• D4 - Product 
graduation

Specific 
Problem 
#5

Insufficient 
protection for 
EU industries 
competing with 
imports from 
GSP 
beneficiaries

MP #3

Conse-
quences

Weaker than 
intended 
safeguarding of 
EU financial 
and economic 
interests

2.2.  What are the problem drivers? 

The underlying drivers for each of the identified problems can be grouped in clusters (see 
Table  2)  according  to  the  main  aspect  they  are  related  to:  GSP  arrangements  and 
beneficiary  countries  coverage;  product  coverage  and  graduation;  conditionality; 
transparency; and safeguard mechanisms. 

Table 2: Clusters of drivers of problems in the GSP implementation 

Main Problems (MP)  

Clusters of drivers 

Drivers and their description 

Main Problem No 1 (MP1) 
The GSP potential for contributing 
to poverty eradication – through 

Coverage of 
beneficiary countries 
under GSP 

Driver No 1 (D1) 

Diminishing number of Standard GSP 
beneficiary countries 

31 Commission Implementing Regulation (EU) 2019/67 of 16 January 2019 imposing safeguard measures 
with regard to imports of Indica rice originating in Cambodia and Myanmar/Burma, OJ L 15 of 17.1.2019. 
https://trade.ec.europa.eu/doclib/press/index.cfm?id=1970  

19 

 
 
 
                                                           
Main Problems (MP)  

Clusters of drivers 

Drivers and their description 

expansion and diversification of 
exports of beneficiary countries, 
especially those most in need – is 
not fully exploited 

arrangements 

Main Problem No 2 (MP2) 
The GSP potential for contributing 
to  sustainable  development  and 
good  governance  in  beneficiary 
countries is not fully exploited 

Products coverage 
and graduation 

Conditionality of 
GSP preferences 
with sustainability 
objectives 

Transparency 

Main Problem No 3 (MP3) 

The  protection  mechanisms 
in 
favour  of  EU  economic  interests 
are not fully exploited 

Safeguards 

20 

Driver No 2 (D2) 
Large 
beneficiary 
industrialised 
countries  with  diversified  export  structure 
also benefit from GSP 

and 

Driver No 3 (D3) 
Unprecedented number of EBA beneficiary 
countries  expected  to  graduate  from  LDC 
status and thus exit EBA 

Driver No 4 (D4) 

Product  graduation  mechanism 
is  not 
targeted  enough  on  competitive  products 
and covers only Standard GSP 

Driver No 5 (D5) 
GSP product coverage does not adequately 
reflect the export potential of beneficiary 
countries 

Driver No 6 (D6) 
Negative  conditionality  (Article  19)  for  all 
GSP  arrangements  is  restricted  to  the  core 
international  conventions 
(human  and 
labour rights) listed in Part A of Annex VIII 
to the GSP Regulation 

Driver No 7 (D7) 
Positive  conditionality  (Art.  15)  is  only 
provided for GSP+. Standard GSP and EBA 
beneficiaries  are  not  required  to  ratify  the 
conventions listed in Part A and B of Annex 
VIII to the Regulation 

Driver No 8 (D8) 
The  list  of  international  conventions  in 
Annex  VIII  to  the  Regulation  is  not  up  to 
date 

Driver No 9 (D9) 
response  – 
insufficient 
Inefficient  or 
through  the  GSP  withdrawal  mechanism  – 
to “serious and systematic violations” 

Driver No 10 (D10) 
Insufficient  information  and  transparency 
and  lack  of  indicators  for  monitoring  and 
evaluation of GSP impact 

Driver No 11 (D11) 

Safeguard  mechanism  not 
enough, in particular on sensitive products 

responsive 

Driver No 4 (D4) 

is  not 
Product  graduation  mechanism 
targeted  enough  on  competitive  products 
and covers only Standard GSP 

 
 
 
2.2.1. Drivers  regarding 
arrangements  

the  coverage  of  beneficiary  countries  under  GSP 

o  Driver No 1: Diminishing number of Standard GSP beneficiaries  

The 2012 GSP reform restricted access to the scheme only to those countries classified 
below Upper Middle Income by the World Bank, and which do not have an FTA with the 
EU.  This  resulted  in  the  reduction  of  GSP  beneficiaries  from  178  to  92  countries. 
Subsequent  economic  growth  in  beneficiary  countries,  or  new  FTAs  with  the  EU,  has 
meant that in 2021 only 18 countries continue to benefit from the Standard arrangement. 

Since 2014, the share of imports under the Standard arrangement in total EU imports has 
decreased. By contrast, the shares of total EU imports for GSP+ and EBA countries has 
increased.  The  two  largest  beneficiaries  of  Standard  GSP  (India  and  Indonesia)  now 
account for a large part of all Standard GSP imports.  

The large reduction in the number of beneficiary countries of the Standard arrangement 
raises  the  question  of  its  relevance  as  a  preferential  arrangement  distinct  from  GSP+ 
beyond 2023. This question was analysed in the supporting External Study. 

o  Driver  No  2:  Large  and  industrialised  beneficiary  countries  with  a  diversified 

export structure also benefit from GSP 

Since  200432,  the  Commission  has  aimed  to  focus  GSP  on  the  countries  most  in  need, 
such  as  LDCs  and  the  most  vulnerable  developing  countries  (small  economies,  land-
locked countries, and low-income countries) in order to help them play a greater role in 
international trade. This was also one of the main objectives of the 2012 GSP reform. 

Taking into account all GSP preferential imports under the three different arrangements, 
Bangladesh (an EBA beneficiary) has become the EU’s top GSP partner with 25% of all 
GSP imports.  

However,  some  large  industrialised  lower-middle-income  countries  remain  GSP 
beneficiaries  and  can  dominate  GSP  imports  into  the  EU.  Preferences  given  to  these 
countries  may  aggravate  the  competitive  pressure  on  exports  from  LDCs  and  other 
vulnerable GSP countries. 

India  is  the  Standard  GSP  beneficiary  with  the  largest  share  (23%)  of  overall  GSP 
imports into the EU, followed by Vietnam (14%) and Indonesia (10%). Other GSP users 
are smaller by comparison in percentage terms.  

32 Communication of 2004 on ‘Developing countries, international trade and sustainable development: the 
function of the Community’s generalised system of preferences (GSP) for the ten-year period from 2006 to 
2015’: https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52004DC0461&from=EN  

21 

 
                                                           
o  Driver No 3: Unprecedented number of EBA beneficiaries expected to graduate 

from LDC status (and thus exit EBA) 

Reports from the UN and UNCTAD indicate that several countries benefitting from the 
EBA could graduate from LDC status by 202433. They would thus be removed from the 
list  of  EBA  beneficiary  countries,  following  a  transition  period  of  three  years,  and, 
depending  on  their  World  Bank  classification,  they  would  transition  to  Standard  GSP 
only or graduate entirely out of the GSP. 

The unprecedented number of countries exiting the EBA poses the challenge of ensuring 
that this transition does not harm the results achieved in terms of economic development 
and eradication of poverty. 

2.2.2. Drivers regarding the products coverage and graduation 

o  Driver No 4: Product graduation mechanism is not targeted enough on sensitive 

products and covers only the Standard GSP arrangement 

Some  stakeholders  contend  that  the  graduation  mechanism  of  the  GSP  does  not 
sufficiently  support  the  aim  of  concentrating  benefits  on  countries  most  in  need. 
Currently, product graduation is calculated at Harmonized System section level34￼,  and 
applies  only  to  Standard  GSP  beneficiary  countries  (it  does  not  cover  EBA  and  GSP+ 
countries).  Although  the  MTE  did  not  make  any  recommendations,  it  found  that  the 
graduation  of  textiles  from  India  had  helped  to  expand  the  exports  of  other  more 
vulnerable GSP beneficiaries. 

o  Driver No 5: GSP product coverage does not adequately reflect export potential 

of beneficiary countries 

EBA beneficiaries enjoy duty-free access to the EU market for all their exported products 
except  arms  and  ammunition  –  but  the  range  of  products  benefitting  from  preferential 
access  from  Standard  GSP  and  GSP+  countries  is  more  limited.  Extending  product 
coverage could help with export diversification.  

The  EP  Resolution  called  on  the  Commission  to  consider  expanding  GSP  product 
coverage, in particular with regard to semi-finished and finished products.  

33 At the time of writing (August 2021) planned LDC graduations include: Bhutan, Angola, Sao Tome and 
Principe, with Vanuatu having recently graduated in 2020. 
https://www.un.org/development/desa/dpad/least-developed-country-category/ldc-graduation.html  
The Committee for Development Policy in its 2021 report, reflecting the economic and publich health 
crisis caused by COVID-19, recommended further three countries for graduation (Bangladesh, Lao DPR, 
and Nepal)  post 2024; noted that Cambodia, Comoros, Djibouti, Senegal and Zambia met the graduation 
criteria for the first time, and deferred decision on the graduation of Myanmar and Timor-Leste until 2024. 
https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/CDP-excerpt-2021-3.pdf  
34  The  “Harmonized  System”  is  a  standardized  numerical  method  of  classifying  traded  products.  The 
Nomenclature  governed  by  the  Convention  on  the  Harmonized  Commodity  Description  and  Coding 
System, commonly known as "HS Nomenclature" was elaborated under the auspices of the World Customs 
Organization  (WCO).  The  HS  comprises  approximately  5,300  article/product  descriptions  that  appear  as 
headings  and  subheadings,  arranged  in  99  chapters,  grouped  in  21  sections.  Therefore,  sections  are  the 
most aggregated grouping, followed by chapter, followed by heading, followed by sub-heading.  

22 

 
 
 
 
                                                           
The  diversification  of  a  beneficiary  country’s  exports  depends  on  a  variety  of  factors, 
including resource endowments and domestic policy choices that favour the development 
of  a  country’s  productive  capacity35.  This  goes  beyond  the  GSP  instrument  and  relates 
more to EU development assistance and improving policy coherence in practice, notably 
between trade and development policies. 

2.2.3.  Drivers  regarding  conditionality  of  GSP  preferences  with  sustainability 

objectives  

o  Driver  No  6:  Negative  conditionality  (Article  19)  for  all  GSP  arrangements  is 
restricted to the core international conventions (human and labour rights) listed in 
Part A of Annex VIII to the GSP Regulation 

Tariff  preferences  can  be  withdrawn,  in  respect  of  all  or  certain  products,  in  cases  of 
serious and systematic violation of the principles enshrined in the core human rights and 
labour rights conventions listed in Part A of Annex VIII. Article 19 refers to a negative 
conditionality  to  respect  human  rights  and  labour  rights,  as  well  as  other  conditions 
indicated therein.  

The use of the withdrawal  procedure so far (against Sri Lanka, Belarus, Myanmar, and 
Cambodia36)  has  shown  that  conditionality    can  contribute  to  the  creation  of  the 
necessary  platform  of  dialogue  on  issues  covered  by  the  GSP  Regulation  and  can 
increase EU’s leverage in pushing for respect of fundamental rights. 

Negative conditionality does not apply to the environmental or governance conventions 
in Part B of Annex VIII to the Regulation. At present, negative conditionality is restricted 
to core conventions on human and labour rights (Part A of Annex VIII). The conditions 
laid down in Article 19(1)(a) should also apply to the conventions relating to protection 
of the environment and governance listed in Part B of Annex VIII.  

Moreover, Article 19(1)(c) provides as a ground for withdrawing preferences “failure to 
comply  with  international  conventions  on  anti-terrorism  and  money  laundering”.  This 
should be extended to cover other important areas for which international conventions for 
the respect of human rights and good governance standards exist.  

35  Persson  M.  and  Wilhelmsson  F.,  EU  Trade  Preference  and  Export  Diversification,  in  The  World 
Economy, 2016. 
36 Only the temporary withdrawal of EBA preferences from Cambodia took place under the current GSP 
Regulation: see Commission delegated regulation 2020/550, OJ L 127, 22.4.2020, p. 1–12  

23 

 
                                                           
o  One such area is migration. It is essential for both origin and destination countries 
to  address  common  challenges,  such  as  stepping  up  cooperation  on  readmission 
of  own  nationals  and  their  sustainable  reintegration  in  the  country  of  origin,  in 
particular in order to avoid a constant drain in active population in the countries 
of  origin,  with  the  ensuing  long-term  consequences  on  development,  and  to 
ensure that migrants are treated with dignity. Driver No 7: Positive conditionality 
(Art.  15)  applies  only  to  GSP+  beneficiaries.  Standard  GSP  and  EBA 
beneficiaries are not required to ratify the international conventions listed in Part 
A and B of Annex VIII to the GSP Regulation  

There  is  no  obligation  for  Standard  GSP  or  EBA  beneficiary  countries  to  ratify  the 
international conventions listed in Annex VIII (Parts A and B) in order to be eligible for 
GSP or EBA preferences. This condition exists for GSP+ countries only. In other words, 
there is no positive conditionality for Standard GSP and EBA beneficiaries in relation to 
the conventions listed in Annex VIII.  

The extension of positive conditionality to all GSP countries is supported by some stakeholders 
(e.g. international trade unions and civil society organisations as well as some EU industries such 
as footwear) as a measure to ensure a level playing field. Other stakeholders warn that such an 
extension  could  overburden  the  administrative  capacity  of  especially  the  smallest  and  least 
developed GSP beneficiaries.  

o  Driver No 8: The list of international conventions in Annex VIII is not up to date 

By making GSP+ status dependent on the ratification and implementation of a number of 
international  conventions,  the  EU  has  leverage  to  directly  contribute  to  sustainable 
development  and  human  rights,  through  the  adherence  to  these  conventions  by  GSP+ 
beneficiaries. 

Expanding  the  list  of  conventions  would  provide  an  opportunity  to  ensure  that  GSP 
beneficiaries  ratify  and comply with  further treaty  obligations  relating to  human rights, 
sustainable development, and good governance.  

The  economic  and  development  challenges  facing  GSP+  beneficiaries  are  often  long-
term and structural; their alleviation may require major reforms over a long period. Thus, 
the fact that a convention must be ratified, and that the country has no serious failures in 
its  implementation  as  a  precondition  to  receive  GSP+  status  can  induce  positive 
sustainability effects, but over the long run. 

o  Driver  No 9:  Inefficient or insufficient  response  – through the GSP withdrawal 

mechanism – to “serious and systematic violations” 

Some  stakeholders  consider  withdrawal  of  preferences  to  be  an  effective  way  of  inducing 
compliance  with  key  human  and  labour  rights  obligations  –  and  recommend  more  stringent 
enforcement  of  withdrawal.  Others  note  that  it  would  generate  great  uncertainty  and  disrupt 
supply chains, thereby undermining the purpose of the preference schemes themselves37.  

37 Study in support of an impact assessment to prepare the review of GSP Regulation No 978/2012, Final 
Report, 2020. 

24 

 
                                                           
As  pointed  out  in  the  EP  Resolution,  a  decision  to  withdraw  preferences  has  to  be 
consistent  with  the  objectives  of  GSP.  Some  stakeholders  argue  that  removing 
preferences – even if for reasons of serious human rights violations – can have a negative 
effect  on  poverty  eradication  by  negatively  affecting  employment.  However,  others 
contend that in cases of serious violations of human rights or environmental protection, 
the objectives of GSP are being seriously prejudiced. Removing GSP preferences due to 
violations of human rights, labour rights, environmental and governance rules (including 
in  new  areas  such  as  migration)  could  thus  be  seen  as  consistent  with  the  scheme’s 
objectives. The introduction of the possibility of a partial withdrawal, under the current 
GSP regulation already laid down the possibility to calibrate the withdrawal. Moreover, 
experience  has shown that when exercising the option of a temporary withdrawal, it is 
appropriate    to  carefully  assess  the  socio-economic  impact  of  any  such  withdrawal  to 
avoid hurting disproportionately the most vulnerable part of the population.  

The  MTE  study  recommended  that  the  Commission  should  take  immediate  steps  to 
initiate the relevant withdrawal procedures whenever a monitoring body reports serious 
and  systematic  violations  (or  findings  of  a  similar  gravity).  The  Commission,  in  its 
response to the MTE report, considered that such an approach might remove much of the 
leverage that GSP brings for pushing – over time – to resolve problematic issues related, 
for instance, to human rights. 

The  2020  External  Study,  however,  noted  there  were  situations  where  negative 
developments  in  beneficiary  countries  required  the  EU  to  respond  faster 
than is currently possible under the withdrawal procedure. It highlighted 
that  the  current  mechanism  is  administratively  burdensome  and  lengthy 
and  does  not  provide  enough  flexibility  to  react  promptly  to  urgent 
situations. In addition, the current GSP scheme provides for full or partial 
withdrawal of preferences vis-à-vis a country, but no flexibility to apply a 
more  targeted  approach  vis-à-vis  individual  operators  from  a  given 
country.2.2.4. Driver regarding transparency  

o  Driver No 10:  Insufficient  information  and transparency,  and lack of indicators 

for monitoring and evaluation of GSP impact 

A  robust  monitoring  system  is  crucial  to  ensure  effective  dialogue  and  support  for 
beneficiary countries in GSP implementation, as well as to ensure that the possibility of 
withdrawal is seen as a likely outcome for failing to meet the GSP+ requirements. 

The  MTE  study,  the  EP  resolution,  as  well  as  civil  society  in  the  public  consultation, 
have all called for the monitoring process to be made more transparent and inclusive, in 
order  to  help  increase  the  GSP  impact  on  sustainable  development.  They  highlight  the 
lack of public access to the written communication part of the GSP+ monitoring; the lack 
of  formal  structures  for  involving  civil  society  in  the  monitoring;  and  the  lack  of  a 
complaint mechanism linked to GSP+ monitoring.  

25 

 
  
 
2.2.5. Driver regarding safeguard mechanism 

o  Driver No 11: Safeguard mechanisms are not responsive enough, in particular on 

sensitive products  

The  MTE  study  recommended  that  the  Commission  should  more  effectively  use  the 
safeguard mechanism in the application of the Regulation.  

The EP Resolution pointed out that the GSP safeguard mechanisms were not responsive 
enough, in particular in the case of “sensitive products”. The Commission considers that 
the  general  safeguard  mechanism  laid  down  in  Article  22  of  the  Regulation  to  be 
functioning  well,  but  acknowledges  concerns  about  the  adequacy  of  the  automatic 
safeguard mechanism established in Article 29. 

Driver  No  438,  point  2.2.2  above,  is  also  relevant  when  responding  to  concerns  about 
sensitive  products.  EU  industry  representatives  maintain  that  the  current  product 
graduation  provisions  may  sometimes  result  in  a  failure  to  target  competitive  products, 
when these are only a part of a broader Section classification.  

2.3. How will the problems evolve? 

The  identified  problems  will  persist  and  increase  if  the  EU  does  not  act  with  an 
appropriate policy initiative. 

If no policy action is taken, upon expiry of the current GSP  Regulation, exports from a 
number  of  developing  countries  (all  those  under  Standard  GSP  and  GSP+)  will  lose 
preferential  treatment  on  the  EU  market.  The  GSP’s  three-tier  architecture,  with  its 
sliding scale of preferences, aims precisely at  addressing the  varying needs of different 
developing countries. No other instruments offer an adequate and timely response to the 
differing needs of different developing countries.  

Depending  on  how  much  a  GSP  beneficiary  country  exports  to  the  EU,  higher  duties 
could  negatively  affect  economic  growth,  employment,  and  investment.  Often  their 
export  products  compete  mainly  on  price,  making  them  especially  vulnerable  to  tariff 
increases. 

GSP+, which offers the best incentives to work towards sustainable development, would 
be discontinued – reducing the EU’s ability to pursue its values agenda and development 
objectives.  

While some European producers would face less competition from developing countries 
in some sectors, EU businesses that currently rely on goods imported under the benefit of 
GSP tariff preferences  would  be negatively impacted, as would the consumers of those 
products. 

Moreover, maintaining GSP preferences with the three arrangements is seen as ensuring 
continuity  and  predictability  for  exporters  and  their  trade  partners  and  supporting 

38  Product  graduation  mechanism  is  not  targeted  enough  on  sensitive  products  and  covers  only  the 
Standard GSP arrangement. 

26 

 
 
 
 
                                                           
economic  recovery  of  the  beneficiary  countries,  many  of  which  have  been  severely 
impacted by COVID-19. 

3.  WHY SHOULD THE EU ACT? 

3.1. Legal basis 

The  legal  basis  for  a  new  GSP  Regulation  lies  in  Article  207  of  the  Treaty  on  the 
Functioning  of  the  European  Union  (TFEU),  which  sets  out  the  EU’s  common 
commercial policy. 

3.2. Subsidiarity: necessity of EU action 

The  common  commercial  policy  is  listed  in  Article  3  of  the  TFEU  among  the  areas  of 
exclusive competence of the Union. 

Pursuant  to  Article  5(3)  of  the  Treaty  on  European  Union  (TEU),  the  subsidiarity 
principle does not apply in areas of exclusive EU competence.  

The principle of proportionality is satisfied since the Regulation is the only appropriate 
type of action that the Union can take to establish unilateral, non-reciprocal, preferential 
market access for developing countries.  

4.  GENERAL AND SPECIFIC OBJECTIVES OF GSP: WHAT IS TO BE ACHIEVED?  

The EU’s overarching objective of economic and trade relations derives from the TFEU, 
which  in  Article  3(1)(e)  establishes  the  EU’s  exclusive  competence  for  the  common 
commercial  policy.  Furthermore,  Article  206  provides  that  the  overall  objective  of  EU 
policy on economic and  trade relations is  to  ‘contribute, in  the common interest,  to  the 
harmonious  development  of  world  trade,  the  progressive  abolition  of  restrictions  on 
international  trade  and  on  foreign  direct  investment,  and  the  lowering  of  customs  and 
other  barriers’.  As  established  by  Article  205  of  the  TFEU,  the  common  commercial 
policy also serves the more general objectives of the Union’s external action as described 
in Article 21 of the TEU. 

The three main objectives of the GSP39 are in line with the common commercial policy 
and  the  Union’s  external  action.  The  recent  Trade  Policy  Review  Communication 
confirmed the continued importance of and focus on these objectives. 40 

The current legal framework for GSP is largely effective and overall is delivering on the 
objectives pursued by the 2012 reform.41 However, Section 2 identified several problems 
to address, based inter alia on the recommendations of the MTE, the EP Resolution, the 

39 See Section 1.2. 
40 See Section 1.3. 
41 See the MTE and the 2020 External Study on GSP. The EP Resolution also acknowledged the positive 
impact of the Regulation on beneficiary countries. 

27 

 
                                                           
supporting  External  Study,  the  public  consultation,  and  the  associated  discussions  with 
stakeholders.42 

The overall task, therefore, is to identify, for each of the three main (general) objectives 
of the GSP, those changes that should be introduced to the new GSP regulation so as to 
further strengthen its effectiveness and efficiency.  

The objectives tree in Figure 6 reflects the general and specific objectives for the GSP 
Regulation as a whole. As explained above (p.11), options to address each of the specific 
problems and their underlying drivers have been considered and analysed. In some cases 
that analysis led to the conclusion that the options for specific new policy measures under 
consideration would be ineffective or inefficient43. The Commission believes that overall, 
the present GSP scheme is functioning well – and that view has been corroborated in first 
the MTE and latterly the supporting Study for this impact assessment. New operational 
objectives (and specific measures by which to attain them) are, therefore, proposed only 
for  some  of  the  identified  specific  objectives.  Once  again,  the  distinction  is  marked  by 
showing operational objectives where policy intervention is proposed in red; operational 
in  black. 
objective  where  no  new 

is  propose  are 

intervention 

shown 

42  While  some  respondents  focused  more  on  the  objectives  of  poverty  eradication  and  promotion  of 
sustainable development. Others suggested modifications corresponding to current trends or MTE findings, 
in  particular,  to  include  more  emphasis  on  SDGs,  trade  and  climate  change,  and  on  monitoring  of 
implementation  of  international  conventions.  Some  respondents  emphasised  the  objective  to  provide 
greater protection of EU production sectors competing with imports (e.g., textiles and garments). 
43 … or at any rate, less effective or less efficient than the measures currently in force under the present 
GSP regulation. 

28 

 
                                                           
Figure 6: GSP objectives tree 

29 

SO1Expand exports from developing countries, particularly those most in needSO2Contribute to export diversification of developing countriesSO3Improve and strengthen GSP support for sustainable development, good governance and human/labour rights in beneficiary countriesSO5Further protect EU industries competing with imports of products from GSP beneficiary countriesSO4Ensure that adequate information on the GSP+ monitoring process is available to stakeholdersGO1Further contribute to poverty eradication in countries most in needGO2Contribute to sustainable development and good governance in beneficiary countriesGO3Ensure protection of EU economic interests in the functioning of the schemeProduct graduation mechanism is targeted and comprehensive(no specific new policy measure –but technical adjustments to the existing framework)Ensure a smooth transition in EU market access for the large number of EBA beneficiaries expected to graduate from LDC statusStandard GSP and EBA beneficiaries are encouraged to respect principles of Annex VIII conventionsRevise and update the list of international conventions in Annex VIIIExtend negativeconditionality to all conventions listed in Annex VIII of the GSP RegulationEffective safeguard mechanisms in place(no specific new policy measure –but technical adjustments to the existing framework)Improve transparency for stakeholders by publishing a detailed description of the monitoring process, the actors involved and interaction with civil societyGSP product coverage reflects export potential of beneficiary countriesGeneral objectivesSpecificobjectivesOperational objectivesEnsure an effective response to serious and systematic violations and greater flexibility through specific improvements to GSP withdrawal mechanism 
 
 
Table 3: Problem drivers linked to the Specific and General Objectives of the GSP review 

Problem drivers 

Specific Objectives (SO) 

General Objectives (GO) 

Driver No 1 (D1) 
Diminishing number of Standard 
GSP beneficiary countries  

Driver No 2 (D2) 
Large and industrialised 
beneficiary countries with 
diversified export structure also 
benefit from GSP   

Driver No 3 (D3) 
Unprecedented 
number of EBA beneficiary 
countries expected to graduate 
from LDC status and thus exit 
EBA  

Driver No 4 (D4) 
Product graduation mechanism is 
not targeted enough on 
competitive products and covers 
only Standard GSP 

Driver No 5 (D5) 
GSP product coverage does not 
adequately reflect the export 
potential of beneficiary countries  

Driver No 6 (D6) 
Negative conditionality (Article 
19) for all GSP arrangements is 
restricted to the core international 
conventions (human and labour 
rights) listed in Part A of Annex 
VIII to the GSP Regulation  

Driver No 7 (D7) 
Positive conditionality (Art. 15) is 
only provided for GSP+. Standard 
GSP and EBA beneficiaries are 
not required to ratify the 
conventions listed in Part A and B 
of Annex VIII to the Regulation 

Driver No 8 (D8) 
The list of international 
conventions in Annex VIII to the 
Regulation is not up to date  

Driver No 9 (D9) 
Inefficient and insufficient 
response – through the GSP 
withdrawal mechanism – to 
“serious and systematic 
violations” 

Specific Objective No 1 (SO 1) 

Expand exports from developing 
countries, particularly those most 
in need 

General Objective No 1 (GO 1) 
Contribute to poverty eradication in 
countries most in need 

Specific Objective No 2 (SO2) 

Contribute to export 
diversification of developing 
countries  

Specific Objective No 3 (SO 3) 
Improve and strengthen GSP 
support for sustainable 
development, good governance, 
and human and labour rights in 
beneficiary countries 

General Objective No 2 (GO 2) 

Contribute to sustainable 
development and good governance 
in beneficiary countries 

30 

 
 
 
 
Driver No 10 (D10) 
Insufficient information and 
transparency and lack of 
indicators for monitoring and 
evaluation of GSP impact  

Driver No 11 (D11) 
Safeguard mechanism not 
responsive enough, in particular 
on sensitive products  

Specific Objective No 4 (SO4) 

Ensure that adequate information 
available on the GSP+ 
monitoring process is available 
to stakeholders 

Specific Objective No 5 (SO5) 

Further protect EU industries 
competing with imports from 
GSP beneficiary countries 

General Objective No 3 (GO 3) 

Ensure protection of EU economic 
interests in the functioning of the 
scheme 

4.1. General Objective No 1: Further contribute to poverty eradication in countries 
most in need 

Following  entry  into  force  of  the  reform  in  2014,  a  significant  decline  in  the  value  of 
imports  under  Standard  GSP  was  observed  because  a  large  number  of  beneficiary 
countries44  were  no  longer  eligible  for  GSP.  The  introduction  of  income  classification 
and vulnerability criteria caused this reduction, and also resulted in benefits being better 
targeted towards the least developed countries. Overall, the positive economic impact of 
the GSP reform is significant45. 

Specific Objective 1 (Expand exports from developing countries, particularly those most 
in need):  

The objective to support beneficiary countries in their potential for expanding exports is 
already  built  into  the  GSP  instrument  through  the  graduation  of  upper-middle  income 
countries and globally competitive sectors. However, more can be done, notably by: 

  Ensuring that the graduation of EBA beneficiaries from LDC status is followed by a 

move to another GSP arrangement (D3); and/or 

  Ensuring  that  tariff  preferences  under  GSP  are  withdrawn  (i.e.,  product  graduation) 
from competitive products in order to provide further opportunities in the EU market 
for the exports of countries most in need (D4). 

As  regards  the  graduation  of  EBA  beneficiaries,  several  LDCs  currently  benefitting 
from the EBA arrangement are expected to graduate from LDC status over the next ten 
years46.  Accordingly,  these  countries  will  be  removed  from  the  list  of  EBA  beneficiary 
countries  “following  a  transitional  period  of  three  years.”47  Although  the  standard 

Regulation 

44 This notably included China, an upper middle-income country since 2010. 
45 2018-2019 Report from the Commission to the European Parliament and the Council on the application 
of  Regulation  (EU)  No  978/2012  applying  a  scheme  of  Generalised  Tariff  Preferences  and  repealing 
Council 
732/2008. 
https://trade.ec.europa.eu/doclib/docs/2018/january/tradoc_156536.pdf  
46 Any other countries that might graduate from LDC status in the future could not leave the EBA earlier 
than 2031 (based on current transition periods): the earliest decision on LDC graduation could take place at 
the UN CDP triennial review meeting in 2024, so that graduation from LDC status could at the earliest be 
during 2027, and graduation from the EBA in 2031. 
47  See  e.g.,  Commission  Delegated  Regulation  (EU)  No  2018/148  of  27  September  2017  amending 
Annexes  II,  III  and  IV  to  Regulation  (EU)  No  978/2012  of  the  European  Parliament  and  of  the  Council 
applying a scheme of generalised tariff preferences, OJ L 26/8, 31 January 2018. 

(EC) 

No 

31 

 
 
 
 
                                                           
transition  period  between  the  UN  General  Assembly  decision  on  graduation  and 
graduation  itself  is  three  years,  recent  practice  has  been  to  grant  longer  preparatory 
periods. Considering the economic impact of Covid-19, it some the scheduled decisions 
for 2021 have been deferred. 48  

Following  graduation  from  LDC  status  and  exit  from  the  EBA,  these  countries  could 
move  to  other  preferential  arrangements:  notably  to  the  Standard  GSP,  or,  in  case  of 
compliance with the vulnerability conditions and the ratification and implementation of 
international conventions listed in Annex VIII of the Regulation, to GSP+.  

The  expiry  of  a  country’s  eligibility  for  the  EBA  arrangement  raises  two  issues.  First, 
what would be the economic, social, human rights and environmental consequences for 
EBA countries moving to the Standard GSP arrangement or GSP+? Second, what should 
be the appropriate transition period for moving from EBA to Standard GSP or to GSP+ 
upon graduation from LDC status? 

The operational objective would be to ensure a smooth transition in EU market access for 
the large number of EBA beneficiaries expected to graduate from LDC status. 

Product  graduation  (defined  under  Article  8  of  the  GSP  Regulation)  provides  for  the 
suspension of preferences for products the exports of which exceed certain thresholds in 
total  EU  imports  from  all  GSP  beneficiaries.  This  mechanism  currently  applies  only  to 
the GSP Standard arrangement, but not to the GSP+ or EBA.  

Product  graduation  is  applied  at  the  level  of  GSP  product  sections.  This  is  a  relatively 
aggregated level, which combines fairly different products within sections.  

Various options to amend the product graduation mechanism have been tested as part of 
this  impact  assessment  (see  §6.2  below);  but  none  was  found  to  have  a  significant 
positive impact on exports to the EU by countries most in need. No operational objective 
has  therefore  been  taken  up  –  instead,  the  Commission  proposes  to  make  technical 
adjustments to the existing framework. 

Specific Objective 2 (Contribute to export diversification of developing countries):  

Both the MTE and the 2020 supporting study found that for the Standard GSP, the GSP+ 
and EBA country groups, the GSP contributed in only a limited way to diversification of 
production and trade in the developing countries. 

Various options to further encourage export diversification among beneficiary countries 
were tested as part of this impact assessment (see §6.2 below); but none was found to be 

48 Statement of the UN Committee for Development Policy (CDP) issued a on how it intended to address 
the impacts of Covid-19 on its work in LDCs, 12 May 2020: “At the 2021 triennial review, the CDP will 
decide whether to recommend the following five countries for graduation, provided they continue to meet 
the criteria: Bangladesh, Lao PDR, Myanmar, Nepal, and Timor-Leste. In making this decision, the CDP 
will  not  only  consider  the  LDC  criteria  scores,  but  also  additional  information  in  the  form  of 
supplementary graduation indicators and country-specific analysis. This material will include information 
on 
https://www.un.org/development/desa/dpad/wp-
content/uploads/sites/45/CDP-Covid-graduation-statement.pdf 
See 
https://www.un.org/development/desa/dpad/publication/2021-cdp-report-ecosoc-and-ga-resolutions/ 

impacts.” 

