The European Commission (EC) is conducting public consultations on EU’s Generalized Scheme of Preferences (GSP)

International Trade & Customs Practice | May 11 2020

The European Commission (EC) is conducting public consultations on EU’s Generalized Scheme of Preferences (GSP) of granting tariff preferences to developing countries.

The EC has already launched its preparatory work in order to review its legal framework governing GSP through public consultations. The purpose of these consultations is to gather input on preparing a future proposal to the Council and Parliament for a regulation to replace the current GSP Regulation upon its expiry.

EU GSP and benefits to Indian exporters:

The EU’s GSP grants unilateral tariff preferences to developing countries as a means of supporting their economic and social development, as well as promoting human rights, employment standards, sustainable development and good governance practices. The preferential tariff scheme allows developing countries to pay fewer or no duties on exports to the EU.

The EU GSP Regulation sets up three distinct arrangements, adapted to the needs of different categories of beneficiary countries: (i) Standard GSP for low and lower-middle income countries; (ii) GSP+ a special incentive arrangement for sustainable development and good governance; and (iii) Everything But Arms (EBA) a special arrangement for least developed countries (LDCs).

India is granted benefits under the Standard GSP and the list of products eligible for preferential tariff for exports from India are listed in Annex V of the EC Regulation 978/2012. These include both agricultural and industrial products but, the coverage of agricultural products is limited since the EU has identified many agricultural products as sensitive. Further, this list of products is reviewed periodically, and certain products are excluded because the average value of imports into the EU of such products from the beneficiary country exceeds the threshold laid down under the EC Regulation 978/2012.

On February 12, 2019, the EC Regulation 249/2019 specifically excluded the following products from India viz. inorganic and organic chemicals, textiles, pearls and precious metals, iron, steel and articles of iron and steel, base metals (excl. iron and steel), articles of base metals (excl. articles of iron and steel), railway or tramway locomotives, rolling-stock, motor vehicles, bicycles, aircraft and spacecraft, ships and boats, from receiving GSP benefits for the 2020 – 2022 period.

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