Covid-19 

March 

report 

2021: 

2021 

CDP 

from 

also 

and 

19 

its 

32 

 
                                                           
effective.  No  operational  objective  has  therefore  been  taken  up  –  instead,  the 
Commission proposes to make technical adjustments to the existing framework. 

4.2.  General  Objective  No  2:  Contribute  to  sustainable  development  and  good 
governance in beneficiary countries 

The Trade Policy Review (TPR) communication of 18 February 2021 confirmed that the 
promotion of sustainable development is an integral part of the EU’s trade policy, since 
trade  is  one  of  the  essential  instruments  that  can  support  economic  and  social 
development  through  better  access  to  the  EU  market.  The  TPR  also  underlined  the 
specific  role  of  GSP  as  an  instrument  creating  trade  opportunities  that  contribute  to 
economic  growth  and  jobs  creation,  as  well  as  sustainable  development  in  beneficiary 
countries. 49 

This  function  of  the  GSP  has  several  limitations,  as  many  of  the  problem  drivers  are 
influenced  by  factors  outside  the  remit  of  the  scheme.  For  instance,  implementation  of 
international conventions is costly. The chances of a successful outcome also depend on 
domestic  political  dynamics  within  the  countries  concerned.  Government  priorities, 
budgetary  constraints,  availability  of  appropriate  development  and  technical  assistance 
are powerful determinants of actual progress, irrespective of the contribution made by the 
EU’s  tariff  preferences.  Ambition  in  this  regard  must,  therefore,  be  tempered  with 
realism:  the  scheme  will  help  but  it  cannot  alone  ensure  sustainable  development  and 
good governance.  

Specific Objective 3 (Improve and strengthen GSP support for sustainable development, 
good governance, and human and labour rights in beneficiary countries):  

Conditionality remains one of the main mechanisms that the EU uses to promote respect 
for  human  rights  and  good  governance  in  GSP  beneficiary  countries:  a  country  should 
not  benefit  from  preferential  trade  arrangements  while  it  is  acting  in  a  way  that  is 
contrary to its own developmental needs.  

Overall, GSP can be considered to have made a positive contribution to the improvement 
of social and human rights in the beneficiary countries. Nevertheless, the conditionality 
mechanisms built into the GSP have shown some limitations.  

In particular, with respect to environmental protection, the MTE concluded that the EU 
currently has very limited leverage through Standard GSP and EBA to directly contribute 
to environmental sustainability in the beneficiary countries.50 

The operational objective would be to extend negative conditionality to  all conventions 
listed in Annex VIII of the GSP Regulation. 

Moreover  –  as  confirmed  by  the  MTE  study  –  the  list  of  international  conventions  in 
Annex VIII is outdated and incomplete. 

49 See Section 1.3. 
50  Under  the  Standard  GSP  and  EBA  arrangements,  there  is  no  requirement  for  beneficiary  countries  to 
comply with international conventions on climate change and environmental protection (listed in Part B of 
Annex  VIII  of  the  Regulation)  and  there  is  no  mechanism  for  sanctioning  violations  of  the  principles  of 
such conventions as the withdrawal of preferences applies only to the respect of the principles of certain 
core human rights and labour conventions (as outlined in Part A of Annex VIII). 

33 

 
                                                           
The operational objective would therefore be to revise and update the list of international 
conventions in Annex VIII. 

GSP  benefits  have  been  suspended  in  only  a  limited  number  of  cases  and  have  been 
triggered  by  criteria  established  in  the  Regulation.  Better  use  of  the  withdrawal 
mechanism could reinforce the positive impact of GSP on the promotion of sustainable 
development. 

The withdrawal mechanism could be made more flexible, to provide the EU with a tool 
that can be used to react faster to exceptionally grave situations  in beneficiary countries. 
The withdrawal mechanism could also be made more targeted and flexible, if it allowed 
the EU to target the withdrawal of preferences against specific individual operators or to 
exempt individual operators from a country-level withdrawal.  

The  revision  of  GSP  should  be  used  to  promote  sustainable  development  objectives 
linked  to  migration.  The  withdrawal  mechanism  can  be  used  to  underline  the 
interlinkages  between  trade  and  migration  by  adding  the  possibility  to  withdraw  tariff 
preferences for violations of the principles of international migration conventions. 

The  operational  objective  would  be  to  ensure  an  effective  response  to  serious  and 
systematic  violations  and  greater  flexibility  through  specific  improvements  to  the  GSP 
withdrawal mechanism.  

Specific Objective 4 (Ensure that adequate information is available to stakeholders on 
the GSP+ monitoring process):  

In  line  with  feedback  from  stakeholders  during  the  MTE,  the  Commission  has  already 
started to put in place tools to improve knowledge and awareness about the role played 
by GSP in supporting sustainable development in beneficiary countries.51 

However,  there  is  a  need  to  further  enhance  the  transparency  of  the  current  GSP 
monitoring system, so as to make the monitoring system more robust and, therefore, to 
contribute towards a more effective dialogue with and support for beneficiary countries,52 
as well as to enhance the buy-in of European stakeholders in the GSP scheme.53 

The  operational  objective  would  be  to  improve  transparency  for  stakeholders  by 
publishing  a  detailed  description  of  the  monitoring  process,  the  actors  involved  and 
interaction with civil society. 

4.3.  General  Objective  No  3:  Ensure  protection  of  EU  economic  interests  in  the 
functioning of the scheme 

Specific Objective 5 (Further protect EU industries competing with imports from GSP 
beneficiary countries).  

51 For instance, GSP Hub is an online platform put in place following the recommendations of the MTE 
which provides information to companies, investors and stakeholders in general about the EU GSP. 
52 For a general treatment on the importance of monitoring for enforcing rules, see Ostrom  (2005). As she 
notes, “the worst of all worlds may be one where external authorities impose rules but are able to achieve 
only weak monitoring and sanctioning” (Ostrom 2005, 130). 
53 The temporary withdrawal of GSP preferences is analysed in more detail in 5.1.3.4 and 5.2.3.4 below. 

34 

 
                                                           
Many stakeholders that participated in the open public consultation called for the review 
of the safeguard mechanism, in light of a perception of inadequate protection of sensitive 
sectors, particularly the rice sector. They called for the creation of an automatic safeguard 
(as  is  the  case  for  other  sensitive  products),  as  well  as  arguing  that  the  automatic 
safeguard should apply to EBA countries as well. 

The  2018  MTE  recommended  that  the  Commission  should  more  effectively  use  the 
safeguard  mechanism  in  the  application  of  the  Regulation.  It  also  called  to  launch 
investigations  in  accordance  with  its  mandate,  and  to  provide  notice  of  its  procedural 
decisions, deadlines, and findings. The EP in its Resolution noted that the GSP safeguard 
mechanisms should be more responsive, in particular in the case of sensitive products.54 

The  Commission  considers  the  current  safeguard  mechanisms  to  be  effective. 
Nonetheless,  various  options  to  amend  the  automatic  safeguard  mechanism  have  been 
tested as part of this impact assessment (see §6.2 below); but none was found to have a 
significant  positive  impact  in  terms  of  protecting  competing  EU  producers.  No 
operational objective has, therefore, been taken up – instead, the Commission proposes to 
make technical adjustments to the existing framework. 

5.  WHAT ARE THE AVAILABLE POLICY OPTIONS? 

This  section  describes  the  available  policy  options  and  the  corresponding  actions  and 
measures considered for inclusion in the new GSP regulation.  Options are bundled and 
described per cluster on the basis of the problem to address. 

5.1.  What is the baseline from which options are assessed? 

As  already  mentioned,  the  current  GSP  Regulation  expires  on  31  December  2023.  A 
positive decision of the Commission and of the co-legislators will be necessary to put in 
place  a  new  Standard  GSP  and  GSP+  arrangement,  while  the  open-ended  EBA 
arrangement will continue irrespectively of the GSP review. Taking into account that the 
MTE, the public consultation, and the supporting External Study showed that the scheme 
was  overall  effective,  a  continuation  of  the  current  GSP  approach  without  any  changes 
was  used  as  the  baseline.  Baselines  are  bundled  and  presented  in  Table  4  in  clusters, 
based on the various parts of the GSP Regulation they refer to. A detailed description of 
baseline scenarios is presented in Annex 7. 

The main drivers for future development of the impacts of the GSP are annual increases 
of trade flows as well as countries dropping out of the scheme due to graduations at large 
or in specific product groups or by joining an FTA with the EU. 

The current regulation entered into force in 2014. 2020 has been a very unusual year. It 
makes  thus  most sense to determine the  growth  of trade flows looking  at  the period of 
2014-2019.  Over  this  time  horizon,  EU  27  imports  from  current  GSP  beneficiaries 
increased  by  about  4.5%  per  year.  However,  over  the  same  period,  countries  have 
dropped  out  of  the  scheme.  Looking  at  the  evolution  of  trade  without  correcting  for 
country coverage results in an annual growth rate of only 3.7%. 

54 “Sensitive products” (applicable to the Standard GSP arrangement only) are defined in Annex V of the 
Regulation. For these products, the Standard GSP provides partial preferences only; see Art. 7(2)-(6) of the 
Regulation. 

35 

 
                                                           
In terms of country graduations55, the most impactful would be Vietnam (accounting for 
14% of trade in 2019 under GSP preferences) having signed an FTA with the EU as well 
as  Bangladesh  (25%)  being  scheduled 
to  graduate  from  LDC  status.  Recent 
developments  also  strongly  point  towards  Indonesia  (10%)  leaving  the  scheme  due  to 
graduation  to  upper-middle-income  country  status  in  the  next  years,  but  raise  doubts 
about the timeline of Bangladesh's transition from EBA to standard GSP (or GSP+). 

Table 4: Clusters of baseline scenarios and their descriptions 

Clusters 

Baseline scenario 

Description 

Arrangements and 
beneficiary 
countries 

Baseline Scenario 1A (BS 1A) 

Baseline Scenario 2A (BS 2A) 

Baseline Scenario 3A (BS 3A) 

No change to the GSP three-tier structure 
(Standard, GSP+ and EBA) 

No change to the criteria defining eligibility 
for Standard GSP 

No change to the vulnerability criteria to be 
met for enjoying GSP+  

Product coverage 
and graduation 
mechanism 

Baseline Scenario 4A (BS 4A) 

No change to the product graduation 
mechanism 

Baseline Scenario 5A (BS 5A) 

No change to the product coverage 

Baseline Scenario 6A (BS 6A) 

Conditionality 

Baseline Scenario 7A (BS 7A) 

Baseline Scenario 8A (BS 8A) 

No change to negative conditionality (Art. 
19) i.e., it remains restricted to the core 
conventions listed in Part A of Annex VIII 
to the Regulation 

No change to positive conditionality i.e., it 
continues to apply only to GSP+ and it is 
not extended to Standard GSP or EBA 

No change in the list of international 
conventions in Annex VIII to the 
Regulation 

Baseline Scenario 9A (BS 9A) 

No change to the mechanism for temporary 
withdrawal of preferences 

Transparency 

Baseline Scenario 10A (BS 10A)  No change to the GSP+ monitoring 

mechanism 

Safeguards 

Baseline Scenario 11A (BS 11A)  No change to the automatic safeguard 

mechanism 

5.2.  Description of the policy options 

The policy options  are  grouped in  clusters: (1) arrangements  and beneficiary  countries, 
(2)  products  coverage  and  graduation  mechanism,  (3)  conditionality,  (4)  transparency 
and (5) safeguards. These clusters correspond to the problems the options aim to address 
(see Table 5).  

The policy options highlighted in red are the most important options to be pursued and 
further analysed. They also correspond to the key drivers that, as described in Chapter 2, 
would  have  the  most  significant  negative  impact  if  not  properly  addressed.  The 

55 The accompanying study made certain assumptions about country graduations detailed there. 

36 

 
 
                                                           
remaining  options  would  be  less  effective  in  addressing  the  GSP’s  main  problems  and 
objectives.  

Table  5:  Clusters  of  policy  options  and  their  sub-options,  and  the  problem  drivers  they 

address 

Clusters 

Drivers 

Policy Options 

Cluster 1 

Arrangements 
and beneficiary 
countries  

Driver 1 (D1) 
Diminishing number of Standard 
GSP beneficiary countries 

Driver 2 (D2) 
Large and industrialised beneficiary 
countries with diversified export 
structure also benefit from GSP 

Driver 3 (D3) 
Unprecedented number of EBA 
beneficiary countries expected to 
graduate from LDC status and thus 
exit EBA  

Cluster 2 

Product 
coverage and 
graduation 
mechanism  

Driver 4 (D4) 
Product graduation 
mechanism is not targeted enough 
on competitive products and covers 
only Standard GSP 

Cluster 3 

Conditionality  

Driver 5 (D5) 
GSP product coverage does not 
adequately reflect the export 
potential of beneficiary countries 

Driver 6 (D6) 
Negative conditionality (Article 19) 
for all GSP arrangements is 
restricted to the 
core international conventions 
(human and labour rights) listed in 
Part A of Annex VIII to 
the GSP Regulation 
Driver No 7 (D7) 
Positive conditionality (Art. 15) is 
only provided for GSP+. Standard 
GSP and EBA beneficiaries are not 
required to ratify the conventions 
listed in Part A and B of Annex VIII 
to the Regulation 
Driver No 8 (D8) 
The list of international conventions 
in Annex VIII to the Regulation 

37 

Option 1B (O. 1B) 
Amend the three-tier structure of the GSP 
  Sub-option 1Ba: Discontinue all but EBA 
  Sub-option 1Bb: Discontinue the Standard 

GSP only 

Option 2B (O. 2B) 
Graduation from GSP of large and industrialised 
developing countries 

Option 3B (O. 3B) 
Ensure all EBA countries expected to graduate 
from LDC can transition to GSP+ by:  

  Sub-option 3Ba: changing the vulnerability 

criteria*; or  

  Sub-option 3Bb: granting a longer transition 

period for meeting the criteria 

Option 4B (O. 4B) 
Expand the application of the product graduation 
mechanism to GSP+ and EBA 

  Sub-option 4Ba: to rice and sugar 
  Sub-option 4Bb: to all agricultural products in 
Annex V and IX of the GSP Regulation 

Option 5B (O. 5B) 
Expand the product coverage for standard GSP 
and GSP+ 

  Sub-option 5Ba: to products that can help 

achieve environmental and climate protection 
goals 

  Sub-option 5Bb: to a number of industrial and 

agricultural semi-finished and finished 
products 

Option 6B (O. 6B) 
Expand negative conditionality to all conventions 
listed in Annex VIII to the Regulation*  

Option 7B (O. 7B) 
Expand positive conditionality to the Standard GSP 
arrangement and EBA beneficiary countries 

Option 8B (O. 8B) 
Amend the list of international conventions in 

 
 
 
 
 
 
 
 
 
 
Clusters 

Drivers 
is not up to date 

Driver 9 (D9) 
Inefficient and insufficient response 
– through the GSP withdrawal 
mechanism  

Cluster 4 

Transparency 

Driver 10 (D10) 
Insufficient information and 
transparency and lack of indicators 
for monitoring and evaluation of 
GSP impact 

Cluster 5  

Safeguards 

Driver 11 (D11) 
Safeguard mechanism not 
responsive enough, in particular 
on sensitive products  

[ and 
Driver No 4 (D4) 
Product graduation mechanism is 
not targeted enough on competitive 
products and covers only Standard 
GSP ] 

Policy Options 
Annex VIII to the Regulation 
 Sub-option 8Ba: Remove conventions deemed 

no longer/less relevant  

 Sub-option 8Bb: Expand the list of conventions 

in Annex VIII to the Regulation 

 Sub-option 8Bc: Combine 8Ba and 8Bb* 

Option 9B (O. 9B) 
Amend the mechanism for temporary withdrawal 
of preferences 

  Sub-option 9Ba: Introduce additional steps 
prior to the formal launch of a withdrawal 
procedure  

  Sub-option 9Bb: Introduce additional steps 
after the formal launch of a withdrawal 
procedure* 

  Sub-option 9Bc: Introduce withdrawal for 
specific economic operators, and/or for 
violation of migration conventions* 

  Sub-option 9Bd: Shorter urgency procedure in 

well qualified circumstances* 

Option 10B (O. 10B) 
Adopt further practical measures to improve 
transparency* 

Option 10 C (O. 10C) 
Extend and align the GSP monitoring cycle* 

Option 11 B (O.11B) 
Expand the application of the automatic safeguard 
mechanism (Art. 29) to all agricultural products 

Option 11 C (O. 11C) 
Expand the application of the automatic safeguard 
mechanism (Article 29) to EBA beneficiary 
countries for different lists of products 
  Sub-option 11Ca: current list of products 

(Art.29) 

  Sub-option 11Cb: expand list to rice and sugar 
  Sub-option 11Cc: expand list to all agricultural 

products 

5.2.1.  Options regarding Cluster 1: arrangements and beneficiary countries 

This set of options looks at different ways to adjust the structure and country coverage of 
the scheme, in  order to  expand exports from  developing  countries most  in  need (SO1), 
and, therefore, contribute to the general objective of poverty eradication (GO1). 

The  starting  point  of  the  External  Study  was  whether  to  amend  to  not  the  three-tier 
structure  of  the  GSP  (O.1B):  either  by  discontinuing  both  the  Standard  GSP  and  the 
GSP+  (1Ba)  or  discontinuing  only  Standard  GSP  (1Bb).  To  address  the  concern  that 
some  large,  industrialised  countries  continue  to  benefit  from  the  preferences  (D2),  the 
External Study also looked at their possible graduation from GSP (O.2B).  

38 

 
 
 
However  the  most  concerning  driver  is  that  a  significant  number  of  EBA  beneficiary 
countries are expected to graduate from LDC status over the next years and would cease 
to  be  eligible  for  EBA.  Options  O.1B  will  aggravate  even  further  the  status  of  those 
LDCs. The total effect current LDCs expected to graduate in the coming years would be 
the  combined  effect  of  losing  EBA  preferences  and  then  losing  Standard  GSP 
preferences.  

Under option O.2B, large developing countries, defined as all countries that individually 
account  for  0.5%  or  more  of  world  GDP,  are  removed  from  the  GSP.  In  practice,  this 
option would apply in a very narrow manner only to India and Indonesia. Furthermore, if 
current trend of economic development is confirmed, Indonesia may lose GSP access by 
2024.  

Option O3.B looks at ways of ensuring all EBA countries expected to graduate from 
LDC  status  can  transition  to  GSP+,  and  attempt  to  mitigate  the  negative  economic, 
social, human rights and environmental effect of several EBA beneficiaries’ graduation 
from  LDC  status  (D3),  In  practice,  Bangladesh  is  the  only  country  not  meeting  the 
vulnerability  criteria  required  to  obtain  GSP+  (in  particular  the  export  competitiveness 
criterion).  

Two different means to ensure graduating LDCs have access to GSP+ can be suggested: 

  Change  the  economic  vulnerability  criteria  for  GSP+  i.e.,  by  abolishing  the 
the  ‘lack  of  export 

‘limited  export  competitiveness’  and  only  keeping 
diversification’ criterion (Sub-option 3Ba). 

  Extend  the  current  three-year  transition  period  for  ex-LDC  countries  i.e.,  on  a 
case-by-case basis to up to 5 years, to make it easier for them to meet the criteria 
for GSP+ (Sub-option 3Bb). 

The  export  competitiveness  criterion  was  inserted  in  the  current  GSP  Regulation  to 
ensure that very large industrialised middle income countries did not become eligible for 
GSP+.  The  additional  GSP+  preferences  for  these  large  economies  would  negatively 
affect  the  most  vulnerable  economies,  and  would  bring  competitive  pressure  to  EU 
industry.  Furthermore, extending GSP+ to  all Standard GSP countries (including  at  the 
time  China,  India,  Vietnam,  Indonesia,  Thailand,  etc.)  would  undermine  EU  policy  of 
entering into bilateral agreements with major trade partners. The criteria were relaxed in 
the  past  to  allow  less  competitive  low  and  lower-middle  income  countries  (Pakistan, 
Philippines) to join GSP+.  

While the reasons for keeping out large industrialised countries are still valid, the export 
competitiveness  criterion  is  no  longer  useful  as  it  could  prevent  LDCs  from  joining 
GSP+.  The  risk  of  large  industrial  countries  de-diversifying  their  economy  to  become 
eligible for GSP+ is limited. 

In  the  consultations  carried  out  for  the  supporting  Study,  some  respondents,  mostly  from 
beneficiary  countries  and  the  public  sector,  were  in  favour  of  granting  the  graduating  LDCs  a 
longer  transition  period  between  the  point  of  meeting  criteria  for  graduation  and  the  actual 
departure  from  the  EBA  arrangement.  Suggestions  varied  from  five  to  ten  years,  to  ensure 
predictability  and  to  take  account  of  a  timeline  related  to  investment  and  sourcing  decisions. 
Additionally,  respondents  pointed  out  the  adverse  impacts  of  COVID-19  on  graduating  EBA 
beneficiaries  might  warrant  longer  transition  periods  to  help  countries  to  recover  economically 
after the pandemic.  

39 

 
Other respondents, mostly EU citizens, believed that the current transition period of three years 
was long enough or that it should even be shortened given that, in the run up to graduation from 
LDC  status,  countries  would  have  been  aware  of  that  milestone  and  –  at  least  theoretically  – 
would have had a chance to prepare.  

There were also suggestions of a flexible approach under which the Commission would evaluate 
each case separately, with a possibility to extend the transition period in certain circumstances. 
Those  respondents  believed  that  an  excessively  long  transition  period  applying  for  each 
graduating country, irrespective of its situation, would discourage necessary reforms. 

5.2.2.  Options regarding Cluster 2: product coverage and graduation 

Option O.4B expands the application of the product graduation mechanism to all GSP+ 
and EBA countries: for two specific products: rice and sugar56 (sub-option 4Ba) or for 
all  agricultural  products  as  listed  in  Annex  V  and  IX  of  the  GSP  Regulation57  (sub-
option  4Bb).  The  supporting  study  concluded  this  option  has  no  impact  –  no  countries 
would reach the required threshold to trigger the graduation rules for rice, sugar or other 
agricultural products. 

Option O.5B expands the product coverage for Standard GSP and GSP+ and attempts to 
address the limited impact of the GSP on export diversification. Sub-option 5Ba looks at 
expanding  product  coverage  to  products  that  can  help  achieve  environmental  and 
climate  protection  goals.  Sub-option  5Bb  looks  at  expanding  product  coverage  to  a 
number of industrial and agricultural semi-finished and finished products currently 
excluded  from  the  GSP  as  “sensitive”  products.  The  supporting  study  found  minor 
economic impact of both sub-options; the additional export gains would be captured by 
the large and already well-diversified economies. 

The  supporting  study  looks  at  a  list  of  34  “environmental  goods58”,  that  are  presently 
considered  as  sensitive  under  the  GSP  and  which,  therefore,  are  still  subject  to 
preferential tariffs (as opposed to being tariff-free) in the case of Standard GSP countries. 

In the public consultations, respondents from GSP beneficiary countries generally supported the 
extension  of  product  coverage  under  the  GSP,  including  to  sustainably  produced  goods;  EU 
respondents,  with  the  exception  of  civil society,  were  more  sceptical.  Some  noted  also that the 
extension  of  product  coverage  to  include  sustainably  produced  or  environmental  (green)  goods 
would  support  credibility  and  consistency  of  EU  policy,  including  the  European  Green  Deal. 
However, others raised questions about the feasibility practical application of such an extension.  

56 The analysis in the supporting study is based on the GSP Sections as defined pursuant to Article 2(j) of 
the GSP Regulation. As rice and sugar are not currently included among the products listed in Annexes V 
and  IX,  the  study  assumed  that  rice  would  be  part  of  Section  S-2d  and  sugar  part  of  Section  S-4b.  In 
addition, imports in relevant, more finely disaggregated HS codes (HS1006 and HS1701 for rice and sugar 
respectively) are analysed separately.  
57 The study excluded fish and tobacco products. In terms of HS Chapters, this covers Chapters 01 to 23 
excluding 03 (fish) and preparations of meat and fish. 
58  Negotiations  have  been  underway  for  some  time  within  the  WTO  towards  an  Environmental  Goods 
Agreement (EGA),  which  would  make environmental goods tariff-free once agreement has been reached 
by  a  critical  mass  of  participating  WTO  Members:  Patricia  Goff,  June  2015  -  The  Environmental  Good 
Agreement: a Piece of the Puzzle, Wilfrid Laurier University. 

40 

 
 
                                                           
5.2.3.  Options regarding Cluster 3: conditionality 

Scope of conditionality 

Option  6B  expands  negative  conditionality  for  all  GSP  arrangements  to  cover  also  the 
conventions on environment and governance (Part B of Annex VIII).  Option 7B extends 
to  all  GSP  beneficiaries  the  obligation  to  ratify  and  effectively  implement  the 
conventions  listed  in  Annex  VIII  (including  any  potential  changes  in  the  list  -  policy 
Option 8B).  

List of international conventions 

Option 8B proposes to update of the current list of 27 international conventions (Annex 
VIII  of  the  Regulation).  The  supporting  Study  analysed59  to  what  extent  these 
international  conventions  are  still  relevant  for  attaining  the  objectives  of  the  GSP  i.e., 
supporting  sustainable  development,  good  governance  and  poverty  eradication  in 
beneficiary  countries  while  also  considering  administrative  cost  issues.  The  following 
criteria were used to assess the conventions listed thereafter:  

  The level of contribution to and coherence with the objectives of the GSP; 

  The extent to which new conventions overlap with the conventions already listed in 

Annex VIII;  

  Legal recognition as a convention; 

  The  ratification  status  of  conventions  globally  and  among  GSP  countries  (only 
conventions  that  are  open  to  ratification  by  all  members  of  the  international 
community are considered); 

  Coherence  with  EU  Member  State  commitments  (ratification  by  all  EU  Member 

States); 

  The  conventions’  decision-making  and  governance  systems  and  institutional 

structures; 

  The system of regular implementation and/or compliance mechanisms and associated 

reporting by monitoring bodies under the convention; and 

  Reporting obligations on ratifying countries. 

In  the  consultations  for  the  supporting  study,  respondents  across  stakeholder  groups  mostly 
agreed with the idea of including international conventions on environment and governance into 
GSP conditionality, thus enabling withdrawal of preferences in the case of serious and systematic 
violations  of  these  conventions  as  well.  If  environmental  conventions  are  enforced,  including 
through  a  threat  to  withdraw  preferences,  this  would  provide  an  incentive  for  beneficiary 
countries to respect them and would also contribute to attaining the SDGs.  

Some  respondents,  however,  noted  the  challenge  that  implementation  of  those  conventions 
represented  for  GSP  beneficiaries.  In  particular,  LDCs  needed  to  make  progress  in  awareness, 
knowledge and technical capacity to be able to comply with environmental conventions, before 
the related conditionality could be introduced.  

59 See Annex 8 for a detailed description of the international conventions analysed by the supporting study. 

41 

 
                                                           
Regarding  climate  change,  respondents  generally  agreed  that  the  Paris  Agreement’s  principles 
should  be  respected  by  all  countries  and  that  addressing  climate  change  should  be  a  common 
objective for all. Some specific comments opined, however, that withdrawal of preferences was 
not the right measure to address such a problem in LDCs, as many of them are already confronted 
with  consequences  of  climate  change  and  losing  preferences  would  further  weaken  their 
economic capacity to act. 

According to the external study, the attainment of GSP objectives, notably on sustainable 
development could be advanced by adding the following conventions:  

  The Paris Agreement on Climate Change (2015);  

  The Convention on the Rights of Persons with Disabilities (CRPD);  

  The  Optional  Protocol  to  the  Convention  on  the  Rights  of  the  Child  on  the 

Involvement of Children in Armed Conflict (OP-CRC-AC);  

 

 

ILO Convention No 81 on Labour Inspection; 

ILO Convention No 144 on Tripartite Consultation;  

  The UN Convention against Transnational Organized Crime (UNTOC).  

Given  the  above  considerations,  a  combination  of  removals  and  additions  is  needed  to 
ensure that the list remain relevant (Sub-option 8Bc: Combine 8Ba and 8Bb). 

Temporary withdrawal mechanism60 

Sub-option  9Ba  introduces  additional  steps  in  the  so-called  enhanced  engagement 
undertaken  by  the  Commission  prior  to  the  formal  launch  of  a  withdrawal  procedure. 
Examples  of  such  steps  could  be  consultations  with  the  beneficiary  country  and  other 
stakeholders  that  can  support  the  Commission’s  considerations  on  whether  there  are 
sufficient grounds justifying the launch of the temporary withdrawal procedure.  

Sub-option  9Bb  proposes  additional  steps61  after  the  formal  launch  of  a  withdrawal 
procedure.  Any  decision  should  also  consider  the  specific  situation  in  the  country  and 
potential links between withdrawing the benefits stemming from GSP and the improved 
living or working conditions or respect for rights of certain groups.  

The supporting study analysed some elements which could be considered before taking a 
decision  on  the  scope  of  withdrawal,  such  as  the  impact  analysis  to  ensure  that  the 
withdrawal is proportional and well balanced with the key GSP objectives. 

Stakeholders  consulted  for  the  study,  in  particular  international  trade  unions  and  NGOs, 
suggested  that  the  introduction  of  a  complaint  mechanism  (now  set  up  to  be  overseen  by  the 
Chief Trade Enforcement Officer62 and include public hearings) might improve the monitoring of 
the situation in GSP beneficiary countries going beyond GSP+. 

60 See Annex 8 for an outline of the withdrawal procedure. 
61 See  Commission’s Delegated Regulation  No 1083/2013 establishing  specific procedural aspects of the 
GSP  withdrawal  procedure,  such  as  access  to  the  constituted  file  (i.e.,  evidence  and  documents  gathered 
during the withdrawal procedure, including documents provided by third parties), the procedural rights of 
third parties, including their rights to be heard and treatment of confidential information available.  
62 In July 2020, the Commission appointed a Chief Trade Enforcement Officer: 
https://trade.ec.europa.eu/doclib/press/index.cfm?id=2173%20 

42 

 
 
                                                           
Some respondents also emphasised that the enhanced engagement stage should be communicated 
to  the  country  in  an  appropriate  way,  taking  into  account  existing  sensitivities,  as  some 
beneficiaries may perceive it as a patronising act and choose not to engage. 

Sub-option  9Bc  introduces  a  withdrawal  of  preferences,  or  exemption  from  such  a 
withdrawal, for specific economic operators, or for violations of the obligation to readmit 
own  nationals  under  international  customary  law,  and  multilateral  international 
conventions such as the Convention on International Civil Aviation signed in Chicago on 
7  December  1944.  The  current  temporary  withdrawal  mechanism  applies  to  “all  or 
certain products originating in a beneficiary country”. An alternative approach could be 
to target or exempt certain economic operators (where violations are especially acute or 
not a pressing issue, respectively). 

Migration  constitutes  an  element  of  the  SDGs.  In  particular,  target  10.7  calls  for  the 
facilitation  of  orderly,  safe,  regular,  and  responsible  migration  and  mobility  of  people. 
The  Commission  is,  therefore,  considering  the  option  of  introducing  a  separate  and 
distinctive  legal  ground  for  withdrawing  preferences  in  cases  of  violations  of  the 
obligation  of  readmission  of  own  nationals  within  Article  19  of  the  GSP  Regulation. 
While  this  was  not  assessed  in  the  study,  it  is  considered  as  an  option  as  it  raises  the 
visibility of migration issues and promoting key EU policy on sustainable development 
involving the movement of people globally.  

Sub-option 9Bd introduces flexibility in the withdrawal of preferences, by introducing a 
faster  procedure  in  well-defined  exceptional  circumstances.  While  a  shorter  urgency 
procedure in well qualified circumstances (Option 9Bd) was not examined by the Study 
and it has not been raised previously, the Commission is considering options for reacting 
more  quickly  to  blatant  violation  of  human  rights  and  increasing  the  pressure  on  the 
beneficiary country to respond. 

5.2.4.  Options regarding Cluster 4: transparency of the GSP+ monitoring process  

Option 10B consists of putting into place, beyond existing GSP+ monitoring63 practices 
by  the  Commission  and  the  EEAS,  further  practical  measures  to  improve 
transparency and involvement of civil society.  

Option 10C considers extending the duration of current GSP+ monitoring cycle and 
aligning it to those of international monitoring bodies.  

Whereas  the  authors  of  the  MTE  believed  that  the  current  shorter  two-year  cycle 
introduced by the 2012 reforms is beneficial, as it puts pressure on beneficiary countries 
to implement the conventions, other studies64 note that a three- or four-year cycle would 
allow  more  time  for  beneficiaries  to  make  meaningful  progress  in  aligning  with  the 
conventions, both at the legislative level and in practice.  

The  analysis  in  the  supporting  Study  shows  that  it  is  not  possible  to  align  a  GSP+ 
reporting  cycle  with  the  reporting  cycles  of  the  international  conventions  since  there  is 
too much variation. Hence, the study recommends that GSP+ reporting cycle should not 

63 Indicators for monitoring and evaluation of GSP impact are presented in Section 9 of this report. 
64  Richardson, Harrison and Campling 2017, van der Ven 2018. 

43 

 
 
                                                           
be determined by the reporting cycles of the international conventions: GSP+ can set its 
own reporting cycle. Thus, this option is not practical and is not explored in detail. 

5.2.5.  Options regarding Cluster 5: safeguards 

The  general  safeguard  mechanism  (Article  22)  has  functioned  well.  The  policy  reform 
options,  therefore,  focus  on  an  expansion  of  the  automatic  safeguard  mechanism 
established in Article 29 of the GSP Regulation. Two options (O.11B and O.11C) have 
been identified. 

Under Option 11B, the automatic safeguard mechanism in Article 29 is expanded to 
cover all agricultural products listed in Annex V and Annex IX of the GSP Regulation, 
while still applying only to Standard GSP and GSP+ beneficiaries (i.e., no extension to 
EBA beneficiaries). Since the supporting Study found virtually no impact of this option, 
it is not explored in detail in this impact assessment report.  

In option 11C, the application of the safeguard mechanism in Article 29 is expanded 
to  EBA  beneficiary  countries.  The  supporting  Study  shows  that  this  option  has  no 
effect.  No  EBA  country  would  meet  the  6%  import  threshold  for  any  of  the  products 
currently covered. Similarly, the extension of automatic safeguards to rice, sugar or to all 
agricultural  goods  to  EBA  beneficiary  countries  would  have  limited  effects.  Therefore, 
this option is not explored in detail in this impact assessment report. 

This  issue  is  one  of  the  topics  where  stakeholders  consulted  for  the  study  disagreed  most. 
Although a majority of respondents were in favour of an extension of safeguard mechanism to all 
GSP  countries,  views  significantly  differed  between  EU  and  GSP  country  respondents:  among 
EU  respondents  54%  considered  that  LDCs  should  not  be  exempted  from  safeguards,  whereas 
71% of GSP country respondents believed that they should. 

In the EU, public sector and civil society were rather in favour of keeping exemptions for LDCs 
from measures to protect EU industry (i.e., keep the status quo), whereas a majority of businesses 
and citizens thought that exemptions should be ended. In GSP countries, the majority for keeping 
exemptions was found across all respondent types.  

5.2.6.  Option discarded at an early stage - extension of GSP coverage to trade in 

services 

Trade  in  services  has  become  increasingly  relevant  to  economic  growth  of  developing 
countries.  There  is  a  recurrent  request  from  stakeholders  to  explore  the  possibility  of 
including trade of certain services within the scope of the GSP.  

Most services are provided under Mode 1 which covers cross border supply i.e., services 
supplied  from  the  territory  of  one  WTO  Member  into  the  territory  of  another  WTO 
Member. These types of services do not trigger typical market access barriers that could 
be  removed  through  preferences.  Moreover,  service  provision  is  intrinsically  linked  to 
supply. The EU already provides preferential treatment to services and service suppliers 
from  LDCs.  Thus,  the  inclusion  of  services  in  the  context  of  GSP  would  only  benefit 
Standard  GSP  and  GSP+  beneficiaries.  However,  unlike  the  General  Agreement  on 
Tariffs and Trade (GATT), the General  Agreement  on Trade in  Services (GATS), does 
not include an Enabling Clause. This means that the EU would have to apply for a waiver 
at  the WTO to  include services  in  its GSP.  In addition,  it is unclear whether  LDCs  are 
actually benefiting from the existing services waiver for LDCs, given supply-side issues 
in developing countries.  

44 

 
6.  WHAT ARE THE IMPACTS OF THE POLICY OPTIONS? 

Like in Chapter 5, the analysis of the impact of the policy options will be conducted at 
the level of clusters, which group options based on the problem to address.  

Overall, continuing GSP with the targeted changes proposed will be a key encouraging 
signal  from  the  EU  to  developing  partners,  maintaining  a  key  platform  to  engage  with 
beneficiary  countries  to  bring  about  change  that  is  consistent  with  the  EU’s  values 
agenda and policy coherence for development. 

We expect  the choice of continuity of the current  GSP architecture to  be welcomed by 
beneficiary  countries  and  by  developed  WTO  partners.  This  is  in  line  with  the  long-
standing principle of the GATT Enabling Clause, which  grants  a permanent  exemption 
from  the  Most  Favoured  Nation  (MFN)  principle  (non-discrimination)  for  developed 
countries  to  unilaterally  grant  elimination  or  reductions  of  the  tariffs  paid  on  imports 
from developing countries.  

The  continuation  of  GSP  is  in  line  with  EU’s  Policy  Coherence  for  Development 
(embedded in Article 208 of the Treaty on the Functioning of the EU) which constitutes a 
key  pillar  of  EU  efforts  to  enhance  the  positive  impact  and  increase  effectiveness  of 
development  cooperation.  Moreover,  it  is  part  of  the  EU’s  political  commitment  to 
support sustainable development globally, as reflected in the implementation of the UN 
Agenda 2030 for Sustainable Development and Sustainable Development Goals (SDGs) 
– to which all WTO Members have committed. 

6.1. 

Impact  of  the  options  under  Cluster  1:  arrangements  and  beneficiary 
countries  

6.1.1.  Analysis of economic impact 

Macroeconomic and sectoral effects, impact on government revenue 

The overall economic and non-economic impact (social, environmental, human rights) 
of  policy  options  is  limited  as  the  current  GSP  three-tier  structure  is  proposed  to  be 
maintained.  This  choice  has  been  made  to  precisely  limit  the  expected  decline  in  GSP 
Standard and GSP+ countries in real GDP, in welfare, in total exports to the EU, and in 
governmental revenues compared to the current baseline, should the current structure be 
modified.  

The economic analysis has been made in the supporting Study using Computable General 
Equilibrium  (CGE)  model-based  simulations.  It  has  showed  in  all  other  scenarios  than 
maintaining the current  architecture of GSP, the negative impact  on GDP and trade for 
both  the  EU  and  the  GSP  beneficiaries,  albeit  small  one  (some  of  them  may  be  more 
affected though). Moreover, in the above mentioned scenarios, even if imports to the EU 
from  current  GSP  countries  decrease  by  3-5%,  the  LDCs  would  not  be  the  main 
beneficiaries as benefits would be distributed across other countries. 

The  choice  to  build  a  bridge  towards  GSP+  for  LDCs  which  exit  EBA  (by  amending 
GSP+  eligibility  criteria)  strengthens  the  continuity  option  and  reduces  the  negative 
impact which could be felt on LDCs. 

45 

 
Under Option 1B (amend the current three-tier structure of the GSP), the countries 
expected  to  graduate  from  LDC  status  and  moving  from  EBA  to  the  standard  GSP 
(Bangladesh,  Lao  PDR,  Nepal,  Myanmar,  Angola,  Bhutan,  Kiribati,  Sao  Tomé  & 
Príncipe, Solomon Islands, Timor-Leste, Tuvalu, and Vanuatu) would be hit twice: first 
by the loss of EBA preferences resulting from a move to the Standard GSP; and second, 
by losing even the Standard GSP preferences. As both changes would materialise around 
the same time, their impacts are considered as a combined effect in this analysis and the 
countries are treated as standard GSP beneficiaries.  

Furthermore, the main economic impact is felt in Standard GSP countries, which would 
see  a  decline  in  real  economic  activity  for  all  modelled  countries,  with  the  strongest 
negative impact on GDP (decline) for Bangladesh.  

Under Option 1Ba, total exports of the most affected country, Pakistan, would be 3.8% 
lower  than  in  the  baseline.  The  only  other  two  countries  whose  total  exports  would 
decrease by more than 1% are Bangladesh (-1.6%) and Tajikistan (-1.1%). Conversely, 
EBA countries remaining in the scheme as well as third countries would experience small 
bilateral export gains. 

to 

the  EU  from 

those  countries 

Exports 
their  preferences  revoked 
(discontinuation of GSP and GSP+) are estimated to drop with the largest fall (25%) in 
the case of Pakistan. Bilateral exports are also estimated to be substantially lower without 
the GSP preferences from Indonesia (-8.0%), Bangladesh (-7.4%) and Tajikistan (-7.2%). 
For all other countries directly affected by the policy, bilateral export losses will be lower 
than 5%. 

that  see 

Impact on GDP and government revenue:  countries that lose GSP benefits will suffer a 
deterioration  in  the  terms  of  trade,  which  will  see  a  fall  in  GDP:  the  largest  fall  is 
predicted for Pakistan (-3%), followed by Bangladesh (-2.1%) and Indonesia (-0.7%). 

EU27 (and Turkey due to the Customs Union with the EU) and UK tariff revenues rise 
by  0.5%  and  0.7%  respectively.65  However,  the  increase  in  revenues  is  offset  by  trade 
diversion to countries with tariff-free access to the EU market. 

At the sector level,  amending the three-tier structure of the GSP  by removing Standard 
GSP and/or GSP+ would significantly reduce total exports, indicating a limited capacity 
to adjust at sector level in these countries. Total clothing exports are expected to be up to 
42% lower in Tajikistan (albeit from a relatively small basis); others with large declines 
in total exports in this sector are Pakistan (-20%), Mongolia (-18%), and Bolivia (-10%). 
Other sectors with a total export contraction of around 10% or more are textiles, leather, 
agri-food, and chemicals, rubber, and plastics. 

Total  EU  imports  of  textiles  and  apparel,  leather  and  footwear,  and  food  products  are 
expected to decrease by about 1% compared to the baseline. Imports of other sectors will 
hardly change.  

Under  Option  2B,  which  looks  at  graduating  large  industrialised  developing 
countries from the scheme, in practice only India and Indonesia lose GSP preferences, 
as  they  would  be  the  only  countries  meeting  the  threshold  of  accounting  for  0.5%  or 

65 These tariff revenues percentage changes are likely to be underestimated. 

46 

 
                                                           
more of world GSP. Exports to the EU from these two countries fall (-8.2% for Indonesia 
and -3.3% for India) by about the same as in sub-option 1Ba.  

All other countries benefit through slightly higher exports to the EU. Sectoral effects are 
slightly  positive  across  the  board  for  bilateral  exports  (except  rice  in  Bangladesh)  and 
negligible for most countries and sectors in terms of total exports and value added, with 
only  some  small  gains  in  the  leather  and  garments  sectors  in  most  Standard  GSP 
countries, but not exceeding 0.8% (leather in Nigeria). 

Following from the limited trade effects, macroeconomic effects would also be marginal 
in all countries except India and Indonesia, where they would be essentially identical to 
Sub-option  1Ba.  Bangladesh  is  expected  to  benefit  from  small  gains  of  around  0.05% 
across all macroeconomic indicators. 

Sub-option 1Ba (discontinue 
Standard GSP and GSP+) 

Sub-option 1Bb (discontinue 
Standard GSP) 

Option 2B (discontinue preferences 
for large developing countries) 

EU27 UK GSP+ GSP EBA

0,04

0,02

0,00

-0,02

-0,04

-0,06

-0,08

-0,10

-0,12

EU27 UK GSP+ GSP EBA

0,04

0,02

0,00

-0,02

-0,04

-0,06

-0,08

-0,10

-0,12

0,04

0,02

0,00

-0,02

-0,04

-0,06

-0,08

-0,10

-0,12

EU27 UK GSP+ GSP EBA

Real GDP Welfare

Real GDP Welfare

Real GDP Welfare

Source: European Commission modelling results. 

Option 3B, ensuring all EBA countries expected to graduate from LDC status can 
transition to GSP+, attempts to mitigate the negative consequences of EBA graduation 
for these countries, which are briefly described below.  

Of the 12 countries assumed to graduate from  the EBA over the next 10 years, six 
are predicted to face non-negligible economic impacts: Bangladesh, Lao PDR, Myanmar, 
Nepal, Sao Tomé and Príncipe, and the Solomon Islands.  

Only  Bangladesh  stands  out  in  terms  of  facing  a  significant  fall  of  exports,  a 
consequential  large  decline  in  real  GDP  and  economic  welfare,  and  large  impacts  in 
sectors such as  textiles and apparel  and leather/footwear that face a high MFN tariff in 
the EU and thus potentially disruptive industrial adjustment.  

In addition, Bangladesh does not meet the vulnerability criterion of GSP+ and would 
therefore  automatically  enter  the  Standard  GSP  upon  graduation  from  EBA.  As  a 
result  of  this,  the  country  is  projected  to  experience  a  severe  contraction  in  output  of 
products  with  a  high  degree  of  substitutability  across  alternative  sources:  rice,  textiles, 
and apparel and leather/footwear take major hits, driving a decline of 1.66% in real GDP 
as Bangladeshi producers are driven to cut prices in order to attempt to preserve market 

47 

 
 
 
 
 
 
share. 

The opportunity to benefit from GSP+ would soften these negative impacts by allowing 
the  country  to  retain  full  tariff  reductions  for  a  majority  of  tariff  lines,  including  in 
sectors key for Bangladesh such as textiles and apparel and leather/ footwear.  

6.1.2.  Analysis  of  social  impacts:  wages,  welfare,  and  sectoral  employment 

changes 

Under  Option  1B  following  from  the  economic  impacts,  it  is  to  be  expected  that 
Standard  GSP  and  GSP+  beneficiaries  would  also  face  negative  social  impacts,  in 
particular under Sub-option 1Ba. Under 1Bb, impact is reduced on GSP+ as they do not 
lose preferences. 

Overall,  wages  and  welfare  in  Standard  GSP  and  GSP+  countries  are  predicted  to  fall, 
while in EBA countries and third countries they are predicted to increase – although only 
marginally so – as they benefit from the relatively better market access to the EU.  

Under sub-option 1Ba (discontinue all but EBA), the most negatively affected countries 
would  be  Bangladesh  (Standard  GSP)  and  Pakistan  (GSP+),  with  welfare  losses  of 
0.4% to 0.5%, and average wage reductions from 0.3% to 0.5%.  

Under sub-option 1Bb (discontinue only Standard GSP), the anticipated negative effects 
for  Standard  GSP  are  moderate,  with  the  strongest  ones  registered  in  leather  where 
employment declines by 4.1% for unskilled workers and by 3.9% for skilled workers in 
Indonesia; by 3.3% (for both skilled and unskilled workers) in  India; and by 2.1% for 
unskilled workers, and by 2.2% for skilled workers in Bangladesh.  

The  results  of  the  economic  modelling  carried  out  by  the  Commission  suggest  that  the 
main  social  impacts  related  to  changes  in  employment  levels  for  both  skilled  and 
low-skilled workers are to be expected in three sectors (textiles, clothing66 and leather & 
footwear). For some countries, changes of a varying magnitude may be recorded also in 
other sectors. Among the Standard GSP beneficiaries, Bangladesh, Lao PDR, India, and 
Indonesia  each  have  at  least  one  sector  where  employment  is  expected  to  contract  by 
more than 2%. For EBA beneficiaries, significant  sectoral  employment effects  are only 
expected  in  the  leather,  apparel,  and  textiles  sectors;  these  are  positive  but  typically 
small. 

Generally, GSP+ countries are more negatively affected than Standard GSP countries. In 
relative terms, the largest  negative impacts  under this option are expected in  Tajikistan 
(presumed  GSP+),  particularly  in  textiles,  apparel,  and  footwear.  Negative  impacts  are 
estimated  also  for  Pakistan  (GSP+),  with  job  reductions  for  skilled  workers  of  3.1%  in 
apparel, 5.3% in textiles,67 and 0.4% in leather; there are, however, limited job increases 
in other sectors.  

In the EU, effects are marginally negative stemming from the efficiency losses associated 
with the increased level of protection in this scenario compared to the baseline.  

66 Note that we use the terms “clothing”, “garments” and “apparel” synonymously. 
67 Due  to the large absolute size  of the sector in Pakistan (when e.g., compared to Mongolia) percentage 
changes are more limited. 

48 

 
                                                           
Under Option 2B graduating large, industrialised countries from GSP, social impacts 
on  the  two  affected  countries  (India  and  Indonesia)  will  mostly  be  felt  in  the  leather 
sector.  In  Indonesia,  employment  in  leather  is  estimated  to  decrease  by  between  3.9% 
(skilled workers) and 4.1% (unskilled workers); and in apparel to decrease by 0.8%.  

In India, employment in leather falls by 3.3% and in apparel by 2.0%. Wages of skilled 
and  low-skilled  workers  are  likely  to  decrease  by  0.1%  and  overall  welfare  is  also 
expected  to  fall  by  0.1%.  As  the  leather  sector  in  India  provides  jobs  to  4.4  million 
people,  30%  of  which  are  women,68  this  could  mean  a  significant  number  of  jobs  lost, 
including for women. 

Finally, Option 3B attempts to mitigate the negative impact of EBA graduation, where 
the highest impact will be felt on Bangladesh:  wages are expected to be lower for both 
skilled  and  non-skilled  workers;  overall  welfare  is  estimated  to  drop  by  2.1%;  and 
employment  would  relocate  away  from  current  exporting  industries  (garment  and 
textiles) to manufactured goods, chemicals, plant oil, primary resources, and leathers.  

Graduation  out  of  the  EBA  threatens  to  reverse  substantial  gains  made  under  the  EBA 
arrangement,  with  consequential  negative  impacts  for  employment,  wages,  gender 
equality,  and  human  rights.  Considering  the  size  of  the  garments  sector  in  Bangladesh 
(between 3.6 million and 4 million, mainly low-skilled workers, 80% of them women), 
the sectoral employment reallocation could require up to 300,000 persons needing to find 
new jobs in other sectors. 

6.1.3.  Analysis of environmental impacts 

Globally,  the  economic  modelling  predicts  hardly  any  change  in  aggregate  CO2 
emissions for all three options, while the highest impacts would be in the textile, apparel, 
and leather sectors, in particular under Sub-option 1Ba discontinuing the Standard GSP 
and GSP+. 

At the same time, changes in emissions vary widely across regions, from slight decreases 
(e.g.,  in  Turkey  and  the  EU),  to  relatively  large  increases  (e.g.,  in  Tajikistan,  Pakistan, 
and Kyrgyzstan). It is to be noted that changes in CO2 emissions are not aligned with the 
macroeconomic effects but are rather influenced by the reallocation of production across 
sectors taking place within economies in response to the policy measures. One consistent 
pattern  is,  however,  that  the  policy  change  would  lead  to  higher  CO2  emissions  in  all 
GSP+ countries considered.  

Option  3B  mitigating  the  transition  after  EBA  graduation,  aims  to  protect  also  against 
negative  environmental  impacts  of  no  action:  out  of  the  twelve  countries  (potentially) 
graduating from LDC status, the impacts in terms of CO2 emissions would be the highest 
(in  relative  terms)  in  Bangladesh  –  resulting  in  a  shift  of  production  from  garment  and 
textile industry to industries with a higher energy and CO2 intensity. 

The  lower  levels  of  GDP  resulting  from  the  country’s  status  change  (from  EBA  to 
Standard  GSP)  would  put  further  stress  on  Bangladesh  and  other  LDC’s  abilities  to 
address  climate  change.  It  should  be  noted  that  environmental  impacts  other  than  CO2 

68  Council  for  Leather  Exports,  Indian  leather  industry,  overview,  export  performance  and  prospects: 
https://leatherindia.org/indian-leather-industry/  

49 

 
                                                           
emission changes – which are not included in the modelling system – would likely occur 
as well. 

6.1.4.  Analysis of impacts on human rights 

The  loss  of  preferences  by  Standard  GSP  and  GSP+  countries  under  Option  1B  has 
negative economic and social effects and from those effects, via a causal chain analysis, 
it is possible to look at potential human rights effects. These effects take place against an 
existing human rights situation that matters  for how the effects of the GSP shock work 
out  for  citizens  in  the  GSP  beneficiary  countries.  The  degree  to  which  the  modelling 
results can be used for the detailed human rights analysis is limited, especially when the 
projected effects are small.  

Among  Standard  GSP  beneficiaries,  the  effect  is  largest  for  Bangladesh.  This 
country  is  impacted  at  the  overall  economic  level  which  has  implications  for  the 
enjoyment of human rights. For most countries, we see that there is a sectoral shift away 
from sectors like textiles, apparel, and leather towards manufacturing, plant-oil, energy, 
and (marginally) services (notably transportation). 

Among  GSP+  beneficiaries,  the  impact  is  largest  for  Pakistan.  This  country  is 
impacted at the overall economic level, which in turn means there are implications for the 
enjoyment of human rights. For most GSP+ countries, the impact manifests itself at the 
sector level: a sectoral shift away from sectors like textiles, apparel, and leather towards 
manufacturing,  services,  and  transport.  Proper  labour  market  adjustments  are  only 
possible  if  skills  requirements  match  and/or  if  re-education  programmes  are  made 
available to facilitate this adjustment. The economic simulations do not take into account 
the  informal  economy.  That  means  the  projected  changes  in  employment  apply  to  the 
formal sector only.  

As  regards  EBA  beneficiary  countries,  there  are  two  changes  that  become  clear  when 
comparing  the  two  1B  Sub-options:  First,  for  the  right  to  work  in  the  textile  sector, 
output  and  employment  for  skilled  and  unskilled  workers  are  expected  to  grow  by  0.3 
percentage  points  less  in  Sub-option  1Ba  versus  1Bb.  This  is  because  EBA  textiles 
exports still face competition from GSP+ countries in Sub-option 1Bb. Second, a smaller 
and  positive  effect  on  the  right  to  work  is  expected  for  the  rice  sector:  output  and 
employment in the rice sector are expected to grow, with positive effects for the right to 
work in that sector.  

When  looking  at  the  effects  for  Option  2B,  there  is  no  significant  change  for  the  two 
countries  affected.  The  supporting  study  compared  the  two  sets  of  impact  results  on 
human  rights  for  India  and  Indonesia,  when  these  two  economies  move  from  Standard 
GSP to MFN trade with the EU.  

As  above,  Option  3B  attempts  to  mitigate  the  following  negative  effects  of  LDC 
graduation: the highest impact from the EBA graduation is expected to be on economic, 
social,  and  human  rights.  Economic  effects  related  to  changes  in  employment  are 
expected  to  have  a  direct  impact  on  the  right  to  work  and  the  right  to  an  adequate 
standard of living, especially for sectors directly impacted by a loss in EU market access 
(textiles  and  apparel  in  Bangladesh  and  Lao  PDR).  For  Bangladesh  in  particular 
graduation  from  EBA  to  Standard  GSP  could  lead  to  a  major  negative  impact  on  a 
number  of  human  rights.  As  the  number  of  jobs  is  expected  to  decrease  in  impacted 
sectors and salaries are expected to decline overall, people will lose their jobs and part of 

50 

 
their income (in particular women, where the labour protection is the weakest). The new 
sectors, manufactured goods and chemicals are expected to create a positive but smaller 
impact on these rights. 

6.2.  Impact  of  the  options  under  Cluster  2:  products  coverage  and  graduation 

mechanism  

6.2.1.  Analysis of economic impacts 

For  Option  4B,  the  supporting  Study  finds  no  significant  economic  impacts.  Neither 
expanding  product  graduation  to  all  GSP  beneficiaries  for  rice  and  sugar  only  (Sub-
option 4Ba), nor expanding it for all agricultural products listed in Annex V and IX of the 
GSP  Regulation  (Sub-option  4Bb)  results  in  any  significant  amount  of  product 
graduation. Therefore, this option is not examined in detail.  

In  particular  on  Sub-option  4Ba,  the  Study  shows  that  among  the  examined  countries, 
none  exceeds  the  threshold  for  GSP  products  Section  S-2d  (which  includes  rice)  or 
Section  S-4b  (which  includes  sugar).  None  of  the  countries  is  close  to  the  product 
graduation  threshold  of  57%69:  Pakistan  is  the  closest  with  an  average  share  in  EU 
imports  from  all  GSP  beneficiaries  over  the  past  three  years  amounting  to  14.3%; 
followed by Cambodia,  with  an average share of 10.3%. For sugar, the Philippines has 
the  highest  share  in  imports  from  all  GSP  beneficiaries,  averaging  5.3%  in  2017-2019, 
followed by Pakistan (4.9%).   

Regarding  extension  to  all  agricultural  products  (Sub-option  4Bb),  one  section  for  one 
country has surpassed the current threshold for product graduation: S-2a, live plants and 
floricultural  products  (essentially,  cut  flowers)  from  Ethiopia,  an  EBA  country.  In 
practice, this Sub-option would lead to a single product graduation from a single country: 
cut  flowers  from  Ethiopia.  The  only  other  product/country  pairs  coming  close  to  the 
threshold  values  are  two  sectors  in  the  Philippines:  S-3  (fats  and  oils)  with  a  share  of 
14.0%  in  total  imports  from  GSP  countries  against  the  17.5%  threshold,  and  S-4a 
(preparations of meat and fish) with a share of 40% compared to the 57% threshold.70 

Regarding Option 5B expanding the product coverage for Standard GSP and GSP+, 
the  supporting  study  finds  minor  economic  impacts  of  both  sub-options,  extending 
product coverage to environmental goods (Sub-option 5Ba) and to several industrial and 
agricultural semi-finished and finished products (Sub-option 5Bb). 

The supporting study notes that diversification is a complex process, underpinned by 
a  tight  nexus  of  trade,  technology,  and  the  presence  of  formally  organised  firms, 

69  The  product  graduation  mechanism  of  Article  8  of  the  Regulation  stipulates  that  the  tariff  preferences 
can  be  suspended  if  the  average  share  of  EU  imports  from  a  given  GSP  beneficiary  of  certain  product 
sections  (defined  in  Annexes  V  and  IX  of  the  GSP  Regulation)  in  the  value  of  EU  imports  of  the  same 
sections  from  all  GSP  beneficiary  countries  over  three  consecutive  years  exceeds  the  thresholds  of  57% 
generally, 47.2% for sections S-11a and S-11b (textile), and 17.5% for sections S-2a (live trees and other 
plants),  S-3  (animal  or  vegetable  fats,  oils,  and  waxes)  and  S-5  (minerals).The  thresholds  are  defined  in  
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, OJ L 289/1, 5 November 2015. 
70 Note that this analysis has been done at the HS Chapter level i.e., assuming that all products within the 
HS  Chapters  covered  by  a  GSP  Section  are  eligible  for  GSP  preferences.  The  actual  list  of  products 
benefitting from preferences under the GSP+ is more limited. 

51 

 
                                                           
which cannot be easily supported through product coverage alone. It concludes it is 
“impossible  to  predict  which  sector  will  flower  in  which  economy”.  Therefore,  product 
coverage would be a blunt  and ineffective instrument to  address  the goal  of supporting 
diversification.  

Given the fairly minor import market share that Standard GSP and GSP+ imports have in 
the  selected  environmental  goods  in  EU  trade,  the  import  expansion  from  removing 
tariffs on these products is predicted to be relatively modest at about EUR 18 million or 
by 4.3%, based on the partial equilibrium modelling results. The implications for EU27 
domestic production are by the same token also very minor71. 

The  benefits  stemming  from  the  improvement  of  treatment  of  environmental  goods 
would  flow  to  the  largest  and  most  diversified  economies.  While  this  would  contribute 
materially to the environmental objectives, it would likely have minimal impact in terms 
of  advancing  the  diversification  objective  for  the  less-diversified  Central  Asian  and 
African economies. 

6.2.2.  Analysis of social, human rights and environmental impacts of Option 5B 

The partial equilibrium modelling suggests that the impact on the EU would be minimal 
in terms of industrial production and the price of domestic production and thus in terms 
of  impact  on  jobs  and  wages.  Consumer  welfare  would  increase  by  about  EUR  1.5 
million in total, which would be negligible on a per capita basis within the EU.  

In the GSP economies, given that most of the additional trade would be captured by large 
and already relatively well-diversified economies, the incremental export gains would not 
be  sufficiently  to  materially  impact  labour  markets,  wages,  or  consumer  welfare. 
Similarly, the human rights impacts would be negligible – but to the extent there are any, 
they would tend to be positive. Environmental impacts would be very marginal and likely 
mixed, with some additional pollution from higher production, offset by likely collateral 
effects within the countries in terms of availability of environmental goods as domestic 
producers expand production. 

6.3. 

Impacts of the options under Cluster 3: conditionality  

6.3.1.  Analysis of economic and administrative impacts 

The  extension  of  the  scope  of  conditionality  and  of  the  list  of  conventions  potentially 
translates  into  additional  costs  related  to  a  wider  use  of  the  temporary  withdrawal 
mechanism.  Therefore,  under  the  present  section  6.3.1,  it  is  less  relevant  to  distinguish 
the specific economic impacts. 

More active use of conditionality linked to  potential (partial  or sectoral) withdrawals  is 
expected  to  positively  impact  the  effectiveness  of  the  GSP  scheme:  it  would  further 
advance the GSP sustainable development objective. It would also be coherent with other 
EU  policies,  in  particular  development  cooperation,  promotion  of  human  rights  and 
social issues, and the EU contribution to Agenda 2030.   

71  The  modelling  results  suggest  a  weighted  average  decline  in  output  of  less  than  -0.02%.  Only  one 
product groups (organic chemicals) would experience an impact approaching as much -0.1%. 

52 

 
                                                           
Option  6B  corresponds  to  the  extension  of  negative  conditionality  to  all  conventions 
listed in Annex VIII to the Regulation would have no impact for GSP+ countries because 
they  are  already  bound  to  ratify  and  effectively  implement  all  conventions  under  the 
positive conditionality mechanism. Conversely, Standard GSP and EBA countries would 
stand  more  chances  to  enter  into  enhanced  engagement  and  face  the  risk  of  temporary 
withdrawal of preferences.  

For  the  EU,  the  administrative  burden  for  monitoring  would  increase  significantly  (the 
number  of  conventions  would  almost  double:  from  currently  15  to  27)  –  unless  no 
systematic monitoring were to be undertaken, and negative conditionality were to be used 
only as an instrument of last resort for particularly blatant violations of the conventions. 

The  administrative  cost  of  Option  7B  (extending  positive  conditionality  to  all  three 
categories, instead of GSP+ only) varies per country and convention, typically depending 
on domestic ratification procedures, the political will of the country, the state of current 
legislation, the degree of cooperation with civil society, the level of cooperation with the 
monitoring  bodies  and  financial  resources.  Furthermore,  each  convention  establishes  a 
monitoring  body  made  up  of  independent  experts  mandated  to  monitor  state  parties’ 
compliance  with  their  treaty  obligations.  The  higher  the  number  of  conventions  not 
ratified,  the  higher  the  effort  to  meet  the  requirements  of  the  new  conditionality.  On 
average,  Standard  GSP  countries  would  need  to  ratify  more  conventions  than  EBA 
beneficiaries.  

GSP  beneficiary  countries  for  which  the  costs  associated  with  ratification  are  higher 
would  face  the  choice  between  having  to  ratify  the  remaining  conventions  listed  in 
Annex  VIII  of  the  Regulation  in  order  to  stay  within  the  GSP  –  or  else  not  ratify  the 
conventions, exit the scheme, and move to the EU’s MFN treatment. 

Finally,  countries  for  which  both  costs  and  benefits  would  be  limited  are  the  largest 
group, both among Standard GSP and EBA beneficiaries. It is, therefore, impossible to 
predict whether these countries would ratify the remaining conventions and remain in the 
GSP or not ratify and forego preferences. 

Under Option 7B, the main additional cost factor for the European Commission and the 
EEAS  would  be  the  costs  related  to  monitoring  implementation  by  the  beneficiary 
countries and engaging  with  them into a sustained dialogue  (e.g., similar as is  now the 
case for GSP+ countries).  

The  general  observation  is  that  the  process  of  ratification  (including  the  possible 
domestic  preparation  for  ratification)  and  implementation  of  international  conventions 
may  take  several  years.  For  those  countries  with  larger  gaps  in  ratification  and 
implementation  of  human  rights  treaties,  the  EU  could  consider  offering  technical 
assistance and sharing of best practices from other GSP countries. Furthermore, technical 
assistance could be linked to the commitment to ratify the conventions, in order to ensure 
that in a transition phase these countries can ratify the conventions and comply with the 
positive conditionality.  

The Study assessed (see Table 6) the resource requirements for the Commission, should 
Option 7B apply. As it is impossible to determine how many and which countries would 
remain in the GSP, a more precise estimate of administrative resource requirements for 
the Commission’s and EEAS’ monitoring is not possible. 

53 

 
Table 6: Administrative costs for the EU of expanded monitoring in Option 7B 

Scope of the monitoring  No of countries 

Professional staff 
(FTE) 

Mission costs per year 
(EUR) 

Current 

GSP+ and Standard GSP 

GSP+ and EBA 

All GSP 

Source: 2020 Supporting Study 

12 

29 

43 

64 

13 

31 

47 

69 

80,000 

193,333 

286,667 

426,667 

The EU already refers to the ongoing periodic reviews of the UN and the ILO for each 
relevant convention to monitor implementation. Engaging these monitoring mechanisms 
allows  shifting  some  of  the  burden  of  monitoring  from  the  GSP  to  these  bodies. 
However, taking into account the long periodicity of UN reporting, other sources could 
be considered, including: 

  Use of human rights indicators that allow to see progress on a yearly basis; 
  Use of SDGs and related indicators to report progress on human rights; 
  Annual reports by international organisations and NGOs related to country progress 
on  human  rights  e.g.,  world  reports  by  the  Human  Rights  Watch  or  Amnesty 
International; 

  Use of extended cooperation by the EU Delegations in each GSP beneficiary country, 
who  could  reach  out  to  local  NGOs  and  work  in  close  cooperation  with  national 
human rights institutes; 

  Cooperation of the EU with the UN monitoring bodies could also be explored (taking 
into  account  limitations  within  the  bodies).  The  EU  already  has  experience  from 
cooperating closely with the ILO within the project Sustainable GSP-Plus Status by 
Strengthened National Capacities to Improve ILO Compliance and Reporting aimed 
to  support  the  GSP+  beneficiaries  in  the  implementation  of  the  ILO  Conventions 
(MTE  2017).  Similar  pilot  projects  could  be  launched  with  the  UN  monitoring 
bodies. 

Another cost item for the Commission would be the additional technical  assistance and 
support  to  GSP  countries  to  ratify  and  implement  Annex  VIII  conventions.  While 
quantification is impossible with the available information, it can be estimated that these 
costs would also be significant. 

Sub-Option  8Bb  (foreseeing  the  expansion  of  the  list  of  conventions  annexed  to  the 
Regulation): The additional EU staff resources required to monitor the implementation of 
the  Convention  on  the Rights  of  Persons  with  Disabilities  (CRPD)  and  of  the  Optional 
Protocol to the Convention on the Rights of the Child (OP-CRC-AC) are considered to 
be  limited.  As  the  Optional  Protocol  can  be  monitored  within  the  framework  of  the 
Convention  on  the  Rights  of  the  Child,  the  number  of  conventions  to  be  monitored 
increases  by  one;  in  any  case,  the  administrative  resource  burden  needs  to  consider  all 
conventions jointly. Likewise, the administrative cost to monitoring the implementation 
of the  ILO Convention  No 81 on  Labour  Inspection appears limited.  Finally,  given the 
very  high  share  of  ratification  of  the  Paris  Agreement  on  Climate  Change  among  GSP 
countries and their active reporting of their progress to the UN Framework Convention 
on Climate Change (UNFCCC), the expected administrative costs appear proportional to 
the goals of the convention.  

54 

 
 
6.3.2.  Analysis  of  social  impacts:  wages,  welfare,  and  sectoral  employment 

changes 

Scope of conditionality and list of international conventions  

The  extension  of  negative  conditionality  (Option  6B)  in  combination  with  Sub-option 
8Bc  (removing  some  conventions  and  adding  others)  further  attains  the  sustainable 
development objective. 

Option 7B may not achieve an effective protection of rights, in case of mere ratification 
of  conventions  without  effective  implementation,  or  may  discourage  the  beneficiary  in 
view of too high ratification costs.   

Sub-Option  8Bc  is  coherent  with  Agenda  2030,  which  advocates  for  a  proactive, 
forward-looking,  progressing  and  constantly  improving  approach  in  building  a  better 
society, “seeking to realize the human rights of all.”   

Including Convention No 81 on Labour  Inspection promotes better working conditions. 
Moreover,  the  Convention  on  the  Rights  of  Persons  with  Disabilities  is  of  particular 
relevance with respect to state obligations that refer to employment, awareness raising in 
order to promote recognition of the skills, merits, and abilities of persons with disabilities 
and of their contributions to the workplace and the labour market.  

Temporary withdrawal mechanism 

Sub-Option  9Bb:  an  analysis  of  trade  related  data  (e.g.,  the  volume  and  structure  of 
GSP-eligible exports from the beneficiary country to the EU) could clarify the potential 
socio-economic  impacts  of  withdrawal  of  preferences.  The  need  for  a  similar  impact 
analysis  prior  to  a  decision  on  withdrawal  of  preferences  (Sub-option  9Ba)  was  also 
highlighted by consulted stakeholders. Introducing additional formal steps in the process, 
would  reduce  the  Commission’s  margin  of  discretion  and  introduce  an  additional 
administrative  burden,  thus  affecting  the  possibilities  to  engage  with  the  beneficiary 
country to obtain progress on the issues of concern.  

Sub-option  9Bc:  There  could  be  cases  where  a  withdrawal  targeted  to  economic 
operators may be effective in sanctioning a government that violates civil and procedural 
rights,  in  particular  where  specific  operators  are  owned  by  the  State.  Moreover,  it  is 
possible  that  certain  violations  of  e.g.  labour  rights  are  perpetrated  only  be  certain 
economic operators. In this respect, a mechanism which allows to target selectively the 
authors of such violations could ensure a more surgical approach to the problems without 
affecting  the  vulnerable  population  of  a  country  at  large.  There  are,  however,  some 
complexities  in  this  approach.  For  instance,  some  violations  may  be  driven  by  the 
government  without  the  involvement  of  the  private  sector.  Moreover,  targeting  or 
exempting certain economic operators would not always effectively address the obstacles 
to  sustainable  development.  In  any  event,  even  if  preferences  are  withdrawn  vis-à-vis 
specific  economic  operators,  the  dialogue  would  need  to  continue  in  parallel  with  the 
beneficiary  country’s  government,  as  under  the  GSP  regulation  the  EU  holds  a 
government- to-government dialogue. 

55 

 
 
6.3.3.  Sub-option 9Bc: Concerning migration, while this option was not considered in 
the External GSP Study, encouraging beneficiaries to respect the obligation to 
readmit  own  nationals  and  their  sustainable  reintegration  in  the  country  of 
origin, can contribute to avoiding a drain in active population in the countries 
of origin, with the ensuing long-term consequences on development. Analysis of 
environmental impacts 

The Study does not provide elements allowing to quantify the environmental impact. In 
qualitative terms, a positive impact is expected on the following considerations:  

Option  6B,  by  extending 
the  negative  conditionality  to  the  environmental 
conventions, achieves the objective of integrating the European Green Deal Agenda into 
the GSP instrument by bringing environmental (and governance) conventions to the same 
conditionality  level  as  human  rights  and  ILO  conventions.  Negative  conditionality  on 
environmental  conventions  can,  however,  face  practical  issues  especially  regarding  the 
identification  of  violations  of  the  norms  established  in  the  Multilateral  Environmental 
Agreements,  due  to  the  lack  of  systematic  monitoring,  over-reliance  on  voluntary 
requirements or limited access to information. 

Sub-option  8Bb:  Given  the  proximity  of  the  expiration  of  the  Doha  Agreement  and 
therewith  of  the  Kyoto  Protocol,  the  Paris  Agreement  on  Climate  Change  becomes  the 
relevant international convention.  

Many developing countries have high population growth, and a significant part of them 
are experiencing increasing industrialisation which may lead to a steep increase in GHG 
(greenhouse  gas)  emissions.  The  Paris  Agreement  on  Climate  Change  is  of  particular 
relevance also in terms of impact on the living conditions.  

Likewise, the introduction of the UN Convention against Transnational Organized Crime 
(UNCTOC)  is  also  directly  relevant  to  international  trade.  For  example,  the  UNCTOC 
has  noted  that  “[w]ildlife  and  forest  crime  has  become  a  low-risk,  high  profit 
transnational  organized  crime,  which  is  overwhelming  countries  and  communities, 
affecting biodiversity and development”. 

6.3.4.  Analysis of impacts on human rights 

Scope of conditionality and list of conventions 

This policy choice implies a careful balance between the additional burden resulting from 
extended conditionality and the benefits awarded under the GSP. An effective impact on 
human  right  at  country  level  is  the  result  of  a  balance  between  the  benefits  that  a 
beneficiary country retrieves from GSP and its additional compliance costs.  

Option 6B, in combination with the insertion of additional conventions under Option 8C, 
extends the potential positive effects to human rights.   

Option  7B  could  have  significant  potential  for  positive  effects  on  human,  labour,  and 
environmental rights in those countries with few existing ratifications, if all conventions 

56 

 
currently  unratified  were  to  be  gradually  ratified72.  However,  some  of  the  countries  in 
this  group  that  would  benefit  most  from  ratifications  are  also  at  the  highest  risk  of 
dropping out of the GSP. 

Temporary withdrawal mechanism 

Sub-option  9Ba  may  create  a  momentum  for  change  among  a  wider  range  of  actors 
involved. However, the Commission should maintain a certain level of discretion.  Sub-
option  9Bd  provides  additional  flexibility  in  the  withdrawal  procedure  to  respond  to 
human rights violations in well-defined exceptional circumstances.  

Sub-option 9Bc migration: Promoting the respect of the beneficiary countries’ obligation 
to  readmit  own  nationals  in  compliance  with  international  standards  has  a  beneficial 
effect on migrants as it guarantees that their basic human rights are to be protected.   

6.4.  Impacts of the options under Cluster 4: transparency 

6.4.1.  Analysis of economic impacts 

Under  the  options  on  transparency,  the  main  economic  impacts  are  related  to 
administrative  resources  and  costs  related  to  the  different  options.  Due  to  the 
administrative and procedural  nature of this set  of options, the  External  Study does  not 
provide  a  detailed  economic  impact  analysis.  Some  idea  of  additional  administrative 
costs  can  be  gathered  from  the  analysis  regarding  additional  administrative  costs  on 
extended conditionality (Option 7B). 

Under  Option  10B  adopting  practical  measures  to 
improve  transparency, 
effectiveness and resource impacts arise when considering disclosure of communication 
between  the  EU  and  beneficiary  countries,  as  well  as  the  creation  of  additional 
documents or structures for formal stakeholder consultation, both within the Commission 
and in beneficiary countries’ administrations. 

Conversely,  an  extension  of  the  monitoring  cycle  (Option  10C)  would  alleviate  the 
administrative  burden  of  the  monitoring  process  both  for  the  Commission  and  the 
beneficiary countries. 

6.4.2.  Analysis of social, human rights, environmental impacts 

We look at the non-economic impacts of this set of options in terms of their anticipated 
effect  on  the  application  of  international  conventions  and  responding  to  concerns  by 
stakeholders,  and  by  extension,  impact  on  social,  human  rights,  and  environmental 
issues. 

Under  Option  10B  adopting  practical  measures  to  improve  transparency,  the 
External  Study  notes  that  increased  transparency  through  making  available  a  detailed 
description of the process may avoid confusion among civil society concerning the stages 
of  the  process,  the  actors  involved,  and  the  related  decision-making  process.  It  would 
also enable civil society to use the GSP+ instrument and its monitoring cycle to hold the 

72 In this context, the MTE noted the positive impact of the GSP+ arrangement on states’ compliance with 
the  UN  human rights conventions  – positive conditionality seems to provide sufficient incentives  for the 
beneficiaries to ratify and effectively implement them. 

57 

 
                                                           
beneficiary  governments  to  account  on  the  implementation  of  the  conventions.  Such  a 
description of the process is already partially foreseen under the GSP Hub project.  

The  disclosure  of  the  documents  exchanged  as  part  of  the  GSP+  monitoring  would 
further  open  up  the  monitoring  process  to  stakeholders  which  could  improve  their 
involvement,  and  eventually  could  positively  impact  the  implementation  of  the 
conventions through increased civil society pressure.  

However,  these  potential  benefits  are  outweighed  by  the  need  to  consider  other  factors 
such as confidentiality  and the purpose  and use  of the developed documents.  A  certain 
degree of confidentiality is needed to ensure the effectiveness of the monitoring process. 
Hence,  trust  between  parties  and  effectiveness  of  the  monitoring  process  could  be 
jeopardized in case all information is made public (full transparency). The Commission 
already  provides  a  summary  of  the  issues discussed in  its GSP Report to  the European 
Parliament and the Council, as well as an indication of the priority issues to watch for the 
next monitoring cycle73. 

A  further  suggestion  concerns  improving  the  content  of  the  list  of  issues  through  the 
creation  of  roadmaps  and  expansion  of  sources,  including  further  involvement  of 
stakeholders in the process. Roadmaps could allow more precise monitoring of progress 
by including time bound commitments on actions to be taken. Such an approach can be 
considered in the framework of the current GSP+ monitoring process without significant 
changes  in  legislation  and  practice.  The  supporting  Study  does  not  point  to  a  need  to 
formalise the current practices involving civil society in the monitoring process and the 
country  assessment,  due  to  effectiveness  and  efficiency  concerns.  Instead,  involvement 
can  be  enhanced  in  current  practice  through  civil  society  dialogues  and  preparatory 
meetings for monitoring visits and Human Rights Dialogues. 

Finally, Option 10C positively assesses the implications of extending the duration of the 
monitoring cycle to three or four years and aligning it with reporting by international 
bodies.  

The analysis of the reporting requirements under the different conventions shows that 
it  is  not  possible  to  align  a  GSP+  reporting  cycle  with  the  reporting  cycles  of  the 
international  conventions  since  there  is  too  much  variation.  Hence,  GSP+  can  set  its 
own reporting cycle.  

In  terms  of  effectiveness,  it  should  be  noted  that  international  conventions  have  longer 
reporting cycles  than 2  years (3  years  for  ILO,  5 for most UN supervisory bodies). An 
extension  of  the  reporting  cycle  to  three  years  would  allow  beneficiary  countries  to 
address problems indicated in the ‘list of issues’ better.  

6.5. 

 Impacts of the options under Cluster 5: safeguards 

The  supporting  Study  finds  no  significant  impact  of  the  options  extending  the  product 
scope  (Option  11B)74  and  country  scope  (Option  11C)  of  the  automatic  safeguard 

73 GSP Report 2018-2019, https//:gsphub.eu   
74 In order to estimate the effect of an expansion of the automatic safeguard mechanism to all agricultural 
products while keeping all other conditions as they are in the current GSP Regulation, the supporting Study 
applied  retroactively  the  current  Article  29  mechanism  to  the  new  products  for  the  same  Standard  GSP 
beneficiary  countries,  to  see  whether  automatic  safeguards  would  have  been  triggered  over  the  past  five 

58 

 
                                                           
 
mechanism  (Article  29  of  the  GSP  Regulation).  We  are  also  maintaining  the  current 
mechanism (baseline) without further extensions in terms of products or countries, hence 
the impact will be reduced. 

The Study shows that across all GSP Sections covering agricultural goods (Option 11B), 
there  would  have  been  only  one  instance  across  the  years  2015-2019  where  all  three 
conditions for automatic safeguards would have been met (assuming the composition of 
GSP countries as defined in the baseline scenario) i.e., S-3 (animal or plant oils, fats and 
waxes)  imports  from  Indonesia  in  2017.  Furthermore,  under  the  current  product 
graduation  mechanism  (Article  8  of  the  Regulation),  preferences  for  S-3  imports  from 
Indonesia have already been suspended since 2014. In other words, automatic safeguards 
would  not  have  been  applied  in  a  single  instance  over  the  past  years.  Therefore,  the 
impact of this option is minimal across all indicators.  

Similarly,  neither  of  the  Sub-options  under  Option  11C  appear  to  be  very  effective  in 
terms of enhancing protection of competing EU industries. Expanding the application of 
automatic safeguards to  EBA countries would have no effect if restricted to the current 
scope of products covered by the mechanism, and a limited protective effect in case the 
product scope was expanded. Under Sub-option 11Ca, no EBA country would have met 
the 6% import threshold for any  of the products  currently  covered.  Under  Sub-options 
11Cb  and  11Cc,  expansion  to  EBA  for  rice  and  sugar,  or  all  agricultural  good  all 
conditions  for  automatic  safeguards  would  have  been  met  only  once,  for  rice  from 
Cambodia in 2015, and only using the narrowest option for determining the product (HS 
Chapter).  

An important observation of the supporting Study is that the breadth of a GSP Section (in 
terms of products included within the section) and the import concentration – and notably 
the import share held by individual GSP countries – are inversely related. Thus, the 6% 
threshold is only ever reached by individual countries in narrowly defined GSP Sections 
such as S-2a (essentially cut flowers), S-3 (animal or plant oils, fats and waxes), or S-4c 
(tobacco  and  tobacco  products),  but  not  in  the  broader  GSP  Sections  such  as  S-2b 
(vegetables,  fruits  and  nuts)  or  S-4b  (prepared  foodstuffs,  beverages,  spirits,  and 
vinegar).  This  would  raise  some  doubts  about  the  equality  of  treatment  by  automatic 
safeguards  across  product  groups:  industries  in  narrowly  defined  GSP  sections  would 
benefit more from a more stringent safeguard mechanism (and exporters of such products 
would face a higher risk of being subjected to preference withdrawal) than industries in 
more broadly defined GSP sections. 

As  none  of  the  options  on  extending  the  product  or  geographical  scope  of  the 
safeguarding mechanism would have any significant effect in terms of actual application, 
their  impacts  are  not  reviewed  here  in  detail.  The  supporting  Study  looks  instead  at 
several conceptual and administrative improvements to address weaknesses in the current 
system and to connect it better with the objective of averting harm to EU industry:   

years with respect to their exports to the EU. One simplification in the analysis is that the Study assumes 
that all products within a GSP Section are eligible for preferences – this in actual practice is not the case, as 
Annexes V and IX of the GSP Regulation list only selected products within the HS Chapters covered by 
the respective GSP Sections; and only these benefit from preferences. 

59 

 
                                                                                                                                                                            
  Adjust  the  current  framing  of  the  import  increase  in  quantity  terms  to  calculate 
import  surges  at  GSP  Section  level  based  on  import  values  rather  than  import 
volumes due to the heterogeneity of products within Sections.  

 

 

Increase  transparency  by  explaining  the  Commission’s  practice  regarding  the 
issues not clearly specified as outlined in the study (product listings granularity, 
timeframes)  in  the  future  regulation  or  a  delegated  regulation  under  it,  or  in  a 
public manual of procedures.  

Introduce  more  granularity  to  the  product  listings  to  deal  with  the  issue  of 
heterogeneity  of  GSP  Sections.  Some  Sections  are  very  broad,  covering  many 
types  of  products,  while  others  are  very  narrow.  This  can  lead  to  unequal 
treatment across sections75. 

  Abolish  the  de  minimis  threshold  (condition  3)  established  in  Article  29.1(b)  of 
the  GSP  Regulation  as  it  provides  no  added  value  in  terms  of  protecting  the 
import-competing EU industries but adds administrative burden and complicates 
the application of the automatic safeguards.  

  Align the rules and thresholds for automatic safeguards and product graduation to 

ensure consistency between these complementary measures. 

6.6. Impact of the preferred options on small and medium sized enterprises 

The GSP Regulation  does not  have specific provisions targeting SMEs in  the EU or in 
beneficiary countries, but the preferences apply to goods produced by SMEs as they do to 
goods  produced  by  larger  companies.  As  the  GSP  Regulation  provides  for  a  unilateral 
tariff preferences granted to beneficiary countries, the benefit of the preferences affects 
SME exporters in beneficiary countries, and SME importers in the EU.  

As regards EU SMEs, research conducted for the European Parliament in the context of 
Free  Trade  Agreements76  shows  that  when  analysing  preference  utilisation  rates,  the 
benefit is higher for importing SMEs who benefit from the reduction in trade costs when 
procuring intermediate products than for exporting SMEs whose preference utilisation is 
lower. Aside from lower costs, EU SMEs may also face greater competition from imports 
from beneficiary countries as a result of GSP preferences, although this depends on the 
extent  to  which  EU  SMEs  and  SMEs  in  beneficiary  countries  compete  on  similar 
products. In case of serious difficulties to EU producers, the GSP Regulation foresees the 
application of safeguards.  

As  regards  SMEs  in  beneficiary  countries,  given  the  number  and  diversity  of  GSP 
beneficiary countries, it has not been possible to collect SME specific data. On the other 
hand,  research  conducted  on  tariff  reduction  in  the  context  of  Free  Trade  Agreements 
shows that in general SMEs, having limited resources, find themselves in a position that 
prevents  them  from  taking  full  advantage  of  FTAs.  This  may  be  because  of  lack  of 
awareness  of  available  preferences  or  difficultly  in  adapting  to  the  procedures  (for 

75 It is relatively easy  for a country to surpass the thresholds in the Regulation  for a  narrow sector (e.g., 
Kenya and Ethiopia for S-2a), but much harder in a broader sector. 
76 https://www.europarl.europa.eu/RegData/etudes/BRIE/2021/653628/EXPO_BRI(2021)653628_EN.pdf 

60 

 
                                                           
example  on  rules  of  origin,  or  to  meet  the  standards  necessary  to  import  into  the  EU). 
Similar dynamics can also be observed in the case of SMEs in GSP beneficiary countries.  

The  preferred  option  addresses  this  to  a  degree,  by  increasing  the  transparency  of  the 
GSP process, which will increase awareness of the process in the beneficiary countries. 
On  the  other  hand,  actions  beyond  the  GSP  Regulation,  including  awareness-raising 
activities  through  the  GSP  Hub,  will  be  necessary  to  reach  out  to  SMEs,  with  the 
cooperation  of  the  authorities  of  the  beneficiary  countries,  in  order  to  exploit  the  full 
potential of the GSP preferences. 

7.  HOW DO THE OPTIONS COMPARE? 

This chapter presents the comparison between the options described in Chapter 5.2 across 
the five clusters of drivers: (1) GSP arrangements and beneficiary countries; (2) products 
coverage and graduation mechanism; (3) conditionality (negative, positive, international 
conventions and withdrawal  mechanism); (4) transparency;  and (5) safeguards.  It  ranks 
the policy options in achieving the five Specific Objectives (see Chapter 4).  

7.1.A comparison among the options proposed to address  problems related to 

Cluster 1: arrangements and beneficiary countries 

The  supporting  Study  confirms  that  the  current  GSP  three-tier  structure  is  broadly 
suitable  to  achieve  the  GSP  objectives.  The  purpose  of  supporting  the  economic 
development and diversification of exports of countries most in need is already built into 
the  GSP  through  the  graduation  of  upper-middle  income  countries  and  the  product 
graduation  mechanism  (see  Chapter  7.2).  Action  is  nevertheless  needed  to  address  the 
unpreceded high number of countries graduating from LDCs status (Driver 3), in order to 
mitigate potential significant negative impacts from full duty elimination under EBA. 

Maintaining  the  baseline  would  not  be  effective  in  achieving  the  overall  objective  of 
poverty eradication (GO1), as of the 12 countries assumed to graduate from the EBA, six 
are predicted to face non-negligible economic impact77 with Bangladesh standing out in 
terms  of  significant  fall  of  exports,  a  consequential  large  decline  in  real  GDP  and 
textile,  apparel  and 
economic  welfare,  and 
leather/footwear  that  would  face  high  MFN  tariff  in  EU.  For  Bangladesh,  the  negative 
impact  will  also  be  felt  on  employment,  wages,  gender,  and  human  rights  (described 
under Chapter 6.1) reversing substantial gains made under EBA. 

in  sectors  such  as 

impacts 

large 

The overall objective (GO1) is unlikely to be achieved by Option 1B and 2B. In terms 
of  effectiveness,  the  economic  and  non-economic  impact  shows  that  exports,  GDP, 
welfare,  and  other  economic  indicators  of  countries  that  will  cease  to  benefit  from 
preferences  will  decline,  and  this  will  not  be  at  the  benefit  of  the  LDCs.  The  costs  of 
changes will be concentrated on few developing countries and sectors, while the benefits 
will be diluted and not targeted on the intended beneficiaries. In addition, the impact of 
both options on LDCs that are expected to graduate from LDC status add to the negative 
impact they will experience as a result from their exit from EBA (see Table 7). 

77 Bangladesh, Lao PDR, Myanmar, Nepal, Sao Tome and Principle, and Solomon Islands. 

61 

 
 
                                                           
Table  7.  Comparison  of  options  related  to  Cluster  1:  arrangements  and  beneficiary 
countries (Baseline = no change) 

Criterion (vis-à-
vis the objective of 
poverty 
reduction) 

Option 1B: 
Discontinue one or 
two GSP 
arrangements 

Option 2B: 
Graduation from 
GSP of large and 
industrialised 
developing 
countries 

Option 3B: Provide transitional 
accommodations for graduating 
LDCs 

Efficiency 

0 

3Ba: Change 
vulnerability 
criterion 

3Bb: Extend 
transition period  

0  ++ /Reduces 

administrative 
burden 

- /Increases 
administrative 
burden  

Effectiveness: 
Does 
benefit 
it 
those most in need? 

- - /Compounds 
negative effects for 
graduating LDCs; 
no benefits for 
remaining LDCs 

Coherence  with 
overall 
GSP 
objectives  or  other 
EU policy 

- /Reduces scope, 
appeal, and 
leverage of 
Standard 
GSP/GSP+ ; not 
coherent with the 
EU’s sustainability 
objectives 

-/No benefits for 
remaining LDCs; 
negative 
externalities 
(reduced 
cumulation 
opportunities)  

- /Reduces scope 
of Standard GSP; 
not coherent with 
the EU’s 
sustainability 
objectives  

+ /Addresses needs 
of LDCs 

+ /Ensures all 
are eligible for 
GSP+ on 
economic 
criteria 

+ /Supports 
development 
goal 

+ /Supports 
development goal  

Legend  (against  the  baseline):  0  =  neutral;  +/-    =  limited  positive/negative  impact;  ++/-  -    =  significant 
positive/negative impact  

Options  1B  and  2B  would  not  be  coherent  with  the  EU  development  cooperation 
policy, as a fundamental part of the EU's contribution to achieving the Agenda 2030 and 
the  Sustainable  Development  Goals,  given  the  strong  negative  impact  on  GSP 
beneficiaries  (low and lower-middle-income countries78) that lose preferential  access  to 
the EU. In particular, the suppression of the GSP+ arrangement and the resulting decline 
in  real  economic  terms  will  have  a  negative  impact  on  beneficiaries’  sustainability 
agenda, and the commitments they have taken to effectively implement the relevant GSP 
international conventions. 

Sub-option 3Ba scores the highest in achieving in particular specific objective (SO1) of 
expanding  exports  from  developing  countries  most  in  need,  in  terms  of  efficiency 
(reduction  in  administrative  burden),  effectiveness  (addressing  the  LDCs  vulnerability 

78 World Bank Country and Lending Groups, 
https://datahelpdesk.worldbank.org/knowledgebase/articles/906519-world-bank-country-and-lending-
groups 

62 

 
 
 
                                                           
resulting  from  loss  of  EBA  preferences)  and  coherence  with  the  EU  development 
policy (EU support to the UN’s 2030 Agenda for Sustainable Development79). 

7.2.  Comparison  among  the  options  proposed  to  address  problems  related  to 

Cluster 2: products coverage and graduation mechanism 

Table  8  compares  all  options  under  the  cluster  on  products.  The  baseline  scores  null 
across all areas as there are no costs or benefits for maintaining the current framework. 
Both  the  Study  and  the  MTE  found  no  compelling  evidence  to  justify  changing  the 
baseline. The study made no explicit recommendations  either. Given the  complexity of 
the economic diversification process, the link between the GSP instrument (coverage 
and graduation) and diversification is difficult to establish. 

The GSP preferential tariffs are assumed to promote trade diversification, even if the data 
fails  to  confirm  a  clear-cut  effect.  Diversification  depends  on  a  variety  of  factors, 
including  resource  allocation,  productive  capacities,  domestic  policy  choices  that  goes 
beyond  GSP.  One  cannot  automatically  expect  a  country’s  export  to  diversify  merely 
because of availability of trade preferences. 

In terms of efficiency, Options 4B and 5B will add complexity to the product graduation 
mechanism and will increase the administrative burden.   

In  terms  of  effectiveness,  the  case  studies  (analysed  by  the  External  Study)  show  that 
introducing  Option  4B  will  not  lead  to  any  suspension  of  benefits:  none  of  the  new 
sectors rice and sugar will exceed the graduation thresholds for any of the countries and 
would therefore have no effects. As for the agricultural products, only one section for 
one  country  (cut  flowers  from  Ethiopia,  an  EBA  country)  will  surpass  the  current 
thresholds. This might lead to significant effects on the sector in Ethiopia.  

Table  8.  Comparison  of  options  related  to  Cluster  2:  product  coverage  and  graduation 
(Baseline = no change in product graduation mechanism or product coverage) 

Criterion (vi- à-
vis the objective 
of poverty 
reduction) 

Option 4B: Expand the product 
graduation mechanism to all GSP+ 
and EBA beneficiaries 

Option 5B: Expand the product 
coverage for Standard GSP and GSP+ 

4Ba:  Rice  and 
sugar 

4Bb: 
agricultural 
products 

All 

Efficiency 

- /Increase in 
administrative 
burden 

- /Increase in 
administrative 
burden 

Industrial 
agricultural 

5Bb: 
and 
products 

- /Increase in 
administrative 
burden 

5Ba: Products 
that promote 
environmental 
and climate 
protection goals 
- /Complexity and 
lack of clarity on 
‘green goods’; 
increase in 
administrative 
burden 

Effectiveness 

0 
Analysis shows 

- /Only one product 
graduation (cut 

0  
Minor 

impact, 

0  
Marginal 

if 

any 

79https://sustainabledevelopment.un.org/content/documents/21252030%20Agenda%20for%20Sustainable
%20Development%20web.pdf  

63 

 
 
                                                           
 
neither product 
would meet 
criteria for 
graduation.  

- /Decrease in 
generosity of 
system for those 
most in need; 
reputational 
damage 

flowers Ethiopia) 
with possible 
significant negative 
effects for the sector 
in the country 

- /Decrease in 
generosity of system 
for those most in 
need; reputational 
damage 

small 
gains 
expected,  but  for 
largest  and  most 
diversified 
economies 

impacts,  small  gains 
for 
expected,  but 
and  most 
largest 
diversified 
economies 

+ / Minor 
contribution to 
environmental 
goals 

+ /Increase 
generosity of the 
system 

Coherence 
GSP 
with 
objectives 
or 
other EU policy 

Legend  (against  the  baseline):  0  =  neutral;  +/-    =  limited  positive/negative  impact;  ++/-  -    =  significant 
positive/negative  impact  Legend  (against  the  baseline):  0  =  neutral;  +/-    =  limited  positive/negative 
impact; ++/- -  = significant positive/negative impact  

Overall,  extending  product  graduation  to  EBA  beneficiaries  would  lead  to  serious 
reputational damage, for the EU which made firm commitments in this regard when the 
EBA initiative was adopted in 2001. Extending product graduation to GSP+ beneficiaries 
would  imply  reducing  the  incentives  currently  attached  to  this  arrangement  to  pursue 
implementation  of  the  relevant  human  rights  and  labour  rights  conventions,  making  it 
less  attractive  for  developing  countries  to  apply  for  (such  arrangement  is  not  granted 
automatically,  eligible  countries  have  to  apply  for  and  accept  stringent  monitoring 
requirements).  

Under Option 5B, the effects would be marginal given the very minor import market 
share  GSP  beneficiaries  have  in  environmental  goods  or  industrial  products.  Secondly, 
benefits  stemming  from  the  extension  to  the  new  products  categories  would  be 
concentrated  in  the  largest  and  most  diversified  GSP  economies.  The  top  two  GSP 
Standard exporters, India and Indonesia, account for virtually all of the GSP exports of 
top environmental goods, followed by Pakistan and the Philippines. 

Options 4B and 5B would not be coherent with the EU development policy, given that 
most  of  the  additional  trade  would  be  captured  by  large  and  already  well-diversified 
economies  (India,  Indonesia)  and  would  have  minimal  effect  on  advancing  the 
diversification objective in the majority of GSP beneficiaries.  

7.3.  Comparison  among  the  options  proposed  to  address  problems  related  to 
international  conventions, 

Cluster  3:  conditionality  (positive,  negative, 
withdrawal procedure) 

The  GSP  Regulation  established  two  types  of  conditionality  for  GSP  beneficiary 
countries:  (i)  positive  conditionality  applies  only  to  GSP+  beneficiaries  which  are 
required to ratify and effectively implement a series of relevant international conventions 
and  (ii)  negative  conditionality  across  all  arrangements  to  respect  human  rights  and 
labour rights. 

Table 9. A comparison of options under Cluster 3: conditionality (Baseline - no change) 

Criterion (vis-
à-vis the 
objective of 
sustainable 
development) 

Negative 
conditionality 
(expand to all 
conventions) 

Positive conditionality 
(expand to Standard 
GSP and EBA) 

International conventions 

64 

 
 
 
 
 
 
 
Efficiency 

Option 6B 
Expand to all 
conventions  

 - / Limited 
administrative burden 
- / Difficult to 
monitor 
implementation of 
environmental 
conventions 

Option 7B: 
Ratify and effectively 
implement 
- / Increased 
administrative burden 
and compliance costs 

Sub-option 8Bc: 
Amend list of conventions 
(combine 8Ba and 8Bb) 

- / Increased administrative burden, 
technical assistance 

Effectiveness 

+  /It  could  lead  to 
improvements 
on 
attaining  sustainable 
development goals 

- / High ratification 
costs. Beneficiary may 
decide not to transit to 
new GSP. 

++ /advance GSP contribution to 
sustainable development 

Coherence 

++ /EU Green Deal 
Agenda 

+/ Could lead to 
improvements on 
attaining sustainable 
development goals  

+ /development policy, 
human rights, and 
social policy 

++ /development policy, EU Green 
Deal Agenda, social policy 
(tackling labour rights, 
discrimination, and child labour) 

Legend (against the baseline): 0 = neutral; +/-  = limited positive/negative impact; ++/- -  = significant 
positive/negative impact  

In  the  comparison  presented  in  Table  9,  Option  6B  scores  the  highest  in  terms  of 
efficiency,  effectiveness,  and  coherence.  It  achieves  the  objective  of  integrating  the 
European Green Deal Agenda into the GSP instrument, by bringing environmental (and 
governance)  conventions  to  the  same  level  as  human  rights  and  ILO  conventions  (and 
thus would be more coherent with the current EU policies).  

Moreover,  the  additional  administrative  resource  burden  for  the  Commission  related  to 
monitoring compliance and dialogue with the beneficiary countries is considered limited 
(efficiency), in particular if negative conditionality were to be used only as an instrument 
of last resort for particularly blatant violations of the conventions. On the other hand, the 
negative conditionality on environmental conventions can also face practical difficulties 
especially  regarding  the  identification  of  violations  of  the  norms  established  in  the 
Multilateral Environmental Agreements, due to the lack of systematic monitoring, over-
reliance on voluntary requirements or limited access to information. 

Thanks  to  monitoring  and  systematic  scrutiny  from  EU  bodies,  widening  the  scope  of 
conditionality could also lead to improvements on the ground in terms of implementation 
(effectiveness), as GSP beneficiaries will face increased risk of temporary withdrawal of 
preferences. 

Option  7B  scores  less  in  terms  of  effectiveness.  Ratification  does  not  immediately 
translate  into  effective  implementation.  It  only  lays  down  the  foundations  for  work 
towards  future  implementation  of  the  UN/ILO  conventions.  It  is  a  necessary  condition 
but  not  sufficient  to  ensure  promotion  of  human  rights,  labour  standards  or  good 
governance on the ground, in particular in GSP countries with weak governance, lacking 
strong civil society mechanism and the rule of law.  

65 

 
 
 
 
 
However, pressure of the international human rights or labour standards bodies as a result 
of ratification may slowly work towards the alignment of national legislation and practice 
with  the  international  human  and  labour  rights  standards  and  contribute  to  gradual 
implementation process in the long run. 

In addition to the time needed for ratification, Standard GSP and EBA countries may face 
capacity  constraints  in  the  ratification  and  implementation  of  additional  conventions 
(efficiency).  The  administrative  costs  can  be  high  if  they  would  have  to  ratify  many 
conventions. The time needed from the moment of starting the domestic process towards 
ratification to actually ratifying the conventions varies per country and typically depends 
on  political  will,  the  country  current  legislation,  the  degree  of  cooperation  with  civil 
society, the level of cooperation with the monitoring bodies and financial resources. 

Furthermore, expanding positive conditionality (Option 7B) to Standard GSP and EBA 
beneficiaries  may  lead  to  denying  duty-free  quota-free  market  access  for  potentially  a 
large group of least developed countries that do not have sufficient resources for ratifying 
or implementing the international conventions.  

Sub-option 8Bc, which proposes to add the following conventions to the list of relevant 
GSP conventions currently in Annex VIII of GSP Regulation, would further advance the 
the  sustainable  development  objective 
attainment  of  GSP  objectives,  notably 
(effectiveness): 

  The Paris Agreement on Climate Change 
  The Convention on the Rights of Persons with Disabilities (CRPD); 
  The  Optional  Protocol  to  the  Convention  on  the  Rights  of  the  Child  on  the 

Involvement of Children in Armed Conflict (OP-CRC-AC); 
ILO Convention No 81 on Labour Inspection; 
ILO Convention No 144 on Tripartite Consultation; 

 
 
  The UN Convention against Transnational Organized Crime (UNTOC). 

All of these conventions have been ratified by all EU Member States as well as a large 
majority  of  GSP  countries  (as  well  as  globally).  They  directly  contribute  to  the 
attainment  of  the  GSP  overarching  objectives,  are  relevant  for  international  trade,  and 
have been recommended for inclusion by a number of stakeholders. 

Sub-option 8Bc is also coherent with what the Agenda 2030 advocates for: a proactive, 
forward-looking,  progressing  and  constantly  improving  approach  in  building  a  better 
society, “seeking to realize the human rights of all.” Thus, maintaining the current list of 
conventions, incomplete from the point of view of international human rights standards, 
represents a static approach to the protection of human rights, not aligned in spirit with 
the SDGs.  

Taking into account the limitations connected to the inclusion of all the core conventions 
and  their  optional  protocols,  it  is  recommended  to  update  and  review  the  list  of 
conventions  in  Annex  VIII  to  increase  the  promotion  of  human  rights  standards  within 
the scheme. 

In terms of efficiency, it will nevertheless imply an increase in the administrative costs 
for both the GSP countries (ratification, implementation, and reporting obligations costs) 
and  the  European  Commission  (administrative  costs  and  additional  technical  assistance 
and support GSP countries would need to ratify the relevant Conventions).  

66 

 
 
Table  10.  A  comparison  of  options  related  to  Cluster  3:  the  withdrawal  mechanism 
(Baseline = no change) 

Criterion (vis-
à-vis the 
objective of 
sustainable 
development) 

Sub-option 9Ba 
New steps before 
formal 
procedure 

Sub-option 9Bb 
New steps 
during formal 
procedure 

Efficiency 

/administrative 

- 
burden 

/administrative 

- 
burden 

Effectiveness 

+ / analysis of 
economic impact 

- / reduces 
country-specific 
analysis, reduces 
Commission 
discretion, each 
country is a 
unique case  

Coherence 

0 

0 

Sub-option 9Bd 
Shorter 
urgency 
procedure in 
well qualified 
circumstances 

+ / deals with 
urgent, blatant 
violations 

+ / increases 
pressure on 
beneficiaries  

+ /  

Sub-option 9Bc 
Withdrawal for 
(i) Specific economic 
operators 
(ii) Migration 
conventions 

(i) - risks transferring 
burden to private sector 
whilst the focus on GSP 
scheme is on 
governments 
(ii)  ++  promotion  of 
international  migration 
conventions  with 
low 
compliance costs 

in 

/  no  direct  or 
(i)  – 
immediate 
impact  on 
business  who  operate 
only 
the  domestic 
market 
- / Questions on process 
(difficulties running a 
comprehensive audit) 
(ii) ++ could lead to 
improvements on 
attaining sustainable 
development goals 

(i) + / promotes due 
diligence 
(ii)  ++  supports  EU 
and 
migration 
multilateral policy 

Legend  (against  the  baseline):  0  =  neutral;  +/-    =  limited  positive/negative  impact;  ++/-  -    =  significant 
positive/negative impact  

The  analysis  of  the  withdrawal  procedure  (baseline)  under  the  study  shows  that  the 
process  is  generally  effective  and  coherent  with  other  EU  policies,  in  particular  on 
development  cooperation,  promotion  of  human  rights  and  social  issues  across  all  EU 
instruments.  As  part  of  the  GSP  engagement  (prior  to  withdrawal  procedure),  the 
European  Commission  has  used  a  wide  range  of  instruments  (political  and  technical 
dialogues,  development  support,  written  communication),  and  consistent  with 
international practice, their selection is adapted to the specific circumstances of each GSP 
country.  

This also includes a systematic involvement of business and other local actors from the 
beneficiary country (e.g., the parliament, employer and worker organisations, other civil 
society actors, enforcement agencies, etc.) and international ones to win their support for 
the recommended changes, to facilitate their adoption and implementation in the longer-
term.  

67 

 
 
 
The  Study  also  acknowledges  that  the  Commission  should  maintain  a  certain  level  of 
discretion in the withdrawal decision making process, including on the start and progress 
of the pre-withdrawal enhanced engagement stage. 

Sub-option  9Ba  would  bring  no  significant  value-added  and  it  will  reduce  the 
Commission  level  of  discretion  in  the  decision-making  process  and  the  choice  of  the 
methodological  approach  (effectiveness)  with  possible  negative  effects  on 
the 
governmental  discussions  to  address  the  underlying  shortcomings.  Each  country  is  a 
unique case, with specific political, economic, and social needs, and specific engagement 
mechanisms  with  the  EU.  Considerable  leverage  is  exercised  through  engagement  and 
the  threat  of  GSP  withdrawal  rather  that  the  withdrawal  itself.  The  amount  of  leverage 
depends,  however,  on  the  nature  and  scale  of  the  problem,  and  the  willingness  of  the 
Government  to  engage  and  to  resolve  the  problem.  It  will  also  add  substantive 
administrative costs (efficiency).  

Sub-option 9Bb scores high on effectiveness. It will allow the Commission to include an 
analysis  of  trade-related  data  (volume,  structure  of  GSP  eligible  exports),  and  the 
potential impacts resulting from the withdrawal of preferences, including for workers and 
vulnerable groups of the society. Commission will take into account:  

  The  economic  development  needs  of  the  beneficiary  country  in  view  of  the 
objective of the GSP Regulation,  including its  need to  diversify its  export base; 
and 

  The socio-economic impact of withdrawal, including the impact on workers (such 
as  number  of  workers,  gender  equality,  skills,  support  of  dependent  family 
members)  and  industries  (such  as  added  value  of  the  products,  mobility  of  the 
the 
industry,  existence  of  alternative  export  markets,  contribution 
diversification of the economy). 

to 

It  will  target  in  a  more  efficient  manner  the  withdrawal  measures  to  address  the 
violations and remedy the situation in the GSP country. 

With  regard  to  targeting  selected  economic  operators,  Sub-option  9Bc(i)  raises 
concerns as to its effectiveness and efficiency. Violations in most cases are driven by the 
government (e.g., through domestic legislation) rather than by individual businesses.  

Targeting  individual  operators  also  carries  the  risk  of  passing  the  burden  of  ensuring 
compliance  with  rights  enshrined  in  international  conventions  from  the  beneficiary 
country  government  to  the  private  sector,  which  would  be  against  the  GSP  effort  of 
overall promoting sustainable development in that beneficiary.  

With regards to migration, Sub-option 9Bc (ii) Migrants are among the most vulnerable 
people in the world. Migration constitutes an element of the SDGs - in particular, target 
10.7  calls  for  the  facilitation  of  orderly,  safe,  regular,  and  responsible  migration  and 
mobility of people. Trade policy can and should help achieve this goal.  

In light  of the above, it is  considered important  to require that beneficiaries respect  the 
obligation to readmit their own nationals through the addition of an additional clause to 
Article 19 setting out the possibility of withdrawal of benefits in case of non-respect of 
such an obligation. 

68 

 
Among  all  identified  options,  Sub-option  9Bd  scores  high  on  efficiency  and 
effectiveness to address some of the concerns expressed by stakeholders linked to lack of 
flexibility of the mechanism to address urgent blatant violations. The current withdrawal 
procedure (takes up to 18 months from initiation to the moment the withdrawal will take 
effect)  can  be  shortened  to  respond  faster  to  well-defined,  exceptional  cases  of  blatant 
human rights and labour rights violations. 

7.4. 

 Comparison among the options proposed to address the problems related to 
the Cluster 4: transparency  

A robust monitoring system is crucial to ensure effective dialogue and implementation of 
conventions  in  beneficiary  countries,  as  well  as  to  guarantee  that  the  possibility  of 
withdrawal  is  seen  as  a  likely  outcome  for  failing  to  meet  the  GSP  requirements. 
Enhancing  the  transparency  of  the  GSP  monitoring  system  is  important  to  ensure  the 
visibility  of  monitoring  actions,  to  increase  oversight  of  GSP  beneficiaries  by  civil 
society  organisations  with  positive  implications  for  the  respect  of  human  rights  and 
sustainable development. 

The supporting Study and MTE find that the monitoring procedure as reformed in 2012 
is  successful  (baseline).  Beneficiary  countries  continued  to  improve  in  effectively 
implementing  the  relevant  conventions,  which  is  evidence  for  GSP  success.  Reports 
prepared by third parties have also shown the GSP monitoring procedure to have been at 
least partly successful, despite some shortcomings. However, based on the analysis and 
consultations, there is a demand for some improvements in the monitoring process.  

Table 11. A comparison of options proposed related to Cluster 4: transparency  

Criterion (vi- à-vis the 
objective of sustainable 
development) 

Option 10B:  
Implement practical 
transparency measures 

Option 10C:  
Amend GSP+ monitoring cycle 

Efficiency 

- /Additional resource demands 

+ /Reduces pressure on resources 

Effectiveness 

+  /Opportunities  for  involvement 
and impact of civil society 

+ /Provides flexibility and additional 
time for improvement 

Coherence 

0 

+ /Align with monitoring bodies 

Legend (against the baseline): 0 = neutral; +/-  = limited positive/negative impact; ++/- -  = significant 
positive/negative impact  

Option 10B scores high on effectiveness, while it implies additional administrative costs 
(impacts  efficiency).  Implementing  additional  steps  to  engage  with  the  civil  society 
would  improve  the  transparency  of  the  monitoring  process  and  ensure  an  effective 
dialogue with civil society to avoid receiving biased or inaccurate information from the 
government. Specific actions are linked to an on-going GSP Hub project that provides a 
context for the NGO community to raise awareness and signal progress on issues. 

An  additional  concrete  step  is  linked  to  the  creation  of  the  Chief  Trade  Enforcement 
Officer and the introduction  of a dedicated mechanism for complaints on GSP matters. 
Such  a  mechanism  gives  a  formal  role  to  civil  society  organisations  to  monitor  GSP 
implementation work and impact and strengthen the legitimacy of monitoring.  

69 

 
 
 
 
In  terms  of  efficiency,  effectiveness  and  coherence,  Option  10C  (extend  monitoring 
cycles  from  the  current  two-year  cycle  to  a  three-year  cycle)  has  positive  effects  on 
Commission internal  resources, collection of information  or submission of intermediate 
progress reports in cases where there are reasons for concern (e.g., a reported aggravating 
situation or lack of will by the partner country to improve its implementation record) or 
when the beneficiary country is supposed to take additional steps further to the enhanced 
engagement.  

Secondly, it also  allows  the beneficiary countries to  better plan their  actions to  comply 
with identified shortcomings. 

Thirdly, the current biennial GSP reporting cycle is too short compared to the reporting 
cycles  of  international  conventions;  they  usually  have  longer  reporting  cycles  to  allow 
beneficiary countries to address problems raised in their monitoring reports.  

Finally, an extension of the monitoring cycle would alleviate the administrative burden of 
the monitoring process both for the Commission and the beneficiary countries.  

7.5. 

 Comparison  among  the  options  proposed  to  address  the  problem  related  to 
Cluster 5: safeguards 

The main conclusion regarding automatic safeguards is that the two types of expansions 
considered  –  in  terms  of  the  products  covered  and  in  terms  of  the  GSP  beneficiaries 
covered – would not lead to an actual application of the mechanism, if the conditions for 
triggering  it  are  left  unchanged.  The  question  of  moving  from  the  baseline  to  an 
alternative scope of automatic safeguards is, therefore, moot.  

The effect of expanding the product coverage of the automatic safeguard mechanism to 
agricultural  goods  (Option  11B)  –when  applied  on  the  basis  of  GSP  Sections  –  is 
considered to be negligible (hence no effectiveness gains) when compared to the current 
rules. Accordingly, no economic or non-economic impacts are expected in this scenario 
when  compared  to  the  baseline.  In  addition,  the  desirability  of  expanding  automatic 
safeguards  to  agricultural  products  based  on  the  current  definition  of  GSP  Sections  is 
doubtful given concerns of equitable treatment highlighted in the supporting study. 

Option  11C  would  also  have  limited  effectiveness  gains.  In  sum,  the  expansion  of 
automatic safeguards to EBA countries and also expanding the product scope to rice and 
sugar could only have any effect if applied using a narrow product definition i.e., not at 
the GSP Section level. Even then, considering recent import trends, the likelihood of its 
application  remains  minimal:  For  sugar,  no  EBA  country  comes  close  to  meeting  the 
conditions for triggering the mechanism, and for rice, the general safeguards mechanism 
has already been used, so the added value of automatic safeguards would be limited.  

70 

 
Table 12. A comparison of options to address Cluster 5: safeguards (Baseline scenario: no 
change to the automatic safeguard mechanism) 

Criterion  
(vis-à-vis the 
objective of 
protecting EU 
economic 
industry) 

Option 11B: 
Expand the range 
of products covered 
by the automatic 
safeguard 
mechanism (Art. 
29) to cover all 
agricultural 
products listed in 
Annex V and 
Annex IX to the 
Regulation 

Efficiency 

0 

Effectiveness 

0 

Coherence  

0 
-  /with  development 
goal 

Impact of Option 11C: Expand the application of the 
automatic safeguard mechanism (Art. 29) to EBA 
beneficiary countries 

Sub-option 11Ca: 
The list of products 
covered by the 
mechanism of 
automatic 
safeguards (Art. 29) 
does not change 

Sub-option 11Cb: 
Expand the list of 
products covered 
by automatic 
safeguards to rice 
and sugar 

Sub-option 11Cc: 
Expand the list of 
products covered 
by automatic 
safeguards to all 
agricultural 
products 

0 

0 

- 
Increase in 
product section to 
be monitored 

-  
Increase in 
product section to 
be monitored 

0 

+ 

-  /with  development 
goal 

- /with 
development goal 

- /with 
development goal 

Legend  (against  the  baseline):  0  =  neutral;  +/-    =  limited  positive/negative  impact;  ++/-  -    =  significant 
positive/negative impact 

Options  11B  and  11C  would  not  be  coherent  with  the  overall  GSP  objective  of 
supporting export diversification. 

8.  PREFERRED OPTIONS 

8.1. 

 Preferred option related to Cluster 1: arrangements and beneficiary countries 

We propose to: 

  Amend  the  existing  vulnerability  criteria  to  ensure  that  all  countries  graduating 

from EBA could become eligible for GSP+ (Sub-option 3Ba) 

The  analysis  above  shows  that  there  is  no  compelling  reason  to  change  the  existing 
structure of GSP.  

The  option  which  contributes  most  to  the  general  objective  of  contributing  to  poverty 
eradication and the specific objective of expanding exports from developing countries is 
the  amendment  of  the  vulnerability  criteria.  This  option  attempts  to  mitigate  the 
significant negative consequences of losing EBA preferences following LDC graduation. 

71 

 
 
 
 
 
Under  the  current  vulnerability  criteria,  all  the  countries  expected  to  graduate  from 
LDC  status  over  the  next  10  years  could  accede  to  GSP+  to  maintain  duty  free 
access80 to the EU market except Bangladesh81.  

Softening the effects of LDC graduation is an objective of the GSP as witnessed by the 
generous transitional period before losing EBA benefits. Moreover, it cannot be excluded 
that  other  LDC  countries  might  in  the  future  face  the  same  obstacle  as  Bangladesh. 
Ensuring  that  graduation  from  LDC  status  can  open  the  path  to  another  generous 
preferential  arrangement  –  especially  one  supporting  sustainable  development  such  as 
GSP+ – is in line with the spirit of EU’s GSP.  

In view of the above, the existing vulnerability criteria can be amended to ensure that 
all  LDCs  beneficiaries  graduating  from  EBA  could  become  eligible  for  GSP+.  In  this 
respect, it is proposed to abolish the criterion of the ‘limited export competitiveness’ and 
only  keep  the  ‘lack  of  export  diversification’  criterion  to  measure  the  vulnerability  of 
beneficiaries. It goes without saying that future access to GSP+ for graduating LDCs will 
not be automatic82; interested beneficiaries will still need to comply fully with the GSP+ 
entry criteria. 

8.2. 

 Preferred  option  related  to  Cluster  2:  products  coverage  and  graduation 
mechanism 

  None of the analysed policy options is retained. 

The  External  Study  concluded  that,  unless  the  thresholds  were  set  at  a  lower  level, 
extending  the  current  product  graduation  to  all  GSP  beneficiary  countries  would  only 
affect  one EBA beneficiary, namely Ethiopia and its export of “cut  flowers” to  the EU 
(and,  in  addition,  might  lead  to  significant  impact  on  this  sector  locally).  Product 
graduation  thresholds  would,  therefore,  need  to  be  substantially  revised  downwards  for 
the product graduation extension to have a significant impact.  

Additionally,  extension  of  the  current  product  graduation  to  new  sectors  and  products 
would  not  lead  to  any  product  graduations  for  any  GSP  countries.  Such  an  extension 
would, therefore, also have no effects unless the thresholds were set at a lower level. 

The product graduation mechanism should, therefore, be maintained  as it is today, only 
for Standard GSP.  

Nevertheless,  we  propose  to  put  forward  technical  adjustments    in  particular  to 
review product graduation thresholds83. 

80 The product scope of GSP+ is by definition smaller than EBA; however, for the products covered under 
GSP+  the  duties  are  zero.  Former  LDCs  would  still  face  stricter  rules  of  origin  under  GSP+  than  under 
EBA.  
81  In  particular,  Bangladesh  is  the  only  country  not  meeting  the  export  competitiveness  criterion.  The 
External Study finds that Bangladesh will thus face a considerable increase in customs tariffs to MFN level 
(especially for textiles which represent over 90% of their exports), with significant negative impact on GSP 
and social and economic welfare. 
82 Unlike with EBA status which was automatically determined on the basis of LDC status. 
83 See additional administrative elements listed at the end of Section 6.5.  

72 

 
                                                           
Product  graduation  thresholds  are  calculated  as  the  share  of  product  imports  from  a 
specific beneficiary of the total EU imports from all GSP beneficiaries. At the same time, 
large  beneficiaries  such  as  Ukraine  and  Vietnam,  and  potentially  Indonesia  are  exiting 
the  scheme,  leaving  GSP  imports  dominated  by  a  few  remaining  large  users  (India, 
Bangladesh)  84.This  suggest  the  product  graduation  thresholds  need  to  be  reviewed  to 
reflect the change in the composition of beneficiaries and to continue focusing the GSP 
benefits  on  the  countries  most  in  need.  Furthermore,  the  analysis  of  the  policy  options 
above suggests that the product graduation mechanism would be more frequently applied 
if the thresholds were reduced. Consideration should, therefore, be given to reducing 
the  product  graduation  thresholds.  For  example,  reducing  all  product  graduation 
thresholds by 10% would impact only India, meaning 44% of its GSP-eligible export to 
the EU would be graduated versus around 40% under the current thresholds85.  

. 

8.3. 

 Preferred options related to Cluster 3: conditionality 

We propose to: 

  Extend  negative  conditionality  to  the  conventions  on  climate/environment  and 

good governance (Option 6B) 

  Add the following to the list in Annex VIII (Sub-option 8Bc):  

o  The Paris Agreement on Climate Change (2015);  

o  The Convention on the Rights of Persons with Disabilities (CRPD), as 
it  plays  an  important  role  in  the  protection  human  rights  of  such  a 
vulnerable group;  

o  The Optional Protocol to the Convention on the Rights of the Child on 
the Involvement of Children in Armed Conflict (OP-CRC-AC) because it 
is  an  important  instrument  to  ensure  the  protection  of  children  in  the 
situation of armed conflicts. 

o  ILO  Convention  No  81  on  Labour  Inspection,  is  an  important 
component in the protection of labour rights as without proper inspection 
systems, there is no sure way to ascertain the respect of labour rights;  

o  ILO  Convention  No  144  on  Tripartite  Consultation  is  an  important 
instrument  given  the  key  role  played  by  the  tripartite  dialogue  in  social 
development  and  respect  for  labour  rights,  including  in  the  work  of  the 
ILO, 

o  The  UN  Convention  against  Transnational  Organized  Crime 

(UNTOC). 

 

Include an assessment of the impact of a withdrawal on workers and vulnerable 
groups of the society (Sub-option 9Bb) 

84 See discussion on the reduced number of GSP beneficiaries in Section 2.1.1. 
85 This calculation assumes same product groups and product graduation mechanism, but that Vietnam and 
Indonesia graduate out of the GSP; and Bangladesh graduates from EBA to Standard GSP (see Annex 10 
for the calculation tables). The impact on Bangladesh is modulated by the changes to the vulnerability 
criteria for GSP+ that would allow Bangladesh to apply for GSP+ status, thus maintaining current market 
access preferences. 

73 

 
                                                           
  Reduce  the  period  for  the  withdrawal  procedure  for  well-defined,  exceptional 
cases of blatant human rights and labour rights violations (Sub-option 9Bd) 

 

Introduce  a  specific  ground  for  withdrawal  for  violations  of  the  principles  of 
international migration conventions (Sub-option 9Bc); 

Extending  negative  conditionality  (Option  6B)  would  put  environmental  conventions 
(including  the  Paris  Agreement  on  Climate  Change)  and  good  governance  conventions 
on  a  par  with  human  rights  and  labour  rights  conventions  for  the  purposes  of  the 
scheme’s  withdrawal  procedure.  This  would  effectively  create  a  single  list  of 
conventions/agreements,  abolishing  the  difference  between  Part  A  (core  human  and 
labour rights  UN/ILO  conventions) and Part  B (conventions related to the environment 
and  to  governance  principles)  of  Annex  VIII.  This  is  in  line  with  the  current  political 
orientation  of the Commission  to promote the protection of the environment  (European 
Green Deal) and is requested by the European Parliament and civil society.  

The  current  list  of  environmental  conventions  included  in  Annex  VIII  of  the  GSP 
Regulation includes both the United Nations Framework Convention on Climate Change 
(UNFCCC)  and  the  Kyoto  Protocol.  In  2015  these  conventions  were  “updated”  by  the 
Paris  Agreement  adopted  by  the  Conference  of  the  Parties  to  the  UNFCCC  at  its  21st 
session, which constitutes the single most important international agreement on the fight 
against climate change. 

It  is,  therefore,  proposed  to  replace  the  Kyoto  Protocol  in  Annex  VIII  with  the  Paris 
Agreement. 

Sub-option 9Bc on withdrawal for violations of the obligation to readmit own nationals 
is  consistent  with  the  EU  migration  policy.  Withdrawal  of  preferences  in  case  of 
important  policy  areas  (e.g.  anti-terrorism,  money  laundering)  is  a  tool  already  used  in 
the GSP regulation. Migration is an area at least as important as the abovementioned ones 
which would, therefore, also deserve a special place under Article 19. In this respect, the 
obligation  to  respect  the  obligation  to  readmit  own  nationals  is  to  be  added  as  an 
additional independent ground justifying the withdrawal of preferences. 

Sub-option 9Bb includes an obligatory step in  the withdrawal  process  linked to  socio-
economic impact of measures to adapt its decision to the circumstances of the beneficiary 
countries. 

The  shorter  urgent  procedure  to  address  blatant  human  rights  violations  (Sub-option 
9Bd)86 would allow the EU to be more reactive to change of circumstances on the ground 
in  beneficiary  countries.  However,  it  will  also  have  to  take  into  account  the  need  for 
predictability on the side of business operators, both in the EU and GSP beneficiaries87.  

Efficiency  and  effectiveness  considerations  as  regards  the  preferred  options  on 
conditionality can be summarised as follows:  For the EU, the administrative burden of 
monitoring GSP+ beneficiaries under positive conditionality will increase as the number 
of  conventions  will  grow  from  currently  27  to  32.  The  burden  will  also  increase  for 
GSP+  beneficiaries  who  will  be  expected  to  ratify  and  effectively  implement  the 
additional conventions. GSP+ beneficiary countries will face the choice between having 
to ratify the additional conventions in Annex VIII of the new regulation in order to stay 

86 This option was not examined by the study and it has not been raised before. 
87 The recent military coup in Myanmar (EBA beneficiary), followed by severe curbs to fundamental rights 
and political freedoms, suggests the need for the EU to have more flexible and adaptable mechanisms to 
react promptly to particularly grave situations. 

74 

 
                                                           
within  the  GSP+  or,  not  ratify  the  conventions,  hence  exit  the  scheme  and  move  to 
Standard GSP.  

We consider that the GSP+ benefits far outweigh any additional administrative costs 
for  GSP+  beneficiaries  so  this  risk  is  limited.  With  respect  to  the  standard  GSP  and 
EBA beneficiaries, the increase in administrative burden for the EU and the beneficiary 
countries will be more limited, since as outlined above negative conditionality does not 
involve ratification or systematic monitoring requirements. 

8.4.  Preferred options regarding Cluster 4: transparency 

We propose to: 

  Adopt  practical  measures  to  improve  the  monitoring:  provide  a  detailed 
description  of  the  monitoring  process  and  clarify  involvement  of  civil  society 
(Option 10B). 

  Expand the monitoring cycle to three years with the option to perform prioritised 

(out of cycle) monitoring for specific issues and/or countries (Option 10C). 

It  should  be  noted  that  the  Commission  has  already  been  addressing  the  demands  for 
increased transparency and coherence in enforcement. In this respect, following feedback 
from stakeholders carried out for the MTE, the Commission has already put in place tools 
to  improve  knowledge  and  awareness  about  the  role  played  by  GSP  in  supporting 
sustainable development in beneficiary countries.  

The  most  important  of  these  are  the  establishment  of  the  Chief  Trade  Enforcement 
Officer and of a Single Entry Point for complaints and a dedicated project (2020-2022) – 
the  Action  on  GSP  Trade  Preferences  (GSP  Hub)  –  which  offers  a  newly  established 
platform providing GSP related information to the public.  

The  Commission  can  publish  guidance  which  would  explain  to  the  public  the  various 
processes as developed through administrative practice. In this respect, it is proposed to 
publish88  a  detailed  description  of  the  monitoring  process,  the  actors  involved  and 
instances  of  civil  society’s  involvement.  Such  a  description  would  ensure  more 
transparency  in  the  process  by  providing  more  clarity  on  interaction  with  civil  society, 
with  beneficiaries  and  on  the  factors  involved  in  decision-making,  thus  making  the 
Commission’s  actions  and  decisions  more  predictable  and  enhancing  the  enforcement 
role of the Commission. 

Lastly,  the  longer  3-years  monitoring  cycle  will  be  complemented  with  an  additional 
“out-of-cycle”  monitoring  exercise  or  the  submission  of  intermediate  progress  reports, 
where there are reasons for concern or when the beneficiary country is supposed to take 
additional steps further to the enhanced engagement. 

8.5. 

 Preferred option regarding Cluster 5: safeguards 

  None of the analysed policy options is retained. 

88 In the GSP Hub and/or the Commission GSP website. 

75 

 
 
 
 
                                                           
The  2020  External  Study’s  recommendations  called  for  the  automatic  safeguard  to  be 
better  connected  to  its  purpose  –  averting  harm  to  EU  industry  including  Small  and 
Medium-sized  enterprises.  In  this  respect,  we  propose  to  proceed  with  a  number  of 
technical adjustments and improvements to the mechanism as follows: 

  Base  the  calculation  of  import  surges  at  GSP  Section  level  on  import  values 
rather than import volumes due to the heterogeneity of products within Sections; 
this  will  better  reflect  instances  of  increased  imports  which  could  harm  EU 
industry; 

  Abolish  the  de  minimis  threshold  established  in  Article  29.1(b)  of  the  GSP 
Regulation as it provides no added value in terms of protecting import-competing 
EU industries – on the contrary, it adds administrative burden and complicates the 
application of the automatic safeguards;  

  Align  the  thresholds  for  automatic  safeguards  and  product  graduation  so  as  to 

complement each other.  

8.6.  REFIT (simplification and improved efficiency) 

The  preferred  set  of  options  as  outlined  in  Chapter  8  aims  at  achieving  the  policy 
objectives  with  the  most  effective  and  efficient  tools,  with  targeted  adjustments  to  the 
GSP  instrument,  ensuring  that  intended  benefits  are  achieved  without  unnecessary 
burdens  for  developing  countries  and  other  stakeholders  including  industry  and  in 
particular SMEs. 

Table 13: REFIT cost savings – preferred option(s); (estimates are with respect to the baseline 
of the unchanged legislation) 

Description 

Amount 

Comments 

Abolish the export competitiveness 
vulnerability criterion for GSP+ 
(Sub-option 3Ba)  

A simplification of the system and a 
reduction of administrative burden for 
calculating and monitoring this threshold 

EU 

Sub-option 8Bc: replace Kyoto 
Protocol with the Paris Agreement  

simplification and updating of the list of 
conventions 

Global benefit 

Option 10Cc: extend the GSP+ 
monitoring cycle to 3 years  

reduction on administrative burden of the 
monitoring process for both the EU and 
beneficiary countries 

EU and beneficiary 
countries 

Abolish the de minimis threshold for 
safeguards  

Simplification of the application of 
automatic safeguards and reduction on 
administrative burden 

EU, business, and 
beneficiary countries 

In  terms  of  efficiency,  the  preferred  set  of  options  avoids  overcomplicating  and 
drastically  changing  the  system.  Where  baseline  scenarios  serve  the  objectives  of  the 
GSP  well,  those  are  retained  to  ensure  continuity  and  predictability.  A  number  of 
technical  improvements  and  simplifications  are  suggested,  to  improve  coherence,  legal 
clarity,  and  transparency.  Excessive  administrative  burden  is  avoided  where  no 
substantive  positive  impact  is  expected  from  it.  Some  additional  obligations  and  costs 
arise from the preferred set of options, for example on expanding negative conditionality 
and improving the withdrawal procedure. These are, however, limited and justified by the 
contribution  to  the  general  objectives  of  GSP.  For  details  on  costs  and  benefits,  please 
see Annex 3: Who is affected and how? 

76 

 
 
9.   HOW WILL ACTUAL IMPACTS BE MONITORED AND EVALUATED? 

As noted by the MTE and as confirmed by the supporting Study, defining a causal link 
between  the  GSP  and  its  overall  objectives  –  and  isolating  effects  and  impacts 
specifically  attributable  to  GSP  from  other  influencing  factors  when  assessing  the 
economic, social, environmental,  and human rights  impacts  of the scheme  – provides  a 
significant challenge. The lack of timely data  and indicators have been  also  part of the 
problem.  

This section provides some indicators that can be used as a measurement framework for 
the preferred option.   

Comprehensive performance measurement would require measurement of the validity of 
causal  relations,  for  example  to  what  extent  an  increase  in  exports  from  developing 
countries  actually  reduces  poverty  in  the  exporting  countries.  However,  given  typical 
resource  and  time  constraints  for  monitoring,  assumptions  about  the  validity  of  certain 
causal  links, especially  at  the higher levels  of the logical  chain  have to  be made.89  The 
validity  of  these  assumptions,  along  with  the  measurement  of  progress  towards  the 
highest-level objectives would be addressed as part of future evaluations. 

9.1. Measuring performance with regard to GSP overarching objectives (at the mid-

term review and/or at the end of the Regulations’ application) 

The following indicators are proposed to be used for measuring the GSP’s performance 
with  respect  to  the  general  objectives  of  reducing  poverty  in  developing  countries,  of 
promoting  sustainable  development  and  good  governance,  and  of  safeguarding  EU 
financial and economic interests. 

9.1.1. Reducing poverty in developing countries 

The preferred option will contribute to this objective in particular by (i) maintaining the 
GSP architecture and thus providing stability; (ii) adjusting the vulnerability criteria for 
countries to join the GSP+ scheme; (iii) adjusting the product graduation mechanism.   

Monitoring  must  take  into  account  the  difficulty  to  establish  causal  links,  described 
above, and the resources intensiveness of using economic models singling out the effect 
of  trade  preferences  on  trade,  such  as  computable  general  equilibrium  models,  partial 
equilibrium models or gravity models. With this in mind, the following indicators can be 
used for monitoring:  

  Poverty rate (over time): Increased exports due to GSP preferences and the induced 
job  creation,  complemented  by  increased  wages  driven  by  collective  bargaining 
agreements  or  legislation  regarding  wage  levels,  including  minimum  wages,  may 
contribute over time to reduction of poverty, including the rate of workers living in 
poverty.  

  Employment  in  sectors  benefitting  from  GSP  preferences:  Available  evidence 
suggests  that  international  demand  and  favourable  export  conditions  encourage 
growth of export-oriented competitive sectors and support job creation therein. This 

89  This  is  also  justified  by  the  fact  that  a  large  body  of  literature  on  the  relationship  between  trade  and 
development exists without however having achieved to put this issue to rest. 

77 

 
 
                                                           
may trigger a move of workers between sectors in the exporting country (e.g. from 
agriculture  to  industry)  and  create  new  job  opportunities  for  those  who  were  not 
present in the labour market, e.g., women (as in the case of the garment industry in a 
number of GSP beneficiary countries). Therefore, sectoral employment trends could 
be measured to capture whether the performance of sectors covered by preferences is 
better than in other sectors. Where possible, women and  youth employment should 
be  disaggregated.  Alternatively  (or  complementary),  sectoral  wages  and/or 
unemployment  could  also  be  used  as  an  indicator,  but  employment  statistics  are 
more generally available.  

  Value of EU imports of goods from GSP countries (individually, and aggregated 

by GSP arrangement) compared to  

(1) Total EU imports of goods from MFN countries; and  

(2) EU goods imports from all developing countries with which the EU has FTAs in 
place.  

Subsidiary indicators as outlined below could help to show if the underlying assumptions 
for  the  GSP’s  role  in  increasing  exports  hold.  These  indicators  are  straightforward  to 
measure;  they  would  be  recorded  annually,  using  EU  import  statistics  or  UN 
COMTRADE statistics. 

  Value of total world exports by GSP beneficiaries: helps to monitor whether the GSP 
does not merely divert beneficiary country exports from other markets to the EU. 
  Share  of  GSP  eligible  exports  in  a  beneficiary  country’s  total  exports  to  the  EU: 
helps  to  establish  whether  the  observed  export  performance  is  due  to  GSP 
preferences  or  other  factors.  In  the  former  case,  the  share  of  GSP  eligible  exports 
should at least remain constant. 

  Preference utilisation rates. 

Furthermore,  diversification  can  be  monitored  by  observing:  (1)  Development  of  GSP 
country exports of manufactured goods (HS chapters 84 to 96) to the EU; and  
(2) Concentration of GSP country exports to the EU across products. 

9.1.2. Promoting sustainable development and good governance 

The  preferred  option  will  contribute  to  this  objective  in  particular  by  (i)  extending 
negative  conditionality  for  GSP  arrangements  from  the  core  human  rights  and  labour 
conventions, to include also environment and governance, (ii) extending and updating the 
list of conventions, (iii) amending the preference withdrawal process and (iv) improving 
monitoring. The following indicators can be taken into account:  

  Ratification  of  international  conventions:  The  reasons  for  countries  to  ratify  (or 
not)  international  conventions  are  diverse  and  are  often  linked  to  domestic  policy. 
However,  there  are  indications  that  for  both  Standard  GSP  beneficiaries  and 
countries  graduating  from  EBA,  additional  preferences  offered  by  the  GSP+ 
arrangement act as an encouragement to ratify international conventions.  

78 

 
 
 
 
  Implementation  of  international  conventions:  The  reports  of  the  conventions’ 
monitoring bodies would be the main source for this indicator, along with additional 
relevant high-quality information. 

  Informal economy and informal employment90: GSP preferences in combination 
with  the  conditionality  regarding  international  conventions  and  corresponding 
government  measures  are  aimed  at  enhancing  conditions  in  the  informal  sector  as 
well as professionalization and hence supporting the move from informal to formal 
business  operations  and  employment91.  The  main  related 
the 
development of the overall rate of informal employment in the economy over time. 

indicator 

is 

  Participation  of  men  and  women  in  the  labour  force:  New  job  opportunities 
created  by  growing  exporting  sectors  may  encourage  employment  of  women  and 
their  enhanced  presence  on  the  labour  market  among  paid  workers  (some  of  them 
might have previously worked as unpaid family members e.g., in agriculture). 

  Composite indices such as (1) the Gender Inequality Index (GII)92 regarding rights 
of women (2) the Global Freedom Index93 regarding civil and political rights, and (3) 
Yale’s  Environmental  Performance  Index94,  possibly  coupled  with  the  number  of 
reports on environmental disasters in beneficiary countries.  

9.1.3. Safeguarding EU financial and economic interests 

The preferred option foresees maintaining the safeguards mechanism. The success can be 
monitored,  for  example,  by  considering  output  and  employment  in  EU  sectors 
competing with major GSP imports: GSP preferences increase the level of competition 
for  EU  producers.  Nevertheless,  if  GSP  instruments  to  safeguard  EU  financial  and 
economic interests function well, there should be no cases where increasing preferential 
imports lead to major reductions in output or employment of competing EU industries. 

90 Research on the impact of international trade on informal economy and informal jobs is not conclusive, 
and  the  size  of  the  informal  sector  depends  on  a  number  of  domestic  factors  (including  rigidity  of  the 
labour market, social protection coverage, regulations related to enterprise registration, etc.). 
91  Corresponding  GSP  country  policy  measures  are  in  line  with  ILO  Recommendation  No  204  (2015) 
Transition  from  the  Informal  to  the  Formal  Economy  which  suggests  initiatives  in  areas,  such  as  trade, 
taxes,  business  environment,  employment,  education  and  skills  development,  business  and  financial 
services,  access  to  markets,  infrastructure  and  technology,  governance  and  targeted  actions  facilitating 
operation of MSMEs. 
92  For  some  GSP  countries,  data  is  not  available  for  this  index,  and  it  can  be  substituted  by  the  Global 
Gender Gap Index, http://www3.weforum.org/docs/WEF_GGGR_2020.pdf  
93 https://freedomhouse.org/ 
94 https://epi.yale.edu/  

79 

 
 
 
 
  
 
                                                           
Annex 1: Procedural information 

Lead DG, Decide Planning/CWP references 

The Directorate-General  (DG) for Trade is  the lead service for this  Impact  Assessment 
Report. 

Decide reference number: PLAN/2019/4979. 

The initiative is included in the Commission Work Programme 2021 (Annex 1, No 19). 

Organisation and timing 

An Inter-service Steering Group (ISG) was established on 23 April 2019 for the purpose 
of preparatory work, including this Impact Assessment, for a possible future Proposal for 
a Regulation of the European Parliament and Council applying a scheme of generalised 
tariff  preferences.  The  ISG  included  all  other  relevant  services  of  the  Commission: 
Secretariat-General,  Legal  Service,  DG  Economic  and  Financial  Affairs,  DG 
Employment, Social Affairs and Inclusion, DG Agriculture and Rural Development, DG 
Climate  Action,  DG  Environment,  DG  Maritime  Affairs  and  Fisheries,  DG  Financial 
Stability,  Financial  Services  and  Capital  Markets  Union,  DG  Taxation  and  Customs 
Union,  DG  Migration  and  Home  Affairs,  DG  Justice  and  Consumers,  DG  Trade,  DG 
International Partnerships, and the European External Action Service (EEAS). 

The ISG met four times: on 21 May 2019, 12 December 2019, 31 March 2020, and 01 
March 2021.   

Consultation of the RSB 

An  upstream  meeting  with  the  Regulatory  Scrutiny  Board  (RSB)  on  GSP  Impact 
Assessment was held on17 February 2020. 

The draft Impact Assessment Report was submitted to the RSB on 08 March 2021 and 
was examined during the RSB meeting of 7 April 2021. 

The  RSB  issued  a  positive  opinion  on  the  draft  Impact  Assessment  Report  on  9  April 
2021. Below are recommendations of the RSB: 

Recommendations of the Regulatory Scrutiny 
Board 
(1) The report should more clearly distinguish 
between the overall success of the GSP and 
the more detailed issues where there is room 
for improvement. In this context, it should 
clarify whether graduation of countries is seen 
as a measure of success and to what extent 
supporting a smooth graduation process is an 
objective of the initiative. 

Modifications to the Impact Assessment 
Report 
The revised report aims to better separate the 
positive assessment of the current GSP vis a 
vis its key objectives in the Introduction (1.1 
The EU GSP) and the possible issues for 
improvement in the Problem Definition 
section (2.1.1 Main Problem #1). The 
Introduction and Problem Definition section 
also now better reflect the fact that the 
graduation of a country is a positive 
development as it means the country has 
achieved some economic growth, to which the 
GSP has arguably contributed, or a better 

80 

 
preferential arrangement with the EU. In the 
case of the graduation of LDC countries and 
their consequent exit from EBA, the issue may 
rather be the smooth transition to a different 
tariff arrangement to access the EU market at 
favourable conditions. 
Key concepts including around conditionality 
are now explained in the Introduction of the 
report (1.1 The EU GSP). Lessons learned and 
assessment of the effectiveness and efficiency 
of the current withdrawal process are now 
included in the Problem Definition section 
(2.2.3 Drivers regarding conditionality, 
Drivers 6 and 9) and the Comparison of 
options (7.3 Comparison among the options 
on conditionality, paragraphs following Table 
10). The issues around vulnerability criteria 
have been further explored in the Policy 
Options section, Options regarding Cluster 1: 
arrangements and beneficiary countries, policy 
option O3.B.  
The revised report reflects the various aspects 
of EU economic interest, and the role GSP 
safeguards play in protecting it, in particular 
regarding competitive pressure on EU industry 
(see Problem Definition section, Main 
Problem #3). The report also reflects the 
Commission’s position that the current 
safeguard mechanism is effective and presents 
examples of when the mechanism has been 
triggered in the Introduction and Problem 
Definition sections. SME dimensions and 
impacts have been further addressed in the 
Impact section (see point 6.6). 
The policy options presentation has been 
simplified (see Table 5). Options on 
Transparency and monitoring were maintained 
in the main text due to their importance for 
key stakeholders. Proposed technical 
adjustments have been retained and elaborated 
on in section 8.2 (Preferred options regarding 
Cluster 2:  products coverage and graduation 
mechanism), in particular on product 
graduation thresholds.  
The report has been revised in its entirety for 
consistency and clarity. The baseline, 
objectives and problem trees have been 
revised to be SMARTer and to more clearly 
identify the key considerations taken on in the 
Impact Assessment Report (IAR) and where 
new specific policy measures were deemed 
ineffective or inefficient. 
The report has been revised to more clearly 

(2) The report should explain upfront core 
concepts, such as positive and negative 
conditionality. It should include an assessment 
of the effectiveness and efficiency of 
conditionality. It should also better explain the 
issues around vulnerability criteria and why a 
change might be considered justified. 

(3)The report should better explain and justify 
the safeguards for the EU’s economic interest, 
including competitiveness of EU economic 
actors. This discussion should be backed by 
clearer examples on losses of EU 
competitiveness. It should also elaborate on 
the SME dimension and impacts. 

(4) The options could be better presented. 
Certain options could be put into annex (on 
transparency and monitoring), while other 
measures presented as technical adjustments 
could be designed and analysed as policy 
options. 

(5) The report should be presented in a more 
consistent, succinct and reader friendly way, 
avoiding repetitions. It could also simplify the 
objectives tree and the presentation of the 
baseline. 

(6) The report should take proper ownership 

81 

 
present the Commission’s position in relation 
to the findings in the external study.  

of its approach and the analysis made. When 
referring to the underlying study, it should 
make clear whether it accepts or deviates from 
this. The report should be self-contained and 
not leave responsibility for the approach to 
external consultants. 

Evidence, sources and quality 

The  evidence  for  the  impact  assessment  report  was  gathered  through  various  activities 
and from different sources:   

- 

Input by stakeholders to the public consultation (see Annex 2) 

-  A quantitative econometric modelling simulation (see Annex 4) 

-  External expertise via the study commissioned to support this impact assessment 

(see Annex 6, in separate document) 

-  The Mid-Term Evaluation95 (MTE) of the implementation of the GSP Regulation 

(see Annex 7, in separate document) 

95 http://trade.ec.europa.eu/doclib/docs/2017/september/tradoc_156085.pdf  

82 

 
 
 
 
                                                           
Annex 2: Stakeholder consultation  

1. Background on the online public consultation 

The open public consultation on the GSP and the defined reform options was open from 
11 March 2020 to 15 July 2020. This Annex reports on the results of the online public 
consultation. Other stakeholder contributions were obtained during the preparation of the 
Impact  Assessment  Report.  In  particular,  during  the  External  Study,  the  consultant 
conducted interviews with key stakeholders, although these were heavily affected by the 
covid-19 pandemic. The number of stakeholders consulted by the consultant (excluding 
EU institutions, EU Member State governments, individuals and stakeholders requesting 
anonymity)  was  about  150.  Results  from  the  interviews  and  position  papers  that  have 
been examined are heterogeneous and therefore they are referred to in the Report where 
necessary, but not summarised here.  

2. Overview of respondents of the online public consultation 

In total,  512  responses  were submitted. Cleaning of the data involved the removal of  a 
few  duplicates  as  well  as  campaign  contributions  characterised  by  virtually  identical 
responses  made  by  different  respondents.  All  contributions  to  one  campaign  were 
counted as one single contribution. The following campaigns were identified: Italian rice 
farmers  (136  responses),  Bangladesh  footwear  sector  representatives  (25),  Myanmar’s 
government (33), and EU plastics sector stakeholders (9).  

After data  cleaning, 309 different  contributions  remained. Even among these, however, 
there  is  a  strong  overrepresentation  of  contributions  provided  by  individual  Italian 
citizens  (40  responses)  which  are  similar  in  nature  and  highly  critical  of  the  GSP  in 
general  (along  the  lines  of  the  rice  farmer  campaign  responses).  However,  since  these 
could not conclusively be identified as campaign responses, they were kept as individual 
contributions. When interpreting the survey responses, one should however keep in mind 
a possible bias. It goes without saying that the survey has no claim to representativeness 
–  neither  among  EU  nor  GSP  country  stakeholders.  Rather,  it  provides  anecdotal 
information  about  views  by  stakeholders  on  the  GSP  and  the  different  options  being 
considered for the future EU GSP scheme. 

Among  the  respondents,  54%  are  EU  stakeholders,  41%  from  GSP  countries,  and  the 
remaining 5% from other countries (including the UK). Among the EU respondents, 67 
are based in Italy, 35 in Belgium, 12 each in Germany and Spain, 8 in France, 7 in the 
Netherlands, 6 in  Sweden, 5 in  Portugal,  2 each  in  Poland and Slovakia, and 1 each in 
Austria, Bulgaria, Czech Republic, Denmark, Finland, Greece, Hungary, Ireland, Latvia, 
Malta,  and  Slovenia.  Among  the  GSP  countries,  most  respondents  are  based  in  EBA 
countries  expected  to  graduate  from  LDC  status  (“EBA-Grad”;  71  –  mostly  from 
Bangladesh  and  Myanmar),  followed  by  Standard  GSP  (mostly  from  India)  and  GSP+ 
countries  (mostly  from  Pakistan).  Relatively  few  responses  were  provided  by 
stakeholders in countries exiting the GSP (such as Sri Lanka or Armenia), as well as in 
EBA countries. 

In  terms  of  the  type  of  respondent,  the  questionnaire  provided  for  a  fairly  detailed 
disaggregation.  According  to  this,  “companies/business  organisations”  account  for  the 
largest  share  of  responses  (28%),  followed  by  business  associations  (24%)  and  EU 
citizens (17%). For the purposes of further analyses of contributions, stakeholders were 

83 

 
grouped into broader types (Figure 2b), i.e., business interests (comprised of companies 
and business associations, 52%), citizens (EU and non-EU citizens, 21%), public sector 
(12%),  civil  society  (NGOs,  environmental  and  consumer  organisations,  and  academia; 
8%), and others (including trade unions; 7%). 

3. Summary of responses 

3.1. Views on the potential of international trade, and of the GSP, to contribute to 
poverty eradication 

A majority of about 70% of respondents considers that international trade can make an 
important contribution to poverty eradication in developing countries (question C.1), and 
another  10%  think  that  it  can  make  a  minor  contribution;  17%  think  that  it  cannot 
contribute  to  poverty  alleviation.  Views  in  GSP  countries  are  clearly  more  positive 
regarding the poverty alleviating role of trade: here, 92% of respondents state that trade 
can  make  an  important  contribution,  compared  to  52%  of  EU  respondents;  conversely, 
19% of EU respondents do not believe that trade can help eradicate poverty, compared to 
2% in GSP countries. 

Disaggregated  by  type  of  respondent,  citizens  in  the  EU  are  more  sceptical  about 
international trade than organisations (roughly divided 50/50 about the role of trade for 
poverty  alleviation),  with  the  exception  of  “other”  respondents  including  trade  unions. 
Among  the  other  organisations  (business  interests,  civil  society,  and  public  sector),  no 
notable differences in views exist. In GSP countries, a large majority (more than 90%) of 
any  type  of  respondents  views  the  role  of  international  trade  for  poverty  alleviation 
favourably. 

Asked  about  how  trade  contributed  to  poverty  alleviation  (question  C.2),  most 
respondents  pointed  to  the  generation  of  employment  and,  in  the  long-term,  skills 
development through exporting.  

Conversely,  respondents  who  do  not  believe  in  the  poverty  alleviating  role  of  trade 
pointed to weak domestic structures in developing countries that would prevent effective 
poverty  alleviation.  Others  also  urged  that  trade  can  only  play  a  positive  role  if  “more 
emphasis [is] put on diversification and on value addition in beneficiary countries; and on 
avoiding perverse incentives of trade preferences that may cause harm to the attainment 
of the SDGs.” 

3.2. Views on the use of the GSP to promote sustainable development and respect 
for human rights 

To  summarise  the  views  held  by  stakeholders  on  the  different  impacts  of  the  GSP  on 
sustainable development and respect for human rights (questions D.1 and D.2), a simple 
indicator  was  constructed,  whereby  each  response  of  a  “strong  positive  impact”  was 
assigned  a  value  of  2,  “somewhat  positive  impact”  a  value  of  1,  “somewhat  negative 
impact”  a  value  of  -1,  and  “strong  negative  impact”  a  value  of  -2.  All  other  responses 
(“no impact”; “I don’t know”) were assigned a value of zero. The indicator thus ranges 
from -2 (all respondents finding a strong negative impact) to +2 (all respondents finding 
a strong positive impact). 

  On  average,  the  GSP  is  viewed  to  have  positive  impacts  across  all  areas  asked 

about (indicated by positive indicator values); 

84 

 
  On  average,  no  major  differences  in  impact  are  seen  across  the  various  impact 
areas  (all  indicator  values  being  close  to  1),  with  the  exception  of  the  GSP’s 
impact on combating corruption, where it is seen as substantially less successful 
(an indicator value of 0.48); 

  Views held by respondents from GSP countries are markedly more positive than 
views  held  by  EU  respondents,  across  all  impact  areas.  Particularly  strong 
differences  in  views  are  observed  with  regard  to  the  GSP’s  contribution  to 
combating corruption, labour rights, human rights, combating money laundering 
and terrorism financing, and combating drug trafficking. The relatively strongest 
alignment  of  views  is  on  effects  of  the  GSP  on  migration,  climate  change 
resilience, protecting the environment and promoting low carbon development; 
  EU  respondents  on  average  see  only  a  marginal  positive  effect  of  the  GSP  on 
combating  money  laundering,  labour  rights,  and  human  rights,  and  a  negative 
effect of the GSP on combating corruption. 

3.3. Views on the monitoring of compliance with the GSP  

86% of all respondents consider it important for the EU to continue monitoring the level 
of  implementation  of  the  27  international  conventions  by  GSP+  beneficiary  countries 
(questions E.1 and E.2), compared to 8% who consider it unimportant. There is no major 
variation  across  regions  or  types  of  respondents,  with  the  exception  that  the  share  of 
respondents  from  GSP  countries  who  consider  monitoring  “very”  important  is 
substantially smaller than in the EU (45% vs. 75%). 

Respondents consider that a wide range of information sources (questions E.3 and E.4) 
provide  useful  information  for  the  Commission’s  monitoring  of  the  implementation  of 
international conventions. The most relevant source, with some distance, are reports by 
the  conventions’  monitoring  bodies,  i.e.,  the  UN,  ILO,  and  other  international 
organisations,  followed  by  information  provided  by  business  and  social  partners  in  the 
beneficiary countries, and by NGOs. EU respondents place substantially more weight on 
NGOs, whereby GSP country respondents more heavily rely on information provided by 
the  beneficiary  country  government,  either  published  or  provided  directly  to  the  EU  in 
the monitoring process. While this is an interesting finding, it is partly explained by the 
fact that public sector respondents from beneficiary countries would be expected to put 
faith in themselves. 

3.4. Views on the withdrawal of GSP benefits 

Respondents  are  divided  over  the  impact  that  the  withdrawal  of  GSP  preferences  can 
have on the human rights or labour rights situation in beneficiary countries (questions F.1 
and F.2): 37% of all respondents think it can have an important positive effect, whereas 
31%  think  that  it  further  worsens  the  situation  on  the  ground.  EU  respondents  hold 
positive  views  (49%  state  that  withdrawal  can  make  an  important  contribution,  and 
another  15%  that  it  can  make  a  minor  contribution),  whereas  a  majority  of  57%  of 
respondents  from  GSP  countries  thinks  that  withdrawal  has  negative  effects  on  the 
human/labour  rights  situation.  Across  types  of  respondents,  public  sector  and  business 
respondents  are  particularly  sceptical.  In  addition,  a  large  majority  of  civil  society 
respondents from GSP beneficiary countries (70%; although based on a limited number 
of  10  responses)  considers  that  withdrawal  of  preferences  is  damaging  rather  than 
helpful. 

85 

 
3.5. Views on beneficiary countries 

54% of all respondents think that the GSP should have a tighter focus on countries “most 
in need” (questions G.1 and G.2), while 28% do not think this is the case. Majorities for 
stronger targeting are found both among EU respondents (65% vs. 21%) and respondents 
from GSP countries, although in the latter case it is only a small majority (40% vs. 34%). 
While  in  GSP  countries  there  are  no  significant  differences  in  responses  across 
stakeholder  groups,  among  EU  respondents  more  targeting  is  particularly  supported  by 
citizens  (76%)  and  businesses  (67%),  whereas  a  majority  of  civil  society  respondents 
(43% vs. 29%) is opposed to stronger targeting, and public sector respondents are evenly 
split (43% for and 43% against). 

Proponents  of  stronger  targeting  noted  that  advanced  or  large  developing  countries 
already  have  competitive  export  industries  and  achieved  some  level  of  export 
diversification  and  should  therefore  continue  to  benefit  from  preferential  access  to  the 
EU only on a reciprocal basis (i.e., under FTAs, nut the GSP). It was also mentioned that 
the  current  list  failed  to  duly  take  into  account  the  level  of  vulnerability  of  some 
developing countries. 

3.6. Views on product coverage for Standard GSP and GSP+ arrangements 

A  clear  majority  of  respondents  (67%  compared  to  22%  who  hold  the  opposite  view) 
thinks  that  sustainable  production  can  make  an  important  contribution  to  poverty 
eradication  and  sustainable  development  (Figure  19).  Respondents  in  the  EU  are  more 
sceptical (58%) than those from GSP countries (77%). The only group across all regions 
and  respondents  where  a  majority  does  not  believe  in  the  positive  contribution  of 
sustainable  production,  are  EU  citizens;  among  the  50  respondents,  28  (56%)  hold  this 
view, compared to 18 (36%) agreeing with the overall majority; the caveat made in the 
introduction on the potential bias among individual EU respondents is recalled. 

When asked whether the GSP product  coverage  should be expanded (questions H.3-5), 
an overall majority of 52% (vs. 35% who oppose) favoured this idea, but responses vary 
significantly  across  regions:  among  EU  respondents,  59%  oppose  the  expansion  of 
product  coverage  (28%  are  in  favour).  Among  respondents  from  GSP  countries,  the 
opposite view is held (across all stakeholder groups): 81% are in favour and 8% against. 
Among EU respondents, the only group that overall favours the extension is civil society, 
but  even  among  this  group  support  is  relatively  limited,  with  3  out  of  8  respondents 
remaining neutral. 

3.6. Views on product graduation 

51% of all respondents support the continuation of product graduation in the future GSP 
(questions  I.1 and I.2), compared to 24% who would abolish it (25% have no opinion). 
Support  for  the  continuation  is  stronger  among  EU  respondents  (55%)  than  among 
respondents  from  GSP  countries  (45%);  also,  a  larger  share  of  EU  respondents  is 
undecided (32%, compared to 18% in GSP countries). 

Some opponents of product graduation comment that some developing countries’ exports 
are  highly  concentrated,  and  that  if  these  products  graduate  the  negative  impact  affects 
the whole economy. Another comment was that the three-year period is not sufficient to 
establish  that  a  sector  has  really  become  competitive  and  should  be  extended  to  five 

86 

 
years. EU respondents expressing views against product  graduation pointed to the need 
for predictability of the system and argued that graduation is detrimental to it. 

Respondents in favour of maintaining product graduation commented that it is necessary 
to maintain a fair trading environment. Globally competitive exporters should therefore 
not benefit from unilateral preferences – especially industries which have been set up in 
countries with the primary objective of benefitting from preferences. Some respondents 
also argued that graduation is in the interest of developing countries as it helps diversify 
exports and thereby avoid getting too reliant on few export products. 

3.7 Views on country graduation 

Questions in this section focussed on the transition period (of currently 3 years) during 
which  countries  that  are  graduating  from  LDC  status  continue  to  export  under  EBA 
preferences from the date of LDC graduation (questions J.1 and J.2). 

Respondents’ views on this issue are split: about one third (32%) thinks the period should 
be  extended,  another  third  (32%)  suggests  keeping  it  at  the  current  three  years,  and 
almost another third (27%) favours reducing it. Views of EU respondents widely differ 
from those of respondents from GSP countries: among the former, 45% are in favour of 
shortening  the  transition  period  and  only  10%  want  to  extend  it,  whereas  in  GSP 
countries 58% are in favour of an extension and only 6% in favour of a reduction. 

3.8. Views on GSP safeguard mechanisms 

67% of respondents agree that safeguards should be provided in the GSP regime, even if 
they  may  have  negative  effects  for  exporters  (questions  K.1  and  K.2).  As  is  to  be 
expected,  this  view  is  held  more  widely  among  EU  respondents  (80%).  This  figures 
clearly  show  that  from  EU  perspective  the  correct  definition  and  implementation  of 
safeguards  measures  are  very  important  to  avoid  negative  effects  in  EU  businesses 
competitiveness  (These  safeguard  mechanisms  are  particularly  relevant  for  middle 
income  countries  like  India  and  Indonesia)  with  56%  strongly  agreeing  to  this  view)  – 
but even among a majority of respondents from GSP countries (53%, with 10% strongly 
agreeing). Across types of respondents, EU citizens but also public sector and business 
respondents strongly advocate for safeguards, whereas civil society respondents are least 
convinced  –  although  a  simple  majority  of  those  who  expressed  a  view  favour 
safeguards. 

Among  stakeholders  in  GSP  countries,  opposition  to  safeguards  is  strongest  among 
citizens  and  civil  society  representatives,  whereas  a  majority  of  businesses  support 
safeguards. 

Opponents of GSP safeguards highlighted the potential negative impacts of safeguards in 
exporting countries, while proponents referred to the need of safeguards for the GSP to 
attain  the  third  objective  of  the  GSP  reform,  i.e.,  avoid  detrimental  effects  for  EU 
producers. 

87 

 
 
 
Annex 3: Who is affected and how? 

Practical implications of the initiative 

The potential benefits of the proposed set of objectives are difficult to quantify, as they 
involve often technical improvements to the existing structure and provisions of the GSP 
scheme – in order to maximise its efficiency and effectiveness and increase the potential 
for sustainable economic development of the beneficiary countries. Under the preferred 
set  of  options,  the  initiative  has  the  following  practical  implications,  benefits,  and 
associated costs, relative to the baseline, per cluster: 

Summary of costs and benefits 

Table I. Overview of benefits (total for all provisions) – preferred option 

Description 

Amount 

Comments 

Abolish the export 
competitiveness 
vulnerability criterion 
for GSP+ (Sub-option 
3Ba) 

Direct benefits 

Arrangements and country coverage 

All graduating EBA countries would be a 
priori eligible for GSP+, in case their 
authorities wish to apply for the 
arrangement. This is a mitigation measure: 
no gains are expected, but it aims to avoid 
losses and serious negative economic 
impact for graduating LDCs which would 
lose EBA preferences. It further supports 
the development goal of GSP, by ensuring 
continued access to the scheme for the 
countries most in need.  

Main beneficiary: graduating LDCs 
In particular, Bangladesh stands out in 
terms of facing a significant fall of 
exports, a consequential large decline 
in real GDP and economic welfare, 
and large impacts in sectors such as 
textiles and apparel and 
leather/footwear that face a high MFN 
tariff in the EU and thus potentially 
disruptive industrial adjustment. 

Product coverage and graduation 

Introduce technical 
adjustments: an 
adjustment of product 
graduation thresholds 

Increase effectiveness of the product 
graduation in targeting specific 
competitive products. More granular 
product graduation deals with the issue of 
the heterogeneity of GSP Sections (some 
very broad, some very narrow). 

Main beneficiary: EU industry 
Also relevant under Safeguards below 

Conditionality and conventions 

Extend negative 
conditionality 
(Option 6B) 

Contribute to the fight against climate 
change by encouraging GSP beneficiary 
countries to improve the implementation 
of climate and environment conventions. 
Similarly, contribute to improvements in 
good governance in all beneficiary 
countries. 

Main beneficiary: citizens of 
developing countries, global 
community (benefits of common fight 
against climate change) 
The role played by GSP can be 
significant as environmental 
degradation tends to hit developing 
countries hardest due to extensive 
manufacturing of products dependent 
on natural resources (such as textiles), 
as well as the lack of environmental 
protection laws and programs in those 
countries.   

Update the list of 
conventions (Sub-
option 8Bc) 

Increased leverage and attention on key 
human rights (i.e., the rights of people of 
disabilities, rights of children) and 

Main beneficiary: citizens of 
developing countries 
On climate: Many developing 

88 

 
countries have high population 
growth, and a significant part of them 
are experiencing increasing 
industrialisation which may lead to a 
steep increase in GHG emissions. 

Main beneficiary: citizens of 
developing countries 

Introduce new steps 
during the formal 
withdrawal procedure 
(Sub-option 9Bb) 

standards (i.e., on labour inspection). 
Support on actions combating climate 
change through the inclusion of the Paris 
Agreement.  

The introduction of an impact assessment 
of the potential withdrawal will make it 
possible to weigh all three GSP general 
objectives: contribution to poverty 
reduction, sustainable development, and 
safeguarding EU industry. In particular, it 
ensures that possible withdrawal is 
adapted to the circumstances in the 
country, its economic development needs, 
and the socio-economic impact of 
withdrawal. 

Introduce shorter 
(urgent) withdrawal 
procedure for 
egregious cases (Sub-
option 9Bd) 

Allows flexibility to address grave 
violations of human and labour rights and 
standards. Increases effectiveness by 
increasing pressure on beneficiaries to 
respond to requests.  

Main beneficiary: Commission, 
citizens of developing countries 

Transparency 

Increase transparency, enhance the 
Commission’s enforcement role, and 
contribute towards civil society’s use of 
the GSP+ instrument to hold beneficiary 
countries’ authorities accountable, and 
therefore, improve implementation of the 
international conventions. 

Approximate the length of the GSP+ 
monitoring cycle to the monitoring cycle 
for the international conventions by the 
treaty monitoring bodies; allow 
beneficiary countries more time to address 
issues on implementation of the 
conventions 

Safeguards 

Main beneficiary: civil society 

Main beneficiary: Commission, 
beneficiary countries 

Ensure consistency between measures 
aimed at protecting EU industry 

Main beneficiary: EU industry 

Improve the effectiveness of safeguards in 
protecting EU industry, by addressing 
better the heterogeneity of products within 
Sections 

Main beneficiary: EU industry 

Indirect benefits 

Simplification of the system and a 
reduction of administrative burden for 
calculating and monitoring this threshold 

Commission 

Introduce practical 
steps to improve 
monitoring and 
transparency (Option 
10B) 

Extend the GSP+ 
monitoring cycle to 
three years (Option 
10C) 

Align automatic 
safeguards and 
product graduation 
thresholds 

Change the 
calculation of import 
surges so as to be 
based on import 
values rather than 
volumes 

Abolish the export 
competitiveness 
vulnerability criterion 
for GSP+ (Option 
3Bb) 

Option 8Bc: replace 

Simplification and updating of the list of  Global benefits 

89 

 
Kyoto Protocol with 
the Paris Agreement 

conventions 

Option 10C: extend 
the GSP+ monitoring 
cycle to 3 years 

Reduction of administrative burden of the 
monitoring process for both the EU and 
beneficiary countries 

Commission and beneficiary 
countries’ administrations 

Abolish the de 
minims threshold for 
safeguards 

Simplification of the application of 
automatic safeguards and reduction on 
administrative burden 

Commission 

Table II – overview of benefits by stakeholder 

Stakeholder 

Policy choice 

Comments 

Developing countries  Abolish the export competitiveness 

EU industry 

Citizens of 
developing countries 
and civil society at 
large 

Commission  

vulnerability criterion for GSP+ (Sub-
option 3Ba) 
Extend the GSP+ monitoring cycle to 
three years (Option 10C) 

Introduce technical adjustments: 
adjustment of product graduation 
thresholds 
Align automatic safeguards and product 
graduation thresholds 
Change the calculation of import surges so 
as to be based on import values rather than 
volumes 

Extend negative conditionality (Option 
6B) 
Update the list of conventions (Sub-option 
8Bc) 
Introduce new steps during the formal 
withdrawal procedure (Sub-option 9Bb) 
Introduce shorter (urgent) withdrawal 
procedure for egregious cases (Sub-option 
9Bd) 
Introduce practical steps to improve 
monitoring and transparency (Option 10B) 

Introduce shorter (urgent) withdrawal 
procedure for egregious cases (Sub-option 
9Bd)  
Extend the GSP+ monitoring cycle to 
three years (Option 10C) 

Table III. Overview of costs – preferred option 

Different countries benefit in different 
ways, with graduating LDCs a 
particular focus.  

These benefits can also be considered 
global benefits for society at large.  

Commission benefits are in terms of 
administrative efficiency. 

r

A

a
r

Direct 
Retain the structure 
o
y
g
n
n
e m e
  C
r
n
d
u
costs 
of the scheme 
t

n
a

s
t

Citizens/Consum
ers 

Businesses 

Administrations 

One-
off 

Recurren
t 

One-
off 

Recurrent 

One-off 

Recurrent 

o
c

e
v

a
r

e
g

None  No change  None 

No change 

90 

 
 
 
 
 
 
 
 
 
 
 
 
         
 
 
(Baseline 1A)  

Retain the criteria 
for standard GSP 
beneficiaries 
(Baseline 2a)  

Abolish the export 
competitiveness 
vulnerability 
criterion for GSP+ 
(Option 3Ba)  

Retain the product 
graduation scope 
(Baseline 4A)  

Retain the product 
coverage (Baseline 
5A)  

Introduce technical 
adjustments: more 
granularity in 
product graduation 
(at CN Chapter 
instead of Section 
level) and an 
adjustment of 
product graduation 
thresholds  

Expand negative 
conditionality 
(Option 6B)  

Indirect 
costs 

Direct 
costs 

Indirect 
costs 

Direct 
costs 

Indirect 
costs 

Direct 
costs 

Indirect 
costs 

Direct 
costs 

Indirect 
costs 

Direct 
costs 

Indirect 
costs 

Direct 
costs 

Indirect 
costs 

n
o
i
t
a
u
d
a
r
g
d
n
a

e
g
a
r
e
v
o
c

t
c
u
d
o
r
P

s
n
o
i
t
n
e
v
n
o
c

d
n
a

y
t
i
l
a
n
o
i
t
i
d
n
o
C

Update the list of 
conventions 
(Option 8Bc)   

Direct 
costs 

91 

None  No change  None 

No change 

None 

None 

None 

Some cost savings 
due to reduced 
administrative 
burden 

None  No change  None 

No change 

None  No change  None  

No change 

Resources for 
applying increased 
number of product 
graduations at the 
CN Chapter level 

Resources 
for 
reviewing 
the list, 
consulting 
with 
business etc.  

Some 
resources 
to 
understand 
the change 
and 
contribute 
to 
consultatio
n 

Additional 
administrative costs 
can be foreseen 
should there be new 
withdrawal 
requests related to 
the principles of the 
conventions on 
climate and good 
governance for 
standard GSP and 
EBA beneficiaries. 

Increased pressure 
on beneficiary 
countries to 
implement 
conventions, 
potential increase in 
withdrawal requests 

Limited monitoring 
costs for EU for four 
conventions; 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
         
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
             
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Indirect 
costs 

Direct 
costs 

Indirect 
costs 

Direct 
costs 

Indirect 
costs 

Direct 
costs 

Indirect 
costs 

Direct 
costs 

Indirect 
costs 

Direct 
costs 

Indirect 
costs 

Introduce new 
steps during the 
formal withdrawal 
procedure (Option 
9Bb)  

Introduce shorter 
(urgent) 
withdrawal 
procedure in well 
qualified 
circumstances 
(Option 9Bd)  

Introduce practical 
steps to improve 
monitoring and 
transparency 
(Option 10B)  

Extend 
the GSP+ monitori
ng cycle to three 
years (Option 
10C)  

y
c
n
e
r
a
p
s
n
a
r
T

  Align automatic 
s
d
safeguards and 
r
a
product graduation 
u
g
e
thresholds  
f
a
S

Change the basis of 
calculation of 
import surges 

Additional 
implementation 
obligations and 
related costs 
beneficiary 
countries’ 
implementation 

Increase in 
beneficiary 
countries’ budget 
support costs for the 
EU 

Increase in 
administrative costs 
for the EU  

Increase in 
administrative costs 
for the EU 

Reduction in 
administrative 
burden for both EU 
and beneficiary 
countries 

Some 
ratification 
costs for 
beneficiary 
countries for 
4 additional 
conventions 

No 
additional 
costs as 
finds have 
already  

Small one 
off 
administrati
ve cost 

Small one 
off 
administrati
ve cost 
regarding 
change in 
methodolog
y of the 
calculation 

92 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
     
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred option 

L
A
T
O
T

Small 
adjustment 
costs 

Small 
adjustment 
costs 

Additional 
administrative costs 
difficult to predict 
and counterbalanced 
by savings.  

93 

 
 
 
 
 
 
 
 
Annex 4: Analytical methods 

DG Trade in-house modelling results of the economic impact of options  for a new 
GSP regulation 

The impact analysis provided for in the external study served as the basis for this Impact 
Assessment.  The  following  info  summarises  the  modelling  results  of  various  scenarios 
for  a  new  GSP  regulation  to  enter  into  force  on  1  January  2024.  The  simulations  have 
been carried out by DG TRADE.  

The  simulations  were  carried  out  with  the  Computable  General  Equilibrium  (CGE) 
model  MIRAGE  developed  by  the  Centre  d'Études  Prospectives  et  d'Informations 
Internationales (CEPII) in Paris. 

CGE Analysis with MIRAGE 

The  model  is  based  on  the  GTAP  database  and  uses  its  version  9.2  with  the  base  year 
2011.  The  simulations  assume  perfect  competition  and  employ  a  neoclassical  closure, 
essentially  keeping  unemployment  in  the  economy  fixed.  The  EU  is  modelled  in  its 
future configuration i.e. with 27 members. The UK is modelled as an individual country, 
however copying EU trade policy.  

The  model  makes  projections  of  the  development  of  key  economic  parameters  such  as 
population and economic growth until the end of the projection horizon. As this horizon, 
the  year  2029  is  chosen  as  it  would  provide  a  view  halfway  through  the  anticipated 
validity  of  the  regulation  which  will  enter  into  force  in  2024.  Furthermore,  important 
baseline  developments,  in  particular  graduation  of  various  countries  from  Least 
Developed  Country  (LDC)  status  or  from  developing  country  status  altogether,  which 
will have an implication for their status in the GSP can be assumed to be completed by 
that point in time. 

In order to identify the necessary tariff shocks, ad valorem equivalents of applied MFN 
GSP+  and  GSP  tariffs  have  been  retrieved  from  WITS/TRAINS  as  well  as  TAXUD-
CDC.  The  resulting  preferential  margin  by  CN8  have  been  aggregated  to  the  model 
sector level.  

The  model  aggregation  for  regions  is  chosen  such  that  all  GSP  beneficiaries  for  which 
preferences would change and for which individual data exists in the GTAP database are 
modelled  individually.  Furthermore,  Turkey  (due  to  an  obligation  stemming  from  the 
customs union) and China as the largest competitor of the GSP beneficiaries on the EU 
market are modelled as individual countries. 

In terms of sectors, all of the 43 goods sectors present in the GTAP database that account 
for more than 1% of the cumulative preferential margin (tariff preference times value of 
trade) from the baseline and the most far-reaching scenario are simulated individually.  

Other sectors and regions are grouped together in relevant aggregates. 

94 

 
 
Baseline 

During the baseline (i.e. independent of the policy choices in the upcoming  regulation), 
10  LDCs96  are simulated to  graduate from  LDC status to GSP. Most of these countries 
would  be  eligible  for  GSP+  provided  they  ratify  and  commit  to  implementing  the 
necessary  international  conventions.  However,  we  decided  not  to  speculate  on  their 
political will to do so. Another 5 countries will graduate from various schemes to MFN 
status97, Tajikistan and Uzbekistan will advance from standard GSP to GSP+ and finally, 
Vietnam will drop out of the GSP on account of the FTA that supersedes the GSP status. 

Scenarios 

Four scenarios are simulated: 

1.  Status Quo (the baseline) 
2.  Abolition of GSP and GSP+, continuation of EBA 
3.  Abolition of GSP, continuation of EBA and GSP+ 
4.  Abolition of GSP for larger beneficiaries (India and Indonesia) 

In the simulations for both baseline and scenarios, the preferential margins by sector are 
added  to  the  tariff  in  the  model  database.  Compared  to  calculating  final  GSP  and, 
respectively, MFN values and imposing these instead of those in the baseline, this has the 
advantage of being immune to bias from errors in the model database. 

Results 

The  main  results  of  the  CGE  analysis  are  displayed  in  Tables  1  (for  GDP)  and  2  (for 
bilateral trade). The rows are for the EU and for the GSP countries combined. The latter 
is the entire set of current GSP beneficiaries98. 

In comparison to scenario 1 i.e. essentially maintaining the current Regulation, all other 
scenarios exhibit losses of GDP and trade for both the EU and the GSP countries, albeit 
small ones. EU GDP would fall by up to 0.01% if one of the options deviating from the 
status quo were enacted. GSP countries losses would be larger than that in relative terms, 
between  0.04%  and  0.07%.  This  relatively  moderate  average  does  not  change  the  fact, 
though,  that  some  individual  countries  are  more  adversely  affected  by  some  of  the 
options. Detailed results reveal that this is true in particular for Pakistan and Bangladesh, 
losing  up  to  0.3%  and  0.36%  of  GDP,  respectively.  Some  other  GSP  beneficiaries  e.g. 
those still remaining in GSP by 2029, would even see slight gains.  

96  Bangladesh,  Bhutan,  Kiribati,  Lao,  Myanmar,  Nepal,  São  Tome  &  Principe,  Solomon  Islands,  Timor 
Leste and Togo. 
97 Armenia, Equatorial Guinee, Samoa, Sri Lanka and Tonga. 
98  Due  to  aggregations  in  the  model  database,  it  is  not  possible  to  clearly  distinguish  in  terms  of  results 
between presumed future beneficiaries and dropouts. 

95 

 
                                                           
Table 1: GDP effects compared to status quo (scenario 1); in % 

EU27 

Current GSP countries 
combined99   

Scenario 2 

Scenario 3 

Scenario 4 

-0.01 

-0.07 

-0.01 

-0.05 

-0.00 

-0.04 

Source: DG Trade’s simulations with MIRAGE 

EU  imports  from  current  GSP  beneficiaries  decrease  by  3-5%  under  the  scenarios 
deviating  from  the  status  quo.  Total  goods  imports  of  the  EU  from  these  countries 
(including those not entering under GSP) might decline by up to almost 18 billion USD, 
as  can  be  seen  in  the  annex  tables.  However,  part  of  the  void  will  be  filled  by  other 
exporters,  in  particular  China,  imports  from  which  are  projected  to  increase  by  up  to  5 
billion USD. 

Table 2: Effects on EU goods imports from GSP countries compared to status quo (scenario 
1), in % 

Current GSP countries combined 

-5% 

-4% 

-3% 

Source: DG Trade’s simulations with MIRAGE 

Scenario 2 

Scenario 3 

Scenario 4 

The  contractor  relied  upon  these  results  to  assess  the  economic  impacts  of  the  most 
important policy options.  

99 Including countries that under the hypothesis of the different scenarios would no longer benefit from any 
GSP arrangement. 

96 

 
  
  
                                                           
Annex 5: Mid-Term Evaluation of the EU’s Generalised 

Scheme of Preferences 

In  2018,  the  Commission  carried  out  a  midterm  evaluation  (MTE)  of  the  current  GSP 
Regulation (Regulation (EU) 978/2012), which has been in effect from 01 January 2014 
and expires on 31 December 2023.  

The main objective of the evaluation was to assess whether the GSP Regulation is on its 
way to achieving its objectives:  

  To contribute to poverty eradication by expanding export from countries most in 

need; 

  To promote sustainable development and good governance; and  
  To ensure better safeguards for the EU’s financial and economic interests.  

The  evaluation  was  supported  by  an  external  study  contracted  with  an  independent 
consultant  (Development  Solutions).  The  study  of  the  external  consultant  can  be  found 
here: 

Executive summary: 
https://trade.ec.europa.eu/doclib/docs/2018/october/tradoc_157435.pdf  

Full Report: 
 https://trade.ec.europa.eu/doclib/docs/2018/october/tradoc_157434.pdf  

The adopted Commission documents are as follows: 

Final Report from the Commission to the European Parliament and the Council on the 
application of the GSP Regulation: 
https://trade.ec.europa.eu/doclib/docs/2018/october/tradoc_157438.PDF  

Commission Staff Working Document on the MTE: 
https://trade.ec.europa.eu/doclib/docs/2018/october/tradoc_157439.PDF 

97 

 
 
   
 
 
Annex 6: Final Report of the supporting Study 

This  Impact  Assessment  Report  was  supported  by  an  external  study  contracted  with 
independent  consultant  (BKP  Economics).  The  study  of  the  external  consultant  can  be 
found here: 

Executive Summary of the Final Report: 
 https://op.europa.eu/en/publication-detail/-/publication/f7031da3-f0dc-11eb-a71c-
01aa75ed71a1/language-en 

Final Report (Main Report): 
 https://op.europa.eu/en/publication-detail/-/publication/706f539c-f0db-11eb-a71c-
01aa75ed71a1/language-en/format-PDF/source-221478841  

Final Report (Annexes): 
https://op.europa.eu/en/publication-detail/-/publication/be174994-f337-11eb-aeb9-
01aa75ed71a1/language-en 

98 

 
 
 
 
Annex 7: Detailed description of baseline scenarios 

1)  Baseline  scenarios  regarding 

the 

three-tier  structure 

(i.e., 

the 

three 

arrangements) and beneficiary countries 

  Baseline  Scenario  1A  (BS  1A):  no  change  to  the  GSP  three-tier  structure 

(Standard GSP, GSP+ and EBA)   

Under baseline scenario 1A, the current three-tier structure remains in place.  

Changes in the status of beneficiary countries that are expected to take place in the 
near future (unrelated to any potential GSP reform) are considered part of this baseline 
scenario. Specifically, this refers to: 

o  A  number  of  countries  reaching  (at  least)  Upper  Middle-Income  Status  for 
three years in a row and hence no longer being GSP beneficiaries and moving 
to  most-favoured  nation  (MFN)  treatment  by  the  EU.  This  applies  to 
Armenia, Equatorial Guinea, Nauru, Samoa and Tonga; 

o  Graduations  of  countries from  LDC  status  which are  expected over the next 
10 years (Angola, Bangladesh, Bhutan, Kiribati, Lao PDR, Myanmar, Nepal, 
Sao  Tomé  and  Principe,  Solomon  Islands,  Timor-Leste,  Tuvalu,  and 
Vanuatu). For these countries, it is assumed that they enter the Standard GSP 
arrangement; 

o  Product  graduations  (suspensions)  that  have  already  taken  place  and  are 
currently  applied.  This  notably  applies  to  selected  products  of  India, 
Indonesia, and Kenya;100 and 

o  Tajikistan  and  Uzbekistan  joining  the  GSP+  (based  on  the  application 

submitted by the latter and the expected application by the former). 

  Baseline  Scenario  2A  (BS  2A):  no  change  to  the  criteria  defining  eligible 

countries  

Any  country  will  benefit  from  General  GSP,  unless  (i)  it  has  another  type  of  special 
trade  arrangement  with  the  EU,  granting  the  same  tariff  preferences,  or  (ii)  it  has 
achieved high or upper-middle income status during three consecutive years on the basis 
of World Bank classification.  

Provided they meet the criteria for GSP eligibility, large and industrialised developing 
countries  (e.g.,  India  and  Indonesia)  will  continue  to  enjoy  GSP  preferences, 
independently from the size of their economy (e.g., as a certain % of total world GDP). 

100  For  the  period  2017-2019,  see  Commission  Implementing  Regulation  (EU)  No  2016/330  of  8  March 
2016  suspending  the  tariff  preferences  for  certain  GSP  beneficiary  countries  in  respect  of  certain  GSP 
sections  in  accordance  with  Regulation  (EU)  No  978/2012  applying  a  scheme  of  generalised  tariff 
preferences  for  the  period  of  2017-2019,  OJ  L  62,  9.3.2016,  p.  9;  for  the  period  2020-2022,  see 
Commission  Implementing  Regulation  (EU)  No  2019/249  of  12  February  2019  suspending  the  tariff 
preferences  for  certain  GSP  beneficiary  countries  in  respect  of  certain  GSP  sections  in  accordance  with 
Regulation  (EU)  No  978/2012  of  the  European  Parliament  and  of  the  Council  applying  a  scheme  of 
generalised tariff preferences for the period of 2020-2022, OJ L 42, 13.2.2019, p. 6. 

99 

 
                                                           
To  be  eligible  to  receive  the  GSP+  status,  a  country  must  submit  an  application  and 
fulfil Standard GSP conditions, in addition to meeting two further criteria: i)  one related 
to vulnerability and one ii) related to sustainable development.  

i)  A  country’s  level  of  vulnerability  is,  in  turn,  assessed  on  the  basis  of  two 
criteria:  

- Diversification criterion:  how concentrated  a country’s main  EU export  industries are 
and is met if a country’s seven largest sections of its GSP-covered EU imports represent 
75% or more of total GSP imports from that country over a three-year period. 

- Import share criterion: the share of import value from a country compared to the total 
GSP  imports  into  the  EU.  This  criterion  is  met  where  the  three-year  average  share  of 
GSP-covered  imports  from  a  country  compared  to  the  total  imports  from  all  GSP 
countries is lower than 7.4%. 

ii) To comply with the sustainable development criteria, a country must ratify 
the  27  international  conventions  on  human  rights,  labour  rights,  environmental 
protection,  and  good  governance,  as  listed  in  Annex  VIII  to  the  Regulation. 
Moreover, the applicant cannot have formulated reservations which are prohibited 
by these conventions, and the monitoring bodies must not identify serious failures 
to effectively implement them.  

As  already  indicated,  the  open  ended  EBA  arrangement  will  continue  to  exist 
independently from the new GSP Regulation. Any country that is listed as an LDC by the 
UN  Committee  for  Development  Policy  (CDP)  is  automatically  included  in  the  EBA 
arrangement; countries do not need to apply for it. 

  Baseline Scenario  3A (BS 3A): no change  to the vulnerability criteria to be 

met for enjoying GSP+ preferences 

The vulnerability criteria, as described above, remain unchanged under baseline scenario 
3A. 

Twelve  LDCs101  currently  benefitting  from  the  EBA  arrangement  are  expected  to 
graduate from LDC status over the next ten years.102 Accordingly, in line with Art. 17(1) 
of  the  Regulation,  these  would  be  removed  from  the  list  of  EBA  beneficiary  countries 
“following  a  transitional  period  of  three  years.”  Delegated  regulations  taken  by  the 
Commission remove graduating countries at the beginning of the calendar year following 
the end of the three-year period.  

In this  context,  it should be noted that, although  the standard transition  period between 
the  UN  General  Assembly  decision  on  LDC  graduation  and  LDC  graduation  itself  is 

101 Some  graduations from LDC status are already set by the  UN General Assembly in 2023 for Bhutan, 
and in 2024 for Angola, Sao Tomé and Príncipe, and the Solomon Islands. A decision is expected in 2021 
on  the  earliest  possible  graduation  years  for  others  (Bangladesh,  Kiribati,  Lao  PDR,  Myanmar,  Nepal, 
Timor-Leste and Tuvalu).  
102 Any other countries that might graduate from LDC status in the future could not leave the EBA earlier 
than 2031 (based on current transition periods): the earliest decision on LDC graduation could take place at 
the UN CDP triennial review meeting in 2024, so that graduation from LDC status could at the earliest be 
during 2027, and graduation from the EBA in 2031. 

100 

 
                                                           
three years, recent practice has been to grant longer preparatory periods. Considering the 
economic impact of Covid-19, it can be expected that the scheduled decisions for 2021 
will either be deferred or longer transition periods will be provided.  

Following  graduation  from  LDC  status  and  exit  from  the  EBA  arrangement,  these 
countries could move to other preference arrangements, notably to Standard GSP or, 
pending  application  and  depending  on  meeting  vulnerability  conditions  and  ratification 
and implementation of international conventions listed in Annex VIII of the Regulation, 
to  GSP+.  Under  the  current  vulnerability  criteria,  all  LDC  graduating  countries  except 
Bangladesh  would  be  considered  as  vulnerable  and  hence  be  eligible  for  GSP+ 
(provided the other GSP+ criteria are fulfilled as well). 

2)  Baseline scenarios regarding the products 

  Baseline  Scenario  4A  (BS  4A):  no  change  to  the  product  graduation 

mechanism 

In  order  to  ensure  that  the  GSP  preferences  accrue  to  those  countries  most  in  need, 
internationally  competitive  producers  of  certain  products  cease  to  benefit  from  the 
preferences  (product  graduation).  This  mechanism  currently  applies  only  to  the 
Standard GSP, but not to the GSP+ or EBA arrangements.  

Under  the  product  graduation  mechanism,  tariff  preferences  can  be  suspended  if  the 
average  share  of  EU  imports  from  a  given  GSP  beneficiary  of  certain  product  sections 
(defined in Annexes V and IX) in the value of EU imports of the same sections from all 
GSP  beneficiary  countries  over  three  consecutive  years  exceeds  the  thresholds  of  57% 
generally,  47.2%  for  sections  S-11a  and  S-11b  (textiles  and  clothing),  and  17.5%  for 
sections S-2a, S-3 and S-5 (live plants, animal fats, minerals).  

Product graduation is applied at the level of GSP product sections. This is a relatively 
aggregated  level  and,  despite  the  reform  in  2012,  which  increased  the  number  of  GSP 
sections in an attempt to create less heterogeneous sections, still combines fairly different 
products  within  sections.  EU  industry  representatives  maintain  that  product  graduation 
might  therefore  not  be  applied  even  though  some  products  within  a  section  might  be 
highly competitive.103 Conversely, product graduation might take place although certain 
products within a section are far from reaching international competitiveness 

At  present,  the  list  of  graduated  products  is  revised  every  three  years.  Moreover,  the 
threshold  levels  are  adjusted  regularly  to  account  for  GSP  beneficiaries  exiting  the 
scheme.  

  Baseline Scenario 5A (BS 5A): no change to the product coverage 

Standard GSP and GSP+ beneficiaries are entitled to receive preferential tariff rates on 
66%  of  all  products.  Of  the  remainder  of  products  that  are  not  eligible  for  GSP 

103  In  this  respect,  the  Commission  Staff  Working  Document  (SWD)  reports  that  “stakeholders  from  the 
EU tyre industry argue that the graduation mechanism does not sufficiently protect their interests because 
the graduation mechanism is only applied at the product section level and, as such, does not target product-
specific  graduation.  Business  representatives  therefore  propose  a  review  of  the  graduation  mechanism 
whereby graduation should be carried out at a more  disaggregated product level, rather than at the  much 
more aggregated level of product sections.” 

101 

 
                                                           
preferences, roughly three quarters (i.e., 25% of all products) already benefit from zero 
MFN  tariff  rates.  The  final  quarter  (i.e.,  just  9%  of  all  products)  have  an  MFN  tariff 
larger than zero and are not covered under the Standard GSP and GSP+ schemes.  EBA 
beneficiaries,  by  contrast,  enjoy  preferential  access  on  all  products,  except  arms  and 
ammunitions.  

In  2012,  no  major  reforms  were  made  in  the  area  of  product  coverage.  However,  a 
handful of products were added to Standard GSP and GSP+, and various products were 
moved  from  the  “sensitive”  category  to  “non-sensitive”.  As  a  result  of  this  reform,  the 
Standard  GSP  and  GSP+  product  coverage  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 on arms and ammunition.  

3)  Baseline scenarios regarding conditionality  

The GSP Regulation establishes two types of conditionality related to the 27 international 
conventions:  positive  conditionality 
ratifying  and  effectively 
implementing all conventions on human and labour rights, environment and climate, and 
good governance listed in Part A and B of Annex VIII) and negative conditionality (non-
violation of the principles of core human and labour rights conventions listed in Part B of 
Annex VIII).  

(requirement  of 

  Baseline Scenario 6A (BS 6A): no change to negative conditionality.  

For all GSP arrangements, the existing negative conditionality mechanism (Article 19) 
continues  to  be  restricted  to  the  international  core  conventions  on  human  and  labour 
rights  (Part  A  of  Annex  VIII)  and  does  not  extend  to  environmental  and  governance 
conventions (Part B of Annex VIII). 

  Baseline Scenario 7A (BS 7A): No change to positive conditionality. 

For GSP+ only, the existing positive conditionality mechanism (Article 15) continues to 
apply. It continues not to apply to Standard GSP or EBA. 

  Baseline  Scenario  8A  (BS  8A):  no  change  in  the  list  of  international 

conventions in Annex VIII to the Regulation 

The list of GSP-relevant international conventions remains the same, namely: 

the eight fundamental ILO conventions on labour rights; 

o 
o  six core UN human rights instruments 
o 
o  eight conventions on environmental protection and climate; and 
o  Four  good  governance  conventions  –  the  three  main  international  drug  control 

the Convention on the Prevention and Punishment of the Crime of Genocide;  

conventions and the Convention against Corruption. 

  Baseline  Scenario  9A  (BS  9A):  no  change  to  the  mechanism  for  temporary 

withdrawal of preferences  

Under baseline scenario 9A, the current withdrawal mechanism is left unchanged and 
allows for the withdrawal of preferences either for all or only for certain products. 

102 

 
 
 
4)  Baseline Scenario regarding transparency  

  Baseline  Scenario  10A  (BS  10A):  no  change  to  the  GSP+  monitoring 

mechanism  

Under baseline scenario 10A, the existing GSP+ monitoring process as outlined in Art. 
13  and  Art.  14  of  the  Regulation  is  maintained  without  change.  The  baseline  scenario 
also involves maintaining the publication of GSP reports to the EP and the Council at 
intervals of two years.  

implementation  of  an 

To  assess  a  country’s 
the 
Commission examines the conclusions and recommendations of the relevant international 
monitoring bodies established by the relevant conventions. The beneficiary country must 
cooperate  in  this  process  by  providing  necessary  information  on  the  effective 
implementation of the conventions and the fulfilment of requirements.  

international  convention, 

The  Commission  may  also  seek  out  other  sources  of  reliable  information  from  “civil 
society,  social  partners,  the  European  Parliament  and  the  Council”  (Preamble  to  the 
Regulation,  recital  15).  The  Commission  actively  engages  with  these  and  other 
stakeholders, including trade unions, employers, human rights defenders, local bodies of 
international  organizations  and  businesses  to  widely  gather  input  on  a  beneficiary 
country’s progress, in particular in preparation of, and during monitoring missions. The 
Commission also organises special Civil Society Dialogue sessions on the GSP.104 

The  monitoring  mechanism  consists  of  two  primary  tools:  written  communication 
exchanges and an ongoing “GSP+ dialogue” with each country.  

i)  Written  communications  with  beneficiaries  include  letters,  follow  up  questions, 
technical exchanges, and a list of issues105 prepared by the Commission and the EEAS, 
containing an overview of the progress made by the country, as well the most significant 
shortcomings  in  the  country’s  effective  implementation  of  the  27  conventions. 
Communications with beneficiaries are not public and are meant to facilitate the dialogue 
tool  and  build  a  relationship  of  trust  with  beneficiary  country  authorities  given  the 
sensitive  (often  political)  nature  of  the  issues  involved  (European  Commission  2018a). 
Beneficiary  countries  are  expected  to  make  improvements  on  the  issues  identified  in 
these  communications  –  the  country’s  progress  on  these  issues  is  evaluated  in  the  next 
round of communications and in the biennial GSP report.  

The confidentiality of list of issues has been criticized as preventing other relevant stakeholders 
to participate in the process (Richardson, Harrison, and Campling 2017; van der Ven 2018).  

ii)  The  GSP+  dialogue  tool  is  anchored  by  the  GSP+  monitoring  missions,  which 
consist of meetings, field visits, workshops and dialogues by the Commission and EEAS 
officials  with  a  variety  of  stakeholders  in  the  beneficiary  country.  The  missions  are 
designed  for  direct  contacts  with  authorities  at  both  national  and  local  levels,  business 
and civil  society representatives, and local  offices of international  organisations.  GSP+ 
preferences can be temporarily withdrawn the Commission determines that a country 
is no longer meeting the GSP+ requirements, as described above (BS 9A).  

104 See the CSD meetings related to the GSP at https://trade.ec.europa.eu/civilsoc/meetlist.cfm.  
105 The list of issues was formerly referred to as “scorecard.” 

103 

 
                                                           
5)  Baseline Scenario regarding safeguard mechanism  

  Baseline  Scenario  11A  (BS  11A):  no  change  to  the  automatic  safeguard 

mechanism  

In  baseline  scenario  11A,  the  safeguard  mechanisms  under  the  Regulation  are  kept 
without change. They continue to respond to serious difficulties for EU producers, or the 
threat  of  such  difficulties  resulting  from  the  GSP  preferences,  by  allowing  for  the  re-
introduction  of  normal  Common  Customs  Tariff  MFN  duties.  Both  the  general 
mechanism and the automatic safeguard mechanisms remain available.  

The  general  safeguard  mechanism  (Articles  22-28  of  the  Regulation)  applies  to  all 
beneficiaries and products covered by any of the GSP arrangements. It can be initiated by 
the  Commission  or  after  a  request  by  an  EU  Member  State,  any  legal  person,  or  any 
association. A decision on whether to apply measures is then taken after an investigation 
by  the  Commission.  The  general  safeguard  mechanism  was  first  used  in  March  2018, 
when  the  Commission,  upon  the  request  from  Italy,  initiated  a  GSP-related  safeguard 
investigation on imports of Indica rice from Cambodia and Myanmar.  

The  automatic  safeguard  mechanism  (Article  29  of  the  Regulation)  applies  only  to 
specific  product  groups  which  are  considered  sensitive,  primarily  textiles  and  garments 
(GSP section S-11a and S-11b) as well as a few selected other products. These specific 
safeguard measures do not apply to EBA beneficiary countries; and, among the Standard 
GSP  and  GSP+  countries,  only  to  those  that  meet  certain  minimum  thresholds  in  EU 
imports.  The  Commission  has  never  activated  this  mechanism  because  the  conditions 
have not been met to date.  

104 

 
 
 
Annex 8: The current temporary withdrawal procedure 

When  the  Commission  considers  that  there  are  sufficient  grounds  for  a  temporary 
withdrawal  of  preferences,106  it  adopts  an  implementing  act  to  launch  the  temporary 
withdrawal procedure in accordance with the advisory procedure and informs the Council 
and the Parliament of the act (Articles 19(3)  and 15(3)).  It  also  publishes a note in  the 
Official Journal on the initiation of the withdrawal procedure and notifies the beneficiary 
country thereof (Articles 19(4) and 15(4)). These steps constitute the formal launch of a 
withdrawal procedure.  

Once a withdrawal procedure has been formally launched, the Commission will “monitor 
and  evaluate  the  situation  in  the  beneficiary  country”  (Art.  19(4)(b)  of  the  GSP 
Regulation) during a period of six months.107  

Over that period, the Commission shall give the beneficiary country every opportunity to 
cooperate  and  shall  seek  every  relevant  information  which  may  support  its  decision-
making process, including conclusions and recommendations of the relevant international 
monitoring bodies. Then, within another six-month period (three months for GSP+), the 
Commission takes a decision to either close the withdrawal procedure or to temporarily 
withdraw the preferences.  

If  the  Commission  considers  there  are  grounds  justifying  the  temporary  withdrawal,  it 
shall  adopt  a  delegated  act  to  amend  the  Annexes  to  the  GSP  Regulation  to  note  the 
country  and  the  scope  of  withdrawn  preferences.  That  act  shall  take  effect  six  months 
after its adoption. 

In  addition,  the  Commission’s  Delegated  Regulation  No  1083/2013  regulates  specific 
procedural  aspects  of  the  withdrawal  procedure,  such  as  access  to  the  constituted  file 
(i.e.,  evidence  and  documents  gathered  during  the  withdrawal  procedure,  including 
documents  provided  by  third  parties),  the  procedural  rights  of  third  parties,  including 
their rights to be heard. 

The GSP Regulation  and Delegated Regulation No. 1083/2013  establish the procedural 
steps leading from the initiation of the withdrawal procedure to a decision about whether 
to withdraw the preferences.  

Both  Regulations  are silent  on the steps to  be taken  that precede  a decision  whether to 
launch  such  a  procedure.  Moreover,  both  documents  leave  for  the  Commission’s 

106 Article 19(1) of the GSP Regulation provides that preferences may be withdrawn temporarily in case of 
the following situation: a) serious and systematic violation of principles laid down in the conventions listed 
in Part  A of  Annex VIII;  b)  export of  goods  made by prison labour; c) serious  shortcomings in customs 
controls  on  the  export  or  transit  of  drugs  (illicit  substances  or  precursors),  or  failure  to  comply  with 
international conventions on anti-terrorism and money laundering; d) serious and systematic unfair trading 
practices including those affecting the supply of raw materials, which have an adverse effect on the Union 
industry and which have not been addressed by the beneficiary country. For those unfair trading practices, 
which  are  prohibited  or  actionable  under  the  WTO  Agreements,  the  application  of  this  Article  shall  be 
based on a  previous determination to that effect by the competent WTO body; e) serious and systematic 
infringement  of  the  objectives  adopted  by  Regional  Fishery  Organisations  or  any  international 
arrangements  to  which  the  Union  is  a  party  concerning  the  conservation  and  management  of  fishery 
resources. For the situations that may lead to the temporary withdrawal of preferences for GSP+ countries, 
see Article 15(1) and (2) of the GSP Regulation. 
107  Article  15(4)(b)  of  the  GSP  Regulation  has  the  corresponding  provision  for  the  GSP+  arrangement. 
Here, the six-month period is an upper limit for the GSP+ country to submit its observations. 

105 

 
                                                           
discretion the methodological approach to the analysis of evidence and the choice of 
scope of withdrawal (partial or full) and (in case of a partial withdrawal) the choice of the 
tariff lines for which preferences will be withdrawn. 

106 

 
  
 
 
Annex  9:  Detailed  description  of 
Conventions analysed by the supporting study 

International 

 Human rights conventions 

The Study considered core international human rights treaties and optional protocols 
that are not currently listed in the Annex, as well as conventions that are relevant for GSP 
countries  and  that  have  repeatedly  been  recommended  for  inclusion  by  the  European 
Parliament  and  other  relevant  stakeholders.  These  suggestions  are  the  Indigenous  and 
Tribal  Peoples  Convention  (ILO  Convention  No.  169)  and  the  Rome  Statute  of  the 
International  Criminal  Court.108  All  the  conventions  proposed  for  addition  are  legally 
recognised as conventions and are open to ratification by all members of the international 
community. 

Many  of  the  human  rights  instruments  not  presently  included  in  Annex  VIII  are  the 
optional  protocols  to  the  conventions  in  Annex  VIII  (ICCPR,  ICESCR,  CEDAW, 
CAT, CRC)109. Almost all of these protocols entail establishing some level of oversight 
over the implementation of the core human rights instruments.  

Inclusion of these instruments into the list of Annex VIII could be of particular relevance 
from  the  perspective  of  shifting  the  burden  of  monitoring  from  the  EU  to  the 
international  monitoring  bodies.  However,  the  ratification  gap  of  these  conventions  by 
the EU members as well as GSP beneficiaries is rather high.  

Of  the  14  conventions  considered,  only  five  have  been  ratified  by  all  EU  Member 
States: 

  Convention on the Rights of Persons with Disabilities (CRPD); 
  Optional  Protocol  to  the  International  Covenant  on  Civil  and  Political  Rights 

(ICCPR-OP1); 

  Second  Optional  Protocol  to  the  International  Convention  on  Civil  and  Political 

Rights on abolishing the death penalty (ICCPR-OP2); 

  Optional Protocol to the Convention on the Rights of the Child on the involvement 

of children in armed conflict (OP-CRC-AC); 
  Rome Statute of the International Criminal Court. 

The  Optional  Protocol  to  the  Convention  on  the  Rights  of  the  Child  on  the  Sale  of 
Children, Child Prostitution and Child Pornography (OP-CRC-SC) is ratified by all EU 
Member States except Ireland, which has however signed the Protocol. According to the 

108 European Parliament (2019).  Report on the implementation of the GSP Regulation (EU) No 978/2012 
(2018/2017(INI)), 26 February 2019, A8-0090/2019. 
109 The First Optional Protocol to the International Covenant on Civil and Political Rights (ICCPR-OP1), 
the  Optional  Protocol  to  the  International  Covenant  on  Economic,  Social  and  Cultural  Rights  (ICESCR-
OP), the Optional Protocol to the Convention on the Elimination of Discrimination against Women (OP-
CEDAW),  the  Optional  Protocol  to  the  Convention  on  the  Rights  of  the  Child  on  a  communications 
procedure  (OP-CRC-IC)  all  establish  mechanisms  through  which  individuals  can  bring  complaints  on 
alleged  violations  at  the  international  level  when  domestic  remedies  have  been  exhausted.  The  Optional 
Protocol  to  the  Convention  against  Torture,  although  not  entailing  an  individual  complaints  mechanism, 
establishes  an  international  inspection  system  through  which  states  allow  oversight  over  their 
implementation of the Convention. 

107 

 
                                                           
Vienna  Convention  on  the  Law  of  Treaties  (VCLT),  a  state  that  has  signed  but  not 
ratified  a  treaty  “is  obliged  to  refrain  from  acts  which  would  defeat  the  object  and 
purpose of the treaty” (Art. 18). Thus, by signing a treaty, a state expresses the intention 
to comply with it, but this expression of intent in itself is not binding. Based on the clear 
requirement of ratification by all EU Member States, this convention is not included into 
the list, however, there is a high degree of ratification of the OP-CRC-SC internationally 
and among the GSP countries (55 countries out of 64, which is even higher than for OP-
CRC-AC). All the other human rights instruments considered are not ratified by at least 
two EU Member States. 

Convention on the Protection of the Rights of Persons with Disabilities (CRPD) 

This  Convention  is  an  international  human  rights  treaty  adopted  by  the  UN  General 
Assembly.  It is intended to protect the rights of people with disabilities, to ensure their 
full enjoyment of human rights.110  

The  CRPD  specifically  prohibits  discrimination  against  persons  with  disabilities  in 
all areas of life. The Convention underlines the greater risk of poverty for persons with 
disabilities  and  emphasises  multiple  discrimination  faced  by  minorities,  Indigenous 
people,  women,  and  children  with  disabilities.  Moreover,  this  is  the  only  core  human 
rights  convention  that  makes  a  direct  reference  to  sustainable  development,  one  of  the 
primary  objectives  of  the  GSP  Regulation  and  contains  explicit  provisions  aimed  at 
strengthening civil society participation in national implementation and monitoring of the 
convention (Art. 33(3), CRPD) which is of relevance for the EU Agenda.  

The Optional Protocol to the Convention on the Rights of the Child on the involvement of 
children in armed conflict (OP-CRC-AC) 

The Optional Protocol to the CRC on the involvement of children in armed conflict is 
aimed at the protection of children from recruitment and use in hostilities. The Optional 
Protocol  is  relevant  for  the  EU  commitment  to  integrate  children’s  rights  into  EU 
external policies.111 

The  OP-CRC-AC  has  been  ratified  by  all  GSP+  countries  as  per  the  baseline  for  the 
study and its inclusion in Annex VIII would therefore create no addition administrative 
burden for these. In case positive conditionality (including its more effective monitoring 
system) of the GSP+ was expanded to all GSP beneficiaries in the new GSP Regulation, 
a  limited  number  of  GSP  countries  would  need  to  ratify  the  Protocol  and  would  likely 
welcome assistance from the EU in their implementation progress. These additional costs 
need  to  be  compared  to  the  potential  for  stronger  EU  leverage  that  may  contribute  to 
preventing more effectively children under 18 from participating in armed hostilities. 

ILO Conventions 

For the potential inclusion of additional ILO conventions in Annex VIII, the supporting 
study considered protocols to the fundamental conventions, the ILO governance (priority 
conventions), as well as selected ILO technical conventions (i.e., ILO conventions other 

110 GA resolution A/RES/61/106. 
111  E.g.,  European  Parliament  Resolution  of  27  November  2014  on  the  25th  anniversary  of  the  UN 
Convention on the Rights of the Child (2014/2919(RSP)), OJ C 289, 9.8.2016, p. 57-64. 

108 

 
                                                           
than fundamental and priority ones).112 Only two of the considered instruments have been 
ratified by all (Convention No 81) or respectively all but one (Convention No 144) EU 
Member States. They also have the highest ratification shares among the reviewed ones 
globally  and  among  GSP  countries  –  73%  (47  out  of  64  GSP  countries  analysed  in 
baseline) for No 144 and 69% (44 GSP countries) for No. 81. 

ILO Labour Inspection Convention No 81 

Convention No 81113 plays an important role in the operation of the international labour 
standards  system.114  It  lays  down  principles  regarding  the  structures  and  operation  of 
labour  inspection  in  industrial  and  commercial  workplaces,  including  duties  of  labour 
inspectors, ways of carrying out inspections and the related decision making and action 
taking  powers  of  labour  inspectors,  their  code  of  conduct  within  the  service  and  after 
leaving it and reporting about activities of labour inspections.  

Promoting ratification and effective implementation of this convention could help in the 
enforcement of other conventions, including the fundamental  ILO conventions and in 
raising  awareness  related  to  their  requirements.  It  is  also  to  note  that  improved 
enforcement  and  operation  of  labour  inspection  ranks  4th  among  the  nine  ILO 
overarching  goals  and  priority  areas  for  action115  and  is  subject  to  policy  dialogue  and 
assistance projects led by the EU or the ILO in relations with several former and current 
GSP beneficiaries. 

Convention No. 81 is open for ratification by all ILO members and has  enjoyed a high 
ratification rate  (148 out  of 187  ILO members by  early July 2020116), including all EU 
Member States, six out of eight GSP+ beneficiaries (the exceptions being Mongolia and 
Philippines),  ten  out  of  21  Standard  GSP  beneficiaries,  and  28  out  of  35  EBA 
beneficiaries  (in  total,  44  out  of  64  countries117).  The  inclusion  of  the  convention  in 
Annex VIII would therefore imply that Mongolia and the Philippines have to ratify and 
implement  it  to  remain  part  of  the  GSP+  arrangement118.  For  Mongolia,  the  EU  is 
supporting the ratification of C 81 through the Technical Assistance for Budget Support. 

112  The  full  list  of  ILO  conventions,  with  links  to  the  convention  texts,  ratification  status  and  other 
information, is available at https://www.ilo.org/dyn/normlex/en/f?p=NORMLEXPUB:12000:0::NO:::  
113 
https://www.ilo.org/dyn/normlex/en/f?p=1000:12100:0::NO:12100:P12100_INSTRUMENT_ID:312226  
114  The  ILO  2008  Declaration  provides  a  list  of  measures  facilitating  implementation  of  the  Declaration, 
and  this  includes  identification  and  promotion  of  the  governance  conventions,  among  others  Convention 
No 81 on Labour Inspection. 
115  The  first  three  goals  relate  to  pursued  ratification  of  the  ILO  fundamental  conventions  and  the  2014 
Protocol  to  Convention  No  29  on  Forced  Labour,  as  well  as  to  effective  implementation  of  the  ILO 
fundamental conventions. See the ILO Integrated Strategy on Fundamental Principles and Rights at Work 
2017-2023: 
https://www.ilo.org/wcmsp5/groups/ 
public/@ed_norm/@ipec/documents/publication/wcms_648801.pdf  
116  For  details  regarding  countries  which  have  ratified  this  convention,  please,  see:  https://www.ilo.org/ 
dyn/normlex/en/f?p=1000:11300:0::NO:11300:P11300_INSTRUMENT_ID:312226  
117 Based on the breakdown of GSP countries as per the baseline (scenario 2a). 
118  If  positive  conditionality  was  expanded  beyond  GSP+  countries,  up  to  18  additional  countries  would 
have to ratify it (see the analysis in section 2.5). 

109 

 
                                                           
ILO priority (governance) Convention No 144 on tripartite consultations 

ILO  priority  (governance)  Convention  No  144  has  been  suggested  for  further 
consideration due to its relevance for GSP objectives, as well as the overall high number 
of  ratifications  globally  and  among  GSP  beneficiary  countries  (47  out  of  64  as  per  the 
baseline).  This  includes  13  of  the  21  Standard  GSP  beneficiaries,  all  GSP+  countries 
except  Bolivia  and  27  of  the  35  EBA  beneficiaries.  Among  EU  Member  States,  it  has 
been ratified by all119.  

Convention  No  144  provides  for  the  Parties  to  consult  employer  and  worker 
organisations  on  matters  being  subject  to  ILO  work,  including  analysis  of  non-ratified 
conventions  and  measures  to  take  towards  their  ratification  and  implementation,  the 
Government’s  replies  to  questionnaires  concerning  items  on  the  agenda  of  the  ILO 
Conference (the supreme ILO decision making body).  

The  Convention  clearly  contributes  to  the  objectives  of  the  GSP  Regulation  and 
complements the other two conventions relating to social partners, No 87 and No 98.  

The  administrative  cost  burden  for  the Commission  services  to  ensure  monitoring  of 
the implementation of Convention No 144 would be identical as for Convention No 81 

Environmental conventions 

The  identification  of  potential  new  environmental  agreements  for  inclusion  among  in 
Annex  VIII  has  been  guided  by  the  understanding  that  increased  international  trade 
should  not  come  at  the  expense  of  the  environment:  For  some  environmental 
conventions  (and  possibly  for  other  conventions,  too)  a  large  difference  exists  between 
ratification and effective implementation of the convention. Effective implementation of 
existing  and  additional  conventions  may  require  significant  efforts,  both  for  the  GSP 
country  and  the  EU.  The  expected  added  value  of  including  additional  environmental 
conventions  into  Annex  VIII  should  be  weighed  against  the  expected  added  value  to 
support improved implementation of existing environmental conventions and total efforts 
should  be  balanced  against  expected  impacts.  In  some  cases,  alternatives  to  such 
expansions could be preferred. 

The study suggested to give priority to the following environmental aspects: 

1.  Climate change, most comprehensively covered by the Paris Agreement, needs to be 
adequately represented due to its overriding global importance. An update of Annex 
VIII to this end seems opportune; 

2.  Increased  trade  should  not  lead  to  an  increase  in  air  pollution,  which  is  one  of  the 
most  pressing  environmental  challenges  in  GSP  beneficiary  countries.  With  a  high 
share  of  ratification  of  the  Montreal  Protocol,  efforts  could  be  put  on  support  to 
more  effective  implementation,  for  example  in  adopting  and  meeting  air  quality 
standards. In addition, due consideration is given to the Kigali Agreement to reduce 
hydrofluorocarbon (HFC) emissions; 

119 Luxembourg most recently ratified the convention on 18 March 2021. The Convention will enter into 
force for Luxembourg on 18 Mar 2022. 

110 

 
                                                           
3.  Increased  international  trade  should  not  lead  to  an  increase  in  production  of  waste. 
Due consideration is given to limiting production of hazardous waste as well as the 
importance of monitoring international movements of hazardous waste as addressed 
in the Ban Amendment to the Basel Convention. In addition, attention is given to 
information  sharing  and  adoption  of  informed  consent  procedures  for  certain 
hazardous  chemicals  and  pesticides  in  international  trade,  as  addressed  in  the 
Rotterdam Convention; 

4.  Due  consideration  is  given  to  recognising  the  importance  of  water  access  and 
water  quality,  and  the  options  to  support  to  cleaner  production  technologies  with 
lower  levels  of  wastewater  or  higher  levels  of  wastewater  treatment,  improved 
knowledge  exchange  on  wastewater  treatment  or  providing  capacity  building  to 
improve the quality of monitoring and inspection. Water quality and availability have 
been raised in numerous instances as negative consequences from increased trade and 
production in response to trade agreements and trade preferences. 

The remainder of this section discusses in more detail which environmental agreements 
could  be  considered  for  expanding  the  list  of  conventions  in  Annex  VIII  of  the  GSP 
Regulation, ordered by environmental area.  

Environmental  quality.  Most  international  environmental  conventions  address  specific 
environmental aspects and therewith do not fall in the category of overall environmental 
quality.  The  Convention  that  could  be  considered  part  of  this  category  is  the  Espoo 
Convention: 
in  a 
Transboundary Context. However, as the Espoo Convention currently has only 45 parties 
(among which only one GSP country), it is not considered for inclusion in Annex VIII of 
the GSP. 

the  1991  Convention  on  Environmental  Impact  Assessment 

Climate Change. The current list of environmental conventions included in Annex VIII 
of the GSP includes both the United Nations Framework Convention on Climate Change 
(UNFCCC)  and  the  Kyoto  Protocol.  Further  agreement  is  the  Doha  amendment  that 
extended  the  agreements  included  in  the  Kyoto  Protocol  to  2020.  In  2015  these 
conventions were “updated” by the Paris Agreement, which sets targets for the year 2030 
with a view towards 2050.  

Further arguments to support this change are the following: 

  Many  developing  countries  are  highly  vulnerable  to  the  effects  of  climate  change 
and have actively  asked  for international  support  to  address  these  effects. Many of 
these countries have included international support as conditional to achieving their 
(I)NDC target; 

  The Paris Agreement is legally recognised as a convention, is open to ratification by 
all members of the international community and has a high degree of ratification by 
members of the international community; 

  The Paris Agreement is ratified by all EU MS, has a high political priority within the 
EU,  and  recent  statements  from  the  EC,  the  EP  and  other  EU  bodies  show  a  firm 
commitment and broad support to this convention; 

  The Paris Agreement has a high relevance for international policy in general, and the 
GSP  specifically.  It  has  a  high  coherence  with  and  potentially  high  contribution  to 
the objectives of the GSP; 

  There is a high coherence with EU Member States’ commitments; 

111 

 
  There is a high coherence with SDG 13 – climate action;  
  The  vast  majority  of  civil  society  organisations  (CSOs)  is  positive  towards 

implementation of the Paris Agreement. 

Air  pollution.  Air  pollution  is  one  of  the  most  pressing  environmental  challenges  in 
many of the GSP beneficiary countries. Addressing air pollution clearly has a strong link 
to  SDG 11  – sustainable cities and communities, but  also  to  SDG 3  –  good health  and 
well-being. The leading environmental convention in this matter that has global coverage 
is  the  1987  Montreal  Protocol  on  Substances  that  Deplete  the  Ozone  Layer  –  which  is 
listed  in  Annex  VIII  of  the  GSP  Regulation  –  and  the  several  amendments  to  this 
Protocol, including the 2016 Kigali Agreement that aims to reduce HFC emissions by 80-
85% by 2045. Nearly all countries in the world have ratified the Montreal Protocol and 
most of its amendments, but the level of ratification for Kigali Agreement is much lower; 
among the 64 GSP countries, 29 ratified it (none of the GSP+ countries did), and among 
the EU Member States, 24 did so (all but Italy, Malta, and Spain).  

A  key  question  however  is  whether  addressing  this  potential  increase  is  best  done  by 
means  of  adding  the  Kigali  Agreement  to  the  list  of  conventions  in  Annex  VIII  of  the 
GSP  or  by  using  other  channels.  Given  the  lower  level  of  ratification,  including  non-
ratification by three EU Member States, the latter seems the better option. 

Waste.  The  list  of  environmental  conventions  addressing  waste  includes  the  Basel 
Convention on the Control of Transboundary Movements of Hazardous Wastes and their 
Disposal, one amendment to this Convention and a Protocol to this convention. Together 
with  the  Rotterdam  Convention  and  the  Stockholm  Convention,  this  forms  the  set  of 
international  conventions  to  protect  human  health  and  the  environment  from  hazardous 
chemicals and wastes.  

The  Basel  Convention,  already  included  in  the  list  of  GSP  conventions,  is  a  very 
comprehensive and prominent convention: with 197 Parties is it almost universal and it 
has had significant impact on waste reduction world-wide. The Ban Amendment to this 
convention  was  adopted  in  1995.  This  amendment  prohibits  parties  listed  in  its  Annex 
VII – members of the EU, OECD, and Liechtenstein – of transboundary movements of 
hazardous  wastes  to  parties  not  included  in  Annex  VII.  The  Ban  Amendment  aims  to 
ensure  that  countries  with  the  capacity  to  manage  their  hazardous  wastes  in  an 
environmentally sound  manner take  responsibility for them,  while still allowing Parties 
wishing to receive wastes required as raw materials for recycling or recovery industries. 
The  Ban  Amendment  entered  into  force  in  December  2019.  Many  of  the  Annex  VII 
Parties already banned or limited the export of hazardous wastes, while many non-Annex 
VII Parties banned the import of hazardous wastes.120 

The Rotterdam Convention aims to promote shared responsibility and cooperative efforts 
in the international trade of certain hazardous chemicals in order to protect human health 
and  the  environment  from  potential  harm.  In  addition,  it  aims  to  contribute  to  the 
environmentally  sound  use  of  those  hazardous  chemicals,  by  facilitating  information 
exchange about their characteristics, by providing for a national decision-making process 
on  their  import  and  export  and  by  disseminating  these  decisions  to  Parties.  The 

120 Website Basel Convention, “Entry into force of amendment to UN treaty boosts efforts to prevent waste 
dumping”. Available at http://www.basel.int/Default.aspx?tabid=8120  

112 

 
                                                           
Convention  creates  legally  binding  obligations  for  the  implementation  of  the  Prior 
Informed Consent (PIC) procedure.121 

The  Stockholm  Convention,  already  included  in  the  GSP  conventions,  aims  to  protect 
human health and the environment from persistent organic pollutants (POPs). It requires 
its  parties  to  take  measures  to  eliminate  or  reduce  the  release  of  POPs  into  the 
environment,  among  others  by  agreements  to  restrict  production  and  use,  as  well  as 
import and export of POPs. Further details on this convention are included in the section 
below on water quality and access. 

Addressing  increasing  amounts  of  waste,  and  especially  hazardous  waste  is  a  key 
problem in many developing countries.  

A  key  question  is  whether  the  inclusion  of  the  Ban  Amendment  or  the  Rotterdam 
Convention  to  the  list  of  environmental  conventions  in  Annex  VIII  of  the  GSP  is 
opportune. The strong influence of the Ban Amendment prior to its entry into force and 
the  high  number  of  Parties  to  the  Rotterdam  Convention  (161)  may  suggest  a  positive 
answer  to  this  question.  On  the  other  hand,  the  current  number  of  Parties  to  the  Ban 
Amendment may suggest that it is too early to include it. Currently 99 Parties ratified this 
Amendment  to  the  Basel  Convention,  of  which  18  of  the  64  GSP  countries,  and  one 
GSP+  country  (Bolivia).  The  non-signatories  are  mainly  non-Annex  VII  Parties  to  the 
Basel Convention.  

Weighing  all  pros  and  cons,  it  is  concluded  that  specific  mentioning  of  the  Ban 
is 
Amendment  to  the  Basel  Convention  and  the  Rotterdam  Convention 
recommended. This could be done by means of inclusion in Annex VIII, but especially 
for the Ban Amendment this seems not to be the preferred route, given the high amount 
of  GSP  and  GSP+  countries  that  have  currently  not  ratified  this  Ban  Amendment  and 
therewith  such  option  would  add  a  combined  high  burden  to  the  group  of  GSP 
beneficiaries.  An  alternative  way  worth  considering  is  to  indicate  possible  inclusion  of 
the Ban Amendment and the Rotterdam Convention in the future or by recognising the 
importance of these conventions and their relations with international trade, by means of 
including a provision in the preamble to the GSP regulation. 

Water quality and access. Quality of and access to water have a direct relation with SDG 
6  –  clean  water  and  sanitation  and  SDG  14  –  life  below  water,  as  well  as  an  indirect 
relation with several other SDGs, including SDG 3 – good health and well-being. The list 
of  current  environmental  conventions  included  in  Annex  VIII  includes  one  convention 
that  indirectly  addresses  water  quality  or  water  access,  the  Stockholm  convention  on 
persistent organic pollutants, as these chemical substances that persist in the environment 
could contaminate surface water.  

The  conclusion  of  the  assessment  is  that,  other  than  the  Stockholm  Convention  on 
Persistent Organic Pollutants that is currently already included in Annex VIII of the GSP, 
there are no  relevant  environmental  conventions that are  recommended for inclusion in 
Annex VIII. 

121 
http://www.pic.int/TheConvention/Overview/tabid/1044/language/en-US/Default.aspx 

Convention. 

“Overview” 

Rotterdam 

Website 

Available 

at 

113 

 
                                                           
Biodiversity.  With  biodiversity  being  addressed  in  three  out  of  the  current  eight 
environmental  conventions  included  in  Annex  VIII,  (CITES,  CBD,  and  its  Cartagena 
Protocol on Biosafety) the theme receives relatively high attention within the framework 
of the GSP. Biodiversity has a clear, direct relation with SDG 14 – Life below water and 
SDG 15 – Life on land, but also an indirect relation with several other SDGs, including 
SDG  1  –  no  poverty,  SDG  2  –  zero  hunger,  SDG  3  –  good  health  and  well-being  and 
SDG 12 – responsible consumption and production. 

In  addition  to  the  three  conventions  currently  included  in  Annex  VIII,  other  important 
international environmental conventions on biodiversity do exist, for example the second 
protocol to the CBD - Nagoya Protocol on Access to Genetic Resources and the Fair and 
Equitable  Sharing  of  Benefits  Arising  from  their  Utilization  –  and  the  Nagoya-Kuala 
Lumpur Supplementary Protocol on Liability and Redress to the Cartagena Protocol on 
Biosafety. Both protocols concluded in 2010 deal with the fair and equitable sharing of 
benefits arising from the utilization of genetic resources.  

Whereas the importance of these protocols is not disputed, the international appreciation 
and level of ratification is high, and the urgency to actively protect biodiversity in GSP 
beneficiary  countries  is  high,  the  study  concluded  that  many  developing  countries  are 
making  good  progress  in  terms  of  biodiversity  and  the  ratification  and  active 
implementation  of  the  CBD  and  its  Cartagena  Protocol,  together  with  the  active 
protection of species under the CITES Convention is addressing most of the biodiversity 
concerns in GSP beneficiary countries. There is certainly a relation between international 
trade  and  the  utilisation  of  genetic  resources,  and  it  is  important  to  ensure  that  larger 
international trade does not lead to increased bio-piracy. However, the inequality of this 
bio-piracy  is  largely  addressed  by  the  ratification  of  these  protocols  by  developed 
countries  as  it  ensures  that  the  users  of  generic  resources  –  that  mostly  stem  from 
developed countries – share the benefits with provider countries and communities in the 
developing countries. Adding the protocols to the list of Annex VIII countries would put 
an  unequal  burden  on  the  developing  countries  compared  to  the  additional  benefit  of 
ratification.  

Land use. The matter of land use is not proposed to be addressed by means of changes in 
Annex VIII, although countries are facing many challenges such as rapid desertification, 
or loss of natural forest coverage or other natural areas because of increased agricultural 
production or urbanisation.  These challenges, however, are mostly  country-specific and 
often  interlinked  with  other  environmental  challenges.  For  example,  the  loss  of  forest 
coverage  reduces  the  role  of  sinks  to  meet  GHG  emission  targets  and  is  therefore 
addressed in GHG mitigation policies, and the share of desertification is directly related 
to issues on water availability.  

Governance conventions 

The  starting  point  for  identifying  candidates  among  governance  conventions  to  be 
included in Annex VIII was to consider those multilateral conventions (treaties) that are 
open to ratification by all states that are relevant for GSP countries and have repeatedly 
been  recommended  for  inclusion  by  the  European  Parliament  or  relevant  stakeholders, 
including in the consultations undertaken in the context of this study. As a result of this, 
the following conventions were initially identified: 

  The 1951 Geneva Convention on the Status of Refugees; 

114 

 
  The  International  Convention  for  the  Suppression  of  the  Financing  of  Terrorism 

(1999); and 

  The  United  Nations  Convention  against  Transnational  Organized  Crime  (UNTOC, 

2000) and its Protocols, i.e.,  
o  The Protocol to Prevent, Suppress and Punish Trafficking in Persons, Especially 

Women and Children (Palermo Protocol);  

o  The  Protocol  against  the  Smuggling  of  Migrants  by  Land,  Sea  and  Air, 
supplementing the United Nations Convention against Transnational Organized 
Crime (Smuggling Protocol); and  

o  The  Protocol  against  the  Illicit  Manufacturing  of  and  Trafficking  in  Firearms, 

Their Parts and Components and Ammunition (Firearms Protocol). 

For these, then, the selection criteria for proposed inclusion in Annex VIII were that they 
have been ratified by all EU Member States as well as a high share of countries globally 
and among GSP countries, and that ratification and implementation of these conventions 
contributes to the development of GSP countries. 

The Geneva Convention on the Status of Refugees has been ratified by all EU Member 
States  as  well  as  45  of  the  64  GSP  countries  in  the  baseline  (70%),  and  146  countries 
globally. However, although migration constitutes an element of the SDGs (target  10.7 
calls for the facilitation of orderly, safe, regular, and responsible migration and mobility 
of people, including through the implementation of planned and well-managed migration 
policies),  a  direct  positive  link  between  ratification  of  the  Convention  and  the 
development  of  a  GSP  country  is  not  evident.  In  addition,  monitoring  of  the 
implementation  of  the  Convention  might  be  complicated  (and  require  a  comparatively 
higher level of resources both by GSP countries and the European Commission) due to 
the  fact  that  the  Convention  lacks  a  periodic  reporting  mechanism.  Inclusion  of  the 
Convention in Annex VIII is therefore not recommended. 

None  of  the  protocols  to  UNTOC  is  proposed  for  inclusion  in  Annex  VIII,  for  the 
following reasons:  

  The Firearms Protocol  has not  been ratified by all EU Member States  –  Ireland 
and Malta have not signed it, and Germany and Luxembourg have signed but not 
ratified it – and therefore has not been further considered.  

  The  Smuggling  Protocol  fails  the  criterion  of  ratification  by  all  EU  Member 

States (Ireland has only signed but not ratified it).  

  The  Palermo  Protocol  has  been  ratified  by  all  EU  Member  States,  but  provides 
limited added value compared to other, related conventions that are already listed 
in  Annex  VIII:  Provisions  related  to  trafficking  in  persons  are  also  included  in 
CEDAW and CRC, as well as ILO Conventions No. 29 and No. 182. 

The Terrorism Financing Convention has been ratified by all EU Member States and 
also has a high ratification score globally, with 189 Parties (as of early July 2020). It has 
been ratified by 58 of the 64 GSP countries (as per the baseline, scenario 2a), including 
all  GSP+  beneficiaries.  Nevertheless,  an  inclusion  in  Annex  VIII  does  not  seem  to  be 
recommendable  because  there  is  no  evident  direct  link  between  the  scope  of  the 
convention and development of GSP countries. It would also seem that compliance with 
the  Convention  is  already  contained  among  the  GSP  conditionality,  as  Article  19(1)(c) 
mentions  the  “failure  to  comply  with  international  conventions  on  anti-terrorism  and 
money laundering” as one of the reasons for temporary preference withdrawal, applicable 

115 

 
to all GSP beneficiaries. Finally, the added value of including the Convention in Annex 
VIII over and above the already included UN Convention against Corruption and the UN 
Convention  against  Transnational  Organised  Crime,  which  is  proposed  for  inclusion  in 
Annex VIII (see next paragraph) seems to be limited.122 

The UN Convention against Transnational Organized Crime has also been ratified by 
all  EU  Member  States  and  has  190  Parties  globally.  Among  the  GSP  countries,  it  has 
been ratified by 58 of the 64 GSP countries (as per the baseline, scenario 2a), including 
all GSP+ beneficiaries (see Tables B6-2.7-8 in Annex B6-2). The Convention contributes 
to  the  attainment  of  the  SDGs  –  most  explicitly,  Target  16.4  aimed  at  combating  all 
forms of organised crime; it is also directly relevant to international trade. As organised 
crime  works  against  progress  towards  the  overall  sustainable  development  objective  of 
the GSP, it appears justified to add the Convention to the list of international convention 
in Annex VIII of the GSP Regulation. 

122 For the European Commission’s view on this, see the Staff Working Document in response to the MTE 
(European Commission 2018c). 

116 

 
 
 
                                                           
Annex  10:  Calculations  on  product  graduation  and 
thresholds 

Current model123 
Amount of trade which loses preferences, 1000 EUR, average 2017-2020 

Total 

2,710 

13,382 

5,797,185  13,022,822 

Nigeria124 

Congo 

India 

Bangladesh 

GDP (2019), million EUR 

Total exports to EU including 
MFN 

of which GSP eligible 

400,286 
0.001% 

11,203 
0.119% 

2,562,689 
0.226% 

270,232 
4.819% 

13,966,251 
0.02% 
1.96% 

817,951  35,257,569  14,554,049 
89.48% 
16.44% 
90.71% 
39.58% 

1.64% 
67.79% 

Lower the thresholds by 10 percentage points 

Total 

GDP (2019), million EUR 

Total exports to EU including 
MFN 

of which GSP eligible 

Nigeria 

Congo 

India 

Bangladesh 

2,710 

13,382 

6,413,708  13,022,822 

400,286 
0.001% 

11,203 
0.119% 

2,562,689 
0.250% 

270,232 
4.819% 

13,966,251 
0.02% 
1.96% 

817,951  35,257,569  14,554,049 
89.48% 
18.19% 
90.71% 
43.79% 

1.64% 
67.79% 

123 Graduation at section level. The product graduation mechanism of Article 8 of the GSP Regulation 
stipulates that the tariff preferences can be suspended if the average share of EU imports from a given GSP 
beneficiary of certain product sections (defined in Annexes V and IX) in the value of EU imports of the 
same sections from all GSP beneficiary countries over three consecutive years exceeds the thresholds of 
57% generally, 47.2% for sections S-11a and S-11b, and 17.5% for sections S-2a, S-3 and S-5. 
Assumptions are made, as with the rest of the economic modelling, that Vietnam and Indonesia graduate 
out of GSP and Bangladesh graduates from EBA to standard GSP.  
124 These four GSP beneficiaries were selected for these calculations according to the following 
considerations: •  Bangladesh will potentially be graduating from EBA to GSP and the vast majority of its 
exports to the EU are concentrated in textiles; India is the largest user of the instrument; Nigeria and Congo 
present also significant concentration of their exports to a handful of products and could be vulnerable to 
such threshold reductions.  

117